Guidance on New Starts Policies and Procedures and FY 2008 New Starts Reporting

1. Guidance on New Starts Policies and ProceduresandFY 2008 New Starts Reporting

2. May 22 Federal Register Notice • Notice of Availability - May 16 Policy Guidance • Response to Comments on Draft Guidance • Notice of Availability - New Starts Reporting Instructions and FY 2008 Evaluation Process • Schedule for FY 2008 New Starts Reporting

3. SAFETEA-LU Says…… • Section 3011(d)(6) requires that FTA publish, for comment and response, Policy Guidance • 180 days after enactment of SAFETEA-LU • Each time significant changes are made to the process/criteria • At least every two years • FTA’s Response…….. • January 19, 2005 Proposed Guidance • 60 day (plus additional week) comment period • 2-day working session w/ APTA Policy and Planning Committee • May 16 Final Guidance

4. Changes Proposed in Draft Guidance • NEPA/New Starts Interfaces • NEPA Scoping • New Starts Information in NEPA Documents • Acceptable New Starts Rating for Issuance of NEPA Final Doc/Decision • Before and After Study Documentation • Expanded Certification of Methods and Assumptions • Uncertainty in Costs and Ridership Forecasts • Project Development Agreements • FFGA New Starts Level Set at Final Design Approval • Consideration of Rules for Use of Mode-Specific Constants

5. Changes Adopted in Final Guidance • NEPA/New Starts Interfaces • NEPA Scoping • New Starts Information in NEPA Documents • Acceptable New Starts Rating for Issuance of NEPA Final Doc/Decision * • Before and After Study Documentation • Expanded Certification of Methods and Assumptions* • Uncertainty in Costs and Ridership Forecasts • Project Development Agreements • FFGA New Starts Level Set at Final Design Approval • Consideration of Rules for Use of Mode-Specific Constants plus • Clarification of Cost Effectiveness Breakpoints • Contractor Performance Report

6. NEPA Scoping Prior to PE • “Require a project to have progressed beyond the NEPA scoping phase before entering preliminary engineering” • Rationale • Confirmation of the LPA / “PE project” • Mitigates against having to do “planning” during PE • Strengthens linkage between NEPA and New Starts

7. NEPA Scoping Prior to PE Comments - Fairly evenly distributed between supporters and opponents • Concern that requiring scoping will prolong project development, increase costs • Subjecting the LPA to scoping is confusing to the public • Policy Guidance Implements this Requirement

8. New Starts Information in NEPA Documents • “Require the EIS to present the New Starts evaluation of the preferred alternative, in addition to NEPA evaluation of the alternatives” • Rationale • Supports CEQ regulations 40 CFR 1502.23 • Provides public and stakeholders with information on the likelihood of receiving New Starts funding • Enhances information available for decisionmaking

9. New Starts Information in NEPA Documents • Comments – majority opposed • May compromise NEPA process and expose FTA to litigation • New Starts information is too confusing to the public • Should be subject to rulemaking • Policy Guidance Implements this Requirement, with Modification

10. New Starts Information in NEPA Documents • Applies to both EAs and EIS’s • For LPA; FTA strongly encourages for all alternatives in AA/DEIS’s • FTA has standard language/format for presenting information and explaining how it is used • Most recent rating would be reported, so long as information in document is consistent w/rating (new rating not always necessary) • Study/project sponsors should work w/FTA to clarify New Starts criteria and evaluation process for public and decisionmakers

11. New Starts Project Achieve an Acceptable Rating Before NEPA Final Doc/Decision • “Require a New Starts project to achieve an acceptable New Starts rating before the FEIS, ROD, or FONSI is signed” • Rationale • Low rating = no New Starts funding recommendation = no Federal action • Scope changes should be addressed within the NEPA process • Final NEPA document must present a project that FTA can fund. • FTA cannot issue a final NEPA document knowing that its supplementation or reevaluation of scope change is mandatory

12. New Starts Project Achieve an Acceptable Rating Before NEPA Final Doc/Decision • Comments – significant opposition • Could prejudice the NEPA process • NEPA delays could: • Delay ROW acquisition, which could result in cost escalation • Prohibit project from securing, and/or advancing in development with, other funding • Should be subject to rulemaking • Policy Guidance Does Not Implement this Requirement, Except Where Supplemental NEPA Documentation is Certain • For all other projects, RODS/FONSIs to include a “New Starts Finding”

13. Preservation of Information for Before and After Study • “Require project sponsors to provide documentation of the information produced during alternatives analysis that will be needed for the required B and A study, when they apply to begin PE, as well as updated information and analyses at the time of the request to enter into final design and before executing an FFGA” • Rationale • Ensures the availability of data for subsequent B and A study • Consistent with FTA objectives for review of AA technical information • “Real time” rather than retrospective analysis • Consistent with Congressional intent

14. Preservation of Information for Before and After Study • Comments – generally supportive • More guidance and training is necessary • Costs of conducting the BnA Study should be an eligible expense • Economic development and land use should be required characteristics of the BnA Study • Policy Guidance Implements this Requirement • Project sponsors should identify the contractor responsible for cost and ridership estimates and describe contractor’s role (in support of FTA contractor assessment report)

15. Certification of Methods, Assumptions and Procedures • “Require that the individuals identified on Template 1 as the person responsible for developing these tools and techniques, in addition to the CEO, certify that they have been properly developed and applied according to professional standards and conventions and FTA guidelines” • Rationale • Improve the reliability of technical information used to support decisionmaking and justification for New Starts projects • Better ensure “level playing field” for FTA’s evaluation of candidate projects • Consistent with Congressional intent

