**Norfolk LRT**

**Norfolk, Virginia**

(November 2003)

# 

# Description 

Hampton Roads Transit (HRT) proposes to construct a 7.4-mile light rail
transit (LRT) line in the city of Norfolk that is intended to serve as
the initial segment of a regional LRT system. The project alignment
begins on the west at the Eastern Virginia Medical Center, moves
eastward in dedicated LRT in-street right-of-way through downtown
Norfolk to Norfolk State University, and continues along an existing
Norfolk Southern Railroad right-of-way generally paralleling I-264 to
the eastern terminus at Newtown Road. The project includes 11 stations
and construction of a new vehicle maintenance and storage facility.

Right-of-way and geographical constraints limit fixed guideway
alternatives that could be developed in the most heavily traveled
corridor in the Hampton Roads region, which continues through Virginia
Beach to the Atlantic Ocean. The Norfolk Southern Railroad alignment
offers the only feasible non-roadway alternative to improve mobility and
capacity in the corridor due to the intricacy of the regional
transportation system that includes waterway traversals. The proposed
Norfolk LRT is intended to: improve mobility, access, and transit
service reliability for area commuters; provide intermodal connections
between automobiles, buses and ferry services; expand and improve
transportation choices for corridor residents; improve reverse commute
options; enhance alternative transportation services for low-income
households; and support redevelopment and revitalization efforts and the
growth of tourism in Norfolk.

  ------------------------------------- ---------------------------------
  **Summary Description**               

  **Proposed Project:**                 Light Rail Transit

  ** **                                 7.4 Miles, 11 Stations

  **Total Capital Cost (\$YOE):**       \$198.5 Million

  **Section 5309 New Starts Share       \$94.6 Million (48%)
  (\$YOE):**                            

  **Annual Operating Cost (2021         \$9.2 Million
  \$YOE):**                             

  **Ridership Forecast (2021):**        10,500 Average Weekday Boardings

  ** **                                 4,000 Daily New Riders

  **Opening Year Ridership Forecast     10,400 Average Weekday Boardings
  (2008)**                              

  **FY 2005 Finance Rating:**           **Medium-High**

  **FY 2005 Project Justification       **Not Rated**
  Rating:**                             

  **FY 2005 Overall Project Rating:**   **Not Rated**
  ------------------------------------- ---------------------------------

The project has not been rated. Although FTA is reporting HRT's
ridership forecasts above, FTA has concerns about their validity and is
thus not evaluating the project's justification criteria. The absence of
a rating applies to this *Annual Report on New Starts* and reflects the
information available as of November 2003. Project cost estimates and
proposed New Starts share are developed by local project sponsors and
are not FTA assumptions. Project evaluation is an ongoing process. As
New Starts projects proceed through project development, estimates of
cost, benefits, schedules and impacts are refined. FTA's ratings and
recommendation will be updated annually to reflect new information,
changing conditions, and refined financing plans.

FTA will continue to work with HRT to improve its ability to more
accurately portray project benefits. Failure of HRT to generate reliable
information on the merits and impacts of the Norfolk LRT project may
result in its removal from preliminary engineering status.

# Status 

The currently proposed project evolved from the failure of a November
1999 Virginia Beach referendum to support the advancement of a planned
18-mile LRT project extending between the cities of Norfolk and Virginia
Beach. FTA approved this project for entry into preliminary engineering
in April 1997. The Draft Environmental Impact Statement (EIS) on the
project was completed in April 1999; a Final EIS was completed in March
2000. Having lost the support of Virginia Beach, the city of Norfolk and
the HRT Board decided to identify an LRT segment based on the original
alignment that would effectively and efficiently support the city's
plans for the future. FTA approved the abridged project to initiate
preliminary engineering in October 2002. In January 2003, HRT completed
a Supplemental EIS that examined several alignment options for a
Norfolk-only LRT system. Subsequently, the project was refined to
achieve additional cost savings and relocate the eastern terminus. HRT
is currently negotiating with Norfolk Southern Railroad to acquire the
abandoned right-of-way. HRT expects to complete the revised Final EIS in
February 2004 and receive a Record of Decision by March 2004. HRT
anticipates LRT start-up in summer 2008.

