**Second Avenue Subway MOS**

**New York, New York**

(November 2005)

The Metropolitan Transportation Authority and New York City Transit
(MTA/NYCT) are proposing to construct 2.3 miles of new subway on
Manhattan's East Side to provide extended Broadway express service
between Brooklyn, Lower Manhattan, West Midtown, and East Harlem. The
Second Avenue Subway Minimum Operable Segment (MOS) would extend MTA
rail service from its current terminal at 57^th^ Street and Seventh
Avenue via an existing track connection to the 63^rd^ Street line, with
new stations at 96^th^, 86^th^, and 72^nd^ Streets and new entrances at
Third Avenue to the existing Lexington Avenue/63^rd^ Street station. New
tunnels would be built from 99^th^ Street to 62^nd^ Street, while the
existing tunnel between 99^th^ and 105^th^ Streets would be used for
train storage. The MOS is the first part of a planned 8.5-mile subway
line extending the length of Manhattan's East Side from 125^th^ Street
in East Harlem to Hanover Square in the Financial District.

Under current conditions, the Lexington Avenue Line (LAL) experiences
significant travel-time delays as crowded trains wait in stations while
large volumes of riders board and alight. For example, during a
15-minute period in the morning peak hour at the 86^th^ Street station,
nearly 3,000 riders enter and exit southbound trains, causing excessive
crowding on platforms and queuing on stairs. This reduces train
throughput on the LAL, as dwell times at stations are extended to
accommodate these heavy passenger loads. The purpose of the Second
Avenue Subway MOS is to reduce excessive overcrowding that currently
occurs on Manhattan's only full north-south passenger rail line (which
is North America's busiest transit line); improve service reliability on
the LAL; improve mobility for commuters on the island's East Side; and
meet existing and future travel demand throughout the corridor and
region.

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Heavy Rail                      |
+------------------------------------+---------------------------------+
| ** **                              | 2.3 Miles                       |
|                                    |                                 |
|                                    | 3 Stations                      |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$4,947.8 Million (includes     |
|                                    | \$1.10 billion in finance       |
|                                    | charges)                        |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$1,300.0 Million (26.3%)       |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Forecast Year Operating   | \$26.5 Million                  |
| Cost:**                            |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2030):**     | 213,000 Average Weekday         |
|                                    | Boardings                       |
+------------------------------------+---------------------------------+
| ** **                              | 5,350 Daily New Riders          |
+------------------------------------+---------------------------------+
| **Opening Year Ridership Forecast  | 191,000 Average Weekday         |
| (2012):**                          | Boardings                       |
+------------------------------------+---------------------------------+
| **FY 2007 Finance Rating:**        | # Medium                        |
+------------------------------------+---------------------------------+
| **FY 2007 Project Justification    | **Medium-High**                 |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2007 Overall Project          | **Medium**                      |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

FTA notes that MTA's New Starts funding request of \$1.3 billion for the
Second Avenue Subway MOS project is higher than what has historically
been provided by FTA to other major transit capital investment projects,
but the New Starts share (just over 26 percent) is significantly lower.

**Project Development History and Current Status**

MTA/NYCT completed a major investment study/Draft Environmental Impact
Statement (MIS/Draft EIS) on the Manhattan East Side Corridor in
September 1999. The MIS/Draft EIS covered the northern portion of the
corridor from 63^rd^ Street to East 125^th^ Street. The full 8.5-mile
Second Avenue Subway was selected as the locally preferred alternative
(LPA) in May 2001. FTA approved the LPA into preliminary engineering in
December 2001. Anticipating the financial difficulties in implementing
the entire project at once, MTA/NYCT contemplated the development of
minimum operable segments within the corridor. A Final EIS covering the
full alignment, but including a strategy for the implementation of
distinct operable segments within the corridor, was completed in April
2004. In July 2004, FTA issued an environmental Record of Decision for
the full-length project. MTA has submitted a final design request for
the Second Avenue Subway MOS, which FTA expects to approve in 2006.

**Significant Changes Since FY 2006 Evaluation** (**November 2004**)

In June 2005, MTA provided a revised set of travel forecasts reflecting
a 2030 forecast year and updated population and employment assumptions
for the New York City area. However, finance charges increased by over
\$600 million since last year, accounting for the project's cost
increase. In early November 2005, New York voters approved a statewide
bond referendum that will provide an additional \$450 million in funding
to the project.

