**Norfolk LRT**

**Norfolk, Virginia**

(November 2006)

Hampton Roads Transit (HRT) is proposing to construct and operate an
11-station, 7.4-mile light rail transit (LRT) line within the city of
Norfolk that is intended to serve as the initial segment of a regional
rapid transit system. The project alignment would begin at the Eastern
Virginia Medical Center, move eastward as a dedicated in-street guideway
through downtown Norfolk to Norfolk State University, and continue along
an abandoned Norfolk Southern Railroad right-of-way (ROW) parallel to
Interstate 264

(I-264) to the eastern terminus at the Norfolk/Virginia Beach city line
at Newtown Road. Park-and-ride access to the system would be provided by
the construction of new facilities at Newtown Road, Military Highway,
and Ballantine Boulevard, as well as shared use of existing parking
facilities at the Harbor Park baseball stadium on the southeastern
fringe of downtown, where a station is planned. The project scope also
includes an LRT maintenance facility and the purchase of nine vehicles.
The project will use line-of-sight operations with advanced vehicle
location systems. Service would operate at 7.5-minute frequencies during
peak periods.

Travel forecasts indicate worsened congestion on I-264 and major
arterials (Brambleton Avenue, Virginia Beach Boulevard, Tidewater Drive)
within the project corridor through 2025. Options for improving mobility
within the area are limited by geographic constraints (numerous
waterways) and the absence of transportation rights-of-way. The Norfolk
LRT project takes advantage of an abandoned rail ROW and is intended to
help meet future travel demand to downtown Norfolk and throughout the
corridor, provide improved mobility for transit dependent populations,
and achieve local land use goals. The project is further intended to
provide a rapid transit connection from Harbor Park and other fringe
park-and-ride facilities to destinations within the downtown area.

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Light Rail Transit              |
+------------------------------------+---------------------------------+
| ** **                              | 7.4 Miles                       |
|                                    |                                 |
|                                    | 11 Stations                     |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$232.10 Million (includes      |
|                                    | \$5.6 million in finance        |
|                                    | charges)                        |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$127.98 Million (55.1%)        |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Forecast Year Operating   | \$10.50 Million                 |
| Cost:**                            |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2025):**     | 6,500 Average Weekday Boardings |
+------------------------------------+---------------------------------+
|                                    | 1,600 Daily New Riders          |
+------------------------------------+---------------------------------+
| **Opening Year Ridership Forecast  | 2,900 Average Weekday Boardings |
| (2010):**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2008 Local Financial          | # Medium                        |
| Commitment Rating:**               |                                 |
+------------------------------------+---------------------------------+
| **FY 2008 Project Justification    | **Medium**                      |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2008 Overall Project          | **Medium**                      |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

HRT has demonstrated significant progress on the project in the last
year. However, the sufficiency of the project's cost effectiveness is
vulnerable to any increase in the project's cost estimate. HRT will need
to develop and implement a project execution strategy which effectively
manages the use of project contingencies and major project risks, as
well as continued achievement of sufficient New Starts ratings, before
FTA considers a Full Funding Grant Agreement (FFGA) for the Norfolk LRT
project.

**Project Development History and Current Status**

In 1997, FTA approved into preliminary engineering (PE) an 18-mile LRT
system extending between the cities of Norfolk and Virginia Beach. The
Draft Environmental Impact Statement (EIS) for the project was completed
in April 1999. In November 1999, Virginia Beach voters failed to approve
a local funding measure for the project, resulting in the truncation of
the project at Kempsville Road within the city limits of Norfolk. FTA
approved the abridged project into PE in October 2002. A Supplemental
Draft EIS was completed in January 2003. HRT undertook subsequent scope
and cost reductions resulting in the current 7.4-mile alignment. In
October 2005, the city of Norfolk passed an ordinance intended to limit
the availability of parking downtown, which was a key assumption in
HRT's travel forecasts for the project. FTA included the Norfolk LRT in
the "other projects" category in the FY 2007 President's Budget, issued
in February 2006. FTA issued a Record of Decision for the project in
April 2006. The following month, FTA completed an assessment of the risk
associated with the project's scope, schedule, and budget that
identified needed scope and budget enhancements to improve the
reliability of the cost estimate. The Norfolk LRT project was approved
into final design in September 2006.

**Significant Changes Since FY 2007 Evaluation** (**November 2005**)

The project's budget increased by over \$28 million as a result of the
findings of the May 2006 risk assessment. HRT increased the requested
New Starts funding amount to cover this increase, resulting in a change
in the New Starts share from 49 percent to 55 percent of total project
costs. In addition, HRT expanded the scope and cost of the baseline
alternative against which the cost effectiveness of the project is
measured, which contributed to the estimate reported below.

###### Project Justification Rating: Medium

The project is rated *Medium* for project justification based on its
*Medium* ratings for cost effectiveness and transit-supportive land use.

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

The *Medium* cost effectiveness rating reflects the level of travel-time
benefits (2,100 weekday hours) relative to the project's annualized
costs.

