**Central Subway**

**San Francisco, California**

(November 2004)

The San Francisco Municipal Railway (Muni) and the San Francisco County
Transportation Authority (SFCTA) are planning the Central Subway
project, a 1.7-mile extension of the Third Street light rail transit
(LRT) line (currently under construction) from its termini at Fourth and
King Streets, north under Market Street and into Chinatown. Five
stations would be constructed along the Central Subway alignment and
four light rail vehicles would be purchased to augment the existing
fleet. The current Third Street LRT project extends 5.4 miles south from
Fourth and King Streets along Third Street and Mission Bay Boulevard to
the Bayshore Caltrain Station in Visitacion Valley. Taken together, the
Third Street LRT, scheduled to open in December 2005, and the Central
Subway project would provide a continuous 7.1-mile light rail system
serving the heavily transit-dependent communities of Bayshore and
Chinatown.

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

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Light Rail Transit              |
+------------------------------------+---------------------------------+
| ** **                              | 1.7 Miles                       |
|                                    |                                 |
|                                    | 5 Stations                      |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$994.4 Million (\$1,594.4      |
|                                    | Million of combined             |
+------------------------------------+---------------------------------+
|                                    | Central Subway and Third Street |
|                                    | LRT)                            |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$762.2 Million (76.6%; 47.8%   |
| (\$YOE):**                         | of combined projects)           |
+------------------------------------+---------------------------------+
| **Annual Forecast Year Operating   | \$24.6 Million                  |
| Cost:**                            |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast 2025:**       | 61,000 Average Weekday          |
|                                    | Boardings                       |
+------------------------------------+---------------------------------+
| ** **                              | 20,500 Daily New Riders         |
+------------------------------------+---------------------------------+
| **FY 2006 Finance Rating:**        | # Medium                        |
+------------------------------------+---------------------------------+
| **FY 2006 Project Justification    | **Medium-High**                 |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2006 Overall Project          | **Recommended**                 |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

Division H of the Consolidated Appropriations Act, 2005, includes
language directing FTA to permit Muni to use local funding expended for
the construction of the Third Street LRT project as match for the
Central Subway. This action reduces the overall New Starts share from 77
percent for the Central Subway project alone to less than 48 percent of
the cost of the combined projects, and renders FTA's rating of the
project's proposed New Starts share as inapplicable.

**Project Development History and Current Status**

In October 1996, FTA authorized the initiation of preliminary
engineering and the preparation of a Draft Environmental Impact
Statement (EIS)/Draft Environmental Impact Report for both the Third
Street and Central Subway light rail lines. Muni is currently
constructing the Third Street light rail line project using local,
State, and non-New Starts Federal funding. In December of 2001, the
Metropolitan Transportation Commission (MTC, the region's metropolitan
planning organization) adopted the Central Subway project into the
region's financially constrained long-range plan as a priority for
future FTA funding. Because of the different schedules for the Third
Street light rail and the Central Subway, they are considered separate
projects. FTA approved the Central Subway project to advance into
preliminary engineering in July of 2002. Muni is currently examining
alternative alignments which would extend the environmental review
period and likely delay final design on the project until 2006.

**Significant Changes Since Last Evaluation** (**November 2003**)

The project capital cost has increased from \$763.9 million to \$994.4
million. Muni's financial plan has been updated to reflect the revised
cost. Additionally, Muni has refined the travel forecasts for the
project, which includes the incorporation of improved results from the
MTC's and San Francisco County Transportation Authority's travel demand
models, as well as special events forecasts for SBC Park

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

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

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

The *Medium-Low* cost effectiveness rating reflects a sufficient level
of travel-time benefits (9,700 hours each weekday) relative to the
project's annualized costs. Muni is considering some significant changes
to the project alignment and construction methodology, which places the
current cost effectiveness estimate at some risk.