**[Project Justification Rating: Medium-High]{.underline}**

The project is rated *Medium-High* for project justification based on a
*Medium* rating for cost effectiveness and a *High* rating for the
project's strong transit-supportive land use.

####### *Cost Effectiveness Rating: Medium* 

The *Medium* cost effectiveness rating reflects the level of travel-time
benefits (62,300 hours each weekday) relative to the project's
annualized costs. The estimate of both costs and benefits of the project
at this stage of development is considered reliable.

+------------------------------------------+---------------------------+
| **Cost Effectiveness**                   |                           |
+------------------------------------------+---------------------------+
| Cost per Hour of Transportation System   | **[New Start vs.          |
| User Benefit                             | Baseline]{.underline}**   |
|                                          |                           |
| Incremental Cost per Incremental Trip    | \$14.10\*                 |
|                                          |                           |
|                                          | \$169.80                  |
+------------------------------------------+---------------------------+

####### \* Indicates that measure is a component of Cost Effectiveness rating.

The first MOS of the Second Avenue Subway would result in a more
efficient ride between the Upper East Side, southern East Harlem, and
West Midtown by providing a cross-platform transfer to the F Line at the
LAL/63^rd^ Street station. With the project, crowding on the LAL is
expected to decrease by as much as 13 percent, with 23,500 fewer riders
entering the Manhattan central business district on southbound express
and local LAL trains on an average weekday. Nearly 72,000 riders
traveling between the Upper East Side or East Harlem and employment
centers in West Midtown are expected to experience approximately 15
percent of the project's travel-time benefits. The remaining travel-time
benefits would accrue to riders traveling from other areas (Upper West
Side, West Harlem, Bronx, etc.) to the corridor under less crowded
conditions. In addition, morning peak hour boardings on the southbound
LAL would decrease by 48 percent at 86^th^ Street, improving passenger
circulation at the station and contributing to better train throughput
and reliability on the LAL.

MTA has developed a risk analysis/risk mitigation program to manage the
technical work and has budgeted for identified risks to reduce
uncertainties. However, FTA believes that the project's current schedule
should be reevaluated. Schedule slippage could result in an increase in
the capital cost estimate. FTA will initiate an assessment of the
reliability of the cost and schedule of the project in early 2006.

####### *Transit-Supportive Land Use Rating: High*

The project's *High* land use rating reflects a high rating for each
component of the land use evaluation criterion.

**Existing Land Use: High**

-   Station areas have a total population of approximately 255,000. Over
    243,000 employees worked in proposed station areas in 2000. Thus,
    the number of residents and workers within walking distance of the
    stations is supportive of very high rates of transit usage.

-   Population density is very high in the proposed station areas, with
    67,600 households per square mile and 110,800 residents per square
    mile. A portion of East Midtown's CBD is within the 72^nd^ Street
    station area at the southern terminus of MOS.

-   Development throughout the corridor is pedestrian-oriented with
    sidewalks on every street and ground floor retail located within
    residential neighborhoods.

-   Numerous public institutions, including museums and hospitals, are
    major trip generators within station areas.

-   The southern portion of the station area that includes part of the
    East Midtown CBD features large-scale retail uses and high-rise
    office development, which front directly on the area's sidewalks.

-   Parking availability is limited, and high parking costs serve as an
    effective disincentive to automobile use.

**Transit-Supportive Plans and Policies: High**

-   New York City policies promote the continued development and
    restoration of older buildings to accommodate growth in the
    corridor. Policies and market conditions continue to encourage dense
    office development, which is among the highest densities in the
    world.

-   Policy support for the concentration of development in high-density
    transit corridors is reflected in city zoning regulations, which
    contain a Special Transit Land Use District mapped along the Second
    Avenue Subway corridor. City zoning emphasizes the concentration of
    new development in areas well served by transit; the preservation of
    the historic and unique character of existing neighborhoods; and
    requirements for sidewalks and other pedestrian amenities.

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-   Zoning regulations establish requirements for the allocation of
    pedestrian space and amenities and limits to curb cuts and truck
    loading. Zoning regulations also encourage strict limits on parking
    supplies throughout station areas.

**Performance and Impacts of Policies:** **High**

-   The intensive development, pedestrian-friendly character, and high
    rates of transit usage in the corridor reflect the impact of land
    use policies and the application of such tools as zoning, floor area
    bonuses, and tax incentives. These measures have worked collectively
    with market forces to create existing, highly transit-supportive
    development patterns in the corridor.

