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New Starts/Small Starts Program

New Starts/Small Starts Program. APTA Annual Meeting San Diego, CA October 4, 2008. Purpose of Session. Increase your understanding of the New and Small Starts programs by: Describing key elements of the program (bureaucratic stuff) Providing the unbureaucratic program principles

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New Starts/Small Starts Program

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  1. New Starts/Small Starts Program APTA Annual Meeting San Diego, CA October 4, 2008

  2. Purpose of Session Increase your understanding of the New and Small Starts programs by: • Describing key elements of the program (bureaucratic stuff) • Providing the unbureaucratic program principles • Provide responses to comments we’ve heard

  3. Topics • Overview of the Program • New/Small Starts Project Planning & Development • New/Small Starts Evaluation and Funding • Outreach

  4. FTA Aspirations the Program • Goal: Fund meritorious projects • Management objectives: • Make decisions with reliable information on project benefits and costs • Treat all projects equitably across the US • Facilitate communication between FTA, transit industry and Congress

  5. Long-standing Legislative Requirements for Funding • Alternative analysis • Cost effectiveness • Local financial commitment

  6. Eligibility: New Starts • New fixed guideway systems and extensions • New Starts funding > $75M or costs ≥ $250m • Fixed guideway is established by any of the following characteristics: • Rail; • Separate right-of-way for the use of public transportation or high occupancy vehicles; or • Catenary

  7. Eligibility: Small Starts • Cost criteria • Total cost <$250 million • Small Starts share < $75 million • Scope criteria • Project has a fixed guideway for 50 percent or more of its length during peak periods, or • Non-fixed guideway project in a corridor including ALL of the following: • Significant transit stations • Traffic signal priority or pre-emption • Low floor buses or level boarding • Premium service branding • 10 min peak/15 min off-peak headways at least 14 hours a day “Exempt” projects exist only until a new rule is published

  8. Eligibility: Very Small Starts • Small Starts criteria for cost and scope • Plus additional eligibility criteria: • Total cost under $50 million • Cost per mile < $3 million per mile, excluding rolling stock • (Existing weekday riders over 3,000)

  9. Key Program Principles • Information for evaluations must properly reflect costs and benefits of the project - THIS IS HARD! • FTA evaluations are mode-neutral • Purpose of each project development phase should be accomplished before progressing to the next • Projects accepted into PE/PD are worthy of funding

  10. Principle: Proper Identification of Project Benefits and Costs Identify benefits of project realized by its infrastructure, not benefits related to: • Land use • Parking costs • Transit service frequencies and coverage • Transit fare • Transit service levels outside study corridor • Highway networks

  11. Principle: Mode-neutral • Credit ridership attractiveness to those attributes that riders value – performance matters, not mode per se • Credit likelihood of economic development to those factors associated with it: developability of land, economic climate, plans and policies and accessibility.

  12. Principle: Accomplish Purpose of Development Phase Before Progressing • Systems planning: corridor identification • Alternatives analysis: mode and alignment • PE: final scope/cost, completion of NEPA, financial plan commitments • Final design: construction documents

  13. Principle: Projects Accepted into PE/PD Are Worthy of Funding Alternatives analysis is sufficiently robust to minimize uncertainties that affect: • Alignment or mode • Capital cost • Transportation benefits • Financial plan • Others that could significantly affect project viability

  14. New Starts/Small Starts Funding: Supply and Demand • Demand: • 18 New Starts projects in PE and Final Design • 16 Small Starts projects in PD • Total cost of pipeline: >$22.6 billion, $10.3 billion in New Starts funding • FTA tracking >100 planning studies considering major transit capital investments • Annual funding • New Starts: $1.4+ billion • Small Starts: $200 million

  15. SAFETEA-LU Provisions Supporting Good Planning Estimates • Before and After Study • Required for both New Starts and Small Starts project – compares cost and ridership forecasts with actual numbers 2 years after revenue operations begins • Before and After Study Report • Required annually to Congress documenting results of B&A studies • Contractor Performance Assessment Report • Required annually to Congress citing contractor forecasts • Incentives awards • Allows more federal funding if actual ridership is at least 90% and cost no more than 110% of forecasts made during alternatives analysis

  16. The New/Small Starts Environment Press 150Projects 15 FFGAs, 34 FD/PE/PD, 100 AA Inspector General Govt Accountability Office Individual Senate and House Members

