## FY 2007 New Starts Evaluation and Rating Process

This document describes the methodology that the Federal Transit
Administration (FTA) used to evaluate, rate, and recommend funding for
projects included in the *FY 2007 Annual Report on New Starts*. This
methodology was similar to the process used in the evaluation of
projects included in the *FY 2004-2006 Annual Reports on New Starts*,
and is consistent with FTA's *Final Rule on Major Capital Investment
Projects* issued on December 7, 2000.

The bulk of this appendix is based on processes that were developed
before passage of the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) which was
signed into law on August 10, 2005. However, the FY 2007 project
evaluation process reflected two changes established in SAFETEA-LU which
FTA 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. Project
sponsors are still encouraged to request the lowest New Starts share
possible given there are limited funds and the number of projects in the
New Starts pipeline exceeds available funds.

This appendix describes how FTA applied these two provisions for the FY
2007 evaluation cycle. For all other changes in SAFETEA-LU, FTA intends
to work closely with the transit industry over the coming months to
fully implement the New Starts provisions, including further refinements
to the New Starts evaluation and rating process to be applied to
subsequent annual project evaluation cycles.

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
means for funding recommendations in the President's Budget for FY 2007.
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 at its site for
*New Starts Project Planning and Development*:

<http://www.fta.dot.gov/grant_programs/transportation_planning/9924_ENG_HTML.htm>.

FTA reminds the audience of this appendix that project evaluation is an
on-going process. It is based on an analysis of Section 5309 New Starts
Criteria and documentation submitted to FTA by local agencies. As New
Starts projects proceed through project development, the estimates of
costs, benefits, and impacts are refined. The FTA ratings and
recommendations will be 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 New Starts*) that
includes 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. It also requires that the annual report include the
Secretary's evaluations and ratings of the capital projects seeking
grants or loans for new or extended fixed guideway systems.

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 and construction." This approval is based, in large part, on an
evaluation of the proposed project's New Starts criteria.

FTA's evaluation includes a review of each project's New Starts criteria
and the assignment of a rating to each criterion. Based on these
criteria-specific ratings, FTA assigns candidate New Starts projects
summary ratings for project justification and local financial
commitment, as well as providing an overall project rating. Sections 1.A
and 1.B below present the criteria used by FTA in its New 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 following criteria:

-   Mobility Improvements;

-   Environmental Benefits;

-   Operating Efficiencies;

-   Cost Effectiveness; and

-   Transportation 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. However, FTA desires to work
with the industry on the development of appropriate factors for
measuring the economic development effects of candidate projects, and
therefore did not consider them in the FY 2007 evaluation cycle.

Section III of this appendix presents the specific measures FTA used in
the FY 2007 evaluation cycle to represent each of the project
justification criteria, and how FTA evaluated 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) calls for an evaluation of the extent to which the
project has 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 used in the FY 2007 evaluation cycle were:

-   The proposed share of total project costs from sources other than
    the Section 5309 New 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 financing 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 used these measures in its evaluation of
candidate 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. 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) requires that FTA assign overall ratings on a
5-point scale of *High, Medium-High, Medium, Medium-Low*, or *Low* to
each New Starts project subject to evaluation.

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

For both project justification and finance, 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 the FY 2007
evaluation cycle under SAFETEA-LU. As the table demonstrates, the
decision rules remain unchanged; only the designation assigned to the
project's overall rating is different from prior practice. While
SAFETEA-LU anticipates that FTA will use the full range of ratings, from
*High, Medium-High, Medium, Medium-Low* to *Low* in making this
determination, however, FTA determined that it was less subjective to
simply use *High, Medium* and *Low* in FY 2007. We want 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)**   |
|                                 | 2006)**          |                 |
+---------------------------------+------------------+-----------------+
| At least Medium-high for        | Highly           | High            |
| finance and project             | Recommended      |                 |
| justification                   |                  |                 |
+---------------------------------+------------------+-----------------+
| At least Medium for finance and | Recommended      | Medium          |
| project justification           |                  |                 |
+---------------------------------+------------------+-----------------+
| Not rated at least Medium for   | Not Recommended  | Low             |
| finance and project             |                  |                 |
| justification                   |                  |                 |
+---------------------------------+------------------+-----------------+

FTA emphasizes that these decision rules are for the FY 2007 evaluation
cycle only. It is anticipated that the decision rules used to achieve an
overall project rating in subsequent evaluation cycles (FY 2008 and
beyond) will be established through a formal rulemaking process and will
encompass all five ratings from *High* to *Low*.

