## FY 2008 New Starts and Small Starts Evaluation and Rating Process

This document describes the methodology that the Federal Transit
Administration (FTA) will use to evaluate, rate, and recommend funding
for candidate New Starts and Small Starts projects beginning May 2006,
including FTA's evaluations for the *FY 2008 Annual Report on Funding
Recommendations*. This methodology is similar to the process used in the
evaluation of projects included in the *FY 2004-2007 Annual Reports on
New Starts*, and is generally consistent with FTA's *Final Rule on Major
Capital Investment Projects* issued on December 7, 2000, but includes
some of the changes found in the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) and
incorporates interim procedures for the evaluation and rating of
proposed Small Starts projects.

FTA intends that the FY 2008 project evaluation process will continue to
reflect two changes established in SAFETEA-LU which FTA had implemented
in time for the FY 2007 evaluation cycle. Specifically, SAFETEA-LU
replaced a three-point rating scale with a five-point scale, with the
overall project rating designations of *Highly Recommended*,
*Recommended*, and *Not Recommended* replaced with *Low*, *Medium-Low*,
*Medium*, *Medium‑High*, and *High*. In addition, SAFETEA-LU, while
continuing to require that a project's overmatch be evaluated, added a
clause that nothing in the Act shall be construed as authorizing the
Secretary to require a non-Federal financial commitment for a project
that is more than 20 percent of the net capital project cost. As noted
in *Section III.A* of this document, projects still receive higher
ratings depending upon the extent of non-New Starts overmatch, and
project sponsors are still encouraged to request the lowest New Starts
share possible given limited fund availability and the overall funding
demand of projects in the New Starts pipeline.

In addition, SAFETEA-LU added a subsection containing a new capital
investment program category for projects requesting Section 5309 Capital
Investment Grant funding of less than \$75,000,000 with a total project
cost of less than \$250,000,000, and expanded the eligibility
requirements for these smaller projects to allow for certain
corridor-based bus projects that do not include a physical "fixed
guideway." That new capital investment program category, referred to as
"Small Starts" is to be funded beginning in FY 2007. The final rule
describing the project evaluation and rating process for New Starts and
Small Starts is still being developed; however, in the interim, FTA
issued in July 2006 *Interim Guidance and Instructions for Small Starts*
to evaluate and rate these projects and recommend them for funding. This
appendix also summarizes the interim Small Starts evaluation process,
and identifies where it differs from the New Starts process.

*Section I* of this appendix introduces the legislative background of
FTA's project evaluation and rating responsibilities; identifies each of
the statutory criteria used by FTA in its evaluation process; and
summarizes the overall project evaluation and rating process. *Sections
II* and *III* describe the specific project justification and local
financial commitment measures and ratings, respectively, including an
explanation of the rating ranges and thresholds for each individual
measure, and how they are rolled up into aggregate criteria ratings.
*Section IV* concludes with a summary of what the overall project rating
will mean for funding recommendations in the President's Budget for FY
2008. All funding recommendations in the President's Budget are subject
to the availability of appropriations.

This document is supplemented by two additional documents. *Guidelines
and Standards for Assessing Transit-Supportive Land Use* and *Guidelines
and Standards for Assessing Local Financial Commitment* provide
additional detail on the process FTA uses to evaluate these two
criteria. These materials are posted on FTA's website under *New Starts
Project Planning and Development*:
<http://www.fta.dot.gov/planning/newstarts/planning_environment_2620.html>.

FTA reminds the audience of this appendix that project evaluation is an
on-going process. It is based on an analysis of the documentation
submitted to FTA by local agencies to support their proposed project. As
New Starts and Small Starts projects proceed through project
development, the estimates of costs, benefits, and impacts are refined.
The FTA ratings and recommendations are updated at least annually to
reflect new information, changing conditions, and refined financing
plans.

**I. LEGISLATIVE BACKGROUND**

SAFETEA-LU continues the evaluation process provisions first established
by the Transportation Equity Act for the 21^st^ Century (TEA-21) in
1998. SAFETEA-LU requires the U.S. Department of Transportation to
submit an annual report to Congress (*Annual Report on Funding
Recommendations*) that includes the Secretary's evaluation, ratings, and
a proposal on the allocation of funds among applicants for amounts to be
made available to finance grants and loans for capital projects for new
fixed guideway systems and extensions to existing fixed guideway systems
and the new Small Starts projects.

Like TEA-21, SAFETEA-LU mandates that proposed New Starts projects must
receive FTA approval to advance from "alternatives analysis" to
"preliminary engineering," and from "preliminary engineering" to "final
design." This approval is based, in large part, on an evaluation of the
proposed project's New Starts criteria. Likewise, Small Starts projects
must receive FTA approval to advance from "alternatives analysis" to
"project development"; a single project development phase that
incorporates the features of preliminary engineering and final design.
FTA also evaluates and rates projects for this *Annual Report* and uses
these ratings in the preparation of the President's Budget
recommendations contained within.

FTA's evaluation includes a review of the information submitted to
support each proposed project and the assignment of a rating to each
evaluation criterion. Based on these criteria-specific ratings, FTA
assigns candidate New Starts projects summary ratings for project
justification and local financial commitment, and develops an overall
project rating. FTA also assigns ratings to Small Starts projects on a
subset of the New Starts evaluation criteria and develops a summary
rating for each project. Sections 1.A and 1.B below present the criteria
used by FTA in its New Starts and Small Starts evaluation process;
Section 1.C provides an overview of how these criteria fit into the
overall evaluation process; and Section 1.D summarizes how overall
project ratings are derived.

***I.A Project Justification Criteria***

Similar to TEA-21, SAFETEA-LU Section 3011(a) (49 USC 5309(d)) requires
that projects proposed for New Starts funding be justified based on a
comprehensive review of the criteria presented on the following page:

-   Mobility Improvements;

-   Environmental Benefits;

-   Operating Efficiencies;

-   Cost Effectiveness; and

-   Transit Supportive Land Use Policies and Future Patterns

SAFETEA-LU also continues the TEA-21 requirement of considering "other
factors."

SAFETEA-LU further requires that FTA consider in its review the economic
development effects of New Starts projects. FTA desires through the
rulemaking process to work with the industry on the development of
appropriate factors for measuring the economic development effects of
candidate projects, and therefore will not consider economic development
explicitly in the FY 2008 evaluation cycle as a specific criteria for
evaluation However, FTA does encourage candidate New Starts project
sponsors to submit information which they believe demonstrates the
economic development impacts of their proposed transit investments as an
"other factor." FTA will consider this information per the process used
for rating other factors as described in *Section II.G* of this
document.

In the interim period before issuance of a final rule governing Small
Starts, Small Starts will be evaluated on the basis of the following
project justification criteria:

-   Cost Effectiveness; and

-   Transit Supportive Land Use Policies and Future Patterns.

The development of this information is intended to be less complex than
required for New Starts. In addition, FTA will also consider "other
factors," which FTA will use to evaluate the anticipated economic
development impacts of proposed Small Starts projects.

A subset of very simple and low cost transit projects, termed "Very
Small Starts" projects, will be evaluated and rated using an even more
simplified process. These Very Small Starts have the following features:

-   Substantial transit stations,

-   Traffic signal priority/pre-emption, to the extent, if any , that
    there are traffic signals on the corridor,

-   Low-floor vehicles or level boarding,

-   "Branding" (distinguishing through marketing and physical
    characteristics) of the proposed service,

-   10 minute peak/15 minute off peak frequencies or better while
    operating at least 14 hours per weekday (not required for commuter
    rail or ferries),

-   Are in corridors with existing riders who will benefit from the
    proposed project that exceed 3,000 per average weekday and

-   Have a total capital cost less than \$50 million (including all
    project elements) and less than \$3 million per mile, exclusive of
    rolling stock.

Very Small Starts projects that meet these criteria, adequately
documented in the Small Starts project submission to FTA, will receive a
rating of *Medium* for project justification. FTA finds that projects
which meet these characteristics are by their nature cost effective and
have transit supportive land-use appropriate to the proposed level of
investment.

*Section III* of this appendix presents the specific measures FTA will
use in the FY 2008 evaluation cycle to represent each of the project
justification criteria, and how FTA will evaluate them.

***I.B Local Financial Commitment***

Similar to TEA-21, SAFETEA-LU Section 3011(a) (49 USC 5309(d)) requires
that proposed projects also be supported by an acceptable degree of
local financial commitment, including evidence of stable and dependable
financing sources to construct, maintain and operate the transit system.
Section 5309(d) further allows for an evaluation of the extent to which
the project proposes a local financial commitment that exceeds the
required non-Federal share of the cost of the project.

The measures for the evaluation of the local financial commitment to a
proposed project to be used in the FY 2008 evaluation cycle are:

-   The proposed share of total project costs from sources other than
    the Section 5309 New Starts or Small Starts program, including
    Federal formula and flexible funds, the local match required by
    Federal law, and any additional capital funding;

-   The strength of the proposed capital financial plan; and

-   The ability of the sponsoring agency to fund operation and
    maintenance of the entire system as planned once the guideway
    project is built.

*Section IV* describes how FTA will use these measures in its evaluation
of candidate New Starts projects.

Small Starts projects may qualify for a highly simplified financial
evaluation if the project sponsor can demonstrate the following:

-   A reasonable plan to secure funding for the local share of capital
    costs or sufficient available funds for the local share (all non-New
    Starts funding must be committed before receiving a Project
    Construction Grant Agreement);

-   The additional operating and maintenance cost to the agency of the
    proposed Small Starts project is less than 5 percent of the agency's
    operating budget; and

-   The agency is in reasonably good financial condition.

Small Starts projects that meet these criteria will receive a local
financial commitment rating of *Medium*. Small Starts projects which
cannot qualify for this highly simplified financial evaluation will be
evaluated and rated in the same manner as other New Starts projects.

***I.C The Evaluation Process***

FTA evaluates proposed New Starts projects against the full range of
criteria for both project justification and local financial commitment,
as described in Figure I-1 on the following page. Small Starts are
evaluated against a subset of these measures including cost
effectiveness, land use, other factors (including economic development
impacts), and local financial commitment. The specific project
justification and local financial commitment measures included in Figure
I-1 are described in detail in *Sections II* and *III* of this appendix,
respectively.

