**Norfolk LRT**

**Norfolk, Virginia**

(November 2004)

Hampton Roads Transit (HRT) is proposing to construct and operate an
11-station, 7.4-mile light rail transit (LRT) line within the city of
Norfolk that is intended to serve as the initial segment of a regional
rapid transit system. The project alignment would begin at the Eastern
Virginia Medical Center, move eastward as a dedicated in-street guideway
through downtown Norfolk to Norfolk State University, and continue along
an existing Norfolk Southern Railroad right-of-way (ROW) parallel to
Interstate-264

(I-264), to the eastern terminus at Newtown Road. Park-and-ride access
to the system would be provided by the construction of new facilities at
Newtown Road, Military Highway, and Ballantine Boulevard, as well as
shared use of existing parking facilities at the Harbor Park baseball
stadium on the southeastern fringe of downtown, where a station is
planned. The project scope also includes LRT maintenance facilities and
the purchase of nine vehicles. Service would operate at 7.5-minute
frequencies during peak periods.

Travel forecasts indicate worsened congestion on I-264 and major
arterials (Brambleton Avenue, Virginia Beach Boulevard, Tidewater Drive)
within the project corridor through 2025. Options for improving mobility
within the area are limited by geographic constraints (numerous
waterways) and the absence of transportation rights-of-way. The Norfolk
LRT project takes advantage of an existing rail ROW and is intended to
help meet future travel demand to downtown Norfolk and throughout the
corridor, provide improved mobility for transit-dependent populations,
and achieve local land use goals. The project is further intended to
provide a rapid transit connection from Harbor Park and other fringe
park-and-ride facilities to destinations within the downtown area.

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Light Rail Transit              |
+------------------------------------+---------------------------------+
| ** **                              | 7.4 Miles                       |
|                                    |                                 |
|                                    | 11 Stations                     |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$203.5 Million (includes \$4.9 |
|                                    | million in finance charges)     |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$100.7 Million (49.5%)         |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Forecast Year Operating   | \$6.8 Million                   |
| Cost:**                            |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2025):**     | Not Available                   |
+------------------------------------+---------------------------------+
| **Opening Year Ridership           | Not Available                   |
| Forecast:**                        |                                 |
+------------------------------------+---------------------------------+
| **FY 2006 Finance Rating:**        | # Medium                        |
+------------------------------------+---------------------------------+
| **FY 2006 Project Justification    | **Not Rated**                   |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2006 Overall Project          | **Not Rated**                   |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

The project is *Not Rated* based on the information available at this
time. While HRT has demonstrated progress in improving its travel
forecasting procedures, its estimate of project travel-time benefits is
based upon an unsubstantiated assumption regarding future parking
deficits in downtown Norfolk. In addition, uncertainty regarding the
cost of acquiring Norfolk Southern Railroad ROW for the project and the
need for updated costs reflecting more advanced design may result in
changes to the project cost estimate, which could affect cost
effectiveness calculations. Prior to advancing the project into final
design, HRT must update its cost estimate and schedules, provide
evidence of the implementation of parking policies and ordinances
intended to constrain future downtown parking supply, and develop an
acceptable cost effectiveness rating. FTA will assist HRT in meeting
these objectives.

**Project Development History and Current Status**

In 1997, FTA approved into preliminary engineering (PE) an 18-mile LRT
system extending between the cities of Norfolk and Virginia Beach. The
Draft Environmental Impact Statement (EIS) for the project was completed
in April 1999. In November 1999, Virginia Beach voters failed to approve
a local funding measure for the project, resulting in the truncation of
the project at Kempsville Road within the city limits of Norfolk. FTA
approved the abridged project into PE in October 2002. A Supplemental
Draft EIS was completed in January 2003. Since that time, HRT has
undertaken additional scope and cost reductions that have resulted in
the current 7.4-mile alignment. HRT anticipates completion of the
project's Final EIS and receipt of a Record of Decision in Spring 2005,
with final design approval assumed shortly thereafter. Revenue
operations are anticipated to begin in Summer 2008.

