**Long Island Rail Road East Side Access**

**New York, New York**

(November 2005)

The Metropolitan Transportation Authority (MTA) and the Long Island Rail
Road (LIRR) are proposing to construct a new direct 3.5-mile commuter
rail extension from LIRR's Main and Port Washington Branch Lines in Long
Island and Queens, to Grand Central Terminal (GCT) on Manhattan's East
Side. The project includes the construction of a new station in the
Sunnyside area of Queens, and new tunnels beneath Sunnyside Yard
connecting to the currently unused lower level of the 63^rd^ Street
Tunnel beneath the East River. In Manhattan, the project would continue
west beneath 63^rd^ Street and towards Park Avenue under the Lexington
Avenue subway, turning south beneath the existing MTA-Metro North
Railroad tracks under Park Avenue to a new LIRR passenger concourse in
the lower level of GCT. At GCT, the project would provide new tracks,
platforms, entrances, waiting areas, ticket windows, and other services.

The current highway system and East River crossings (bridges and
tunnels) to Manhattan from Nassau/Suffolk (and parts of eastern Queens)
are at capacity and subject to severe congestion and long delays.
Expansion of the highway network is not feasible due to lack of
available rights-of-way, high costs, and potentially adverse
environmental impacts in a "severe" non-attainment area for ozone. The
LIRR operates at capacity in this area with peak service of 37 trains
per hour into its only Manhattan terminal at Penn Station. Nearly half
of LIRR's 106,000 existing daily riders have destinations on Manhattan's
East Side, and currently spend approximately 20 minutes "doubling back"
from Penn Station on the island's West Side. Without the project, future
LIRR trains to Penn Station will be severely congested, and are
projected to operate at 27 percent over their passenger-carrying
capacity. This level of crowding and discomfort would discourage or
prevent new riders from using the LIRR to reach Manhattan. By
redirecting trains to GCT, this congestion would be relieved and added
capacity for Amtrak and New Jersey Transit service would be created at
Penn Station.

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Commuter Rail Extension         |
+------------------------------------+---------------------------------+
| ** **                              | 3.5 Miles                       |
|                                    |                                 |
|                                    | 2 Stations                      |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$7,779.3 Million (includes     |
|                                    | \$1.47 billion in finance       |
|                                    | charges)                        |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$2,632.1 Million (33.8%)       |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Forecast Year Operating   | \$348.0 Million                 |
| Cost:**                            |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2030):**     | 171,900 Average Weekday         |
|                                    | Boardings                       |
+------------------------------------+---------------------------------+
| ** **                              | 27,300 Daily New Riders         |
+------------------------------------+---------------------------------+
| **Opening Year Ridership Forecast  | 166,300 Average Weekday         |
| (2012):**                          | Boardings                       |
+------------------------------------+---------------------------------+
| **FY 2007 Finance Rating:**        | # Medium                        |
+------------------------------------+---------------------------------+
| **FY 2007 Project Justification    | **Medium-High**                 |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2007 Overall Project          | **Medium**                      |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

FTA notes that MTA/LIRR's New Starts funding request of \$2.63 billion
is higher than what has historically been provided by FTA to other major
transit capital investment projects, but the New Starts share (less than
34%) is significantly lower. FTA expects to execute a Full Funding Grant
Agreement (FFGA) for the Long Island Rail Road East Side Access project
in FY 2006.

**Project Development History and Current Status**

MTA/LIRR completed a major investment study for the project corridor in
April 1998. FTA approved MTA/LIRR's request to advance the project into
preliminary engineering in September 1998. A Draft Environmental Impact
Statement (EIS) was completed in May 2000; a Final EIS was completed in
March 2001; and an environmental Record of Decision was issued by FTA in
May 2001. FTA approved the project into final design in February 2002.
The project was recommended for an FFGA in the FY 2005 and 2006
President's Budgets. Execution of the FFGA was delayed because the MTA's
2005-2009 capital program did not include expected revenues for the
project. MTA and State budget officials are currently solidifying
financing strategies to implement the project, including the use of
recently approved bond revenues.

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

In June 2005, MTA provided a revised set of travel forecasts reflecting
a 2030 forecast year and updated population and employment assumptions
for the New York City area. Project finance costs increased by \$40
million since last year. In early November 2005, New York voters
approved a statewide bond referendum that will provide an additional
\$450 million in funding to the project.

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

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

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

The *Medium* cost effectiveness rating reflects the level of travel-time
benefits (106,200 hours each weekday) relative to the project's
annualized costs. The estimate of both costs and benefits of the project
at this stage of development is considered reliable.

