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U.S. Department of TransportationFederal Transit Administration

NEW STARTS AND SMALL STARTS

Notice of Proposed Rulemaking

February 2012

New and Small Starts Program

• Successful 30-year program of investing in transit infrastructure around the country

• Generates projects that are transformational, create economic opportunity, and improve our quality of life

• In the past year alone under the Obama Administration, there has been a record number of projects approved for construction

• But FTA believes we can still do better2

Reasons for Undertaking Regulation Change

• Better Address Obama Administration Goals:– Invest in infrastructure– Foster economic development and job

creation– Improve sustainability and livability– Ensure consideration of the environment,

disadvantaged populations, and the impact these projects have on economic development

– Streamline project delivery

• Inform reauthorization discussion

• Better quantify benefits of transit projects 3

The ANPRM Process

• To ensure we captured a broad range of ideas on how to improve the process, FTA:

– Published an Advanced Notice of Proposed Rulemaking (ANPRM) on June 3, 2010

– Conducted extensive outreach to non-traditional partners

– Worked closely with our partners and HUD and EPA

• As a result, FTA received more than 1,000 pages of comments on the ANPRM from a wide audience

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The NPRM

• FTA believes the proposals included in the NPRM will: – Reduce red tape and allow projects to reach the

construction stage sooner

– Potentially shave six months or more off the time required to move major projects through the process

– Eliminate time-consuming technical requirements

• These are common-sense changes that:– Continue an appropriate level of scrutiny for

these significant investments of taxpayer dollars

– Increase the transparency of the process5

Agenda

• Ground Rules for the Session• Overview of NPRM• Current Process and Legislative

Framework• Streamlining Proposals in NPRM• Criteria and Measures Proposed in

NPRM• Wrap Up

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Ground Rules for this Session

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NPRM Information Session Ground Rules

• This is not a public hearing

• The purpose of this session is to provide an overview of the NPRM and respond to questions

• Comments on the NPRM must be submitted in writing to the Docket by the closing date of the comment period: March 26, 2012

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NPRM

• Published January 25, 2012 in the Federal Register: Volume 77, Pages 3848-3909

• 60 day public comment period

• Submit written comments to the Docket by Mail, Fax, Hand Delivery, or On-Line at regulations.gov

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NPRM

• Structured within existing statutory framework of the program– Eligibility requirements– Steps in the project development

process– Evaluation and rating criteria,

timeframes, and 5-point rating scale

• If reauthorization occurs before completion of final rule, FTA will need to re-examine next steps 10

Overview

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NPRM

• Summarizes and responds to comments received on ANPRM

• Proposes regulatory text that outlines the evaluation criteria and parameters of the program

• Includes an appendix that provides more detail on specific measures and weights

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Proposed Policy Guidance

• Published concurrently with NPRM

• Provides more details and specifics on the measures and weights

• Comments received on policy guidance will be considered in conjunction with those provided on the NPRM

• Can be found on FTA website at http://fta.dot.gov/grants/12304.html 13

Benefits of This Structure

• Consistent with direction in SAFETEA-LU:“Secretary shall publish policy guidance regarding the capital project review and evaluation process and criteria . . .each time significant changes are made, but not less frequently than once every two years”

• Provides certainty on the criteria by including them in the regulation

• Allows FTA flexibility to incorporate latest research on technical methods by including details on the measures and procedures in the appendix and policy guidance

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Issues with Current Process

• Misses Important Administration Priorities– Perceived bias against projects designed to

address economic development and projects serving shorter, inner-city trips

• Overly Complex Measures– False precision and unnecessarily burdensome

• Incomplete Measure of Project Benefits– No measurement of environmental benefits or

economic development effects

• Lacks Transparency– Use of incremental measures and point of

comparison used are hard to explain and difficult to understand 15

Goals for NPRM

• Capture a wider range of transit benefits

• Develop clear, understandable measures to support streamlining

• Maintain data driven approach with quantitative measures wherever possible

• Utilize simplified analytical methods

• Retain ability to identify investment-worthy projects

Streamlining Ideas in the NPRM

• Expand ability for projects to pre-qualify

• Simplify data development – Use trips on the project rather than travel time

savings– Allow use of FTA developed direct demand

model to estimate trips– Eliminate baseline alternative– Use simplified methods and standard factors to

estimate benefits

• Give sponsors flexibility and options about the level of analysis they wish to undertake for some measures