FTA further notes that a project will no longer receive a designation of
**Not Rated** if it receives a *Medium* or higher rating for finance,
but cannot produce acceptable information in support of its 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 New Starts*
and when a project sponsor requests FTA approval to advance their
proposed New Starts project into preliminary engineering and final
design. Consequently, as proposed New 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 below:

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

+-----------------------------------+-----------------------------------+
| **Criterion**                     | **Measures/Categories**           |
+-----------------------------------+-----------------------------------+
| Cost Effectiveness                | -   Incremental Cost per Hour of  |
|                                   |     Transportation System User    |
|                                   |     Benefit                       |
+-----------------------------------+-----------------------------------+
| Transit Supportive Land Use and   | -   Existing Land Use             |
| Future Patterns                   |                                   |
|                                   | -   Transit Supportive Plans and  |
|                                   |     Policies                      |
|                                   |                                   |
|                                   | -   Performance and Impacts of    |
|                                   |     Policies                      |
+-----------------------------------+-----------------------------------+
| Mobility Improvements             | -   Normalized Travel Time        |
|                                   |     Savings (Transportation       |
|                                   |     System User Benefit per       |
|                                   |     Project Passenger Mile)       |
|                                   |                                   |
|                                   | -   Low-Income Households Served  |
|                                   |                                   |
|                                   | -   Employment Near Stations      |
+-----------------------------------+-----------------------------------+
| Operating Efficiencies            | -   System Operating Cost per     |
|                                   |     Passenger Mile                |
+-----------------------------------+-----------------------------------+
| Environmental Benefits            | -   Change in Regional Pollutant  |
|                                   |     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. 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, the rating is
\"rounded-up\" to establish the summary project justification rating.
For example, a 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 any 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 New Starts*, they are not considered
in the determination of an overall project justification rating. If well
documented, and considered by FTA to be an unusually significant benefit
to a proposed project that is not otherwise captured in the other New
Starts criteria, "other factors" may increase a summary project
justification rating by no more than one step (for example, from
*Medium‑High* to *High*). 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. This measure, expressed in constant
base-year dollars, is based on the annualized total capital and annual
operating costs divided by the forecast change in annual user benefits,
comparing the proposed project to the New Starts baseline alternative.
Table II-2 below presents the thresholds FTA used in FY 2007 for
assigning a *High, Medium-High, Medium, Medium-Low* or *Low* cost
effectiveness rating for each project:

Table II-2 Cost Effectiveness Breakpoints

  ----------------------------------- -----------------------------------
  High                                \$10.99 and under

  Medium-High                         \$11.00- \$13.99

  Medium                              \$14.00-\$21.99

  Medium-low                          \$22.00-\$27.99

  Low                                 \$28.00 and over
  ----------------------------------- -----------------------------------

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

In its evaluation of the land use affecting 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 New Starts project sponsors to submit information in
support of an optional "other land use considerations" category.

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  |         |                                              |
| Man        |         |                                              |
| agement*** |         |                                              |
+------------+---------+----------------------------------------------+
| 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
New Starts*, 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 New Starts*, it does not formally
incorporate this measure in its evaluation of New Starts projects.