+------------------------------------------+---------------------------+
| **Cost Effectiveness**                   |                           |
+------------------------------------------+---------------------------+
| Cost per Hour of Transportation System   | **[New Start vs.          |
| User Benefit                             | Baseline]{.underline}**   |
|                                          |                           |
| Incremental Cost per Incremental Trip    | \$22.77\*                 |
|                                          |                           |
|                                          | \$29.56                   |
+------------------------------------------+---------------------------+

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

HRT's travel forecasts indicate that the project will predominantly
benefit downtown-bound commuters. The forecasts assume the existence of
a significant parking deficit in downtown Norfolk by 2025. This parking
deficit would be relieved, in part, by the connection of the proposed
LRT system to parking facilities located on the fringe of the central
business district (CBD). Seventy-five percent of projected travel-time
benefits are consequently attributable to this park-and-ride market,
assuming the projected parking deficit is realized. FTA has accepted the
City of Norfolk's downtown parking ordinance as the basis for
realization of its travel forecasts, but notes that such a policy-driven
estimate carries some risk.

####### 

The project is modest compared to most other LRT systems.  The scope
includes single car operations and "line of sight" signalization;
therefore, its cost estimate is significantly lower than any other LRT
system currently under construction.   Attainment of the current cost
estimate requires very close monitoring of the project schedule and
market data.  This is HRT's first undertaking of a major capital gudeway
project.

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

The *Medium* land use rating is based upon the *Medium-High* rating
assigned to transit-supportive plans and policies and performance and
impacts of policies, and the *Medium-Low* rating for existing land uses
in the project corridor.

**Existing Land Use: Medium-Low**

-   Employment and population levels in the area served by the project
    are modest. Station area employment is estimated at approximately
    53,800 employees. Total CBD employment is 42,000, and population
    densities average 4,200 persons per square mile in station areas.

-   Pedestrian access in the CBD and redeveloping waterfront
    neighborhoods has improved considerably within the past few years.
    Elsewhere, neighborhoods are generally walkable, but some
    developments at each end of the alignment have considerable surface
    parking.

-   Downtown Norfolk generally maintains an adequate parking supply,
    although some areas suffer from parking shortages. Parking costs in
    the CBD range from \$4 to \$14 per day.

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

-   Jurisdictions in the Hampton Roads area have adopted and applied
    various tools for growth management, primarily oriented toward the
    preservation of natural areas.

-   The City of Norfolk has adopted and implemented redevelopment plans
    for the downtown area that focus on creating a mixed-use,
    pedestrian-scaled environment that builds on historic architecture
    and amenities such as the waterfront.

-   Residential densities in corridor neighborhoods typically range from
    six to 15 units per acre but are much higher for some newer downtown
    developments. Redevelopment plans are also being implemented to
    rebuild residential neighborhoods in the corridor.

-   Pedestrian-oriented design guidelines have been adopted for a number
    of areas in the corridor, especially near downtown, and are being
    enforced.

-   Some downtown and adjacent districts do not require off-street
    parking and allow provisions for shared parking. The city has
    adopted a transit-oriented parking policy that sets a goal of
    maintaining overall parking ratios for office development at or
    below current levels of 3.7 spaces per 1,000 square feet.

-   The city is considering the adoption of a transit overlay district
    that could be applied to station areas to restrict uses, establish
    design standards, and restrict parking.

-   The City of Norfolk has been a strong leader in planning initiatives
    to redevelop downtown and many residential neighborhoods of the
    city. City agencies have a number of financial and regulatory
    incentives at their disposal and have aided with land acquisition
    and assembly in redevelopment areas.

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

-   Significant redevelopment activities have occurred in downtown
    Norfolk in recent years, and these developments have been consistent
    with pedestrian-oriented design principles.

-   Vacant and underutilized properties are being transformed into
    mixed-use, urban-scale developments with residential, retail, and
    office uses.

-   Development in the easternmost station areas continues to be
    auto-oriented.

-   There is a moderate amount of redevelopment potential in transit
    station areas. A market for both new commercial and residential
    development in the downtown area has been demonstrated and is likely
    to continue.

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

+------------------------------------------+--------------+------------+
| **Mobility Improvements Rating: Medium** |              |            |
+------------------------------------------+--------------+------------+
| **[Within ½-mile radius of boarding      | 53,800       |            |
| areas]{.underline}:**                    |              |            |
|                                          | 62,200       |            |
| Existing Employment                      |              |            |
|                                          | 1,800 (24%)  |            |
| Projected Employment (2025)              |              |            |
|                                          | 4,900\*      |            |
| Low Income Households (% of total HH)    |              |            |
|                                          | 200\*        |            |
| **[Average Per Station]{.underline}:**   |              |            |
|                                          | **[New Start |            |
| Employment                               | vs.          |            |
|                                          | Baseline]{.  |            |
| Low Income Households                    | underline}** |            |
|                                          |              |            |
| **Transportation System User Benefit Per | 7.84\*       |            |
| 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~)                 | 36           |            |
| >                                        |              |            |
| > Volatile Organic Compounds (VOC)       | 1            |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | 1            |            |
| >                                        |              |            |
| > Carbon Dioxide (CO~2~)                 | 0            |            |
|                                          |              |            |
| **[Criteria Pollutant                    | 1,149        |            |
| Status]{.underline}**                    |              |            |
|                                          | **[EPA       |            |
| > 8-Hour Ozone (O3)                      | De           |            |
|                                          | signation]{. |            |
| **Annual Energy Savings (million British | underline}** |            |
| Thermal Units)**                         |              |            |
|                                          | Marginal     |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | 15,017       |            |
+------------------------------------------+--------------+------------+
| **Operating Efficiencies Rating:         |              |            |
| Medium**                                 |              |            |
+------------------------------------------+--------------+------------+
| **System Operating Cost per**            | > **         | **[New     |
|                                          | [Baseline]{. | Start]{.un |
| **Passenger Mile (current year           | underline}** | derline}** |
| dollars)**                               | >            |            |
|                                          | > \$0.439\*  | \$0.433\*  |
+------------------------------------------+--------------+------------+