TEA-21 Section 3030(a)(58) authorized the Norfolk-Virginia Beach
Corridor for final design and construction. Through FY 2003, Congress
has appropriated \$10.91 million in Section 5309 New Starts funds for
this project.

# Evaluation 

The following criteria have been estimated in conformance with FTA's
*Reporting Instructions for the Section 5309 New Starts Criteria*,
updated in June 2003. The project will be re-evaluated, and the results
provided to Congress and other interested parties, when HRT has remedied
its travel forecasting problems. The project will also re-evaluated when
it is ready to advance into final design and for next year's *Annual
Report on New Starts.*

N/A indicates that information for this measure is not available.

# Project Justification 

**[Rating: Not-Rated]{.underline}**

This project is *Not Rated* for project justification because FTA could
not evaluate the benefits of the project. The project sponsor calculated
the project's cost effectiveness at \$24.47 per hour of transportation
system user benefit. However, FTA has concerns about the information
submitted for this measure. FTA will continue to work with HRT to
improve its travel demand projections.

Based on 2000 Census data, there are an estimated 1,800 low-income
households, approximately 24 percent of total households, within a
½-mile radius of proposed stations, and 53,770 jobs within a ½-mile
radius of proposed stations. The Norfolk-Virginia Beach-Newport News
(Hampton Roads) region is designated as in attainment for all air
quality criteria pollutants.

+---------------------------------------+---------------+--------------+
| **Project Justification Quantitative  |               |              |
| Criteria**                            |               |              |
+---------------------------------------+---------------+--------------+
| **Mobility Improvements Rating: Not   |               |              |
| Rated**                               |               |              |
+---------------------------------------+---------------+--------------+
| **Average Employment Per Station**    | **[New Start  |              |
|                                       | vs.           |              |
| **Average Low Income Households Per   | Baseline]{    |              |
| Station**                             | .underline}** |              |
|                                       |               |              |
| **Transportation System User Benefit  | 5,650         |              |
| Per Project Passenger Mile            |               |              |
| (Minutes)**                           | 164           |              |
|                                       |               |              |
|                                       | N/A           |              |
+---------------------------------------+---------------+--------------+
| **Environmental Benefits Rating:      |               |              |
| Medium**                              |               |              |
+---------------------------------------+---------------+--------------+
| **[Criteria Pollutant                 | **[New Start  |              |
| Reduced]{.underline} (tons)**         | vs.           |              |
|                                       | Baseline]{    |              |
| **Carbon Monoxide (CO)**              | .underline}** |              |
|                                       |               |              |
| **Nitrogen Oxide (NO~x~)**            | N/A           |              |
|                                       |               |              |
| **Volatile Organic Compounds**        | N/A           |              |
|                                       |               |              |
| **Particulate Matter (PM~10~)**       | N/A           |              |
|                                       |               |              |
| **Carbon Dioxide (CO~2~)**            | N/A           |              |
|                                       |               |              |
| **[Annual Energy Savings]{.underline} | N/A           |              |
| (millions of BTU)**                   |               |              |
|                                       | N/A           |              |
+---------------------------------------+---------------+--------------+
| **Cost Effectiveness Rating: Not      |               |              |
| Rated**                               |               |              |
+---------------------------------------+---------------+--------------+
| **Cost per Transportation System User | **[New Start  |              |
| Benefit**                             | vs.           |              |
|                                       | Baseline]{    |              |
| **(current year dollars/hour)**       | .underline}** |              |
|                                       |               |              |
|                                       | N/A           |              |
+---------------------------------------+---------------+--------------+
| **Operating Efficiencies Rating: Not  |               |              |
| Rated**                               |               |              |
+---------------------------------------+---------------+--------------+
| **System Operating Cost per**         | >             | **[New       |
|                                       | **[Baseline]{ | Start]{.     |
| **Passenger Mile (current year        | .underline}** | underline}** |
| dollars)**                            | >             |              |
|                                       | > N/A         | N/A          |
+---------------------------------------+---------------+--------------+

######## 

# Existing Land Use, Transit-Supportive Land Use Policies and Future Patterns 

# [Rating: Medium]{.underline} 

The *Medium* land use rating reflects the aggressive redevelopment
efforts of the city to create a mixed-use, pedestrian-scaled environment
despite relatively low CBD and corridor population and employment
densities.