-   New York City's zoning regulations have achieved improvements to the
    pedestrian environment in dense areas and resulted in street-level
    retail, as well as clustered street-level commercial uses near
    transit stations.

####### *Other Project Justification Criteria* 

+------------------------------------------+--------------+------------+
| **Mobility Improvements Rating:          |              |            |
| Medium-High**                            |              |            |
+------------------------------------------+--------------+------------+
| **[Within ½-mile radius of boarding      | 243,000      |            |
| areas]{.underline}:**                    |              |            |
|                                          | 274,900      |            |
| Existing Employment                      |              |            |
|                                          | 11,940 (8%)  |            |
| Projected Employment (2030)              |              |            |
|                                          | 95,330\*     |            |
| Low Income Households (% of total HH)    |              |            |
|                                          | 3,980\*      |            |
| **[Average Per Station]{.underline}:**   |              |            |
|                                          | **[New Start |            |
| Employment                               | vs.          |            |
|                                          | Baseline]{.  |            |
| Low Income Households                    | underline}** |            |
|                                          |              |            |
| **Transportation System User Benefit Per | 1.92\*       |            |
| Project Passenger Mile (Minutes)**       |              |            |
+------------------------------------------+--------------+------------+
| **Environmental Benefits Rating: High**  |              |            |
+------------------------------------------+--------------+------------+
| **[Criteria Pollutant (Reduction in      | **[New Start |            |
| tons)]{.underline}**                     | vs.          |            |
|                                          | Baseline]{.  |            |
| > Carbon Monoxide (CO)                   | underline}** |            |
| >                                        |              |            |
| > Nitrogen Oxide (NO~x~)                 | 148          |            |
| >                                        |              |            |
| > Volatile Organic Compounds (VOC)       | 4            |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | 8            |            |
| >                                        |              |            |
| > Carbon Dioxide (CO~2~)                 | 5            |            |
|                                          |              |            |
| **[Criteria Pollutant                    | 27,200       |            |
| Status]{.underline}**                    |              |            |
|                                          | **[EPA       |            |
| > Carbon Monoxide (CO)                   | De           |            |
| >                                        | signation]{. |            |
| > 8-Hour Ozone (O~3~)                    | underline}** |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | Maintenance  |            |
| >                                        | Area\*       |            |
| > Particulate Matter (PM~2.5~)           |              |            |
|                                          | Moderate     |            |
| **Annual Energy Savings (million British | No           |            |
| Thermal Units)**                         | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | Moderate     |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | 420,400      |            |
+------------------------------------------+--------------+------------+
| **Operating Efficiencies Rating:         |              |            |
| Medium**                                 |              |            |
+------------------------------------------+--------------+------------+
| **System Operating Cost per**            | > **         | **[New     |
|                                          | [Baseline]{. | Start]{.un |
| **Passenger Mile (current year           | underline}** | derline}** |
| dollars)**                               | >            |            |
|                                          | > \$0.375\*  | \$0.376\*  |
+------------------------------------------+--------------+------------+

\* Indicates that measure is a component of rating for each criterion.

N/A indicates information was not available for this entry.

# [Local Financial Commitment Rating: Medium]{.underline}

The *Medium* local financial commitment rating is based on the *High*
rating for the New Starts share of project costs and the *Medium*
ratings for both the capital and operating finance plans.

####### *Section 5309 New Starts Share of Total Project Costs: 26%* 

####### *Rating: High*

MTA/NYCT is requesting an approximately 26 percent New Starts share of
total project costs, which results in a *High* rating for this measure.

+-------------------------+-----------------------+--------------------+
| **Locally Proposed      |                       |                    |
| Financial Plan**        |                       |                    |
+-------------------------+-----------------------+--------------------+
| **[Source of            | **[Total Funds        | **[Percent of      |
| Funds]{.underline}**    | (\$mi                 | To                 |
|                         | llion)]{.underline}** | tal]{.underline}** |
+-------------------------+-----------------------+--------------------+
| **Federal:**            | \$1,300.0             | 26.3%              |
|                         |                       |                    |
| Section 5309 New Starts | \$45.3                | 0.9%               |
|                         |                       |                    |
| Flexible Funds (CMAQ)   |                       |                    |
+-------------------------+-----------------------+--------------------+
| **State:**              | \$450.0               | 9.1%               |
|                         |                       |                    |
| State Transportation    |                       |                    |
| Bond                    |                       |                    |
|                         |                       |                    |
| Act of 2005             |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Local:**              | \$2,043.2             | 41.3%              |
|                         |                       |                    |
| MTA Dedicated Sources   | \$1,109.3             | 22.4%              |
| (bonds, surplus toll    |                       |                    |
| revenues, etc.)         |                       |                    |
|                         |                       |                    |
| MTA Operating Budget    |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Total:**              | **\$4,947.8**         | 100.0%             |
+-------------------------+-----------------------+--------------------+