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

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

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

####### *Section 5309 New Starts Share of Total Project Costs: 55%* 

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

HRT is requesting 55 percent in New Starts funding to cover total
project costs, which results in a *Medium* rating for this measure.

+-------------------------+-----------------------+--------------------+
| **Locally Proposed      |                       |                    |
| Financial Plan**        |                       |                    |
+-------------------------+-----------------------+--------------------+
| **[Source of            | **[Total Funds        | **[Percent of      |
| Funds]{.underline}**    | (\$mi                 | To                 |
|                         | llion)]{.underline}** | tal]{.underline}** |
+-------------------------+-----------------------+--------------------+
| **Federal:**            | \$127.98              | 55.1%              |
|                         |                       |                    |
| Section 5309 New Starts | \$35.47               | 15.3%              |
|                         |                       |                    |
| Flexible Funds (STP)    | \$1.00                | 0.4%               |
|                         |                       |                    |
| FHWA FY 2003 Earmark    |                       |                    |
+-------------------------+-----------------------+--------------------+
| **State:**              | \$2.26                | 1.0%               |
|                         |                       |                    |
| General Assembly        | \$15.38               | 6.6%               |
| Appropriations          |                       |                    |
|                         | \$2.49                | 1.1%               |
| Virginia Mass Transit   |                       |                    |
| Fund                    | \$8.87                | 3.8%               |
|                         |                       |                    |
| Virginia Transportation |                       |                    |
| Trust Fund              |                       |                    |
|                         |                       |                    |
| MPO Flexible Funds      |                       |                    |
| (STP)                   |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Local:**              | \$38.65               | 16.7%              |
|                         |                       |                    |
| City of Norfolk Bonds   |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Total:**              | **\$232.10**          | 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-High* 

The capital finance plan is rated *Medium-High*. The project received a
*High* rating on completeness, commitment of capital funds, and capital
funding capacity, a *Medium* rating on capital cost estimates and
assumptions, and a *Medium-Low* rating on capital condition. The average
of these ratings is *Medium-High.*

#### Agency Capital Condition: Medium-Low

-   The average age of HRT's bus fleet is 9.3 years, which is older than
    the industry average.

-   HRT does not have bond ratings.

#### Completeness of Capital Plan: High

-   The capital plan was complete and included a 20-year cash flow
    statement, identification of all key assumptions, a fleet management
    plan, more than five years of historical data, and an extensive
    sensitivity analysis.

#### Commitment of Capital Funds: High

-   All non-New Starts funding is either committed or budgeted. Local
    funding sources include City of Norfolk bonds, Federal flexible
    funds, and State capital grants.

#### Capital Funding Capacity: High

-   The project's financial plan shows no projected cash balances or
    reserve accounts, but the City of Norfolk can cover cost increases
    or funding shortfalls through additional bonding equal to more than
    twice the project cost.

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

#### Assumptions in the capital financial plan are consistent with historical experience. 

-   Capital cost estimates for the project's modest scope are considered
    reasonable.

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

The operating finance plan is rated *Medium* based upon the average of
the ratings assigned to each of the subfactors listed below.
Completeness of the operating plan is rated *High;* a *Medium-High*
rating is assigned to commitment of operating funds; *Medium* ratings
were assigned to the operating cost estimates and planning assumptions
and operating funding capacity subfactors; and a *Medium-Low* rating was
assigned to the operating condition subfactor.

#### Agency Operating Condition: Medium-Low

-   HRT's current ratio of assets to liabilities as reported in its most
    recent audited financial statement (FY 2005) is 1.16.

-   HRT has not had any service cutbacks in the last five years.

#### Completeness of Operating Plan: High

-   The operating plan was very thorough and contained all required
    elements including a 20-year cash flow statement, identification of
    all key assumptions with an extensive level of detail, more than
    five years of historical data, and an extensive sensitivity
    analysis.

#### Commitment of Operating Funds: Medium-High

-   Seventy-nine percent of operating funding is committed. The City of
    Norfolk will fund project operating and maintenance costs that are
    not covered by fare revenues and State operating assistance.

#### Operating Funding Capacity: Medium

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

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

-   Assumptions in the operating plan are generally consistent with
    historical experience.

Map

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