## Figure I-1 New Starts Evaluation Process

![](media/image1.jpeg){width="6.779861111111111in"
height="4.627083333333333in"}

***I.D Overall Project Ratings***

TEA-21 required that an overall project rating of *Highly Recommended*,
*Recommended* or *Not Recommended* be assigned to each proposed project,
based on the results of FTA's evaluation of each of the criteria for
project justification and local financial commitment. However,
SAFETEA-LU Section 5309(d) and (e) requires that FTA assign overall
ratings on a 5-point scale of *High, Medium-High, Medium, Medium-Low*,
or *Low* to each New Starts or Small Starts project subject to
evaluation.

To assign overall project ratings to each proposed project, FTA
considers the individual ratings for each of the local financial
commitment measures and project justification criteria. FTA combines
this information into summary \"local financial commitment\" and
\"project justification\" ratings for each project.

For both project justification and local financial commitment, summary
ratings are assigned as one of the following: *High, Medium-High,
Medium, Medium-Low* or *Low*. These summary ratings are then combined
into an overall project rating. Table I-1 on the following page
summarizes the decision rules used to reach overall project ratings
under both TEA-21 and SAFETEA-LU. As the table demonstrates, the
decision rules remain unchanged from TEA-21; only the designation
assigned to the project's overall rating is different from prior
practice. While FTA anticipates that it will use the full range of
ratings, from *High, Medium-High, Medium, Medium-Low* to *Low* in making
this determination, it intends to use the simpler designations of *High,
Medium* and *Low* used in FY 2007 until the completion of rulemaking.
FTA desires to receive input from the transit community before using the
five-point rating system.

## 

## Table I-1 FY 2007 Overall Rating Decision Rules

+---------------------------------+------------------+-----------------+
| **Summary Ratings**             | **Overall        | **Overall       |
|                                 | Ratings**        | Ratings**       |
|                                 |                  |                 |
|                                 | **TEA-21**       | **SAFETEA-LU**  |
|                                 |                  |                 |
|                                 | **(FY 2000 -FY   | **(FY 2007-FY   |
|                                 | 2006)**          | 2008)**         |
+---------------------------------+------------------+-----------------+
| At least Medium-high for local  | Highly           | High            |
| financial commitment and        | Recommended      |                 |
| project justification           |                  |                 |
+---------------------------------+------------------+-----------------+
| At least Medium for local       | Recommended      | Medium          |
| financial commitment and        |                  |                 |
| project justification           |                  |                 |
+---------------------------------+------------------+-----------------+
| Not rated at least Medium for   | Not Recommended  | Low             |
| local financial commitment and  |                  |                 |
| project justification           |                  |                 |
+---------------------------------+------------------+-----------------+

FTA reminds project sponsors that candidate projects will no longer
receive a designation of

**Not Rated** if they receive a *Medium* or higher rating for local
financial commitment but cannot produce acceptable information in
support of their project justification criteria. In cases where such
information is either not submitted or submitted but deemed to be
unreliable, FTA will assign a rating of *Low* to the affected project
justification criteria.

***I.E Ratings: An On-going Process***

Again, it is important to emphasize that project evaluation is an
on-going process. FTA evaluation and rating occurs annually in support
of budget recommendations presented in the *Annual Report on Funding
Recommendations* and when a project sponsor requests FTA approval to
advance their proposed New Starts project into preliminary engineering
and final design or Small Starts projects into project development.
Consequently, as proposed New Starts and Small Starts projects proceed
through the project development process, information concerning costs,
benefits, and impacts is refined and the ratings are updated to reflect
new information.

**II. SUMMARY PROJECT JUSTIFICATION RATING**

The following summarizes FTA's process for evaluating the project
justification criteria of proposed New Starts projects.

***II.A Project Justification Rating***

FTA assigns a summary project justification rating of *High,
Medium-High, Medium, Medium‑Low* or *Low* to each project based on
consideration of the ratings applied to the project justification
criteria presented in *Section I.A* and each of the specific measures
identified in Table II-1 on the following page:

**Table II-1 New Starts and Small Starts Project Justification Criteria
and Supporting Measures and Categories**

+-----------------------------------+-----------------------------------+
| **Criterion**                     | **Measures/Categories**           |
+-----------------------------------+-----------------------------------+
| Cost Effectiveness (New Starts    | -   Incremental Cost per Hour of  |
| and Small Starts)                 |     Transportation System User    |
|                                   |     Benefit                       |
+-----------------------------------+-----------------------------------+
| Transit Supportive Land Use and   | -   Existing Land Use             |
| Future Patterns (New Starts and   |                                   |
| Small Starts)                     | -   Transit Supportive Plans and  |
|                                   |     Policies                      |
|                                   |                                   |
|                                   | -   Performance and Impacts of    |
|                                   |     Policies                      |
+-----------------------------------+-----------------------------------+
| Mobility Improvements (New Starts | -   Normalized Travel Time        |
| only)                             |     Savings (Transportation       |
|                                   |     System User Benefit per       |
|                                   |     Project Passenger Mile)       |
|                                   |                                   |
|                                   | -   Low-Income Households Served  |
|                                   |                                   |
|                                   | -   Employment Near Stations      |
+-----------------------------------+-----------------------------------+
| Operating Efficiencies (New       | -   System Operating Cost per     |
| Starts only)                      |     Passenger Mile                |
+-----------------------------------+-----------------------------------+
| Environmental Benefits (New       | -   Change in Regional Pollutant  |
| Starts only)                      |     Emissions                     |
|                                   |                                   |
|                                   | -   Change in Regional Energy     |
|                                   |     Consumption                   |
|                                   |                                   |
|                                   | -   EPA Air Quality Designation   |
+-----------------------------------+-----------------------------------+

For mobility improvements and transit supportive land use, projects are
aligned for each measure and category in a continuum of values from
*Low* to *High* and broken into five groups, with each group assigned a
numerative rating of 1 (*Low*) to 5 (*High*). The thresholds that
distinguish the five groups are not pure quintiles (that is, 20 percent
each of the total number of projects being evaluated for the measure)
but rather logical break points in the aligned data that separate one
group from another. Where criteria are represented by more than one
measure, ratings for each measure are rolled up and averaged into
criterion-specific ratings, where the numerative rating is converted
into a corresponding *High, Medium-High, Medium, Medium-Low* or *Low*
rating. The mobility improvements and land use rating process are
described in greater detail in *Sections II.C* and *II.D* below.

For the cost effectiveness criterion, specific dollar breakpoints are
defined for *High, Medium-High, Medium, Medium-Low* and *Low* ratings
(these breakpoints are presented in *Section II.B* below). Decision
rules for the operating efficiencies and environmental benefits criteria
are described in *Sections II.E* and *II.F* below.

Criterion-specific ratings are subsequently combined to form the summary
*High, Medium-High, Medium, Medium-Low* or *Low* justification ratings
for each project presented in *Section I.E*.

FTA assigns a weight of 50 percent each to the cost effectiveness and
land use criteria in order to establish a summary project justification
rating. For New Starts, when the average of the cost effectiveness and
land use rating falls equally between two ratings (say, between a
*Medium* and a *Medium-High* rating), the mobility improvements rating
is introduced as a "tiebreaker." Specifically, when mobility
improvements are rated *Low*, the summary rating will \"round down\" to
the lower of the two ratings; for all other mobility improvement ratings
(and for all Small Starts projects, which are not rated for mobility
improvements), the rating is \"rounded-up\" to establish the summary
project justification rating. For example, a New Starts project with a
cost effectiveness rating of *Medium-High* and a land use rating of
*Low* - along with a mobility improvements rating of *Medium* - would
receive a summary project justification rating of *Medium*.

Based upon its prior experience in evaluating New Starts projects, FTA
has determined that locally-generated and reported information in
support of the operating efficiencies and environmental benefits
criteria does not distinguish in any meaningful way differences between
competing major transit capital investments. Consequently, while ratings
for these criteria are assigned by FTA and reported in (among other
places) the *Annual Report on Funding Recommendations*, they are not
considered in the determination of an overall project justification
rating.

If well documented, and considered by FTA to be a significant benefit to
a proposed project that is not otherwise captured in the other
evaluation criteria, "other factors" may increase a summary project
justification rating by no more than one step (for example, from
*Medium-Low* to *Medium* or from *Medium‑High* to *High*). Consistent
with SAFETEA-LU, FTA will give particular attention to well-documented
and justified economic development impacts in its evaluation of "other
factors" for candidate New Starts and Small Starts projects. The
evaluation and rating of individual project justification criteria is
discussed below.

Failure to submit acceptable information (for example, reliable travel
forecasts to support the cost effectiveness, mobility improvements, and
operating efficiencies criteria) will result in a *Low* rating for the
affected project justification criteria.

***II.B Cost Effectiveness***

In its evaluation of the cost effectiveness of a proposed project, FTA
considers the incremental cost per hour of transportation system user
benefits in the forecast year. Transportation system user benefits
reflect the improvements in regional mobility - as measured by the
weighted in- and out-of-vehicle changes in travel-time to users of the
regional transit system -- caused by the implementation of the proposed
New Starts project. The cost effectiveness measure is calculated by (a)
estimating the incremental "base-year" annualized capital and operating
costs of the project (over a lower cost "baseline" of transit service),
and then (b) dividing these costs by the projected user benefits. The
result of this calculation is a measure of project cost per hour of
projected user (i.e. travel-time) benefits expected to be achieved if
the project is added to the regional transit system. Proposed projects
with a lower cost per hour of projected travel-time benefits are
evaluated as more cost effective than those with a higher cost per hour
of projected travel-time benefits.

FTA believes that the cost per hour of transportation system user
benefits is a sound measure for cost effectiveness - and preferable to
the prior measure of incremental cost per new rider - because it (1)
captures the benefits which accrue to *all* transit users (including
existing transit riders); (2) better reflects the *cause* of ridership
increases -- improvements in travel time -- rather than simply the
patronage *outcome*; (3) reflects the nature of the service being
provided by the candidate project (for example, the measure
distinguishes the benefits of long vs. short trips); and (4) does not
penalize those agencies which are already providing a high level of
transit service in a corridor for which a major capital investment is
proposed.

Table II-2 below presents the thresholds FTA will use in FY 2008 for
assigning a *High, Medium-High, Medium, Medium-Low* or *Low* cost
effectiveness rating for each proposed project. FTA publishes updates to
these breakpoints annually to reflect the impact of inflation:

Table II-2 Cost Effectiveness Breakpoints

  ----------------------------------- -----------------------------------
  High                                \$11.49 and under

  Medium-High                         \$11.50- \$14.99

  Medium                              \$15.00-\$22.99

  Medium-low                          \$23.00-\$28.99

  Low                                 \$29.00 and over
  ----------------------------------- -----------------------------------

Very Small Starts include low-cost elements such as service branding,
low-floor buses operating at improved frequencies, transit stations with
real-time passenger information, and traffic signal priority, all of
which FTA has determined to be cost effective by their very nature.
Therefore, Very Small Starts projects automatically receive a *Medium*
rating for cost effectiveness.