16. Certification of Methods, Assumptions and Procedures • Comment – Significant opposition • No one individual can be identified as responsible for work. • Risk of professional liability and Federal prosecution. • No industry-accepted standards. • FTA reviews obviate the need for certification. • Policy Guidance Does Not Implement this Requirement • Modest update to long-standing certification statement

17. Identification of Uncertainties in Costs and Ridership Forecasts • “Require forecasts of costs and benefits to include an analysis of uncertainties” • Rationale • Responds to SAFETEA-LU emphasis on reliability of estimates of costs and benefits • Supports requirement for Contractor Performance Assessment reporting • Acknowledges elements of uncertainties for strengthening decisionmaking and focusing project development activities

18. Identification of Uncertainties in Costs and Ridership Forecasts • Comments – Generally opposed, seeking more clarification • All risk can never be eliminated and so too great a focus on it is not productive • FTA should delay implementation of this requirement until guidance is issued that defines how uncertainties should be characterized • Unclear how uncertainties would be presented for cost effectiveness • Policy Guidance Does Not Implement this Requirement • FTA will issue guidance on reporting of risks and uncertainties at a later date • In interim, sponsors strongly encouraged to report uncertainties

19. Project Development Agreements • “At FTA’s discretion, selectively require project development agreements (at time of PE and/or FD approval)” • Rationale • Provides mutually agreed upon yardstick for measuring progress in project development • Focuses project sponsors effort/FTA oversight upon principal issues • Provides basis for FTA rescission of PE/FD approval

20. Project Development Agreements • Comments – Some support, but majority requested further information • When required? What criteria would be used to determine if necessary? • Concern that PDA’s, at FTA’s discretion, could result in inequitable treatment of projects • PDAs will delay projects • Could be partnering agreements, if not used punitively • Existing procedures are already in place to achieve PDA objectives • Policy Guidance Does Not Implement this Requirement • PDAs will be developed and executed when mutually agreeable

21. New Starts Funding Level Set at Final Design Approval • “Place a cap on the FFGA New Starts funding amount at the point of approval to enter final design” • Rationale • Consistent with Congressional intent • Clarifies FTA participation in project costs • Supports decisionmaking

22. New Starts Funding Level Set at Final Design Approval • Comments – Slight majority opposition, but some support and some suggested alternatives • Concern that approach would inhibit innovative contracting • Concern that approach would inhibit traditional approaches • Cap costs at some percentage higher than PE cost estimate • Entry into Final Design should become the trigger for negotiating an FFGA • Allow for some exceptions due to unavoidable cost increases • Policy Guidance Implements this Requirement, with Modification

23. New Starts Funding Level Set at Final Design Approval • Expanded definition and eligible activities for “New Starts Preliminary Engineering” • Once approved into final design, projects not subject to changes in New Starts program • “PE Exit Criteria” being developed to further clarify completion of PE • FTA will consider unanticipated cost increases after final design approval (natural disasters, unforseen significant commodity market fluctuations, etc.), but not execution of FFGA

24. Possible Rules for Mode-Specific Constants • “Require all project sponsors to use pre-established mode-specific constants for each of the included attributes (reliability, span of service, and passenger amenities) that appear to be prominent in a specific fixed-guideway proposal” • Rationale • Acknowledges and captures heretofore ignored non-transportation (time and cost) attributes of fixed guideway projects for areas considering new guideway modes • Enhances consistent treatment of projects nationally • Improves reliability of travel forecasts by mitigating against poorly-estimated constants (“correction factors”)

25. Possible Rules for Mode-Specific Constants • Comment – Generally supportive, but more information needed • Option 2 (specific value for each guideway mode) was preferred • Defensible locally-derived and validated constants should be permitted • A panel of experts should be convened to establish constant values • More information needed before “standard” constant values are implemented. • Policy Guidance Does Not Implement this Requirement

26. Cost Effectiveness Breakpoints • Based on DOT Guidance on the Value of Time • Original breakpoints reflected Year 2000 data: (50% * Annual MHI ($42,148))/ (hourly factor (2000)) = $10.54 per hour $10.54 * highway benefits (1.2) * indirect benefits (2.0) = $25.00 per hour • Adjusted Annually by GDP Deflator

27. Cost Effectiveness Breakpoints

28. Contractor Performance Assessment ReportSAFETEA-LU Provisions • Secretary shall submit a report to Congressional committees analyzing the consistency and accuracy of cost and ridership estimates made by each contractor to public transportation agencies developing new fixed guideway capital projects • Report should compare the cost and ridership estimates at PE approval with estimates made at FD approval, commencement of revenue operation and 2 years afterward • Comparisons should take into consideration factors not under control of the contractor

29. Contractor Performance Assessment ReportImplementation • In effect for all PE requests subsequent to May 22 • Required information: • Ridership forecasts, service levels, underlying assumptions, uncertainties • Cost estimates, plans/profiles, design standards, uncertainties • Identification of responsible parties and roles • Reporting format available from FTA • Information reported at subsequent milestones • Report annually to Congressional committees • Performance assessment will be project-specific, not overall assessment of firm

30. New Starts Reporting Instructions • No significant changes to reporting • New Starts Baseline Principles and Cost Parameters • Updated Standard Cost Categories • Updated CEO Certification • “Linked” New Starts Templates

31. Schedule for FY 2008 New Starts Reporting • July 14 (requested): Any changes to New Starts Project Justification Criteria “inputs” since last FTA evaluation • Travel Forecasts • Capital Costs (Build and Annualized Baseline) • O/M Cost Methodology • Annualization Factor • August 18: Formal New Starts submission (templates, land use, financial info) • September 30: Latest that FTA can consider new/updated/revised information

32. FY 2008 New Starts Evaluation Process • Consistent with FY 2007 Process • Updated Cost Effectiveness Breakpoints • Consideration of Economic Development as an “Other Factor”