+------------------------------------------+---------------------------+
| **Cost Effectiveness**                   |                           |
+------------------------------------------+---------------------------+
| Cost per Hour of Transportation System   | **[New Start vs.          |
| User Benefit                             | Baseline]{.underline}**   |
|                                          |                           |
| Incremental Cost per Incremental Trip    | \$18.43\*                 |
|                                          |                           |
|                                          | \$36.22                   |
+------------------------------------------+---------------------------+

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

The East Side Access project would increase LIRR's tunnel capacity
across the East River by 50 percent and shorten daily travel time for
84,000 LIRR riders destined for Manhattan's East Side by an estimated 40
minutes per passenger. The redistribution of ridership from Penn Station
to LIRR's new service at GCT would significantly improve travel
throughout the LIRR network. LIRR would be able to expand peak hour
service to Manhattan from 37 trains to a projected 61 trains (a 40
percent increase), with 24 peak hour trains serving GCT. Approximately
70 percent of daily travel-time benefits would result from LIRR riders
no longer traveling in overcrowded conditions between parts of Queens,
all of Nassau and Suffolk counties, and Manhattan. The remaining travel
time benefits are experienced by LIRR riders who will no longer have to
retrace their route to reach destinations on Manhattan's East Side near
GCT, and those who encounter less crowded conditions at Penn Station on
Manhattan's West Side.

The project has been sufficiently developed to the point that the
definition of the scope is firm. However, since several critical path
items (award of Manhattan and Queens tunnel excavation contracts and an
executed Amtrak operating agreement) did not occur as planned, the
current schedule for revenue operations (2012) is being reevaluated.
Inflation assumptions for capital costs should also be reexamined. FTA
is working with MTA to update the project's risk analysis/risk
mitigation program to manage the technical work and reduce project
uncertainties.

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

The *High* land use rating is based upon the *High* ratings assigned to
all of the subfactors as summarized below.

**Existing Land Use: High**

-   The Grand Central Terminal is located in a uniquely high-intensity
    setting where transit and walking are the dominant modes of
    transportation. Nearly 660,000 employees work within ½ mile of the
    station, and over 50,000 people reside within this same area.

-   Land use in the Sunnyside station area is currently industrial,
    although the Queens Plaza transportation hub, directly to the north
    of the yard, has a station serving six subway lines, and thus
    generates substantial pedestrian activity. Redevelopment of the
    areas northwest and south of the railroad complex is underway. Over
    25,000 employees currently work in the Sunnyside station area, which
    houses a residential population of 9,300.

-   The character of development is highly pedestrian-oriented in the
    GCT station area. While existing land use at the site of the
    proposed Sunnyside station area does not currently create an
    attractive pedestrian environment, there is significant pedestrian
    traffic in the area due to the presence of several subway
    connections at Queens Plaza and pockets of redevelopment to the
    northwest (Court Square) and south of the railroad complex.

-   New York City discourages parking in the central business district
    (CBD) by leveraging an 18 percent tax on off-street parking in
    Manhattan. Off-street parking is available in the GCT area, but
    parking costs are extremely high, typically upwards of \$25 per day.

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

-   Building density on the East Side of Midtown Manhattan near the GCT
    area is exceptionally high, and city policies encourage neighborhood
    preservation, the continued concentration of activity in the area,
    and investment in pedestrian facilities. An increase of 70,000
    workers and 7,000 residents is projected in the GCT area by 2025.

-   New York City plans to create a new central business district within
    the Sunnyside station area by promoting intensification of office,
    residential, and institutional development. Zoning revisions have
    recently been adopted to implement these plans. It is anticipated
    that the dense urban environment combining industrial, commercial,
    institutional, and residential uses that will be created will be
    more typical of transit-oriented development than the existing,
    predominantly industrial, landscape. Employment in the Sunnyside
    station area is projected to grow by 3,500, while population is
    estimated to increase by 1,200 by 2025.

-   New York City's development plan for the Sunnyside area includes
    four million additional square feet of office space within walking
    distance of the proposed station.

-   Policies in New York City, Nassau County and Suffolk County support
    the concentration of new development in existing centers.

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

-   Several examples of transit- and pedestrian-friendly improvements
    implemented in conjunction with new private development illustrate
    the effectiveness of city land use policies. A 45-story Bear Stearns
    headquarters building is nearing completion along Madison Avenue and
    will include ground floor retail uses and escalators leading to
    cross passageways serving the platforms at GCT. A major insurance
    company, Met Life, has moved its corporate headquarters to the
    Sunnyside station area at Queens Plaza North and is building an
    adjacent tower.

-   Recent zoning changes have resulted in development of a new
    commercial hub proposal between the Queens Plaza subway station
    adjacent to the proposed Sunnyside station and the Court Square
    office district.