***II.C Transit-Supportive Existing Land Use and Future Patterns***

In its evaluation of the land use for New Starts projects, FTA
explicitly considers the following transit supportive land use
categories and factors:

1.  **Existing Land Use**

2.  **Transit Supportive Plans and Policies**, including the following
    factors:

    -   Growth management;

    -   Transit supportive corridor policies;

    -   Supportive zoning regulations near transit stations; and

    -   Tools to implement land use policies.

3.  **Performance and Impacts of Policies**, including the following
    factors:

-   Performance of land use policies; and

-   Potential impact of transit project on regional land use.

FTA also permits project sponsors to submit information in support of an
optional "other land use considerations" category.

The evaluation of transit supportive existing land use and future
patterns is similar for Small Starts projects, but eliminates the growth
management and "other land use considerations" factors and simplifies
the reporting of information supporting the remaining factors. More
information on the land use evaluation process for Small Starts projects
can be found in Appendix A of the *Interim Guidance and Instructions for
Small Starts*.

FTA considers projects which meet the minimum existing ridership
threshold of 3,000 daily boardings to be in corridors with
transit-supportive land use appropriate to the proposed level of
investment. Therefore, Very Small Starts projects automatically receive
a *Medium* rating for transit supportive land use plans and policies.

Based on information submitted to FTA by local agencies, FTA gauges each
category by the factors identified above. FTA assigns one of five
numerical ratings ("1" to "5") to each project for each of these
factors. Each factor is weighted equally within its category, averaged,
and combined into category-specific ratings. These category ratings are
then combined equally (that is, each land use category rating
contributes one-third of the value) and converted to a descriptive
rating of *High, Medium-High, Medium, Medium-Low* or *Low* to determine
the overall land use rating. In rare cases, when based on unusually
compelling "other" land use considerations, FTA may increase the land
use rating by one point.

Additional detail on FTA's land use rating process is contained in
*Guidelines and Standards for Assessing Transit-Supportive Land Use*.
Table II-3 on the following pages summarizes the ratings applied by FTA
in the assessment of each land use category and supporting factor at
each stage of project development.

Table II-3 Ratings Applied in Assessment of Land Use Criterion

+------------+---------+----------------------------------------------+
| **I.       |         |                                              |
| EXISTING   |         |                                              |
| LAND USE** |         |                                              |
+------------+---------+----------------------------------------------+
| *          |         |                                              |
| **Existing |         |                                              |
| Land       |         |                                              |
| Use***     |         |                                              |
+------------+---------+----------------------------------------------+
| Phase of   | Land    |                                              |
| Project    | Use     |                                              |
| D          | Ass     |                                              |
| evelopment | essment |                                              |
|            | Ratings |                                              |
+------------+---------+----------------------------------------------+
| P          | HIGH    | Current levels of population, employment,    |
| reliminary | (5)     | and other trip generators in station areas   |
| E          |         | are suffi­cient to support a major transit    |
| ngineering |         | investment. Most station areas are           |
| and Final  |         | pedestrian-friendly and fully accessible.    |
| Design     |         |                                              |
+------------+---------+----------------------------------------------+
|            | MEDIUM  | Current levels of population, employment,    |
|            | (3)     | and other trip generators in station areas   |
|            |         | marginally support a major transit           |
|            |         | investment. Some sta­tion areas are           |
|            |         | pedestrian-friendly and accessi­ble.          |
|            |         | Significant growth must be realized.         |
+------------+---------+----------------------------------------------+
|            | LOW (1) | Current levels of population, employment,    |
|            |         | and other trip generators in station areas   |
|            |         | are inade­quate to support a major transit    |
|            |         | investment. Station areas are not            |
|            |         | pedestrian-friendly.                         |
+------------+---------+----------------------------------------------+
| Ratings    |         |                                              |
| based on   |         |                                              |
| assessment |         |                                              |
| of the     |         |                                              |
| following: |         |                                              |
|            |         |                                              |
| -          |         |                                              |
|   Existing |         |                                              |
|            |         |                                              |
|   corridor |         |                                              |
|     and    |         |                                              |
|            |         |                                              |
|    station |         |                                              |
|     area   |         |                                              |
|     de     |         |                                              |
| velopment; |         |                                              |
|            |         |                                              |
| -          |         |                                              |
|   Existing |         |                                              |
|            |         |                                              |
|   corridor |         |                                              |
|     and    |         |                                              |
|            |         |                                              |
|    station |         |                                              |
|     area   |         |                                              |
|     d      |         |                                              |
| evelopment |         |                                              |
|            |         |                                              |
| character; |         |                                              |
|            |         |                                              |
| -          |         |                                              |
|   Existing |         |                                              |
|            |         |                                              |
|    station |         |                                              |
|     area   |         |                                              |
|            |         |                                              |
| pedestrian |         |                                              |
|     f      |         |                                              |
| acilities, |         |                                              |
|            |         |                                              |
|  including |         |                                              |
|     access |         |                                              |
|     for    |         |                                              |
|            |         |                                              |
|    persons |         |                                              |
|     with   |         |                                              |
|     dis    |         |                                              |
| abilities; |         |                                              |
|     and    |         |                                              |
|            |         |                                              |
| -          |         |                                              |
|   Existing |         |                                              |
|            |         |                                              |
|   corridor |         |                                              |
|     and    |         |                                              |
|            |         |                                              |
|    station |         |                                              |
|     area   |         |                                              |
|            |         |                                              |
|    parking |         |                                              |
|            |         |                                              |
|    supply. |         |                                              |
+------------+---------+----------------------------------------------+
| **II.      |         |                                              |
| TRANSIT-   |         |                                              |
| SUPPORTIVE |         |                                              |
| PLANS AND  |         |                                              |
| POLICIES** |         |                                              |
+------------+---------+----------------------------------------------+
| ***Growth  |         |                                              |
| M          |         |                                              |
| anagement* |         |                                              |
| (DOES NOT  |         |                                              |
| APPLY TO   |         |                                              |
| SMALL      |         |                                              |
| STARTS)**  |         |                                              |
+------------+---------+----------------------------------------------+
| Phase of   | Land    |                                              |
| Project    | Use     |                                              |
| D          | Ass     |                                              |
| evelopment | essment |                                              |
|            | Ratings |                                              |
+------------+---------+----------------------------------------------+
| P          | HIGH    | Adopted and enforceable growth management    |
| reliminary | (5)     | and land conservation policies are in place  |
| E          |         | throughout the region. Existing and planned  |
| ngineering |         | densities, along with market trends in the   |
| and Final  |         | region and corridor are strongly compatible  |
| Design     |         | with transit.                                |
+------------+---------+----------------------------------------------+
|            | MEDIUM  | Significant progress has been made toward    |
|            | (3)     | implementing growth management and land      |
|            |         | conservation policies. Strong policies may   |
|            |         | be adopted in some jurisdictions but not     |
|            |         | others, or only moderately enforceable       |
|            |         | policies (e.g., incentive-based) may be      |
|            |         | adopted regionwide. Existing and/or planned  |
|            |         | densities and market trends are moderately   |
|            |         | compatible with transit.                     |
+------------+---------+----------------------------------------------+
|            | LOW (1) | Limited consideration has been given to      |
|            |         | implementing growth management and land      |
|            |         | conservation policies; adopted policies may  |
|            |         | be weak and apply to only a limited area.    |
|            |         | Existing and/or planned densities and market |
|            |         | trends are minimally or not supportive of    |
|            |         | transit.                                     |
+------------+---------+----------------------------------------------+
| Ratings    |         |                                              |
| based on   |         |                                              |
| assessment |         |                                              |
| of the     |         |                                              |
| following: |         |                                              |
|            |         |                                              |
| -   Con    |         |                                              |
| centration |         |                                              |
|     of     |         |                                              |
|     d      |         |                                              |
| evelopment |         |                                              |
|     around |         |                                              |
|     e      |         |                                              |
| stablished |         |                                              |
|            |         |                                              |
|   activity |         |                                              |
|            |         |                                              |
|    centers |         |                                              |
|     and    |         |                                              |
|            |         |                                              |
|   regional |         |                                              |
|            |         |                                              |
|   transit; |         |                                              |
|     and    |         |                                              |
|            |         |                                              |
| -   Land   |         |                                              |
|     co     |         |                                              |
| nservation |         |                                              |
|     and    |         |                                              |
|     m      |         |                                              |
| anagement. |         |                                              |
+------------+---------+----------------------------------------------+

Table II-3 Ratings Applied in Assessment of Land Use Criterion (cont.)