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

Based on FTA comments, HRT has improved its travel forecasting
procedures and generated revised estimates of the project's ridership
and travel-time benefits. These revised forecasts reflect the Hampton
Roads region's adopted 2025 population and employment assumptions, as
well as an assumed (though unsubstantiated) parking deficit in downtown
Norfolk. Since last year, the project implementation schedule has been
extended a year, resulting in a modest cost increase reflecting
inflation.

###### Project Justification Rating: Not Rated

The project is *Not Rated* for project justification based on the
absence of defensible information on the cost effectiveness of the
project. The project is rated *Medium* for transit-supportive land use.

####### *Cost Effectiveness Rating: Not Rated*

HRT's submission of project benefits indicates that the Norfolk LRT
project will predominantly benefit downtown-bound commuters. HRT's
travel forecasts assume the existence of a significant parking deficit
in downtown Norfolk by 2025. This parking deficit would be relieved, in
part, by the connection of the proposed LRT system to parking facilities
located on the fringe of the central business district (CBD).
Seventy-five percent of projected user benefits are consequently
attributable to this park-and-ride market. However, there is
insufficient evidence that local parking policies under consideration
would result in the parking deficit that is assumed in the travel
forecasting model.

The project's current cost estimate represents an escalation (based on
inflation) of a 2002 preliminary engineering estimate. The per-mile cost
appears to be low for a light rail project, especially one with multiple
grade conditions. As noted, HRT must fully update its cost estimate and
schedule prior to advancing the project into final design.

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

The *Medium* land use rating is based upon the *Medium-High* rating
assigned to transit-supportive plans and policies and performance and
impacts of policies, and the *Medium-Low* rating for existing land uses
in the project corridor.

**Existing Land Use: Medium-Low**

-   Employment and population levels in the area served by the project
    are modest. Station area employment is estimated at approximately
    53,800 employees. Total CBD employment is 42,000, and population
    densities average 4,200 persons per square mile in station areas.

-   Pedestrian access in the CBD and redeveloping waterfront
    neighborhoods has improved considerably within the past few years.
    Elsewhere, neighborhoods are generally walkable, but some
    developments at each end of the alignment have considerable surface
    parking.

-   Downtown Norfolk generally maintains a more than adequate parking
    supply, although some areas suffer from parking shortages. Parking
    costs in the CBD range from \$4 to \$14 per day.

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

-   Jurisdictions in the Hampton Roads area have adopted and applied
    various tools for growth management, primarily oriented toward the
    preservation of natural areas.

-   The city of Norfolk has adopted and implemented redevelopment plans
    for the downtown area that focus on creating a mixed-use,
    pedestrian-scaled environment that builds on historic architecture
    and amenities such as the waterfront.

-   Residential densities in corridor neighborhoods typically range from
    six to 15 units per acre but are much higher for some newer downtown
    developments. Redevelopment plans are also being implemented to
    rebuild residential neighborhoods in the corridor.

-   Pedestrian-oriented design guidelines have been adopted for a number
    of areas in the corridor, especially near downtown, and are being
    enforced.

-   Some downtown and adjacent districts do not require off-street
    parking and allow provisions for shared parking.

-   The city is considering the adoption of a transit overlay district
    that could be applied to station areas to restrict uses, establish
    design standards, and restrict parking.

-   The city of Norfolk has been a strong leader in planning initiatives
    to redevelop downtown and many residential neighborhoods of the
    city. City agencies have a number of financial and regulatory
    incentives at their disposal and have aided with land acquisition
    and assembly in redevelopment areas.

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

-   Significant redevelopment activities have occurred in downtown
    Norfolk in recent years, and these developments have been consistent
    with pedestrian-oriented design principles.

-   Vacant and underutilized properties are being transformed into
    mixed-use, urban-scale developments with residential, retail, and
    office uses.

-   Development in the easternmost station areas continues to be
    auto-oriented.

-   There is a moderate amount of redevelopment potential in transit
    station areas. A market for both new commercial and residential
    development in the downtown area has been demonstrated and is likely
    to continue.