• Allow use of current year data to satisfy requirements, future year projections only at sponsor’s option

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Grandfathering of Projects

• This new proposed rule would not apply to– New Starts and Small Starts projects

that have already received a grant for construction

– New Starts already approved for entry into Preliminary Engineering or Final Design

– Small Starts already approved for entry into Project Development

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Legislative Framework

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Eligibility Requirements

Eligible Projects • New Starts

– New Starts funding is >$75M and/or total project cost ≥ $250M

– fixed guideway or extension to existing fixed guideway system

• Small Starts– Total project cost <$250 million and Small

Starts share <$75 million– fixed guideway, extension to existing fixed

guideway system, or corridor based bus system

Eligible Project Sponsors• Public bodies and agencies

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Required Steps in theNew Starts Process

Alternatives Analysis

Preliminary

Engineering

Final Design

Full Funding Grant

Agreement

Determine Locally

Preferred Alternative and adopt it

into constrained long range

transportation plan

FTA rating and decision points

Required Steps in the Small Starts Process

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FTA rating and decision points

Alternatives

Analysis

Project Development

ProjectConstructio

n Grant Agreement

Determine Locally

Preferred Alternative and adopt it

into constrained long range

transportation plan

Requirements for FTA Evaluation and Rating

• FTA must evaluate and rate projects:

– Annually in a Report to Congress (due First Monday in February)

– New Starts• For entry into Preliminary Engineering• For entry into Final Design• Prior to Full Funding Grant Agreement (FFGA)

and construction

– Small Starts• For entry into Project Development• Prior to Project Construction Grant Agreement

(PCGA) and construction

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Requirements for FFGA/PCGA

• To receive an FFGA/PCGA– At least “medium” overall project rating required– No outstanding issues remain

• Contents of FFGA/PCGA– Formal agreement on project scope, budget, and

schedule signed by FTA and project sponsor – Establishes terms and conditions of Federal

participation– Caps Federal Section 5309 New/Small Starts

funds– New/Small Starts funds subject to annual

congressional appropriation

• By law FFGA/PCGA cannot be signed until after a 60 day congressional review

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“Exempt” Projects

• TEA-21 allowed projects seeking less than $25 million in New Starts funds to be exempt from evaluation and rating by FTA

• SAFETEA-LU eliminated the exempt project category upon publication of final rule implementing Small Starts

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Requirements for Before and After Study

• Project sponsor must conduct a study that:– analyzes the impacts of the project on transit

services and ridership– Evaluates predicted and actual outcomes– Identifies differences between predicted and

actual outcomes

• Study plan must be developed and included in the FFGA

• Actual outcomes should be based on two years after opening of the project 26

Summary Rating

Project Justification Rating

Financial Rating

Non-New Starts Share

Capital Finances

Operating Finances

Other Factors

Mobility Improvements

Environmental Benefits

Operating Efficiencies

Cost Effectiveness

Land Use

Economic Development

Statutory New Starts Project Evaluation and Rating Framework

Summary Rating

Project Justification Rating

Financial Rating

Non-New Starts Share

Capital Finances

Operating Finances

Other Factors

Cost Effectiveness

Land Use

Economic Development

Statutory Small Starts Project Evaluation and Rating Framework

Development of Ratings

Law requires that FTA:• Develop an overall project rating based on

ratings for project justification and local financial commitment

• Provide individual ratings for each of the criteria specified in law

• Rate projects on a 5 point scale

• Give each of the project justification criteria “comparable, but not necessarily equal numerical weight”

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Summary Ratings

Current FTA Decision Rules:– Must have at least “Medium” on both to

receive “Medium” overall

– If a project gets a “Low” rating on either, the overall rating will be “Low”

Summary Rating

Project Justification Rating (50%)