+--------------+--------+----------------------------------------------+
| **II.        |        |                                              |
| TRANSI       |        |                                              |
| T-SUPPORTIVE |        |                                              |
| PLANS AND    |        |                                              |
| POLICIES**   |        |                                              |
+--------------+--------+----------------------------------------------+
| ***Transi    |        |                                              |
| t-Supportive |        |                                              |
| Corridor     |        |                                              |
| Policies***  |        |                                              |
+--------------+--------+----------------------------------------------+
| Final Design | HIGH   | Conceptual plans for the corridor and        |
|              | (5)    | station areas have been developed. Local     |
|              |        | jurisdictions have adopted or drafted        |
|              |        | revisions to compre­hensive and/or small area |
|              |        | plans in most or all station areas. Land use |
|              |        | patterns proposed in conceptual plans and    |
|              |        | local and institutional plan revisions are   |
|              |        | strongly supportive of a major transit       |
|              |        | investment.                                  |
+--------------+--------+----------------------------------------------+
|              | MEDIUM | Conceptual plans for the corridor and        |
|              | (3)    | station areas have been developed. Local     |
|              |        | jurisdictions have initiated the process of  |
|              |        | revising compre­hensive and/or small area     |
|              |        | plans. Land use pat­terns proposed in         |
|              |        | conceptual plans and local and institutional |
|              |        | plan revisions are at least moderately       |
|              |        | supportive of a major transit investment.    |
+--------------+--------+----------------------------------------------+
|              | LOW    | Limited progress, to date, has been made     |
|              | (1)    | toward developing station area conceptual    |
|              |        | plans or revising local comprehensive or     |
|              |        | small area plans. Existing station area land |
|              |        | uses identified in local comprehensive plans |
|              |        | are marginally or not transit-supportive.    |
+--------------+--------+----------------------------------------------+
| Preliminary  | HIGH   | Conceptual plans for the corridor and        |
| Engineering  | (5)    | station areas have been developed.           |
|              |        | Discussions have been undertaken with local  |
|              |        | jurisdictions about revising comprehensive   |
|              |        | plans. Land use patterns proposed in         |
|              |        | conceptual plans for station areas (or in    |
|              |        | existing comprehensive plans and             |
|              |        | institutional master plans throughout the    |
|              |        | corri­dor) are strongly supportive of a major |
|              |        | transit investment.                          |
+--------------+--------+----------------------------------------------+
|              | MEDIUM | Conceptual plans for the corridor and        |
|              | (3)    | station areas are being developed.           |
|              |        | Discussions have been undertaken with local  |
|              |        | jurisdictions about revising comprehensive   |
|              |        | plans. Land use pat­terns proposed in         |
|              |        | conceptual plans for station areas (or       |
|              |        | existing in local comprehensive plans and    |
|              |        | institutional master plans) are at least     |
|              |        | mod­erately supportive of a major transit     |
|              |        | investment.                                  |
+--------------+--------+----------------------------------------------+
|              | LOW    | Limited progress, to date, has been made     |
|              | (1)    | toward developing station area conceptual    |
|              |        | plans or working with local jurisdictions to |
|              |        | revise comprehensive plans. Existing station |
|              |        | area land uses identified in local           |
|              |        | comprehen­sive plans are marginally or not    |
|              |        | transit-supportive.                          |
+--------------+--------+----------------------------------------------+
| Ratings      |        |                                              |
| based on     |        |                                              |
| assessment   |        |                                              |
| of the       |        |                                              |
| following:   |        |                                              |
|              |        |                                              |
| -   Plans    |        |                                              |
|     and      |        |                                              |
|     policies |        |                                              |
|     to       |        |                                              |
|     increase |        |                                              |
|     corridor |        |                                              |
|     and      |        |                                              |
|     station  |        |                                              |
|     area     |        |                                              |
|              |        |                                              |
| development; |        |                                              |
|              |        |                                              |
| -   Plans    |        |                                              |
|     and      |        |                                              |
|     policies |        |                                              |
|     to       |        |                                              |
|     enhance  |        |                                              |
|     tran     |        |                                              |
| sit-friendly |        |                                              |
|              |        |                                              |
|    character |        |                                              |
|     of       |        |                                              |
|     corridor |        |                                              |
|     and      |        |                                              |
|     station  |        |                                              |
|     area     |        |                                              |
|              |        |                                              |
| development; |        |                                              |
|              |        |                                              |
| -   Plans to |        |                                              |
|     improve  |        |                                              |
|              |        |                                              |
|   pedestrian |        |                                              |
|              |        |                                              |
|  facilities, |        |                                              |
|              |        |                                              |
|    including |        |                                              |
|              |        |                                              |
|   facilities |        |                                              |
|     for      |        |                                              |
|     persons  |        |                                              |
|     with     |        |                                              |
|     d        |        |                                              |
| isabilities; |        |                                              |
|     and      |        |                                              |
|              |        |                                              |
| -   Parking  |        |                                              |
|              |        |                                              |
|    policies. |        |                                              |
+--------------+--------+----------------------------------------------+

Table II-3 Ratings Applied in Assessment of Land Use Criterion (cont.)

+-------------+--------+----------------------------------------------+
| **II.       |        |                                              |
| TRANSIT     |        |                                              |
| -SUPPORTIVE |        |                                              |
| PLANS AND   |        |                                              |
| POLICIES**  |        |                                              |
+-------------+--------+----------------------------------------------+
| **          |        |                                              |
| *Supportive |        |                                              |
| Zoning      |        |                                              |
| Regulations |        |                                              |
| Near        |        |                                              |
| Transit     |        |                                              |
| Stations*** |        |                                              |
+-------------+--------+----------------------------------------------+
| Final       | HIGH   | Local jurisdictions have adopted zoning      |
| Design      | (5)    | changes that strongly support a major        |
|             |        | transit investment in most or all transit    |
|             |        | station areas.                               |
+-------------+--------+----------------------------------------------+
|             | MEDIUM | Local jurisdictions are in the process of    |
|             | (3)    | adopting zoning changes that moderately or   |
|             |        | strongly support a major transit investment  |
|             |        | in most or all transit station areas.        |
|             |        | Alternatively: strongly transit-supportive   |
|             |        | zoning has been adopted in some station      |
|             |        | areas but not in others.                     |
+-------------+--------+----------------------------------------------+
|             | LOW    | No more than initial efforts have begun to   |
|             | (1)    | pre­pare station area plans and related       |
|             |        | zoning. Existing station area zoning is      |
|             |        | marginally or not transit-supportive.        |
+-------------+--------+----------------------------------------------+
| Preliminary | HIGH   | A conceptual planning process is underway to |
| Engineering | (5)    | recommend zoning changes for station areas.  |
|             |        | Conceptual plans and policies for station    |
|             |        | areas are recommending transit-supportive    |
|             |        | densities and design characteristics. Local  |
|             |        | jurisdictions have committed to examining    |
|             |        | and changing zoning regulations where        |
|             |        | necessary. Alterna­tively, a "high" rating    |
|             |        | can be assigned if existing zoning in most   |
|             |        | or all transit station areas is already      |
|             |        | strongly transit-supportive.                 |
+-------------+--------+----------------------------------------------+
|             | MEDIUM | A conceptual planning process is underway to |
|             | (3)    | recommend zoning changes for station areas.  |
|             |        | Local jurisdictions are in the process of    |
|             |        | com­mitting to examining and changing zoning  |
|             |        | regulations where necessary. Alternatively,  |
|             |        | a "medium" rating can be assigned if         |
|             |        | existing zoning in most or all transit       |
|             |        | station areas is already moderately          |
|             |        | transit-supportive.                          |
+-------------+--------+----------------------------------------------+
|             | LOW    | Limited consideration has been given to      |
|             | (1)    | pre­paring station area plans and related     |
|             |        | zoning. Existing station area zoning is      |
|             |        | marginally or not transit-supportive.        |
+-------------+--------+----------------------------------------------+
| Ratings     |        |                                              |
| based on    |        |                                              |
| assessment  |        |                                              |
| of the      |        |                                              |
| following:  |        |                                              |
|             |        |                                              |
| -   Zoning  |        |                                              |
|             |        |                                              |
|  ordinances |        |                                              |
|     that    |        |                                              |
|     support |        |                                              |
|             |        |                                              |
|   increased |        |                                              |
|             |        |                                              |
| development |        |                                              |
|     den­sity |        |                                              |
|     in      |        |                                              |
|     transit |        |                                              |
|     station |        |                                              |
|     areas;  |        |                                              |
|             |        |                                              |
| -   Zoning  |        |                                              |
|             |        |                                              |
|  ordinances |        |                                              |
|     that    |        |                                              |
|     enhance |        |                                              |
|     trans   |        |                                              |
| it-oriented |        |                                              |
|             |        |                                              |
|   character |        |                                              |
|     of      |        |                                              |
|     station |        |                                              |
|     area    |        |                                              |
|             |        |                                              |
| development |        |                                              |
|     and     |        |                                              |
|             |        |                                              |
|  pedestrian |        |                                              |
|     access; |        |                                              |
|     and     |        |                                              |
|             |        |                                              |
| -   Zoning  |        |                                              |
|             |        |                                              |
|  allowances |        |                                              |
|     for     |        |                                              |
|     reduced |        |                                              |
|     parking |        |                                              |
|     and     |        |                                              |
|     traffic |        |                                              |
|             |        |                                              |
| mitigation. |        |                                              |
+-------------+--------+----------------------------------------------+

Table II-3 Ratings Applied in Assessment of Land Use Criterion (cont.)

  -------------------- --------- -----------------------------------------------
  **II.                          
  TRANSIT-SUPPORTIVE             
  PLANS AND POLICIES**           

  ***Tools to                    
  Implement Land Use             
  Policies***                    

  Final Design         HIGH (5)  Transit agencies and/or regional agencies are
                                 working proactively with local jurisdictions,
                                 developers, and the public to promote
                                 transit-supportive land use planning and
                                 station area development. The transit agency
                                 has estab­lished a joint development program and
                                 identi­fied development opportunities. Agencies
                                 have adopted effective regulatory and financial
                                 incentives to promote transit-oriented
                                 devel­opment. Public and private capital
                                 improve­ments are being programmed in the
                                 corridor and station areas which implement the
                                 local land use policies and which leverage the
                                 Federal investment in the proposed corridor.

                       MEDIUM    Transit agencies and/or regional agencies have
                       (3)       conducted some outreach to promote
                                 transit-supportive land use planning and
                                 station area development. Regulatory and
                                 financial incen­tives to promote
                                 transit-oriented development are being
                                 developed, or have been adopted but are only
                                 moderately effective. Capital improvements are
                                 being identified that support station area land
                                 use plans and leverage the Federal investment
                                 in the proposed major tran­sit corridor.

                       LOW (1)   Limited effort has been made to reach out to
                                 jurisdictions, developers, or the public to
                                 pro­mote transit-supportive land use planning;
                                 to identify regulatory and financial incentives
                                 to promote development; or to identify capital
                                 improvements.

  Preliminary          HIGH (5)  Transit agencies and/or regional agencies are
  Engineering                    working proactively with local jurisdictions,
                                 developers, and the public to promote
                                 transit-supportive land use planning and
                                 station area development. Local agencies are
                                 making rec­ommendations for effective regulatory
                                 and financial incentives to promote
                                 transit-oriented development. Capital
                                 improvement programs are being developed that
                                 support station area land use plans and
                                 leverage the Federal invest­ment in the proposed
                                 major transit corridor.

                       MEDIUM    Transit agencies and/or regional agencies have
                       (3)       conducted some outreach to promote
                                 transit-supportive land use planning and
                                 station area development. Agencies are
                                 investigating regulatory and financial
                                 incentives to promote transit-oriented
                                 development. Capital improvements are being
                                 identified that support station area land use
                                 plans and leverage the Federal investment in
                                 the proposed major tran­sit corridor.

                       LOW (1)   Limited effort has been made to reach out to
                                 jurisdictions, developers, or the public to
                                 pro­mote transit-supportive land use planning;
                                 to identify regulatory and financial incentives
                                 to promote development; or to identify capital
                                 improvements.
  -------------------- --------- -----------------------------------------------

Table II-3 Ratings Applied in Assessment of Land Use Criterion (cont.)