+------------------------------------------+---------------------------+
| **Cost Effectiveness**                   |                           |
+------------------------------------------+---------------------------+
| Cost per Hour of Transportation System   | **[New Start vs.          |
| User Benefit                             | Baseline]{.underline}**   |
|                                          |                           |
| Incremental Cost per Incremental Trip    | \$22.45\*                 |
|                                          |                           |
|                                          | \$11.17                   |
+------------------------------------------+---------------------------+

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

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

The project's revised capital cost estimate reflects a 30 percent
increase in costs since last year. While the estimate is improved, some
uncertainties continue to exist. Muni is considering various horizontal
and vertical alignment options under 3^rd^ or 4^th^ Street, with either
a deep or shallow tunnel, which, if advanced, would result in a revised
estimate of project costs, ridership, travel time benefits, and cost
effectiveness.

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

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

**Existing Land Use: High**

-   Population density is approximately 35,300 people per square mile,
    and total employment in the corridor is over 250,000 jobs.

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

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

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

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

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

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

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

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

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

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

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

#### 

####  

####### Other Project Justification Criteria 

+------------------------------------------+--------------+------------+
| **Mobility Improvements Rating: High**   |              |            |
+------------------------------------------+--------------+------------+
| **[Within ½-mile radius of boarding      | 254,500      |            |
| areas]{.underline}:**                    |              |            |
|                                          | 268,700      |            |
| Existing Employment                      |              |            |
|                                          | 6,000 (18%)  |            |
| Projected Employment (2025)              |              |            |
|                                          | 50,900\*     |            |
| Low Income Households (% of total HH)    |              |            |
|                                          | 1,200\*      |            |
| **[Average Per Station]{.underline}:**   |              |            |
|                                          | **[New Start |            |
| Employment                               | vs.          |            |
|                                          | Baseline]{.  |            |
| Low Income Households                    | underline}** |            |
|                                          |              |            |
| **Transportation System User Benefit Per | 4.30\*       |            |
| Project Passenger Mile (Minutes)**       |              |            |
+------------------------------------------+--------------+------------+
| **Environmental Benefits Rating: High**  |              |            |
+------------------------------------------+--------------+------------+
| **[Criteria Pollutant (Reduction in      | **[New Start |            |
| tons)]{.underline}**                     | vs.          |            |
|                                          | Baseline]{.  |            |
| > Carbon Monoxide (CO)                   | underline}** |            |
| >                                        |              |            |
| > Nitrogen Oxide (NO~x~)                 | 1            |            |
| >                                        |              |            |
| > Volatile Organic Compounds (VOC)       | 9            |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | 3            |            |
| >                                        |              |            |
| > Carbon Dioxide (CO~2~)                 | 0            |            |
|                                          |              |            |
| **[Criteria Pollutant                    | 429          |            |
| Status]{.underline}**                    |              |            |
|                                          | **[EPA       |            |
| > Carbon Monoxide                        | De           |            |
| >                                        | signation]{. |            |
| > 1-Hour Ozone (O~3~)                    | underline}** |            |
| >                                        |              |            |
| > 8-Hour Ozone                           | Maintenance  |            |
|                                          | Area\*       |            |
| **Annual Energy Savings (million British |              |            |
| Thermal Units)**                         | Other \*     |            |
|                                          |              |            |
|                                          | Marginal     |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | 4,079        |            |
+------------------------------------------+--------------+------------+
| **Operating Efficiencies Rating:         |              |            |
| Medium**                                 |              |            |
+------------------------------------------+--------------+------------+
| **System Operating Cost per**            | > **         | **[New     |
|                                          | [Baseline]{. | Start]{.un |
| **Passenger Mile (current year           | underline}** | derline}** |
| dollars)**                               | >            |            |
|                                          | > \$0.736\*  | \$0.753\*  |
+------------------------------------------+--------------+------------+

\* 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* rating is based upon the *Medium* ratings assigned to both
the capital and operating financial plans.