**Existing Conditions:** Total employment and population in station
areas are relatively low; CBD employment is 31,600 and population
density averages 4,200 persons per square mile.  Most stations would
serve neighborhoods comprised of both multi-family and single-family
pedestrian-accessible housing within a ½-mile radius at typical
densities of 10 to 12 units per acre.  The Norfolk CBD is small but
relatively dense and pedestrian accessible.  Streetscape initiatives
have recently been undertaken in conjunction with redevelopment projects
in transit station areas.  Parking supply is somewhat limited in the
core area, but not for the CBD as a whole.  Other high trip generators
include the Eastern Virginia Medical Center, Norfolk State University
(6,600 students), MacArthur Center shopping mall, the Harbor Park minor
league baseball stadium, and Tidewater Community College (1,500
students).  Commercial development at the easternmost stations on the
alignment is auto-oriented in nature.

**Future Plans, Policies, and Performance:** The city of Norfolk has
undertaken some significant activities that are supportive of
transit-oriented development and urban redevelopment.  Norfolk has
recently revised zoning in station areas and other areas of downtown to
facilitate higher-intensity commercial, residential, and/or mixed-use
development.  A number of multi-family, urban residential developments
adjacent to the CBD in the waterfront area can be categorized as
recently completed, under construction, or proposed. The MacArthur
Center shopping mall is an example of a recent major downtown
redevelopment project that has been successfully integrated into the
pedestrian streetscape. Two major neighborhood revitalization projects
are underway in station areas east of the CBD.  Master planning has been
undertaken for the redevelopment of the so-called "Atlantic City" area
on the waterfront west of the CBD; this area would be redeveloped with
three- to five-story mixed-use, urban-style buildings on a street grid.
On a regional scale, relatively restrictive land conservation and growth
limitation policies are in effect in a number of jurisdictions, and
these policies have been noted as a barrier to suburban growth in some
areas.

# Local Financial Commitment 

# [Rating: Medium-High]{.underline} 

The *Medium-High* local financial commitment rating was determined by
the large non-New Starts share of costs, the thoroughness of the project
financial plan, and the sound financial condition of HRT and its funding
partners.

# Proposed Non-Section 5309 New Starts Share of Total Project Costs: 52% 

# [Rating: Medium-High]{.underline}

HRT plans to use Section 5309 New Starts funds to cover less than 48
percent of project capital costs. Federal Surface Transportation Program
(STP) funds, State Transportation Trust Funds, general appropriation
funds, and city of Norfolk bonds are also proposed to construct the
project.

+-------------------------+--------------------+----------------------+
| **Locally Proposed      |                    |                      |
| Financial Plan**        |                    |                      |
+-------------------------+--------------------+----------------------+
| **[Proposed Source of   | **[Total Funding   | **[Percent of        |
| Funds]{.underline}**    | (\$milli           | Total]{.underline}** |
|                         | on)]{.underline}** |                      |
+-------------------------+--------------------+----------------------+
| **Federal:**            | \$94.6             | 47.7 %               |
|                         |                    |                      |
| Section 5309 New Starts | \$12.0             | 6.0 %                |
|                         |                    |                      |
| Flexible Funding        | \$3.0              | 1.5 %                |
| (Statewide STP)         |                    |                      |
|                         |                    |                      |
| Flexible Funding        |                    |                      |
| (Regional STP)          |                    |                      |
+-------------------------+--------------------+----------------------+
| **State:**              | \$41.7             | 21.0 %               |
|                         |                    |                      |
| Transportation Trust    | \$1.2              | 0.6 %                |
| Fund                    |                    |                      |
|                         | \$45.9             | 23.1 %               |
| General Assembly Funds  |                    |                      |
|                         |                    |                      |
| **Local:**              |                    |                      |
|                         |                    |                      |
| City of Norfolk General |                    |                      |
| Obligation Bonds        |                    |                      |
+-------------------------+--------------------+----------------------+
| **Total:**              | **\$198.5**        | 100.0 %              |
+-------------------------+--------------------+----------------------+

**NOTE:** Funding statements reflected in this table have been made by
project sponsors and are not DOT or FTA assumptions. Sum of figures may
differ from total as listed due to rounding.