+------------+--------+-----------------------------------------------+
| **II.      |        |                                               |
| TRANSIT-   |        |                                               |
| SUPPORTIVE |        |                                               |
| PLANS AND  |        |                                               |
| POLICIES** |        |                                               |
+------------+--------+-----------------------------------------------+
| ***Tools   |        |                                               |
| to         |        |                                               |
| Implement  |        |                                               |
| Land Use   |        |                                               |
| Policies   |        |                                               |
| (Con       |        |                                               |
| tinued)*** |        |                                               |
+------------+--------+-----------------------------------------------+
| Ratings    |        |                                               |
| based on   |        |                                               |
| assessment |        |                                               |
| of the     |        |                                               |
| following: |        |                                               |
|            |        |                                               |
| -          |        |                                               |
|   Outreach |        |                                               |
|     to     |        |                                               |
|            |        |                                               |
| government |        |                                               |
|            |        |                                               |
|   agencies |        |                                               |
|     and    |        |                                               |
|     the    |        |                                               |
|            |        |                                               |
|  community |        |                                               |
|     in     |        |                                               |
|            |        |                                               |
|    sup­port |        |                                               |
|     of     |        |                                               |
|     land   |        |                                               |
|     use    |        |                                               |
|            |        |                                               |
|  planning; |        |                                               |
|            |        |                                               |
| -          |        |                                               |
| Regulatory |        |                                               |
|     and    |        |                                               |
|            |        |                                               |
|  financial |        |                                               |
|            |        |                                               |
| incentives |        |                                               |
|     to     |        |                                               |
|            |        |                                               |
|    promote |        |                                               |
|            |        |                                               |
|   transit- |        |                                               |
| supportive |        |                                               |
|     de     |        |                                               |
| velopment; |        |                                               |
|     and    |        |                                               |
|            |        |                                               |
| -          |        |                                               |
|    Efforts |        |                                               |
|     to     |        |                                               |
|     engage |        |                                               |
|     the    |        |                                               |
|     d      |        |                                               |
| evelopment |        |                                               |
|            |        |                                               |
|  community |        |                                               |
|     in     |        |                                               |
|            |        |                                               |
|    station |        |                                               |
|     area   |        |                                               |
|            |        |                                               |
|   planning |        |                                               |
|     and    |        |                                               |
|            |        |                                               |
|   transit- |        |                                               |
| supportive |        |                                               |
|     de     |        |                                               |
| velopment. |        |                                               |
+------------+--------+-----------------------------------------------+
| **III.     |        |                                               |
| P          |        |                                               |
| ERFORMANCE |        |                                               |
| AND        |        |                                               |
| IMPACTS OF |        |                                               |
| LAND USE   |        |                                               |
| POLICIES** |        |                                               |
+------------+--------+-----------------------------------------------+
| ***P       |        |                                               |
| erformance |        |                                               |
| of Land    |        |                                               |
| Use        |        |                                               |
| P          |        |                                               |
| olicies*** |        |                                               |
+------------+--------+-----------------------------------------------+
| Final      | HIGH   | A significant number of development proposals |
| Design     | (5)    | are being received for transit-supportive     |
|            |        | housing and employment in station areas.      |
|            |        | Sig­nificant amounts of transit-supportive     |
|            |        | devel­opment have occurred in other, existing  |
|            |        | transit corridors and station areas in the    |
|            |        | region.                                       |
+------------+--------+-----------------------------------------------+
|            | MEDIUM | Some development proposals are being received |
|            | (3)    | for transit-supportive housing and employment |
|            |        | in station areas. Moderate amounts of         |
|            |        | transit-supportive development have occurred  |
|            |        | in other existing transit corri­dors and       |
|            |        | station areas in the region.                  |
+------------+--------+-----------------------------------------------+
|            | LOW    | A limited number of proposals for             |
|            | (1)    | transit-sup­portive housing and employment     |
|            |        | development in the corridor are being         |
|            |        | received. Other existing transit corridors    |
|            |        | and station areas in the region lack          |
|            |        | significant examples of transit-supportive    |
|            |        | housing and employment development.           |
+------------+--------+-----------------------------------------------+
| P          | HIGH   | Transit-supportive housing and employment     |
| reliminary | (5)    | development is occurring in the corridor.     |
| E          |        | Sig­nificant amounts of transit-supportive     |
| ngineering |        | devel­opment have occurred in other, existing  |
|            |        | transit corridors and station areas in the    |
|            |        | region.                                       |
+------------+--------+-----------------------------------------------+
|            | MEDIUM | Station locations have not been established   |
|            | (3)    | with finality, and therefore, development     |
|            |        | would not be expected. Moderate amounts of    |
|            |        | transit-supportive housing and employment     |
|            |        | develop­ment have occurred in other, existing  |
|            |        | transit corridors and station areas in the    |
|            |        | region.                                       |
+------------+--------+-----------------------------------------------+
|            | LOW    | Other existing transit corridors and station  |
|            | (1)    | areas in the region lack significant examples |
|            |        | of transit-supportive housing and employment  |
|            |        | development.                                  |
+------------+--------+-----------------------------------------------+
| Ratings    |        |                                               |
| based on   |        |                                               |
| assessment |        |                                               |
| of the     |        |                                               |
| following: |        |                                               |
|            |        |                                               |
| -   De     |        |                                               |
| monstrated |        |                                               |
|     cases  |        |                                               |
|     of     |        |                                               |
|     d      |        |                                               |
| evelopment |        |                                               |
|            |        |                                               |
|   affected |        |                                               |
|     by     |        |                                               |
|     transi |        |                                               |
| t-oriented |        |                                               |
|            |        |                                               |
|  policies; |        |                                               |
|     and    |        |                                               |
|            |        |                                               |
| -          |        |                                               |
|    Station |        |                                               |
|     area   |        |                                               |
|     d      |        |                                               |
| evelopment |        |                                               |
|            |        |                                               |
|  proposals |        |                                               |
|     and    |        |                                               |
|            |        |                                               |
|    status. |        |                                               |
+------------+--------+-----------------------------------------------+

Table II-3 Ratings Applied in Assessment of Land Use Criterion (cont.)

+----------+--------+-------------------------------------------------+
| **III.   |        |                                                 |
| PER      |        |                                                 |
| FORMANCE |        |                                                 |
| AND      |        |                                                 |
| IMPACTS  |        |                                                 |
| OF LAND  |        |                                                 |
| USE      |        |                                                 |
| PO       |        |                                                 |
| LICIES** |        |                                                 |
+----------+--------+-------------------------------------------------+
| ***P     |        |                                                 |
| otential |        |                                                 |
| Impact   |        |                                                 |
| of       |        |                                                 |
| Transit  |        |                                                 |
| Project  |        |                                                 |
| on       |        |                                                 |
| Regional |        |                                                 |
| Land     |        |                                                 |
| Use***   |        |                                                 |
+----------+--------+-------------------------------------------------+
| Pre      | HIGH   | A significant amount of land in station areas   |
| liminary | (5)    | is available for new development or             |
| Eng      |        | redevelop­ment at transit-supportive densities.  |
| ineering |        | Local plans, policies, and development          |
| and      |        | programs, as well as real estate market         |
| Final    |        | conditions, strongly support such development.  |
| Design   |        |                                                 |
+----------+--------+-------------------------------------------------+
|          | MEDIUM | A moderate amount of land in station areas is   |
|          | (3)    | available for new development or redevelop­ment  |
|          |        | at transit-supportive densities. Local plans,   |
|          |        | policies, and development programs, as well as  |
|          |        | real estate market conditions, moder­ately       |
|          |        | support such development.                       |
+----------+--------+-------------------------------------------------+
|          | LOW    | Only a modest amount of land in station areas   |
|          | (1)    | is available for new development or             |
|          |        | redevel­opment. Local plans, policies, and       |
|          |        | develop­ment programs, as well as real estate    |
|          |        | market conditions, provide marginal support for |
|          |        | new development in station areas.               |
+----------+--------+-------------------------------------------------+
| Ratings  |        |                                                 |
| based on |        |                                                 |
| as       |        |                                                 |
| sessment |        |                                                 |
| of the   |        |                                                 |
| fo       |        |                                                 |
| llowing: |        |                                                 |
|          |        |                                                 |
| -   Adap |        |                                                 |
| tability |        |                                                 |
|     of   |        |                                                 |
|          |        |                                                 |
|  station |        |                                                 |
|     area |        |                                                 |
|     land |        |                                                 |
|     for  |        |                                                 |
|     deve |        |                                                 |
| lopment; |        |                                                 |
|     and  |        |                                                 |
|          |        |                                                 |
| -        |        |                                                 |
| Corridor |        |                                                 |
|          |        |                                                 |
| economic |        |                                                 |
|     envi |        |                                                 |
| ronment. |        |                                                 |
+----------+--------+-------------------------------------------------+

As Table II-3 indicates, FTA takes into consideration the stage of
development of a proposed project in its evaluation of land use
information. For example, the planning and policy oriented factors
(existing land use, containment of sprawl, and corridor policies) are
relevant in evaluating projects in all stages of project development,
but particularly useful for projects early in project development. On
the other hand, the implementation-oriented factors (supportive zoning
regulations, implementation tools, and performance of land use policies)
are more applicable in evaluating projects more advanced in preliminary
engineering or final design.

