**Central Subway**

**San Francisco, California**

(November 2005)

The San Francisco Municipal Railway (Muni) and the San Francisco County
Transportation Authority (SFCTA) are planning the Central Subway
project, a 1.5-mile extension of the Third Street light rail transit
(LRT) line (currently under construction) from its termini at Fourth and
King Streets, north under Market Street and into Chinatown. Three new
stations would be constructed along the Central Subway alignment and
four light rail vehicles would be purchased to augment the existing
fleet. The current Third Street LRT project extends 5.4 miles south from
Fourth and King Streets along Third Street and Mission Bay Boulevard to
the Bayshore Caltrain Station in Visitacion Valley. Taken together, the
Third Street LRT, scheduled to open in December 2005, and the Central
Subway project would provide a continuous 6.9-mile light rail system
serving the heavily transit-dependent communities of Bayshore and
Chinatown.

The Financial District, Union Square, and Chinatown have a very high
level of existing transit service. Bus routes that serve the project
corridor operate on two-minute headways during peak hours and typically
carry passenger loads which are at or above capacity. Currently,
commuter rail passengers from the south must board these crowded buses
or walk over a mile from the CalTrain Station to reach the San Francisco
central business district (CBD). The Central Subway project would
provide high-capacity rail service, with 2.5-minute peak headways, to an
area of San Francisco that has demand for transit which exceeds the
extensive existing bus service. Additionally, implementation of the
Central Subway project would restore a continuous transportation link
from the communities of Visitacion Valley, Bayshore, and South of Market
area (SOMA) to Union Square and Chinatown that was lost when the
Embarcadero Freeway was destroyed by the Loma Preita earthquake in 1989.
This restored connection is anticipated to improve transit service
between these areas, accommodate redevelopment of SOMA, and serve large
crowds attending events at the Moscone Center and SBC Park (home of the
San Francisco Giants).

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Light Rail Transit              |
+------------------------------------+---------------------------------+
| ** **                              | 1.5 Miles                       |
|                                    |                                 |
|                                    | 3 Stations                      |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$1,412.5 Million               |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$762.2 Million (54%)           |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Forecast Year Operating   | \$24.6 Million                  |
| Cost:**                            |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2030):**     | 45,900 Average Weekday          |
|                                    | Boardings                       |
+------------------------------------+---------------------------------+
| ** **                              | 20,800 Daily New Riders         |
+------------------------------------+---------------------------------+
| **FY 2007 Finance Rating:**        | # Medium                        |
+------------------------------------+---------------------------------+
| **FY 2007 Project Justification    | **Medium-High**                 |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2007 Overall Project          | **Medium**                      |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

Division H of the Consolidated Appropriations Act, 2005, includes
language directing FTA to permit Muni to use local funding expended for
the construction of the Third Street LRT project as match for the
Central Subway. This action reduces the overall New Starts share from 54
percent for the Central Subway project alone to less than 38 percent of
the cost of the combined projects.

**Project Development History and Current Status**

In October 1996, FTA Muni began preparation of a Draft Environmental
Impact Statement (EIS)/Draft Environmental Impact Report for the Third
Street/Central Subway light rail line. Because of their phased
implementation schedule, the two segments are considered separate
projects. Muni is currently constructing the Third Street light rail
line using local, State, and non-New Starts Federal funding. FTA
approved the Central Subway project to advance into preliminary
engineering in July of 2002. While the Central Subway alignment has
recently been revised, requiring supplemental environmental work,
ongoing consideration of alternative alignments is expected to delay
further advancement of the project.

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

The alignment of the Central Subway project has been changed to use a
more direct configuration under 4^th^ Street, and the number of stations
has been reduced from five to three. Because of the revised alignment,
an increased level of engineering, and extension of the project
implementation schedule, the project capital cost has increased from
\$994.4 million. Additionally, Muni has updated its travel forecasts for
the project to reflect a 2030 design year, and the systemwide operations
and maintenance cost estimate used in calculating project cost
effectiveness has been corrected.