  17. New Starts Planning and Project Development

  18. New Starts Project Development Process • Project Development: Typically 6-12 Years FTA Approval Required forFull Funding Grant Agreement (FFGA) FTA Approval Required FTA Approval Required Alternatives Analysis 1-2 years Preliminary Engineering2-3 years Final Design Construction Operation 3-7 years ~ 100 AA Studies 12 PE Projects 6 FD Projects 15 FFGA Projects

  19. Key Decisions for Each Phase of Project Development • Systems planning: priority corridor • Alternatives analysis: mode and alignment • Preliminary engineering: final scope/cost, completion of NEPA, financial plan • Final design: construction documents • Full Funding Grant Agreement • FTA: funding • Project sponsor: delivery of the project

  20. Planning and Project Development System Planning Alternatives Analysis Select LPA • Decisions • Needs • Policies • Priority corridor(s) • Decisions • Mode, general alignment • Financial plan FTA Approval to Start PE • Decisions • Refinements to LPA • Final scope and cost • Complete NEPA • Implement financial plan Preliminary Engineering FTA Approval to Start Final Design

  21. Alternatives Analysis:Guiding Principles • Information on costs, benefits and impacts of alternatives results in better decisionmaking by local and federal officials • Given its importance, information needs to be reliable with frank disclosure of uncertainties

  22. Alternatives Analysis: Key Elements • Identification of corridor problems, project “purpose and need,” and goals and objectives • Development of a range of alternatives that address causes of transportation problems • Analysis of costs, benefits, and impacts of alternatives • Refinement of Alternatives • Evaluation of alternatives

  23. Useful FTA Reviews during AA • Scope of work • Initiation package • Technical framework • Technical results • Final report (AA report or AA/DEIS)

  24. Preliminary Engineering: Key Elements • Work necessary to develop a firm scope and cost estimate with appropriate contingencies: • Finalize station locations and configuration • Yard and shop location • Alignment • Park and ride size and configuration • Number of vehicles and peak capacity needs • Work necessary to complete the environmental requirements • Work necessary to firm up funding commitments

  25. What is a Full Funding Grant Agreement (FFGA)? • Formal Agreement signed by FTA and Grantee that includes: • Project Scope, Budget, and Schedule • Terms and Conditions of Federal Participation • Multi-year Funding Commitment (subject to Congressional Appropriations) • Cap on New Starts funds

  26. Significance of FFGA • Historically, 85% of New Starts Funds Appropriated for FFGAs and Projects with “Medium” or Higher Ratings • All Projects Eventually Receive 100% of Total New Starts Funding in FFGA • Majority of Projects Receive New Starts Funding according to Annual Schedule in FFGA • Practical Limits on Total New Starts Funding and Annual Schedule for Individual Projects

  27. Practical Limits for New Starts Funds • Consider other projects in the region and their request for New Starts funds • Assume no more than 50 percent in New Starts funding • Historical maximum New Starts funds per project: $750M total, $100M per year (NYC region is exception)

  28. What is a Project Construction Grant Agreement (PCGA)? (Small Starts) • Formal Agreement signed by FTA and Grantee that includes: • Project Scope, Budget, and Schedule • Terms and Conditions of Federal Participation • Multi-year Funding Commitment (subject to Congressional Appropriations) • Cap on Small Starts funds

  29. Actual Capital Cost vs. Inflation-Adjusted AA Estimate for Projects Completed 2003-2007

  30. Actual Ridership versus AA Forecast for Projects Completed 2003-2007 Average = 74.5% 50th Percentile = 63.8%

  31. New Starts Evaluation and Funding

  32. Documents Related to SAFETEA-LU Requirements • FTA must publish policy guidance for the New/Small Starts review and evaluation process and criteria each time significant changes are made, and not less than every two years • Guidance issued in Spring of 2006 and 2007, and in 2008 • FTA must prepare new regulation for New and Small Starts • NPRM issued August 3, 2007 • Current appropriation bill prohibits issuance of final rule

  33. New Starts Evaluation and Oversight • Among most rigorous in government • Increasingly credible and important to Congress and local communities • Program Management Oversight recommended by GAO and OIG

  34. New Starts Evaluation and Oversight: Over 3 Decades of Disagreement Between FTA and Project Sponsors Why??? • Two significantly different perspectives • Local decisionmaking • Local values and priorities • Local questions and answers • New Starts decisionmaking • Congressionally mandated evaluation criteria • Level playing field that treats proposals fairly and objectively

  35. FTA Ratings: New Starts Summary Rating Project Justification Rating Financial Rating Other Factors Mobility Improvements Environmental Benefits Operating Efficiencies Cost Effectiveness Non-Section 5309 Share Capital Finances Land Use Operating Finances Capital Cost Low Income Households User Benefits Employment O&M Cost User Benefits Minimum Project Development Requirements: NEPA Approvals Metropolitan Planning and Programming Requirements Project Management Technical Capability Other Considerations