***II.D Mobility Improvements***

In its evaluation of the mobility improvements that would be realized by
implementation of a proposed project, FTA reviews three measures:

1.  **Normalized Travel Time Savings**, as measured by transportation
    system user benefits per project passenger mile;

2.  Number of current **Low-income Households** which would be served by
    the proposed New Starts investment; and

3.  Number of current **Jobs** served by the proposed New Starts
    project.

The normalized travel time savings of New Starts projects is weighted 50
percent in the development of the mobility improvements rating; the
low-income households and employment measures *combined* account for the
other 50 percent of the rating. The process FTA uses to establish
measure-specific ratings and the overall mobility improvements rating is
described below:

> **Transportation System User Benefits per Passenger Mile** This
> measure reflects the travel time savings, as measured by minutes of
> transportation system user benefits in the forecast year anticipated
> from the proposed project compared to its baseline alternative. In
> order to rate projects in comparison to other proposed New Starts,
> this measure is normalized by the annual passenger miles traveled on
> the New Starts project in the forecast year.
>
> As noted previously, projects are aligned in ascending order of user
> benefits per passenger mile and categorized into five groups,
> separated by the logical breakpoints indicated by the submitted data
> for the measure. Projects in the highest grouping (that is with the
> most user benefits per passenger mile) receive a "5," while projects
> in the lowest grouping receive a "1."
>
> **Number of Low-income Households and Jobs Served** These two measures
> reflect the absolute number of low-income households (defined as below
> the poverty level) and jobs located within ½ mile of the \"boarding
> points\", or stations, associated with the proposed project. The total
> number of low-income households and jobs located within these ½ mile
> zones is then divided by the total number of stations to determine
> both the average number of low-income households and average number of
> jobs per station. Projects are aligned in ascending order of both
> low-income households per station and jobs per station, categorized
> into five groups, and assigned a numerical rating from "1" to "5."
>
> The numerical ratings assigned for both low-income households and jobs
> are compared for each project. FTA then considers the potential for
> connections of these two markets in assigning a single rating for both
> measures. In the case of projects which are new guideway systems in
> their regions, the lower of the low-income households or jobs rating
> is assigned as the combined rating for the two measures. For
> extensions to existing guideways, the higher of the low-income
> households and employment rating is utilized, unless the employment
> rating is higher and there are few low-income households living along
> the guideway. In this latter case, the low-income rating would be
> assigned as the combined rating of the two measures.

***II.E Operating Efficiencies***

FTA measures this criterion by evaluating the change in systemwide
operating costs per passenger mile in the forecast year, comparing the
Section 5309 New Start investment to the baseline alternative. FTA
assigns a rating of *Medium* to all projects that have information
submitted for this measure. As noted previously, FTA has found that
information submitted in support of the operating efficiencies criterion
does not distinguish with any meaning the merits of competing New Starts
projects. While FTA reports the information submitted by project
sponsors on operating efficiencies to Congress in the *Annual Report on
Funding Recommendations*, it does not formally incorporate this measure
into its evaluation.

***II.F Environmental Benefits***

In its evaluation of environmental benefits that would be realized
through the implementation of a proposed project, FTA considers the
current air quality designation by EPA. This measure is defined for each
of the transportation-related pollutants (ozone, CO, and PM-10) as the
current air quality designation by EPA for the metropolitan region in
which the proposed project is located, indicating the severity of the
metropolitan area's noncompliance with the health-based EPA standard
(NAAQS) for the pollutant, or its compliance with that standard. New
Starts project sponsors submit information to FTA on the forecast
reductions in emissions resulting from the New Starts project for each
transportation-related pollutant.

Specifically, FTA follows the following decision rule when assigning
ratings for environmental benefits:

-   Projects in non-attainment areas for any transportation-related
    pollutants that demonstrate a reduction in that pollutant receive a
    *High* rating.

-   Projects that are in attainment areas that demonstrate reductions in
    any transportation-related pollutant receive a *Medium* rating.

-   All other projects are rated *Low*.

As noted previously, FTA has found that information submitted in support
of the environmental benefits criterion does not distinguish with any
meaning the merits of competing New Starts projects. While FTA reports
the information submitted by project sponsors on environmental benefits
to Congress in the *Annual Report on Funding Recommendations*, it does
not formally incorporate this measure in its evaluation of New Starts
projects.

***II.G Other Factors***

Consistent with Section 5309(d) and (e), FTA also includes a variety of
other factors when evaluating project justification, including:

-   The nature and extent of the transportation problem or opportunity
    in the project corridor;

-   Environmental justice considerations and equity issues;

-   Opportunities for increased access to employment for low-income
    persons, and welfare to work initiatives;

-   Consideration of innovative financing, procurement, and construction
    techniques, including design-build turnkey applications;

-   Any other factor which the project sponsor believes articulates the
    benefits of the proposed major transit capital investment but which
    is not captured within the other project justification criteria.

Consistent with SAFETEA-LU, FTA intends that economic development should
be an "other factor" of particular significance for the FY 2008
evaluation cycle. Through its ongoing rulemaking process, FTA hopes to
define specific measures for evaluating the economic development impacts
of candidate New Starts projects. Until such measures are defined and
subject to industry comment, FTA encourages project sponsors to submit
information which they feel best justifies the anticipated economic
development impacts of their proposed New Starts or Small Starts
investments. FTA is particularly interested in quantifiable economic
development benefits which can be clearly distinguished from a) the
transportation system user benefits which comprise one variable of FTA's
measure for cost effectiveness, and b) land use impacts which are
reported and evaluated in support of the transit supportive land use
plans and policies criteria. Specifically, FTA desires to avoid both the
double-counting of benefits *and* the crediting of benefits to projects
which may be more appropriately attributable to other supporting local
economic development initiatives, policies, and/or incentives by
isolating the specific impacts resulting from the presence of fixed
guideway transit in a given corridor. FTA's objectives for measuring
economic development are outlined in Part II of its January 11, 2006
*New Starts Policy Guidance*, and will be further articulated in a
formal notice of proposed rulemaking.

In compelling cases, other factors may be formally assigned a rating.
When they are rated, the other factors rating is introduced *after* the
assignment of an initial summary project justification rating. If the
other factors rating is higher than the summary project justification
rating, FTA may increase this initial summary justification rating by a
maximum of one step (i.e. from *Medium* to *Medium-High*). In less
compelling cases, other factors may be reported alongside other project
information in the *Annual Report on Funding Recommendations*, but not
formally considered in the project's evaluation and rating. Where
information in support of being considered as an other factor is not
determined to be worthy of such recognition, it is neither considered in
FTA's evaluation nor reported.

**III. SUMMARY LOCAL FINANCIAL COMMITMENT RATING**

The following provides a summary of FTA's process for evaluating the
local financial commitment of proposed New Starts and Small Starts
projects. Small Starts projects that meet the criteria described in
*Section I.B* receive a summary local financial commitment rating of
*Medium*. Those Small Starts projects that cannot meet those criteria
must be evaluated and rated based on the criteria described in this
section.

***III.A Local Financial Commitment Rating***

FTA assigns a summary local financial commitment rating of *High,
Medium-High, Medium, Medium-Low* or *Low* to each project following
consideration of individual ratings applied to the following measures
for local financial commitment:

1.  **Share of non-Section 5309 New Starts funding**;

2.  Stability and reliability of the proposed project's **capital
    finance plan**, including the following factors:

-   Current capital condition;

-   Completeness of plan;

-   Commitment of capital funds;

-   Capital funding capacity; and

-   Reasonable capital planning assumptions and cost estimates.

3.  Stability and reliability of the proposed project's **operating
    finance plan**, including the following factors:

-   Current operating financial condition;

-   Completeness of operating plan;

-   Commitment of operations and maintenance (O&M) funds;

-   O&M funding capacity; and

-   Operations planning assumptions and cost estimates.

These ratings are based on an analysis of the financial plans and
documentation submitted to FTA by local agencies. FTA's evaluation takes
into account the stage of project development, particularly when
considering the stability and reliability of the capital and operating
finance plans. Expectations for firm commitments of non-Federal funding
sources become increasingly higher as projects progress further through
development (preliminary engineering, followed by final design), and are
rated accordingly.

The summary local financial commitment rating considers the non-Section
5309 New Starts funding share of project capital costs. The following
ratings are assigned to this criterion:

-   \>60 percent = *Low* rating

-   50-60 percent = *Medium* rating

-   35-49 percent = *Medium-High* rating

-   \< 35 percent = *High* rating

FTA rates the capital and operating finance plans according to the
standards defined in Tables III-1 and III-2 on the following pages.
Additional detail on FTA's process for rating local financial commitment
is contained in its *Guidelines and Standards for Assessing Local
Financial Commitment*. However, it should be noted that those guidelines
do not reflect the way that FTA treated the non-New Starts share of the
project in FY 2007, nor how it intends to address the share in the FY
2008 evaluation cycle. Based on language in SAFETEA-LU, where there is
any inconsistency between those guidelines and this appendix, the
practices spelled out in this appendix supersede those guidelines.

Numerical ratings from 1 to 5 (*Low* to *High*) are assigned to each of
the five factors under the capital and operating finance plan measures.
These factors are usually averaged to arrive at a summary rating for the
capital and operating finance plan measures. However, should the cost
estimates and planning assumptions factor receive a *Low* (1) or
*Medium-Low* (2) rating, FTA may, at its discretion, downgrade the
summary capital or operating finance plan rating one level since the
other factors are primarily based on the planning assumptions and cost
estimates used in the analysis. FTA weighs the proposed non-New Starts
share as 20 percent of the summary local financial commitment rating;
the strength and reliability of the capital plan counts as 50 percent of
the rating; and the strength and reliability of the operating plan
accounts for 30 percent of the rating. These ratings are combined and
converted by FTA into a summary local financial commitment rating of
*High, Medium-High, Medium, Medium-Low* or *Low*.

Small Starts projects which do not qualify for the streamlined financial
evaluation process presented in *Section 1.B* of this appendix are
subject to the full financial evaluation and must meet the "PE"
standards described in Tables III-1 and III-2 before entering project
development and the final design criteria before receiving a Project
Construction Grant Agreement.

Failure to submit either a capital or operating financial plan for
evaluation will result in a *Low* rating for local financial commitment.