**NOTE**: The financial plan reflected in this table has been developed
by the project sponsor and does not reflect a commitment by DOT or FTA.
The sum of the figures may differ from the total as listed due to
rounding.

# *Capital Finance Plan Rating: Medium* 

The capital finance plan is rated *Medium*, based upon the average of
the ratings assigned to each of the subfactors listed below. The
commitment of capital funds subfactor was rated as *High;* the capital
condition, completeness of the plan, and the capital cost estimate and
planning assumptions subfactors were rated *Medium;* and capital funding
capacity was rated *Medium‑Low*.

#### Agency Capital Condition: Medium 

-   The average age of MTA's bus fleet is 6.1 years, which is near the
    industry average. The average age of the MTA's rail fleet is 19.8
    years for NYCT and 19.9 years and 19.0 years for the Long Island
    Rail Road and Metro-North Railroad, respectively.

-   MTA's bond ratings, which were issued in March 2000, are as follows:
    Standard & Poor's Corporation AA- and Fitch A+.

#### Completeness of Capital Plan: Medium 

-   The financial plan included a 20-year cash flow statement, more than
    five years of historical data, identification of some key
    assumptions with little detail, supporting documentation including
    fleet management plans, and a limited sensitivity analyses.

#### 

#### 

#### Commitment of Capital Funds: High

-   Approximately 78 percent of non-New Starts funding is committed or
    budgeted. Primary funding sources include bond proceeds, State and
    local capital support, and other dedicated tax revenues.

#### Capital Funding Capacity: Medium-Low

-   The financial plan shows a balanced budget, with no cash surpluses
    beyond 2005. MTA has limited reserve accounts and/or access to
    credit that would allow the agency to cover cost increases or
    funding shortfalls.

#### Capital Cost Estimate and Planning Assumptions: Medium

### Assumptions in the capital plan are consistent with historical experience, but are not completely supported. 

### The capital cost estimate is considered reasonable and includes overall contingencies of 17 percent of total capital cost; however, there are concerns related to the MTA's ability to maintain the current schedule.

#### *Operating Finance Plan Rating: Medium*

The operating finance plan is rated *Medium*, based upon the average
rating of the five subfactors listed below. A *High* rating was assigned
for the commitment of operating funds subfactor. The completeness and
operating cost estimates and planning assumptions subfactors were rated
*Medium*. The agency operating condition and operating funding capacity
subfactors were rated *Medium-Low*.

#### Agency Operating Condition: Medium-Low

-   MTA is in fair financial condition. Except for the service
    interruptions resulting from the September 11^th^ attacks, MTA has
    not reduced service in recent years.

-   MTA's current ratio of assets to liabilities as reported in its most
    recent audited financial statement is 1.02.

#### Completeness of Operating Plan: Medium

-   The financial plan included a 20-year cash flow statement, more than
    five years of historical data, and the identification of some
    assumptions with little detail, supporting documentation and no
    sensitivity analysis. There were inconsistencies between the
    financial plan narrative, the financial plan cash flow statement and
    the adopted and proposed MTA multi-year budgets.

#### Commitment of Operating Funds: High

-   Over 92 percent of operating funding is committed. Funding sources
    include fares, other operating revenues, and dedicated State and
    local taxes.

#### Operating Funding Capacity: Medium-Low

-   The financial plan does not show cash balances or reserve accounts
    because MTA is required to operate under a balanced budget by
    statute. Consequently, MTA's financial plan indicates that operating
    sources will be exactly equal to operating uses for the period
    2005--2024. MTA has access to short-term credit exceeding eight
    percent of annual operating expenses.

#### Operating Cost Estimates and Planning Assumptions: Medium

### Operating cost estimates and revenue forecasts are consistent with historical trends. 

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