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

The project is rated *Medium-High* based on a *Medium-Low* rating for
cost effectiveness and a *High* rating for transit-supportive land use.

####### *Cost Effectiveness Rating: Medium-Low* 

The *Medium-Low* cost effectiveness rating reflects the level of
travel-time benefits (11,300 hours each weekday) relative to the
project's annualized costs. Given the uncertainty of the project scope,
this estimate of project cost effectiveness carries some risk.

+------------------------------------------+---------------------------+
| **Cost Effectiveness**                   |                           |
+------------------------------------------+---------------------------+
| Cost per Hour of Transportation System   | **[New Start vs.          |
| User Benefit                             | Baseline]{.underline}**   |
|                                          |                           |
| Incremental Cost per Incremental Trip    | \$23.05\*                 |
|                                          |                           |
|                                          | \$11.28                   |
+------------------------------------------+---------------------------+

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

The Central Subway provides a new direct transit link between the San
Francisco CBD and southeastern San Francisco, and provides an improved
connection between these areas and CalTrain and other commuter services
from the region's South Bay area. Without the Central Subway, commuters
from Mission Bay, Bayview, and the South Bay destined for Chinatown and
Union Square must travel along the circuitous Embarcadero alignment to
reach Market Street on the far eastern end of the CBD, or transfer to
local bus service at King Street. The proposed project provides a more
direct connection to downtown and eliminates transfers for riders
originating within the City; fully one-third of work trip benefits are
attributable to this market. The project also generates a significant
level of travel time benefits for reverse commute trips to industrial
areas in the Third Street corridor. Approximately 85 percent of forecast
benefits are attributable to San Francisco residents; the remainder of
benefits accrue to residents from other jurisdictions in the region
taking advantage of improved LRT connections to CalTrain and BART. Over
40 percent of benefits accrue to low-income households.

MUNI has revised the capital cost estimate to reflect increased finance
costs, a revised construction schedule, added contingencies, a higher
inflation rate, and a more comprehensive construction cost estimate. 
The revised cost estimate is considered reasonable and reliable for this
stage of project development, although FTA notes that the cost
contingency is still considered marginal for an extensive tunnel
investment.

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

The *High* land use rating is based upon the *High* ratings assigned to
existing land use and performance of land use policies, and the
*Medium-High* rating for transit-supportive land use plans and policies.

**Existing Land Use: High**

-   Population density is approximately 35,300 people per square mile in
    the corridor, and total employment in project station areas is
    approximately 217,600 jobs.

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-   The San Francisco CBD is the densest and most transit accessible
    downtown on the west coast. Union Square is the primary retail
    district in the city with dense pedestrian and transit-oriented
    development. Chinatown has extremely dense concentrations of
    residential units, retail, and some office and small-scale
    industrial uses.

-   Available parking in the corridor is generally on-street, with some
    off-street parking for commuters and city-owned parking garages for
    commuters and shoppers. The daily cost to park in city-owned lots in
    the corridor is high, ranging from \$20 to \$30 per day.

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

-   While the city and entire Bay Area have a number of physical
    constraints to growth such as topographical limitations, it does not
    have a unified or enforceable growth management policy.

-   San Francisco's *General Plan* has long encouraged higher-density
    and transit-oriented development. The city is undertaking additional
    planning initiatives to focus higher-intensity growth in transit
    corridors. The city is considering zoning changes that would require
    residential community-oriented retail development near transit
    nodes.

-   The city's zoning regulations are intended to maintain a medium to
    high-density profile and scale, with a mixture of land uses in many
    areas. The city's plan generally supports transit-supportive
    densities. There are no minimum parking requirements or off-street
    parking provisions in the CBD and other major employment areas.

-   The City of San Francisco Redevelopment Agency employs a number of
    special tools to help implement land use policies contained in the
    city's *General Plan* such as tax increment financing, special land
    acquisition rules, and special land assembly abilities.