Table III-1 Capital Plan Rating Standards

<table>
<colgroup>
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 14%" />
<col style="width: 2%" />
<col style="width: 17%" />
<col style="width: 0%" />
<col style="width: 18%" />
<col style="width: 0%" />
<col style="width: 17%" />
<col style="width: 0%" />
<col style="width: 17%" />
</colgroup>
<thead>
<tr class="header">
<th></th>
<th colspan="2"><strong>High (5)</strong></th>
<th colspan="3"><strong>Medium-High (4)</strong></th>
<th><strong>Medium (3)</strong></th>
<th colspan="2"><strong>Medium-low (2)</strong></th>
<th colspan="2"><strong>Low (1)</strong></th>
</tr>
<tr class="odd">
<th colspan="2"></th>
<th colspan="2"></th>
<th></th>
<th colspan="3"></th>
<th colspan="2"></th>
<th></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="2"><strong>Current capital condition</strong></td>
<td colspan="2"><p>- Average bus fleet age under 6 years.</p>
<p>- Bond ratings less than 2 years old (if any) of AAA (Fitch/S&amp;P)
or Aaa (Moody’s) or better</p></td>
<td><p>- Average bus fleet age under 6 years.</p>
<p>- Bond ratings less than 2 years old (if any) of A (Fitch/S&amp;P) or
A2 (Moody’s) or better</p></td>
<td colspan="3"><p>- Average bus fleet age under 8 years.</p>
<p>- Bond ratings less than 2 years old (if any) of A - (Fitch/S&amp;P)
or A3 (Moody’s) or better</p></td>
<td colspan="2"><p>- Average bus fleet age under 12.</p>
<p>- Bond ratings less than 2 years old (if any) of BBB+ (Fitch/S&amp;P)
or Baa (Moody’s) or better</p></td>
<td><p>- Average bus fleet age 12 years or more.</p>
<p>- Bond ratings less than 2 years old (if any) of BBB (Fitch/S&amp;P)
or Baa3 (Moody’s) or below</p></td>
</tr>
<tr class="even">
<td colspan="2"><strong>Completeness</strong></td>
<td colspan="2"><p>Capital plan includes:</p>
<p>- 20-year cash flow</p>
<p>- All assumptions are clearly explained</p>
<p>- High level of detail</p>
<p>- Fleet Management Plan</p>
<p>- Extensive Sensitivity analysis</p>
<p>- More than 5 years of historical data</p></td>
<td><p>Capital plan is complete, i.e. it includes:</p>
<p>- 20-year cash flow</p>
<p>- Key assumptions</p>
<p>- Moderate level of detail</p>
<p>- Fleet Management Plan</p>
<p>- Sensitivity Analysis</p>
<p>- More than 5 years of historical data</p></td>
<td colspan="3"><p>Capital plan is complete, i.e. it includes:</p>
<p>- 20-year cash flow</p>
<p>- Key assumptions</p>
<p>- Missing some explanatory details</p>
<p>- Fleet Management Plan</p>
<p>- 5 years historical data</p></td>
<td colspan="2"><p>Capital plan is partially complete, i.e. it
includes:</p>
<p>- 20-year cash flow</p>
<p>- Missing other items of supporting documentation (i.e. fleet
management plan, key assumptions, historical data)</p></td>
<td>Capital plan is incomplete. Missing some key components, including
the 20-year cash flow.</td>
</tr>
<tr class="odd">
<td colspan="2"><strong>Commitment of capital funds</strong></td>
<td colspan="2"><p>For final design - 100% of Non-Section 5309 New
Starts Funds are committed or budgeted.</p>
<p>For PE – Over 50% of Non-Section 5309 New Starts Funds are committed
or budgeted. The remaining funds are planned.</p></td>
<td><p>For final design - Over 75% of Non-Section 5309 New Starts Funds
are committed or budgeted.</p>
<p>For PE – Over 25% of Non-Section 5309 New Starts Funds are committed
or budgeted. The remaining funds are planned.</p></td>
<td colspan="3"><p>For final design - Over 50% of Non-Section 5309 New
Starts Funds are committed or budgeted.</p>
<p>For PE - No Non-Section 5309 New Starts Funds are committed or
budgeted, but the sponsor has a reasonable plan to secure all needed
funding.</p></td>
<td colspan="2"><p>For final design – Between 25% and 50% of Non-Section
5309 New Starts Funds are committed or budgeted.</p>
<p>For PE - No Non-Section 5309 New Starts funds are committed. The
sponsor has no reasonable plan to secure the necessary funding.</p></td>
<td><p>For final design - Under 25% of Non-Section 5309 New Starts Funds
are committed or budgeted.</p>
<p>For PE - The sponsor has not identified any reasonable funding
sources for the Non-Section 5309 New Starts funding share.</p></td>
</tr>
<tr class="even">
<td colspan="2"><strong>Capital funding capacity</strong></td>
<td colspan="2">The applicant has access to funds via additional debt
capacity, cash reserves, or other committed funds to cover cost
increases or funding shortfalls equal to at least 50% of estimated
project costs.</td>
<td>The applicant has available cash reserves, debt capacity, or
additional funding commitments to cover cost increases or funding
shortfalls equal to at least 25% of estimated project costs.</td>
<td colspan="3"><p>For final design - The applicant has available cash
reserves, debt capacity, or additional committed funds to cover cost
increases or funding shortfalls equal to at least 10% of estimated
project costs.</p>
<p>For PE - The applicant has a reasonable plan to cover cost increases
or funding shortfalls equal to at least 25% of project costs.</p></td>
<td colspan="2"><p>The applicant has a reasonable plan to cover only
minor (under 10%) cost increases or funding shortfalls.</p>
<p>For PE –The applicant has a reasonable plan to cover cost increases
or funding shortfalls equal to at least 10% of estimated project
costs.</p></td>
<td>The applicant has no reasonable plan to cover cost increases or
funding shortfalls.</td>
</tr>
<tr class="odd">
<td colspan="2"><strong>Reasonable capital planning
assumptions</strong></td>
<td colspan="2">Financial plan contains very conservative capital
planning assumptions and cost estimates when compared with recent
historical experience.</td>
<td>Financial plan contains conservative capital planning assumptions
and cost estimates when compared with recent historical experience.</td>
<td colspan="3">Financial plan contains capital planning assumptions and
cost estimates that are in line with historical experience.</td>
<td colspan="2">Financial plan contains optimistic capital planning
assumptions and cost estimates.</td>
<td>Financial plan contains capital planning assumptions and cost
estimates that are far more optimistic than recent history
suggests.</td>
</tr>
</tbody>
</table>