-   HRT's estimates of station area development potential suggest that
    approximately 12,000 new residents and 25,000 jobs could be
    accommodated if currently vacant or underutilized parcels were built
    out, which is more development than assumed in regional land use
    forecasts for the corridor.

####### *Other Project Justification Criteria* 

+------------------------------------------+--------------+------------+
| **Mobility Improvements Rating: Not      |              |            |
| Rated**                                  |              |            |
+------------------------------------------+--------------+------------+
| **[Within ½-mile radius of boarding      | 53,800       |            |
| areas]{.underline}:**                    |              |            |
|                                          | 62,200       |            |
| Existing Employment                      |              |            |
|                                          | 1,800 (24%)  |            |
| Projected Employment (2025)              |              |            |
|                                          | 4,890\*      |            |
| Low Income Households (% of total HH)    |              |            |
|                                          | 164\*        |            |
| **[Average Per Station]{.underline}:**   |              |            |
|                                          | **[New Start |            |
| Employment                               | vs.          |            |
|                                          | Baseline]{.  |            |
| Low Income Households                    | underline}** |            |
|                                          |              |            |
| **Transportation System User Benefit Per | N/A\*        |            |
| Project Passenger Mile (Minutes)**       |              |            |
+------------------------------------------+--------------+------------+
| **Environmental Benefits Rating: Not     |              |            |
| Rated**                                  |              |            |
+------------------------------------------+--------------+------------+
| **[Criteria Pollutant (Reduction in      | **[New Start |            |
| tons)]{.underline}**                     | vs.          |            |
|                                          | Baseline]{.  |            |
| > Carbon Monoxide (CO)                   | underline}** |            |
| >                                        |              |            |
| > Nitrogen Oxide (NO~x~)                 | N/A          |            |
| >                                        |              |            |
| > Volatile Organic Compounds (VOC)       | N/A          |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | N/A          |            |
| >                                        |              |            |
| > Carbon Dioxide (CO~2~)                 | N/A          |            |
|                                          |              |            |
| **[Criteria Pollutant                    | N/A          |            |
| Status]{.underline}**                    |              |            |
|                                          | **[EPA       |            |
| > 1-Hour Ozone (O~3~)                    | De           |            |
| >                                        | signation]{. |            |
| > 8-Hour Ozone                           | underline}** |            |
|                                          |              |            |
| **Annual Energy Savings (million British | Maintenance  |            |
| Thermal Units)**                         | Area\*       |            |
|                                          |              |            |
|                                          | Marginal     |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | N/A          |            |
+------------------------------------------+--------------+------------+
| **Operating Efficiencies Rating: Not     |              |            |
| Rated**                                  |              |            |
+------------------------------------------+--------------+------------+
| **System Operating Cost per**            | > **         | **[New     |
|                                          | [Baseline]{. | Start]{.un |
| **Passenger Mile (current year           | underline}** | derline}** |
| dollars)**                               | >            |            |
|                                          | > N/A\*      | N/A\*      |
+------------------------------------------+--------------+------------+

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

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

# 

####### *Other Factors*

Based on an alternative land use forecast developed by HRT, which
reflects anticipated development generated by the project beyond the
region's adopted land use forecast, HRT is estimating that the Norfolk
LRT project will generate approximately 2,800 hours of travel-time
benefits each weekday. This would result in a cost effectiveness of
\$16.21 per hour of user benefits. This estimate is based upon
optimistic parking and land use development assumptions, as well as an
early PE-level cost estimate, and consequently carries some risk.
However, it does provide some indication of the potential of the project
should these assumptions prove achievable.

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

The *Medium* rating for local financial commitment was determined by the
*Medium* ratings for the New Starts share, as well as both the capital
and operating plans.

####### *Section 5309 New Starts Share of Total Project Costs: 50%* 

####### *Rating: Medium*

HRT is requesting slightly under 50 percent in New Starts funding to
cover total project costs, which results in a *Medium* rating for this
measure.