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-   San Francisco's existing land use pattern includes the densest
    development along its major transportation corridors. The objective
    of the City Planning Department and directing codes and ordinances
    is to reinforce this pattern of development along corridors that
    have high transit capacity such as the Central Subway corridor.
    Thus, land use planning in the Central Subway corridor is focused
    more on the corridor and neighborhood level than around individual
    stations or stops.

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

-   The existing high-density development and pedestrian accessibility
    in the City of San Francisco demonstrates the strength of city
    policies and market forces at achieving transit-oriented intensities
    and urban design. The number of jobs in the San Francisco CBD has
    doubled since the 1970s with no increase in the volume of traffic
    entering the area.

-   The South of Market area within the New Central Subway corridor is
    expected to experience strong growth over the next two decades, with
    high density residential, high-tech office, and a variety of retail
    uses continuing to fill in sites formerly occupied by industrial
    uses.

#### 

####  

####### Other Project Justification Criteria 

+------------------------------------------+--------------+------------+
| **Mobility Improvements Rating: High**   |              |            |
+------------------------------------------+--------------+------------+
| **[Within ½-mile radius of boarding      | 217,600      |            |
| areas]{.underline}:**                    |              |            |
|                                          | 268,700      |            |
| Existing Employment                      |              |            |
|                                          | 6,000 (18%)  |            |
| Projected Employment (2030)              |              |            |
|                                          | 72,520\*     |            |
| Low Income Households (% of total HH)    |              |            |
|                                          | 2,000\*      |            |
| **[Average Per Station]{.underline}:**   |              |            |
|                                          | **[New Start |            |
| Employment                               | vs.          |            |
|                                          | Baseline]{.  |            |
| Low Income Households                    | underline}** |            |
|                                          |              |            |
| **Transportation System User Benefit Per | 3.35\*       |            |
| 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~)                 | 1            |            |
| >                                        |              |            |
| > Volatile Organic Compounds (VOC)       | 9            |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | 3            |            |
| >                                        |              |            |
| > Carbon Dioxide (CO~2~)                 | 0            |            |
|                                          |              |            |
| **[Criteria Pollutant                    | 429          |            |
| Status]{.underline}**                    |              |            |
|                                          | **[EPA       |            |
| > Carbon Monoxide (CO)                   | De           |            |
| >                                        | signation]{. |            |
| > 8-Hour Ozone (O~3~)                    | underline}** |            |
|                                          |              |            |
| **Annual Energy Savings (million British | Maintenance  |            |
| Thermal Units)**                         | Area\*       |            |
|                                          |              |            |
|                                          | Marginal     |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | 4,079        |            |
+------------------------------------------+--------------+------------+
| **Operating Efficiencies Rating:         |              |            |
| Medium**                                 |              |            |
+------------------------------------------+--------------+------------+
| **System Operating Cost per**            | > **         | **[New     |
|                                          | [Baseline]{. | Start]{.un |
| **Passenger Mile (current year           | underline}** | derline}** |
| dollars)**                               | >            |            |
|                                          | > \$0.717\*  | \$0.734\*  |
+------------------------------------------+--------------+------------+

\* 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 upon the
*Medium* ratings assigned to both the capital and operating finance
plans.

####### *Section 5309 New Starts Share of Total Project Costs: 54%* 

####### *Rating: Medium*

Division H of the Consolidated Appropriations Act, 2005, permits Muni to
use non-New Starts funds expended for the Third Street LRT project as
match to the Central Subway. While the New Starts share rating reflects
the Central Subway project alone (\$1,412.5 million), the legislative
language lowers the New Starts share to approximately 38 percent of the
total costs of the combined Third Street/Central Subway project
(\$2,012.5 million).