Table III-2 Operating Plan Rating Standards

+-------+---------+-------------+------------+-----------+-----------+
|       | **High  | **          | **Medium   | **M       | **Low     |
|       | (5)**   | Medium-High | (3)**      | edium-low | (1)**     |
|       |         | (4)**       |            | (2)**     |           |
+=======+=========+=============+============+===========+===========+
| **Cu  | \-      | \-          | \-         | \-        | \-        |
| rrent | His     | Historical  | Historical | H         | H         |
| Oper  | torical | and actual  | and actual | istorical | istorical |
| ating | and     | balanced    | balanced   | and       | and       |
| Fina  | actual  | budgets.    | budgets.   | actual    | actual    |
| ncial | p       | Any annual  | Any annual | cash flow | cash flow |
| C     | ositive | cash flow   | cash flow  | show      | show      |
| ondit | cash    | shortfalls  | shortfalls | several   | several   |
| ion** | flow.   | paid from   | paid from  | years of  | years of  |
|       | No cash | cash        | cash       | revenue   | revenue   |
|       | flow    | reserves or | reserves   | sh        | sh        |
|       | shor    | other       | or annual  | ortfalls. | ortfalls, |
|       | tfalls. | committed   | appro      | Any       | or        |
|       |         | sources.    | priations. | annual    | h         |
|       | \-      |             |            | cash flow | istorical |
|       | Current | \- Current  | \- Current | s         | in        |
|       | op      | operating   | operating  | hortfalls | formation |
|       | erating | ratio is at | ratio is   | paid from | not       |
|       | ratio   | least 1.5   | at least   | s         | provided. |
|       | ex      |             | 1.2        | hort-term |           |
|       | ceeding | \- No       |            | b         | \-        |
|       | 2.0     | service     | \- No      | orrowing. | Current   |
|       |         | cutbacks in | service    |           | operating |
|       | \- No   | recent      | cutbacks   | \-        | ratio is  |
|       | service | years.      | or only    | Current   | less than |
|       | c       |             | minor      | operating | 1.0       |
|       | utbacks |             | service    | ratio is  |           |
|       | in      |             | cutbacks   | at least  | \- Major  |
|       | recent  |             | in recent  | 1.0       | Service   |
|       | years.  |             | years      |           | cutbacks  |
|       |         |             |            | \- Major  | in recent |
|       |         |             |            | Service   | years     |
|       |         |             |            | cutbacks  |           |
|       |         |             |            | in recent |           |
|       |         |             |            | years     |           |
+-------+---------+-------------+------------+-----------+-----------+
| *     | Op      | Operating   | Operating  | Operating | Operating |
| *Comp | erating | plan is     | plan is    | plan is   | plan is   |
| leten | plan    | complete,   | complete,  | missing   | missing   |
| ess** | in      | including:  | including: | no key    | some key  |
|       | cludes: |             |            | co        | co        |
|       |         | \- More     | \- 20-year | mponents, | mponents, |
|       | \- More | than 5      | cash flow  | i.e.:     | i.e.:     |
|       | than 5  | years of    |            |           |           |
|       | years   | historical  | \- 5 years | \- 3      | \- No     |
|       | of      | data        | of         | years or  | cash flow |
|       | his     |             | historical | less of   |           |
|       | torical | \- 20-year  | data       | h         | \- No     |
|       | data    | cash flow   |            | istorical | h         |
|       |         |             | \- Key     | data      | istorical |
|       | \-      | \- Key      | a          |           | data      |
|       | 20-year | assumptions | ssumptions | \-        |           |
|       | cash    | identified  | identified | 20-year   |           |
|       | flow    |             |            | cash flow |           |
|       |         | \- Moderate | \- Missing |           |           |
|       | \- Key  | level of    | some       | \-        |           |
|       | assu    | detail      | e          | Missing   |           |
|       | mptions |             | xplanatory | key       |           |
|       | ide     | -           | detail     | as        |           |
|       | ntified | Sensitivity |            | sumptions |           |
|       |         | Analysis    |            |           |           |
|       | \-      |             |            |           |           |
|       | Ex      |             |            |           |           |
|       | tensive |             |            |           |           |
|       | level   |             |            |           |           |
|       | of      |             |            |           |           |
|       | detail  |             |            |           |           |
|       |         |             |            |           |           |
|       | \-      |             |            |           |           |
|       | Ex      |             |            |           |           |
|       | tensive |             |            |           |           |
|       | Sens    |             |            |           |           |
|       | itivity |             |            |           |           |
|       | A       |             |            |           |           |
|       | nalysis |             |            |           |           |
+-------+---------+-------------+------------+-----------+-----------+
| **    | For     | For final   | For final  | For final | For final |
| Commi | final   | design -    | design --  | design -  | design -  |
| tment | d       | Over 75% of | Over 50%   | Sponsor   | Sponsor   |
| of    | esign - | the funds   | of the     | has       | has not   |
| O&M   | 100% of | needed to   | funds      | i         | yet       |
| Fu    | the     | operate and | needed to  | dentified | received  |
| nds** | funds   | maintain    | operate    | r         | any       |
|       | needed  | the         | and        | easonable | funding   |
|       | to      | proposed    | maintain   | potential | co        |
|       | operate | transit     | the        | funding   | mmitments |
|       | and     | project are | proposed   | sources,  | to fund   |
|       | m       | committed   | transit    | but has   | transit   |
|       | aintain | or          | system are | received  | o         |
|       | the     | budgeted.   | committed  | less than | perations |
|       | p       |             | or         | 50%       | and       |
|       | roposed | For PE -    | budgeted.  | co        | ma        |
|       | transit | Over 50% of |            | mmitments | intenance |
|       | project | the funds   | For PE --  | to fund   | and has   |
|       | are     | needed to   | While no   | transit   | not       |
|       | co      | operate and | additional | o         | i         |
|       | mmitted | maintain    | O&M        | perations | dentified |
|       | or      | the         | funding    | and       | any       |
|       | bu      | proposed    | has been   | mai       | r         |
|       | dgeted. | transit     | committed, | ntenance. | easonable |
|       |         | system are  | a          |           | plan for  |
|       | For PE  | committed   | reasonable | For PE -  | securing  |
|       | -- Over | or          | plan to    | Sponsor   | funding   |
|       | 75% of  | budgeted.   | secure     | does not  | com       |
|       | the     | The         | funding    | have a    | mitments. |
|       | funds   | remaining   | c          | r         |           |
|       | needed  | funds are   | ommitments | easonable | For PE -  |
|       | to      | planned.    | has been   | plan to   | Sponsor   |
|       | operate |             | presented. | secure    | has not   |
|       | and     |             |            | O&M       | i         |
|       | m       |             |            | funding.  | dentified |
|       | aintain |             |            | No        | any       |
|       | the     |             |            | un        | r         |
|       | p       |             |            | specified | easonable |
|       | roposed |             |            | sources.  | funding   |
|       | transit |             |            |           | sources   |
|       | system  |             |            |           | for the   |
|       | are     |             |            |           | operation |
|       | co      |             |            |           | and       |
|       | mmitted |             |            |           | ma        |
|       | or      |             |            |           | intenance |
|       | bu      |             |            |           | of the    |
|       | dgeted. |             |            |           | proposed  |
|       | The     |             |            |           | project.  |
|       | re      |             |            |           |           |
|       | maining |             |            |           |           |
|       | funds   |             |            |           |           |
|       | are     |             |            |           |           |
|       | p       |             |            |           |           |
|       | lanned. |             |            |           |           |
+-------+---------+-------------+------------+-----------+-----------+
| **O&M | \-      | \-          | \-         | \-        | \-        |
| Fu    | Pr      | Projected   | Projected  | Projected | Projected |
| nding | ojected | cash        | cash       | cash      | cash      |
| Capac | cash    | balances,   | balances,  | balances, | balances  |
| ity** | ba      | reserve     | reserve    | reserve   | are       |
|       | lances, | accounts or | accounts   | accounts  | ins       |
|       | reserve | access to   | or access  | or access | ufficient |
|       | a       | line of     | to line of | to line   | to        |
|       | ccounts | credit      | credit     | of credit | maintain  |
|       | or      | exceeding   | exceeding  | are less  | balanced  |
|       | access  | 25 percent  | 12 percent | than 8    | budgets.  |
|       | to line | (3 months)  | (1.5       | percent   |           |
|       | of      | of annual   | months) of | (1 month) |           |
|       | credit  | operating   | annual     | of annual |           |
|       | ex      | expenses.   | operating  | operating |           |
|       | ceeding |             | expenses.  | expenses. |           |
|       | 50      |             |            |           |           |
|       | percent |             |            |           |           |
|       | (6      |             |            |           |           |
|       | months) |             |            |           |           |
|       | of      |             |            |           |           |
|       | annual  |             |            |           |           |
|       | op      |             |            |           |           |
|       | erating |             |            |           |           |
|       | ex      |             |            |           |           |
|       | penses. |             |            |           |           |
+-------+---------+-------------+------------+-----------+-----------+
| *     | The     | The         | The        | The       | The       |
| *Oper | assu    | assumptions | a          | as        | as        |
| ating | mptions | supporting  | ssumptions | sumptions | sumptions |
| Pla   | sup     | the         | supporting | s         | s         |
| nning | porting | operating   | the        | upporting | upporting |
| Ass   | the     | and         | operating  | the       | the       |
| umpti | op      | maintenance | and        | operating | operating |
| ons** | erating | cost        | m          | and       | and       |
|       | and     | estimates   | aintenance | ma        | ma        |
|       | main    | and revenue | cost       | intenance | intenance |
|       | tenance | forecasts   | estimates  | cost      | cost      |
|       | cost    | are         | and        | estimates | estimates |
|       | es      | c           | revenue    | and       | and       |
|       | timates | onservative | forecasts  | revenue   | revenue   |
|       | and     | relative to | are        | forecasts | forecasts |
|       | revenue | historical  | consistent | are       | are far   |
|       | fo      | experience. | with       | o         | more      |
|       | recasts |             | historical | ptimistic | o         |
|       | are     |             | e          | relative  | ptimistic |
|       | very    |             | xperience. | to        | than      |
|       | conse   |             |            | h         | h         |
|       | rvative |             |            | istorical | istorical |
|       | r       |             |            | ex        | e         |
|       | elative |             |            | perience. | xperience |
|       | to      |             |            |           | suggests  |
|       | his     |             |            |           | is        |
|       | torical |             |            |           | re        |
|       | expe    |             |            |           | asonable. |
|       | rience. |             |            |           |           |
+-------+---------+-------------+------------+-----------+-----------+

***III.B Local Financial Commitment Rating Decision Rules***

In addition to the non-Section 5309 New Starts program share, capital
and operating financial rating considerations and weights described
above, FTA uses the following decision rules to calculate the overall
local financial commitment rating.

-   If the Section 5309 New Starts share, which accounts for 20 percent
    of the local financial commitment rating, brings the overall local
    financial commitment rating to less than *Medium*, it will be
    excluded from the calculation. In other words, a New Starts share of
    less than 80 percent can improve the project's rating but it cannot
    hurt it. This rule was applied for the first time in FY 2007 in
    order to respond to direction in SAFETEA-LU that FTA evaluate the
    percent of the Section 5309 New Starts program share, as required by
    Section 5309(d)(4)(B)(v), while ensuring that no project is required
    to provide more than the required 20 percent match as provided in
    Section 5309(h)(5). If and how this rule is applied in future years
    will be subject to rulemaking.

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-   If either of a proposed project's capital or operating finance plan
    receives a *Medium‑Low* or *Low* rating, the summary local financial
    commitment rating for the project cannot be higher than a
    *Medium-Low*.

-   To receive a summary local financial commitment rating of
    *Medium-High*, both the capital and operating finance plans must be
    rated at least *Medium-High*.

**IV. RATINGS AND FUNDING RECOMMENDATIONS**

Section 5309(d)(1)(B)(ii) directs FTA to consider proposed New Starts
projects for Full Funding Grant Agreements (FFGA) and proposed Small
Starts for Project Construction Grant Agreements (PCGA), only if they
receive a *Medium, Medium-High*, or *High* overall project rating. (Note
that for the FY 2007 funding recommendations FTA did not use the
*Medium-High* overall rating; similarly, the FY 2008 evaluation cycle
contemplates only using *High* and *Medium* as a basis for funding
recommendations.) FTA notes, however, that project ratings are intended
only to reflect the worthiness of each project, not the readiness of a
project for an FFGA or PCGA.  A rating of *High* or *Medium* does not
translate directly into a funding recommendation in any given fiscal
year.  Proposed projects that are rated *High* or *Medium*, will be
eligible for multi-year funding recommendations in the Administration\'s
proposed budget [if]{.underline} other requirements have been met
(completion of the Federal environmental review process, demonstrated
technical capability to construct and operate the project, development
of a firm and final cost estimate and financial plan, etc.) and if
funding is available. In addition, notwithstanding their overall project
rating, as a general practice the Administration will target its funding
recommendations in FY 2008 and beyond to those proposed New Starts
projects able to achieve a *Medium* or higher rating for cost
effectiveness, unless the project has been exempt from this policy.

When determining annual funding allocations among proposed New Starts
and Small Starts, the following general principles are applied: 

-   Any project recommended for new funding commitments should meet the
    project justification, local financial commitment, and process
    criteria established by Sections 5309(d) and 5309(e) and be
    consistent with Executive Order 12893, *Principles for Federal
    Infrastructure Investments*, issued January 26, 1994.

-   Existing FFGA commitments should be honored before any additional
    funding recommendations are made, to the extent that funds can be
    obligated for these projects in the coming fiscal year.

-   The FFGA and PCGA define the terms of the Federal commitment to a
    specific project, including funding.  Upon completion of an FFGA or
    PCGA, the Federal funding commitment has been fulfilled.  Additional
    project funding will not be recommended.  Any additional costs
    beyond the scope of the Federal commitment are the responsibility of
    the grantee, although FTA works closely with grantees to identify
    and implement strategies for containing capital costs at the level
    included in the FFGA or PCGA at the time it was executed.

-   Funding for initial planning efforts such as alternatives analysis
    is no longer eligible for Section 5309 funding under SAFETEA-LU, but
    may be provided through grants under the Section 5303 Metropolitan
    Planning or Section 5307 Urbanized Area Formula programs; from Title
    23 "flexible funding" sources; or from the newly created Section
    5339 Alternatives Analysis program.

-   Firm funding commitments, embodied in FFGAs or PCGAs, will not be
    made until projects demonstrate that they are ready for such an
    agreement, i.e. the project's development and design has progressed
    to the point where its scope, costs, benefits, and impacts are
    considered firm and final.

-   Funding should be provided to the most worthy investments to allow
    them to proceed through the process on a reasonable schedule, to the
    extent that funds can be obligated to such projects in the upcoming
    fiscal year.  Funding decisions will be based on the results of the
    project evaluation process and resulting project justification,
    local financial commitment, and overall project ratings.

-   For the specific Small Starts projects identified in the FY 2008
    *Annual Report on Funding Recommendations*, those which have
    demonstrated an overmatch of the statutory 20 percent local share
    are proposed to be funded under a one-year PCGA. Projects proposing
    a 20 percent share of local funding are proposed to be funded
    through a PCGA that will cover at least two years. FTA encourages
    overmatch of both New Starts and Small Starts funding as a means of
    funding more projects and leveraging state, local, and other Federal
    financial resources.

Again, FTA emphasizes that project evaluation and rating is an on-going
process. As proposed New Starts and Small Starts projects proceed
through the project development process, information concerning costs,
benefits, and impacts is refined and the ratings may be updated to
reflect new information.