######## 

####### Stability and Reliability of Capital Financing Plan

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

The capital financing plan is rated *Medium-High* because it is thorough
and uses conservative assumptions, and the financial condition of local
funding partners is good.

**Agency Capital Financial Condition:** The capital financial condition
of HRT is good. The average age of the bus fleet is 7.2 years, which is
just above the national average. A major funding partner is the city of
Norfolk, which is committed to the project and has the capacity to issue
additional bonds in the event of revenue shortfalls/cost increases. The
city has received ratings of AAA from Fitch and Standard and Poor's,
respectively, and a rating of Aaa from Moody's, based on insured bond
issues.

**Capital Cost Estimate and Contingencies:** The Norfolk LRT capital
cost estimate decreased from \$222 million to \$198.5 million due to a
½-mile alignment reduction, the relocation of the eastern terminus
station from Kempsville Road at the Barry Robinson Center to Newtown
Road within the existing railroad right-of-way; the reduction or
elimination of several facility elements due to the shortening of the
line; and the modification of other components resulting from continuing
alignment and design refinements. The capital cost has been developed
based on an October 2002 preliminary engineering cost estimate that was
supplemented in August 2003 to reflect the project refinements aimed at
reducing the overall project cost. The capital plan projects balanced
budgets through the 20-year analysis period. No cash reserves are
projected in the plan. The city of Norfolk appears committed to
providing financial support to the project, and in the event of funding
shortfalls/cost increases, the city could issue additional bonds. The
city's debt capacity is estimated at about \$471.5 million, which is
double the project cost. The financial plan makes a reasonable case that
the city would be in a position to accommodate moderate cost overruns
and has demonstrated its historical ability to do so.

Existing and Committed Funding: The only committed non-New Starts
funding source is the Virginia General Assembly funds, which comprise
0.6 percent of the project's costs.

**New and Proposed Funding Sources:** Almost 99 percent of the non-New
Starts funds are either planned or budgeted. The capital plan proposes
that the Commonwealth of Virginia provide 50 percent of the non-Section
5309 New Starts funding through Virginia DOT's Transportation Trust
Fund, General Assembly Funds, and the State match to FHWA STP funding.
Local funds will account for the remaining non-New Starts funding and be
provided by the city of Norfolk through debt financing; these are
considered planned. According to the financial plan, the city has
adequate debt capacity to issue general obligation bonds without a
referendum, but the city is considering issuing revenue bonds instead.

# Stability and Reliability of Operating Finance Plan 

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

The *Medium-High* rating reflects HRT's good operating condition and
sufficient operating revenues.

**Agency Operating Financial Condition:** The operating financial
condition of HRT is good. There are no operating shortfalls. Over the
past ten years, 1993 to 2003, revenue vehicle hours grew at a rate of 33
percent for an average rate of 2.9 percent growth per year. The current
operating ratio is 1.20, which is good. Service levels declined between
2001 and 2002; however the plan indicates that this was due to an
unusually high level of demonstration service in 2001.

**Operating Cost Estimates and Contingencies:** The Norfolk LRT
project's operating costs are projected at seven percent of systemwide
operating costs. The project's operating costs were estimated using a
cost allocation model that includes typical and reasonable cost drivers
and is based on actual operating experience of new light rail systems.
The plan projects that annual operating costs for all HRT transit
services will increase at an average rate of three percent, except for
operating costs in FY 2008 and 2009, which are projected to increase by
6.0 and 13.9 percent as a result of the Norfolk LRT opening. Overall,
the planning assumptions on revenue projections and operating costs are
reasonable and in line with historical values.

Existing and Committed Funding: Almost 55 percent of operating sources
are committed and come from existing revenue sources. These sources
include existing passenger revenues, city assistance funding, and other
agency revenues, which account for 24.2 percent, 27.1 percent, and 3.7
percent of operating funding respectively in the first full year of
operation.

New and Proposed Funding Sources: Federal and State funding sources are
considered planned but come from existing sources. In the first full
year of operation, these funding sources include Section 5307 funds,
CMAQ funds, and Commonwealth of Virginia funds. The only new proposed
funding source is the LRT fare revenue.

MAP