+-------------------------+-----------------------+--------------------+
| **Locally Proposed      |                       |                    |
| Financial Plan**        |                       |                    |
+-------------------------+-----------------------+--------------------+
| **[Source of            | **[Total Funds        | **[Percent of      |
| Funds]{.underline}**    | (\$mi                 | To                 |
|                         | llion)]{.underline}** | tal]{.underline}** |
+-------------------------+-----------------------+--------------------+
| **Federal:**            | \$762.2               | 54.0%              |
|                         |                       |                    |
| Section 5309 New Starts | \$92.2                | 6.5%               |
|                         |                       |                    |
| STIP Funds              |                       |                    |
+-------------------------+-----------------------+--------------------+
| **State:**              | \$14.0                | 1.0%               |
|                         |                       |                    |
| Traffic Congestion      |                       |                    |
| Relief Plan             |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Local:**              | \$126.0               | 8.9%               |
|                         |                       |                    |
| Proposition B/K Sales   | \$418.1               | 29.6%              |
| Tax Funds               |                       |                    |
|                         |                       |                    |
| Other Local Sources     |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Total:**              | **\$1,412.5**         | 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.

\*STIP funds are state-administered Federal flexible funds augmented by
state gas tax and other revenues. These funds are passed from the state
to local transportation agencies as STIP funds, but all Federal
requirements apply.

# *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 *High*; the capital
condition was rated *Medium-High*; the completeness and capital cost
estimates and planning assumptions subfactors were rated *Medium-Low*;
and the capital funding capacity subfactor was rated *Low*.

#### Agency Capital Condition: Medium-High

-   The average age of Muni's bus fleet is 4.9 years, which is
    significantly younger than the industry average.

-   Muni's good bond ratings, which were issued in May 2004, are as
    follows: Moody's Investors Service Aa3, Standard & Poor's
    Corporation AA, and Fitch AA-.

#### Completeness of Capital Plan: Medium-Low

-   The financial plan omits key explanatory details such as a funding
    source for the \$418 million increase in the project's cost, details
    on the financing costs, and a sensitivity analysis.

#### Commitment of Capital Funds: High

-   Over 50 percent of the Non-Section 5309 New Starts funds (Muni Third
    Street Light Rail and New Central Subway) have been committed and
    budgeted. Sources of funds include traffic congestion relief funding
    and proposition B and K sales tax revenues.

#### Capital Funding Capacity: Low

-   The project's financial plan does not specify how Muni intends to
    pay for the recent \$418 million project cost increase and,
    therefore, does not provide for any additional funding capacity to
    cover additional cost increases or funding shortfalls.

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

### Muni's financial plan contains numerous inconsistencies. Assumptions regarding project financing were lacking detail.

-   There are ongoing uncertainties regarding the project's scope at
    this stage of preliminary engineering.

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

The operating finance plan is rated *Medium*, based upon the averaged
ratings of the five subfactors listed below. The commitment of operating
funds subfactor was rated *High;* operating funding capacity was rated
*Medium-Low*; and the remaining subfactors were rated *Medium*.

#### Agency Operating Condition: Medium

-   Muni is undergoing a challenging economic environment with some
    recent service cuts (roughly four percent reduction in service
    hours).

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-   Muni's current ratio of assets to liabilities as reported in its
    most recent audited financial statement is 1.53.

#### Completeness of Operating Plan: Medium

-   The submission was complete and included a 20-year cash flow
    statement, more than five years of historical data, identification
    of key assumptions, and a moderate level of detail. The plan did not
    include a sensitivity analysis.

#### Commitment of Operating Funds: High

-   Over 50 percent of operating funding is committed. The main revenue
    sources are fares, parking fees, General Fund contributions, and
    sales tax and fuel assistance revenues.

#### Operating Funding Capacity: Medium-Low

-   The project's financial plan shows projected reserve accounts and/or
    access to credit exceeding 12 percent of annual operating expenses.

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

-   The operating plan assumes frequent fare increases that differ from
    history. However, the project has only a minimal impact on overall
    system-wide operating costs. Other assumptions are generally in line
    with historical experience

####  

Map

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