***II.G Other Factors***

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

-   Environmental justice considerations and equity issues;

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

-   Livable communities initiatives and local economic development
    initiatives;

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

-   The cost effectiveness of the New Starts project based on
    alternative land use forecasts which consider the economic
    development impacts (benefits) of the proposed transit capital
    investment; and

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

Only in the most compelling of cases are other factors formally assigned
a rating. When they are rated, FTA considers other factors in the
evaluation of candidate New Starts projects in two ways. For evaluations
in support of budget recommendations contained in the *Annual Report on
New Starts*, the other factors rating is introduced *after* the
assignment of an initial summary project justification rating. If the
other factors rating are higher than the summary project justification
rating, FTA may increase this initial summary justification rating by a
maximum of one step.

For preliminary engineering and final design approvals, other factors
are considered in the same way. In addition, the technical capability of
the project sponsor to implement and operate the project is implicitly
considered within the "other factors" criteria. This inclusion ensures
that project management issues are adequately addressed in FTA's
decision to permit advancement into the next stage of the project
development process.

**III. SUMMARY FINANCE RATING**

The following provides a summary of FTA's process for evaluating the
local financial commitment of proposed New Starts projects.

***III.A Financial Rating***

FTA assigns a summary finance 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-New Starts funding**;

2.  Stability and reliability of the proposed project's **capital
    funding 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
    funding 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 Section 5309 New Starts
Criteria 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 finance rating considers the non-Section 5309 New Starts
share of project capital costs. The following ratings are assigned to
the New Starts share of project costs:

-   \>60 percent = *Low* rating

-   50-60 percent = *Medium* rating

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

-   \< 35 percent = *High* rating

In addition, FTA rates the capital and operating plan for each factor
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-Section 5309 New Starts
share of the project in FY2007. Based on language in SAFETEA-LU, where
there is any inconsistency between those guidelines and this appendix,
the practices spelled out in this appendix supersedes those guidelines.

Numerical ratings from 1 to 5 (*Low* to *High*) are assigned to each of
the factors reflecting each measure; these factors are weighted equally
within each measure, then averaged and combined into ratings for each
measure. Once measure-specific ratings have been determined, FTA weighs
the proposed non-New Starts share as 20 percent of the summary financial
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 financial rating of *High,
Medium-High, Medium, Medium-Low* or *Low*.

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

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>- ExtensiveSensitivity 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 Financial Rating Decision Rule***

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

-   If the New Starts share, which accounts for 20% of the financial
    rating, brings the overall financial rating to less than *Medium*,
    it will be excluded from the overall financial rating 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 FY2007 in order to respond to
    direction in SAFETEA-LU that we evaluate the percent of New Starts
    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 the New Starts
    rulemaking.

```{=html}
<!-- -->
```
-   If either of a proposed project's capital or operating finance plan
    receives a *Medium‑Low* or *Low* rating, the summary finance rating
    for the project cannot be higher than a *Medium-Low*.

-   To receive a summary financial rating of *Medium-High*, both the
    capital and operating funding plan must be rated at least
    *Medium-High*.

**IV. RATINGS AND FUNDING RECOMMENDATIONS**

Section 5309(d)(1)(B)(ii) directs FTA to consider for full funding grant
agreements (FFGA) only those projects which 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.) 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.  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 2007 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,
the following general principles are applied: 

-   Any project recommended for new funding commitments should meet the
    project justification, finance, and process criteria established by
    Section 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 defines the terms of the Federal commitment to a specific
    project, including funding.  Upon completion of an FFGA, 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.

-   Funding for initial planning efforts such as alternatives analysis
    is provided through grants out of the Section 5303 Metropolitan
    Planning or Section 5307 Urbanized Area Formula programs or from the
    newly created Section 5339 Alternatives Analysis program.

-   Firm funding commitments, embodied in FFGAs, will not be made until
    the final design process has progressed to the point where costs,
    benefits, and impacts are accurately forecasted.

-   Funding should be provided to the most worthy projects 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.  The results of the project evaluation process and
    resulting finance, justification, and overall ratings determine
    whether particular projects are "worthy."

Again, FTA emphasizes that project evaluation and rating is an on-going
process. As proposed New 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.