Local Financial Commitment Rating

(50%)

Proposals in the NPRM

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Project Justification CriteriaCurrent Weights

• Mobility = 20%

• Cost effectiveness = 20%

• Environmental Benefits = 10%

• Land Use = 20%

• Economic Development = 20%

• Operating Efficiencies = 10%

• Other Factors – can raise or lower overall project justification rating one level

Proposed Weights• Mobility = 16.66%

• Cost effectiveness = 16.66%

• Environmental Benefits = 16.66%

• Land Use = 16.66%

• Economic Development = 16.66%

• Operating Efficiencies = 16.66%

• Other Factors – can raise or lower overall project justification rating one level

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Pre-Qualification (Warrants)

Current FTA defined warrants• Small Starts and Very Small Starts

– If O&M cost of the project is less than 5% of current system-wide O&M, project qualifies for automatic medium or better rating on local financial commitment

• Very Small Starts– If project meets FTA defined parameters

for cost and existing transit ridership in the corridor, project qualifies for automatic medium rating for project justification

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Pre-Qualification (Warrants)

NPRM Proposed Expansion of Warrants

• Could cover larger projects and a wider range of corridor types

• Projects could receive an automatic rating of ‘‘medium’’ or better on one or more of the project justification criteria

• Specific proposals would be identified in future proposed policy guidance

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Current Year/Horizon Year

Current Approach• New Starts

– Measures based on 20 year time horizon

• Small Starts– Measures based on

opening year of project

Proposed Approach• New and Small Starts

– Require forecast of costs/benefits based on current year inputs

– At sponsor’s option, horizon year measures may be calculated if the sponsor feels it will help the project rating• Horizon is 10 years in the

future

– If sponsors chooses to do both, rating is proposed to be based on equal weighting of the two

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Point of Comparison

Current Approach• “Baseline” alternative

– best that can be done in the corridor absent a major capital investment

• Typically a Transportation System Management Alternative (lower cost bus option)

Proposed Approach

• If only current year forecasts prepared, existing system will serve as point of comparison

• If horizon year forecasts prepared, no build alternative will serve as point of comparison (can include expansion projects funded in the TIP)

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Breakpoints

• Will recognize small amounts of benefits are simply small, but not bad– Small positive benefits will be rated medium rather

than low – Only adverse impacts or disbenefits would receive

medium-low or low ratings

• FTA will look for research to help inform breakpoints

• If no research available, FTA will establish an initial set of breakpoints based on the performance measures available from projects currently in the pipeline of projects

• FTA seeking comment on how to establish breakpoints

• Breakpoints will be discussed in future proposed policy guidance

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Before and After Study

Current Regulation• Project sponsor develops B&A study plan

during preliminary engineering, must be submitted to FTA before final design

• Require collection of ‘‘before’’ data prior to start of construction

• Requires collection of ‘‘after’’ data two years after the project opens

• Study is an eligible expense under the FFGA

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Before and After Study

Proposal in NPRM

• Keeps existing requirements but:

– Specifies in more detail the information to be collected

– Adds that before execution of FFGA, there must be satisfactory progress on carrying out the study plan

– Seeks comments on whether 2 years after opening is a sufficient time for project impacts to be fully realized

– Proposes that the final report be submitted to FTA within 3 years of project opening

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Pre-Award Authority

NPRM proposes to codify existing procedures

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Point when automatic pre-award authority is extended

Activity PE Completion of NEPA

FD

Preliminary engineering ROW acquisition Utility relocation Procurement of vehicles Final Design Non-construction activities

Reimbursement with Federal Funds

NPRM proposes to codify:• PE and FD costs potentially

reimbursable once project approved into that phase

• Real estate potentially reimbursable once a project is approved into final design

• Vehicles and construction reimbursable only once a project is approved for construction 41

Definitions Added

• Small Starts• Project Development• Corridor-Based Bus System• Early Systems Work Agreement• No-Build Alternative• Metropolitan Transportation Plan• Locally Preferred Alternative

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No Changes Currently Proposed

