January 28, 2004

Dear Colleague:

I am pleased to provide you the Federal Transit Administration's (FTA)
*Annual Report on New Starts* for Fiscal Year (FY) 2005. This report
makes recommendations for the allocation of over \$1.5 billion for new
fixed guideway systems and extensions to existing fixed guideway
systems, also known as "New Starts," for FY 2005. It is a collateral
document to the President's FY 2005 budget submission to Congress.

With the strong foundation provided by Congress and the technical
assistance and oversight by FTA, New Starts grantees engage in one of
the most rigorous financial planning, project development, and
engineering processes in government. The FY 2005 budget recommendation
includes funding for 32 existing, pending, and proposed Full Funding
Grant Agreements (FFGAs), which are multi-year contractual agreements
between FTA and project sponsors to implement major transit capital
investments. Located in every geographic area of the country and in
cities of all sizes, these projects include commuter rail, light rail,
heavy rail, and bus rapid transit. When complete, they will carry over
243 million riders annually, save over 121 million hours in travel time
benefits, and significantly improve air quality and mobility in America.

The *Annual Report on New Starts* also provides a snapshot of each
project in development. In addition to providing information to
Congress, it serves as guidance to project sponsors, so that
improvements can be made. Since projects can be expected to continue to
change as they progress through the development process, the ratings for
projects that are not yet recommended for FFGAs should not be construed
as a statement about the ultimate merits of these projects, but an
assessment of each project's current strengths and weaknesses.

The criteria and measures supporting the project ratings presented in
the *Annual Report on New Starts* for FY 2005 were the same as those
used in the FY 2004 Report. The FY 2004 Report included the transition
to the cost-per-hour of transportation system user benefits as the
measure for project cost effectiveness and placed greater emphasis on
the share of non-New Starts funding when assigning both financial and
overall project ratings.  In addition, the report encouraged project
sponsors to improve the cost-effectiveness of projects that received a
"low" rating on cost-effectiveness. The FY 2005 Report continues these
important elements of our evaluation process.

***Highlights of the FY 2005 New*** ***Starts Evaluation Process***

Beginning this year, FTA invited New Starts project sponsors to submit
information that demonstrates the anticipated economic development
impacts of their proposed major transit capital investments.  FTA's
measure for these impacts is the same measure used for the cost
effectiveness criteria -- the annualized "cost per hour of user benefit"
-- but is based upon an alternative set of land use forecasts that
reflect the additional development anticipated to occur as a result of
the proposed New Starts project. Only three project sponsors submitted
such information for the FY 2005 New Starts evaluation. Due to the
limited number of sponsors submitting this information and FTA concerns
about the submissions that were received, the factor has not been used
in this year's evaluation process. Nevertheless, FTA is committed to
further understanding and quantifying the economic development impacts
of public transportation, and will work to improve guidance in this area
and include such information in future reports. 

Transit-oriented development continues to be a key component of the
success of New Starts projects in terms of both transportation and
economic development. FTA is extremely pleased by the progress made in a
number of cities that have adopted transit-supportive land use plans and
policies. In every case, the local transit agency has played an
important role in the development and adoption of these plans and
policies.  The following projects being recommended for FFGAs in the FY
2005 Annual Report and that have been particularly successful in this
arena are:  the Cleveland Euclid Corridor Transportation Project; the
Pittsburgh North Shore Light Rail Connector; and the New York Long
Island Rail Road East Side Access Project.

As noted earlier, FTA is placing increased emphasis on the
cost-effectiveness of projects proposed for funding. Over the past year,
FTA assisted a number of proposed New Starts projects that received
*"low"* ratings on cost-effectiveness in the FY 2004 Annual Report to
improve their cost effectiveness, without sacrificing the transportation
benefits of the projects.  These projects include: the Metro Gold Line
Eastside Extension in Los Angeles, the Euclid Corridor Transportation
Project in Cleveland, and the North Shore Light Rail Transit (LRT)
Connector in Pittsburgh.

In addition, FTA helped or is helping several projects in preliminary
engineering or final design to improve their cost effectiveness. These
include the Boston Silverline Phase III Bus Rapid Transit Project; the
Charlotte South Corridor LRT Project in North Carolina; the Los Angeles
Mid-City Exposition LRT Project; the Raleigh-Durham Regional Rail
Project in North Carolina; and the Wilsonville-Beaverton Commuter Rail
Project in Oregon. To date, project sponsors have reduced costs by a
combined \$670 million with no diminution of transportation benefits as
a result of FTA's proactive cost management efforts. FTA will continue
to take an active role in helping project sponsors improve the cost
effectiveness of their proposed major transit capital investments. 