####### *Section 5309 New Starts Share of Total Project Costs: 77%* 

####### *Rating: Not Applicable*

Division H of the Consolidated Appropriations Act, 2005, permits Muni to
use non-New Starts funds expended for the Third Street LRT project as
match to the Central Subway. This lowers the non-New Starts share of
project costs from approximately 77 percent for the Central Subway
project alone (\$994.4 million) to approximately 48 percent of the total
costs of the combined Third Street/Central Subway project (\$1,594.4
million). However, due to the Appropriations Act provision, the New
Starts share of project costs is not applicable to FTA's rating process.

+-------------------------+-----------------------+--------------------+
| **Locally Proposed      |                       |                    |
| Financial Plan**        |                       |                    |
+-------------------------+-----------------------+--------------------+
| **[Source of            | **[Total Funds        | **[Percent of      |
| Funds]{.underline}**    | (\$mi                 | To                 |
|                         | llion)]{.underline}** | tal]{.underline}** |
+-------------------------+-----------------------+--------------------+
| **Federal:**            | \$762.2               | 76.6%              |
|                         |                       |                    |
| Section 5309 New Starts | \$92.2                | 9.3%               |
|                         |                       |                    |
| STIP Funds              |                       |                    |
+-------------------------+-----------------------+--------------------+
| **State:**              | \$14.0                | 1.4%               |
|                         |                       |                    |
| Traffic Congestion      |                       |                    |
| Relief Plan             |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Local:**              | \$126.0               | 12.7%              |
|                         |                       |                    |
| Proposition B/K Sales   |                       |                    |
| Tax Funds               |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Total:**              | **\$994.4**           | 100.0%             |
+-------------------------+-----------------------+--------------------+

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

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

# *Capital Finance Plan Rating: Medium* 

The capital finance plan is rated *Medium,* based upon the average of
the ratings assigned to each of the subfactors listed below. The
commitment of capital funds subfactor was rated *High*; agency capital
condition was rated *Medium-High*; plan completeness was rated *Medium*;
and the remaining subfactors were rated *Medium-Low*.

#### Agency Capital Condition: Medium-High

-   The average age of Muni's bus fleet is 3.8 years, which is
    significantly younger than the industry average.

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

#### Completeness of Capital Plan: Medium

-   The submission was generally complete but lacked a sensitivity
    analysis and information regarding the project's very modest
    financing costs.

#### Commitment of Capital Funds: High

-   A majority (60 percent of the Central Subway only; 89 percent of the
    combined project) of the non-New Starts funding has been committed.

#### Capital Funding Capacity: Medium-Low

-   The project's financial plan shows projected cash balances, reserve
    accounts, and/or access to credit that would allow Muni to cover
    cost increases or funding shortfalls equal to approximately 10
    percent of project costs.

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

### The assumed inflation rate is considered optimistic, while project contingencies are small. 

-   Muni is currently reviewing alternatives to the project's current
    alignment along 3^rd^ Street, placing the current cost estimate at
    some risk.

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

The operating finance plan is rated *Medium*, based upon the averaged
ratings of the five subfactors listed below. All subfactors were rated
*Medium* except for completeness, which was rated *Medium-High*.

#### Agency Operating Condition: Medium

-   Muni is in average operating condition, having weathered a
    challenging economic environment with limited or no service cuts and
    the requirement to balance its budget.

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-   Muni's current ratio of assets to liabilities as reported in its
    most recent audited financial statement is 1.42, which is considered
    good.

#### Completeness of Operating Plan: Medium-High

-   The operating plan contains a moderate level of detail and a
    sensitivity analysis. The main weakness is the plan's failure to
    identify which of the possible funding source(s) will support the
    project's small incremental increase in operating costs.

#### Commitment of Operating Funds: Medium

-   Over 25 percent of operating funding is committed. The main revenue
    sources are fares, parking fees, General Fund contributions, and
    sales tax and fuel assistance revenues.

#### Operating Funding Capacity: Medium

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

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

-   The rating is a balance between the plan's assumption of frequent
    fare increases that differ from history and the minimal of the line
    on operating costs and Muni's extensive light rail operations
    experience.

####  

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