• The following areas have no changes proposed at this time:

– NEPA and New Starts interfaces

– Letter of No Prejudice policies/procedures

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Proposed Criteria and Measures

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Trips Rather Than Travel Time Saved

• Allows for use of simplified direct demand model rather than traditional forecasting methods– FTA will develop the simplified model

based on ridership experience on systems around the country

– Will use census data and transit network information

– Sponsors can choose to continue to use traditional methods if they prefer

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Mobility Benefits – Current Measure

• Based on: – Number of Transit Trips – User Benefits per Passenger Mile– Number of Transit Dependents Using the

Project– Transit Dependent User Benefits per Passenger

Mile– Share of User Benefits Received by Transit

Dependents Compared to Share of Transit Dependents in the Region

Mobility Benefits – Proposed Measure

• Trips on the Project – Each trip by a transit dependent person

would be equivalent to two trips by a non transit dependent person

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Environmental Benefits – Current Measure

• Based on the EPA air quality designation for the metropolitan area where the project is located– Projects in non-attainment areas for any

transportation-related pollutants receive a “High” rating

– Projects that are in attainment areas receive a “Medium” rating

Environmental Benefits – Proposed Measure

• Based on estimated change in VMT resulting from mode shift

• Monetized value of changes in– Energy use– Greenhouse gas emissions– Air quality criteria pollutants– Safety– Human Health (in the future when method is

determined)

• Compared to annualized capital and operating cost

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Environmental Benefits – Proposed Measure (continued)

• Measures would be converted from VMT into their native units (e.g., tons of emissions or total accidents) using national-level standard conversion factors

• Native units would be monetized based on standard dollar values

• Monetized values would be summed and compared to the annualized capital and operating cost of the proposed project

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Environmental Benefits – Proposed Measure (continued)

Change in Energy Use

– Changes in VMT would be multiplied by standard energy factors to calculate changes in energy use

– FTA would consider the type of transit vehicles and fuels used

– Would be standardized in British thermal units

– Monetized value will be factored down to avoid double counting of benefits of reduced energy use already considered based on the change in pollutant and greenhouse gas emissions

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Environmental Benefits – Proposed Measure (continued)

Change in Air Quality Criteria Pollutants

• VMT would be multiplied by standard national emission factors for CO, NO x, PM2.5, PM10 to generate estimated tons of emissions

• The health consequences varies by criteria pollutant. FTA would normalize each of these pollutants by multiplying them by a health risk factor to create a generic “ton of air emissions”

• When monetizing, a ton of emissions reduced in a non-attainment area for a given pollutant would be worth more than a ton of emissions reduced in an attainment area 52

Environmental Benefits – Proposed Measure (continued)

Change in Greenhouse Gas Emissions

• Change in VMT would be multiplied by standard emissions factors based on national average values from EPA emissions models

• Greenhouse gas emissions would be normalized to CO2

• To monetize, FTA would use a cost estimate per ton of CO2 emissions from the Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government 53

Environmental Benefits – Proposed Measure (continued)

Change in Safety

– Change in highway VMT would be multiplied by standard safety factor based on data from the Fatality Analysis Reporting System (FARS) database produced by the National Highway Traffic Safety Administration

– Change in transit VMT would be multiplied by standard safety factor based on data from the National Transit Database 54

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Cost Effectiveness – Current Measure

• Dollars per hour of “user benefits” =

• Benefits and costs computed in relation to a “Baseline Alternative”

annualized capital cost + annual O&M cost

user benefits

Cost-Effectiveness – Proposed Measure

• Annualized capital and operating cost per trip– Cost could exclude certain betterments

• FTA would specify betterments and percentage cost reduction allowed

• Discount rate used to annualize costs proposed to be changed from 7% to 2%

– Trips would be the same measure used for mobility (extra weight given to trips made by transit dependent persons)

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Operating Efficiencies – Current Measure

• Comparison of system-wide operating cost per passenger mile of the proposed project compared to the baseline alternative