  36. What We’ve Heard…. Why doesn’t FTA use all the criteria for its ratings? • Useful metrics for operating efficiencies and environmental benefits have not be developed • Metrics for mobility, while useful, have been delayed until rulemaking

  37. FTA Ratings: New Starts • Existing New Starts Criteria • Project Justification • Land-use (transit friendliness of the setting) • Cost-effectiveness (costs in scale with benefits) • Other factors, including economic development, congestion and pricing strategies, and the case for the project • Local Financial Commitment

  38. Cost Effectiveness • Dollars per hour of “user benefits” = • Benefits and costs computed in relation to a “Baseline Alternative” Cost Effectiveness annualized capital cost + annual O&M cost user benefits Capital Cost O&M Cost User Benefits

  39. Cost Effectiveness • Potential sources of transportation benefits • Highway users: benefits from less congestion due to travelers changing from driving to riding on the project • Current transit users: benefits from faster travel times using project compared to their previous transit mode • New transit users: benefits from faster travel times using project

  40. Cost Effectiveness • Current measurement of transportation benefits • Highway users: not included because of serious travel model difficulties in quantifying degree of congestion relief • Transit users: benefits from faster travel times for New Starts project for all travelers in the region • In-vehicle time • Walk and wait time • Number of transfers • Capacity constraints • Reliability, comfort, security, branding

  41. FTA values for Non-Travel Time Benefits Maximum benefit “Other” attribute Guideway only Guideway + local Guideway-like characteristics 8.0 3.0 - reliability of vehicle arrival 4.0 2.0 - branding/visibility/learnability 2.0 1.0 - schedule-free service 2.0 0.0 Span of good service 3.0 0.0 Passenger amenities 4.0 3.0 - stations/stops 3.0 2.0 - dynamic schedule information 1.0 1.0 TOTAL constant 15.0 6.0 IVT coefficient 0.75*Civt 0.75*Civt

  42. User Benefits Example Local bus TSM 100 transit trips Wait time = 5 min; run time = 20 min On Off BLD Train 110 transit trips Wait time = 5 min; run time = 15 min On Off User benefits = 100 trips x 5 minutes/trip (existing trips) + 10 trips x 5/2 minutes/trip (new trips) User benefits = 500 minutes + 25 minutes = 525 minutes

  43. Cost-Effectiveness • Current breakpoints* for ratings: • Low >$30.49 per hour • Medium-low $24.50 - $30.49 per hour • Medium $16 - $24.49 per hour • Medium-high $12 - $15.99 per hour • High < $12 per hour * Adjusted annually using the GDP deflator

  44. Determination of Cost Effectiveness Breakpoints Based on the Value of Time • 50% of median income per DOT policy ($10.54 when breakpoints established) plus • 20% assumed for highway user benefits ($2.11) plus • Indirect benefits such as economic development, safety improvements, pollutant reductions ($12.65) • Result ($25.30 rounded to $25.00)

  45. Breakpoints and Funding • Projects with cost effectiveness over $25.00 should not be funded • FTA established the breakpoint for “Low” rating at $25.00  “Low” rated projects cannot be funded • April 2005 - FTA announced more stringent standards • Projects with “Medium-Low” rating would not be recommended for funding

  46. What We’ve Heard…… Why not include other benefits beyond user benefits in the cost effectiveness measure, e.g. economic development benefits? • Other benefits, particularly for economic development cannot be easily quantified • Even if additional economic development could be determined, adding these benefits to user benefits is problematic

  47. What’s a Baseline Alternative? • Low capital cost relative to fixed guideway • Includes service frequencies, coverage, p&r lots comparable to the build alternatives • “Best you can do to improve transit without building a new guideway”

  48. Why Use a Baseline Alternative? • Illuminates project’s benefits and costs • Allows for identification of the additional project benefits due to significantly larger additional capital costs • Addresses concerns of critics that lower cost options are just as effective • Ensures consistent evaluations nationally • Enables FTA to fairly assess project benefits in areas with good current transit service and areas with poor service

  49. Land Use Based on strength of: • Transit supportive existing land use • Transit supportive plans and policies • Demonstrated local performance of transit supportive policies Land Use

  50. Mobility Improvements • User benefits per project passenger mile for all users and for transit dependents • Number of all users of project and transit dependent riders • Share of user benefits for transit dependents compared to the share of transit dependents in the Region

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