FTA is also improving its oversight of the New Starts program by
undertaking risk assessments on a number of projects in development.
These assessments identify the major areas of risk in a project and
assist project sponsors in the development of risk mitigation plans to
ensure that projects can meet their cost projections and implementation
schedules.  These assessments provide FTA and Congress with much greater
confidence in the capital cost estimates of candidates for New Starts
funding. FTA intends to conduct a risk assessment for every project
prior to awarding an FFGA.

Five projects are not rated in the FY 2005 Report because of continuing
concerns about the validity of the transportation benefits forecast for
these projects.  FTA has contacted and continues to work with the
sponsors of these projects to help develop valid travel demand
assumptions, better information, and improved ridership projections for
their proposed major transit capital investments.  Such projects have
been listed as "Not Rated" for the project justification measures in
this report.  Revised ratings for projects that have not been rated will
be made available to Congress and other interested parties, as these
issues are resolved. 

##### Funding Recommendations

Of the 29 existing and pending FFGAs included in this report, 27 are
recommended for funding in FY 2005. It is anticipated that the Federal
funding commitments for the two remaining projects will be completed in
FY 2004, based upon the funding levels identified in the Conference
Report for the consolidated Appropriations Act, 2004. In addition to the
existing and pending FFGAs, FTA proposes that the following five
additional projects be considered for multiyear funding commitments
(FFGAs) in FY 2005:

###### Cleveland Euclid Corridor Transportation Project

> The Greater Cleveland Regional Transit Authority is proposing a
> 9.4-mile, 35 station, bus rapid transit (BRT) line along Euclid Avenue
> from Public Square in downtown Cleveland to the Stokes-Windermere
> Rapid Transit Station (Red Line) in East Cleveland. The new BRT line
> will connect the region's two largest employment areas and serve a
> number of large hospitals and educational and research facilities,
> including Cleveland State University and Case Western University.
> Currently, this corridor suffers from severe transit delays due to
> antiquated traffic signaling, poor road configuration, excessive bus
> stops, and long bus dwell times. To remedy these issues, the proposed
> Euclid Corridor Transportation Project will redistribute east-west bus
> routes through the central business district to University Circle via
> a fixed guideway BRT facility. The project will serve approximately
> 195,350 jobs located within a one-half mile radius of the station
> areas. Patrons of this new service will experience improved travel
> time, enhanced reliability and comfort, and other improvements
> associated with BRT service. In addition, it is expected that this
> project will promote significant economic growth and revitalization in
> the Euclid Corridor.
>
> [Las Vegas Resort Corridor Fixed Guideway]{.underline}
>
> As a monorail system located in the fastest growing city in the
> country, this project will serve the northern portion of the Las Vegas
> "Strip," which employs an estimated 235,000 people and draws 33
> million tourists annually. The project is a flagship for
> public-private partnership in public transportation, as the proposed
> segment will link to a privately-funded monorail system that is
> expected to be opening for revenue operations in February 2004.
> Currently, the Regional Transportation Commission of Nevada operates a
> high level of bus service along this corridor; however, the
> combination of conventional bus service, private taxis, and shuttle
> buses between entertainment destinations along the corridor has led to
> heavy congestion. The proposed project will decrease congestion along
> this corridor, while improving transportation access to the Las Vegas
> central business district and the Fremont entertainment district, and
> promoting economic development in the Main Street area. It is
> anticipated that the Resort Corridor Fixed Guideway project will carry
> more than 40,000 riders daily.

[New York Long Island Rail Road East Side Access]{.underline}

> > The Long Island Rail Road (LIRR) commuter rail system carries more
> > than 75 percent of workers to Manhattan's business district from New
> > York's Nassau and Suffolk counties. Currently, most LIRR commuters
> > arrive at Penn Station in west Midtown, and nearly 50 percent of
> > these people must transfer to other public transportation modes to
> > reach their final destinations on Manhattan's East Side. As a
> > result, overcrowded conditions exist in Penn Station and on the LIRR
> > trains. To remedy this congestion, the New York LIRR East Side
> > Access project will include the construction of a direct connection
> > from Long Island/Queens under the East River and a new passenger
> > terminal at Grand Central Terminal on Manhattan's East Side. T he
> > project will increase LIRR tunnel capacity under the East River by
> > 45 percent, provide greater flexibility at New York's Penn Station,
> > and improve commute times for over 167,000 LIRR commuters. With an
> > estimated 700,000 jobs and 34,600 households located within one-half
> > mile of the proposed stations, this project is expected to ease
> > congestion and significantly shorten travel time for LIRR customers
> > who use the Nation\'s largest commuter rail system.
>
> [Central Phoenix/East Valley LRT Corridor]{.underline}
>
> Located in one of the fastest growing areas in the United States,
> Valley Metro Rail is looking to provide a transit alternative to
> congested roads and promote new development in key areas around the
> region. Overall, Valley Metro is seeking to develop a 25-mile, light
> rail transit (LRT) system with 26 stations that will connect the
> cities of Phoenix, Tempe, and Mesa. The first segment of this project
> will involve construction of a 20.3-mile segment that will run
> southeast from the Chris-Town Mall in Phoenix, through the downtown
> areas of Phoenix and Tempe, ending in Mesa. The project will serve as
> a focal point for new development along the Central Avenue corridor
> and in areas east of the Phoenix central business district, including
> Sky Harbor Airport, Tempe, and Mesa. The project is notable for the
> number of major activity centers it will serve, including downtown
> Phoenix and Tempe, Arizona State University, Sky Harbor Airport,
> Papago Park Center, the Civic Plaza Convention Center, Bank One
> Ballpark, America West Arena, and Sun Devil Stadium. In addition, this
> project will result in significant travel time benefits for non-work
> trips between Mesa, Tempe, and downtown Phoenix, and for students
> traveling by transit to
>
> Arizona State University. Valley Metro Rail estimates that the project
> will carry approximately 49,900 average weekday riders, including
> 28,300 daily new riders, by the year 2020.