Operating Efficiencies – Proposed Measure

• Change in operating and maintenance (O&M) cost per “place-mile”– Place-miles would be the passenger capacity of a

vehicle multiplied by its annual revenue-miles of service and summed over all vehicles in the transit system• Passenger capacity would include both seated and

standing passengers

• Standing capacity would be computed with an FTA-defined nationally consistent standing-density assumption

• Vehicle-miles would be required to be consistent with the most recent report to the National Transit Database

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Land Use – Existing Measure

• Looks at existing conditions in the corridor

– existing corridor and station area development

– existing corridor and station area development character

– existing station area pedestrian facilities, including access for persons with disabilities

– existing corridor and station area parking supply 59

Land Use – Proposed Measure

• Looks at existing conditions in the corridor

– existing corridor and station area development

– existing corridor and station area development character

– existing station area pedestrian facilities, including access for persons with disabilities

– existing corridor and station area parking supply

– existing publically supported housing in the corridor and station areas

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Economic Development – Current Measure

• Likelihood economic development will occur in the corridor

• Looks at– Transit supportive plans and policies– Demonstrated local performance of

transit supportive policies

Economic Development – Proposed Measure

• Likelihood economic development will occur in the corridor

• Looks at– Transit supportive plans and policies– Demonstrated local performance of

transit supportive policies– Number of domestic jobs (reported but

not included in the rating)• Optional quantitative scenario

analysis can be undertaken at sponsor’s option 62

Economic Development – Proposed Measure (continued)

Optional quantitative scenario analysis

• Estimate additional changes in VMT expected to result from economic development anticipated in the corridor

• Estimate the environmental benefits that would result

• Monetize the environmental benefits and compare them to the annualized capital and operating costs

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Other Factors – Current Approach

• Specific measures or calculations not proposed

• Salient factors can vary by project. Examples might include: – Environmental justice considerations and

equity issues;

– Opportunities for increased access to employment for low-income persons, and welfare to work initiatives;

– Reliability of the data supporting the evaluation criteria

– Any other factor which the project sponsor believes articulates the benefits of the proposed project

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Other Factors – Proposed Approach

• Specific measures or calculations not proposed

• Other factors could include, but are not limited to:– Multimodal connectivity of the proposed project;

– Environmental justice considerations and equity issues;

– Livable Communities initiatives and local economic activities;

– Policies in place to locate federal, and other major public, facilities and investments in proximity to the proposed project;

– Whether a project is consistent with regional sustainability or blueprint plans;

– Consideration of innovative procurement, and construction techniques, including design-build turnkey applications; and

– Additional factors relevant to local and national priorities and to the success of the project

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Local Financial Commitment – Current Approach

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Local Financial Commitment Rating

Non-Section5309 Share

(20%)

Capital Finances

(50%)

Operating Finances

(30%)

Subfactors examined include:– Current capital and

operating financing condition

– Commitment of capital and operating funds

– Cost estimates/planning assumptions/capacity

Decision Rules:– Share can help but

can’t hurt the rating– Must have medium on

both capital and operating to get medium overall

Local Financial Commitment – Proposed Approach

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Local Financial Commitment Rating

Current Condition (both Capital

and Operating)25%

Commitment of Funds (both Capital

and Operating)25%

Reasonableness of Assumptions

and Financial Capacity (both Capital and Operating)

50%

To encourage overmatch, projects proposing less than 50% share will have their local financing commitment rating raised one level

Wrap Up

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How to Comment

• www.regulations.gov

• Fax 202-493-2251

• By Mail to USDOT HQ

• Hand Deliver to USDOT HQ

• Cite Docket FTA-2010-0009

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Suggestions for Commenters

• Organize comments by Subject or by Section Number of the Proposed Rule

• Support comments with Data, Source Material, and Specific Rationale

• Note: All comments will be included in FTA’s Administrative Record for the Final Rule (49 CFR Part 611)

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Next Steps

• Receive and Review Comments

• Develop Final Rule

• Executive Branch Review

• Promulgation of Final Rule, with effective date some point in the future to allow for:– Publication of additional Proposed Policy

Guidance

– Public Comment Period on that guidance

– Publication of final policy guidance