+-------------------------+-----------------------+--------------------+
| **Locally Proposed      |                       |                    |
| Financial Plan**        |                       |                    |
+-------------------------+-----------------------+--------------------+
| **[Source of            | **[Total Funds        | **[Percent of      |
| Funds]{.underline}**    | (\$mi                 | To                 |
|                         | llion)]{.underline}** | tal]{.underline}** |
+-------------------------+-----------------------+--------------------+
| **Federal:**            | \$100.7               | 49.5%              |
|                         |                       |                    |
| Section 5309 New Starts | \$33.6                | 16.5%              |
|                         |                       |                    |
| Flexible Funds (STP)    | \$1.0                 | 0.5%               |
|                         |                       |                    |
| FHWA FY 2003 Earmark    |                       |                    |
+-------------------------+-----------------------+--------------------+
| **State:**              | \$9.3                 | 4.6%               |
|                         |                       |                    |
| General Assembly        | \$21.4                | 10.5%              |
| Appropriations          |                       |                    |
|                         | \$3.6                 | 1.8%               |
| Virginia Mass Transit   |                       |                    |
| Fund                    |                       |                    |
|                         |                       |                    |
| Virginia Transportation |                       |                    |
| Trust Fund              |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Local:**              | \$33.9                | 16.7%              |
|                         |                       |                    |
| City of Norfolk Bonds   |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Total:**              | **\$203.5**           | 100.0%             |
+-------------------------+-----------------------+--------------------+

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

# *Capital Finance Plan Rating: Medium* 

The capital finance plan is rated *Medium*, based upon the average of
the ratings assigned to each of the subfactors listed below. The project
received a *High* score on completeness, a *Medium-High* score on
capital funding capacity, and a *Medium-Low* score on capital condition.
The remaining subfactors received *Medium* ratings.

#### Agency Capital Condition: Medium-Low

-   The average age of HRT's bus fleet is 8.2 years, which is older than
    the industry average.

-   HRT does not have bond ratings.

#### Completeness of Capital Plan: High

-   HRT submitted a very thorough plan that included a 20-year cash flow
    statement, identification of all key assumptions, a fleet management
    plan, more than five years of historical data, and an extensive
    sensitivity analysis.

#### Commitment of Capital Funds: Medium

-   Approximately 24 percent of non-New Starts funding is committed and
    43 percent is budgeted. Local funding is expected to come from bonds
    issued by the city of Norfolk, Federal flexible funds, and State
    capital grants.

#### Capital Funding Capacity Medium-High

-   The city of Norfolk (which is responsible for the local share of the
    project capital cost) can cover cost increases or funding shortfalls
    through additional bonding equal to more than twice the project
    cost. However, the city will undoubtedly have other demands on this
    debt capacity, aside from the transit system.

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

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

-   Capital cost estimates, contingency, and project schedule reflect an
    early PE-level of design and need to be updated.

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

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

#### Agency Operating Condition: Medium

-   HRT is in average operating condition, with service cutbacks in FY
    2002 that eliminated some demonstration services and reduced service
    in Chesapeake, Portsmouth, and Virginia Beach.

-   HRT's current ratio of assets to liabilities as reported in its most
    recent audited financial statement (FY 2003) is 1.31.

#### Completeness of Operating Plan: High

-   HRT submitted a very thorough plan that contained all required
    elements including a 20-year cash flow statement, identification of
    all key assumptions with an extensive level of detail, more than
    five years of historical data, and an extensive sensitivity
    analysis.

#### Commitment of Operating Funds: Medium-High

-   Over 55 percent of operating funding is committed. The city of
    Norfolk will fund project operating and maintenance costs that are
    not covered by fare revenues and State operating assistance.

#### Operating Funding Capacity: Medium

-   The project's financial plan shows projected cash balances, reserve
    accounts, and/or access to credit exceeding 20 percent of annual
    operating expenses.

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

### Ridership and fare revenue assumptions are optimistic compared to historical experience.

### Revenue projections for other operating sources and operating cost projections are in line with historical experience.

Map

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