#### Pittsburgh North Shore LRT Connector 

> The Port Authority of Allegheny County is proposing a 1.5-mile,
> four-station light rail transit (LRT) extension of its existing
> 25-mile LRT system. Currently, there is limited transportation access
> between Pittsburgh's Golden Triangle business district and the North
> Shore area, a focal point for redevelopment within the city. This LRT
> extension project will connect these areas, and link the Convention
> Center to the existing LRT station at Steel Plaza. It will support
> existing and proposed development of the North Shore and deliver
> efficient transit service in established neighborhoods. The project
> will also enhance accessibility to major sports events, cultural and
> civic facilities, and improve the linkage between North Shore fringe
> parking and Golden Triangle employment centers. By providing more
> direct transit access between the North Shore and points to the south
> and east of the Allegheny River, the project will result in over 4,200
> hours of travel time benefits each weekday as compared to bus service
> improvements.

Two other meritorious projects are recommended for funding to continue
project development. These projects have met the planning requirements
of the New Starts program and the local communities have demonstrated
support for their respective projects by committing a substantial amount
of local and/or state funding. These projects are:

####### Charlotte South Corridor LRT Project 

> The Charlotte Area Transit System, in cooperation with the City of
> Charlotte, is proposing a 9.6-mile, 15 station light rail transit
> (LRT) system extending from Uptown Charlotte to Interstate 485 in
> south Mecklenburg County. Interstate 77 and South Boulevard, the
> primary roadway options used by commuters traveling north-south along
> this corridor, experience heavy congestion during both the morning and
> evening rush hours. With no ability to expand or improve the existing
> road capacity, the South Corridor LRT project will provide a transit
> alternative to these congested roads and will also serve as a focal
> point for new development along the corridor. While over 107,000 jobs
> are forecasted within one-half mile of the stations by 2025, the South
> Corridor LRT system will also include park-and-ride lots and bus
> service transfer service at seven stations. The project will serve a
> variety of travel markets including inbound and reverse commute work
> trips, as well as leisure trips to the Charlotte Arena (home of the
> future NBA Bobcats), Ericsson Stadium (home of the NFL Panthers) and
> the historic South End.

###### Raleigh-Durham Regional Rail System

> Located in one of the most congested travel corridors in the region,
> the Triangle Transit Authority is proposing a 35.2-mile, 16-station
> diesel multiple unit rail transit project. The corridor includes 44
> percent of the region's current population and 62 percent of its
> employment, but it is projected that vehicle-hours of travel will
> increase from approximately 750,000 hours today to 1.7 million hours
> by 2025. The Raleigh-Durham Regional Rail project is intended to
> provide a transportation alternative between the Raleigh, Research
> Triangle Park and Durham areas, where improvements to the highway
> system are unable to accommodate the projected demand. The project
> also will promote economic development within the corridor. The
> Regional Rail System will use existing North Carolina Railroad and CSX
> rail corridors to connect Duke University, downtown Durham, Research
> Triangle Park, Raleigh-Durham International Airport, Cary, North
> Carolina State University, downtown Raleigh and North Raleigh. While
> there are approximately 80,000 jobs and 11,000 households within
> one-half mile of the proposed stations, this project will also include
> construction of 13 park-and-ride lots to accommodate up to 3,700
> vehicles.

In addition to the projects anticipated to be ready for new FFGAs and
funding in FY 2005, the enclosed report includes information on the 32
projects in the New Starts "pipeline" that are in preliminary
engineering or final design. These projects are located in 22 states and
Puerto Rico, and in cities of all sizes, with populations from over five
million to less than 500,000. Spanning every means of public
transportation service, from ferry boats to commuter rail to light rail
to bus rapid transit, these projects can be expected to significantly
enhance our Nation's public transportation network in the years to come.

Sincerely,

Jennifer L. Dorn

Enclosure