***Other Project Justification Criteria***

+------------------------------------------+--------------+------------+
| **Mobility Improvements Rating: High**   |              |            |
+------------------------------------------+--------------+------------+
| **[Within ½-mile radius of boarding      | 697,700      |            |
| areas]{.underline}:**                    |              |            |
|                                          | 828,600      |            |
| Existing Employment                      |              |            |
|                                          | 3,130 (8%)   |            |
| Projected Employment (2030)              |              |            |
|                                          | 348,900\*    |            |
| Low Income Households (% of total HH)    |              |            |
|                                          | 1,600\*      |            |
| **[Average Per Station]{.underline}:**   |              |            |
|                                          | **[New Start |            |
| Employment                               | vs.          |            |
|                                          | Baseline]{.  |            |
| Low Income Households                    | underline}** |            |
|                                          |              |            |
| **Transportation System User Benefit Per | 11.05\*      |            |
| Project Passenger Mile (Minutes)**       |              |            |
+------------------------------------------+--------------+------------+
| **Environmental Benefits Rating: High**  |              |            |
+------------------------------------------+--------------+------------+
| **[Criteria Pollutant (Reduction in      | **[New Start |            |
| tons)]{.underline}**                     | vs.          |            |
|                                          | Baseline]{.  |            |
| > Carbon Monoxide (CO)                   | underline}** |            |
| >                                        |              |            |
| > Nitrogen Oxide (NO~x~)                 | 1,470        |            |
| >                                        |              |            |
| > Volatile Organic Compounds (VOC)       | 40           |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | 30           |            |
| >                                        |              |            |
| > Carbon Dioxide (CO~2~)                 | 30           |            |
|                                          |              |            |
| **[Criteria Pollutant                    | 36,900       |            |
| Status]{.underline}**                    |              |            |
|                                          | **[EPA       |            |
| > Carbon Monoxide (CO)                   | De           |            |
| >                                        | signation]{. |            |
| > 8-Hour Ozone (O~3~)                    | underline}** |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | Maintenance  |            |
| >                                        | Area\*       |            |
| > Particulate Matter (PM~2.5~)           |              |            |
|                                          | Moderate     |            |
| **Annual Energy Savings (million British | No           |            |
| Thermal Units)**                         | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | Moderate     |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | 418,800      |            |
+------------------------------------------+--------------+------------+
| **Operating Efficiencies Rating:         |              |            |
| Medium**                                 |              |            |
+------------------------------------------+--------------+------------+
| **System Operating Cost per**            | > **         | **[New     |
|                                          | [Baseline]{. | Start]{.un |
| **Passenger Mile (current year           | underline}** | derline}** |
| dollars)**                               | >            |            |
|                                          | > \$0.295\*  | \$0.299\*  |
+------------------------------------------+--------------+------------+

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

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

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

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

####### *Section 5309 New Starts Share of Total Project Costs: 34%* 

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

MTA/LIRR is requesting a 34 percent New Starts share of total project
costs, which results in a *High* rating for this measure.

+-------------------------+-----------------------+--------------------+
| **Locally Proposed      |                       |                    |
| Financial Plan**        |                       |                    |
+-------------------------+-----------------------+--------------------+
| **[Source of            | **[Total Funds        | **[Percent of      |
| Funds]{.underline}**    | (\$mi                 | To                 |
|                         | llion)]{.underline}** | tal]{.underline}** |
+-------------------------+-----------------------+--------------------+
| **Federal:**            | \$2,632.1             | 33.8%              |
|                         |                       |                    |
| Section 5309 New Starts | \$11.2                | 0.1%               |
|                         |                       |                    |
| Flexible Funds (CMAQ)   | \$28.2                | 0.4%               |
|                         |                       |                    |
| Other Federal           |                       |                    |
+-------------------------+-----------------------+--------------------+
| **State:**              | \$450.0               | 5.8%               |
|                         |                       |                    |
| State Transportation    |                       |                    |
| Bond                    |                       |                    |
|                         |                       |                    |
| Act of 2005             |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Local:**              | \$3,184.2             | 40.9%              |
|                         |                       |                    |
| MTA Dedicated Sources   | \$1,473.6             | 18.9%              |
| (bonds, surplus toll    |                       |                    |
| revenues, etc.)         |                       |                    |
|                         |                       |                    |
| MTA Operating Budget    |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Total:**              | **\$7,779.3**         | 100.0%             |
+-------------------------+-----------------------+--------------------+

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

# *Capital Finance Plan Rating: Medium* 

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

#### Agency Capital Condition: Medium 

-   The average age of MTA's bus fleet is 6.1 years, which is near the
    industry average. The average age of the MTA's rail fleet is 19.8
    years for New York City Transit and 19.9 years and 19.0 years for
    the LIRR and Metro-North Railroad, respectively.

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

#### Completeness of Capital Plan: Medium 

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

#### Commitment of Capital Funds: Medium

-   Approximately 62 percent of non-New Starts funding is committed or
    budgeted. Primary funding sources include bond proceeds, State and
    local capital support, and other dedicated tax revenues.

#### Capital Funding Capacity: Medium-Low

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

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

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

### There is concern about maintaining the project schedule, which would likely have an effect on the capital cost estimate. 

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

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

#### Agency Operating Condition: Medium-Low

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

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

#### Completeness of Operating Plan: Medium

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

#### Commitment of Operating Funds: High

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

#### Operating Funding Capacity: Medium-Low

-   The financial plan does not show cash balances or reserve accounts
    because MTA is required to operate under a balanced budget by
    statute. Consequently, MTA's financial plan indicates that operating
    sources will be equal to operating uses for the period 2005--2024.
    MTA has access to short-term credit exceeding 8 percent of annual
    operating expenses.

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

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

> []{.mark}

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