**Silver Line Phase III**

**Boston, Massachusetts**

(November 2003)

# 

# Description 

The Massachusetts Bay Transportation Authority (MBTA) is proposing to
implement Phase III of the Silver Line BRT system, consisting of a
tunnel connection between the existing South Station and New England
Medical Center (NEMC) Station in downtown Boston. This tunnel would
provide an operational link connecting Phase I of the Silver Line,
defined as the Washington Street Replacement Service between Dudley
Square in Roxbury and downtown, and the Silver Line Phase II project
which is currently under construction and which consists of a tunnel
extending from South Station to the World Trade Center in the South
Boston Waterfront combined with service to and from Logan International
Airport. Beginning at the new Silver Line platform at South Station
being constructed as part of the Phase II effort, Phase III would follow
below Essex and Tremont Streets and provide new connections between the
existing Chinatown (Orange Line/Heavy Rail), Boylston (Green Line/Light
Rail), and NEMC (Orange Line) Stations.

Continued development in Boston, including dramatic growth in the
Waterfront area, has resulted in significant traffic congestion in the
Phase III corridor. The surrounding area has several roadways suffering
from congestion throughout the day. As a result, long delays occur,
reducing transit travel speeds on existing surface bus routes operating
within the corridor. The proposed project would provide a transportation
alternative to these congested roads, while providing a one-seat ride
between Roxbury and the growing South Boston Waterfront and improved
access to destinations approximate to the rest of MBTA's rail system.

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Bus Rapid Transit               |
+------------------------------------+---------------------------------+
| ** **                              | 1.0 Miles, 3 Stations           |
|                                    | (existing)                      |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$756.0 Million                 |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$378.0 Million (50%)           |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Operating Cost (2010      | \$11.0 Million                  |
| \$YOE):**                          |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2025):**     | 148,700 Average Weekday         |
|                                    | Boardings                       |
+------------------------------------+---------------------------------+
| ** **                              | 9,600 Daily New Riders          |
+------------------------------------+---------------------------------+
| **Opening Year Ridership Forecast  | 111,500 Average Weekday         |
| (2010):**                          | Boardings                       |
+------------------------------------+---------------------------------+
| **FY 2005 Finance Rating:**        | # Low-Medium                    |
+------------------------------------+---------------------------------+
| **FY 2005 Project Justification    | **Not Rated**                   |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2005 Overall Project          | **Not Recommended**             |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

The overall project rating of ***Not Recommended*** is based on MBTA's
unreasonable operating cost assumptions. In addition, although FTA is
reporting MBTA's ridership forecasts above, FTA has concerns about their
validity and is thus not evaluating the project's justification
criteria. FTA intends to work with MBTA over the next several months to
more accurately portray the benefits of the Silver Line Phase III
project. The overall project rating applies to this *Annual Report on
New Starts* and reflects conditions as of November 2003. Project cost
estimates and proposed New Starts share are developed by local project
sponsors and are not FTA assumptions. Project evaluation is an ongoing
process. As New Starts projects proceed through project development,
estimates of cost, benefits, schedules, and impacts are refined. FTA's
ratings and recommendation will be updated annually to reflect new
information, changing conditions, and refined financing plans.

FTA will continue to work with MBTA over the next several months to
improve its financial plan and its ability to accurately portray the
benefits of the Silver Line Phase III project.

##### Status

In February 1993, MBTA completed an alternatives analysis and selected a
1.5-mile underground transit tunnel from Boylston Station to the World
Trade Center combined with surface bus operations as the locally
preferred alternative. This alternative, referred to as the Full Build
Transitway, was proposed in response to funding availability. FTA issued
a NEPA Record of Decision in May 1994 applicable to the Full Build
Transitway.

In 1994, FTA signed a Full Funding Grant Agreement for \$330.73 million
with MBTA for the South Boston Piers Transitway -- Phase I that is part
of the Full Build Transitway from South Station to the World Trade
Center. It is currently under construction and is scheduled to be in
revenue operation by December 2004.

The Silver Line Phase III is the remaining part of the Full Build
Transitway, combined with a continuation of the tunnel under Tremont
Street to connect with Washington Street service at the New England
Medical Center. FTA approved the Phase III project to enter preliminary
engineering (PE) in July 2002. FTA identified several items to be
addressed during PE, including the documentation of inflationary
assumptions to support operating and maintenance cost projections. This
documentation remains lacking and raises concerns about the
reasonability of the project's financial plan; these concerns are the
reason the project fell from a *Recommended* rating in the FY 2004
*Annual Report on New Starts* to the *Not Recommended* rating assigned
in this year's Report.

In an effort to reduce costs and risks associated with the project, MBTA
has made several changes to the project scope in the past year. These
changes include redesigning stations, altering tunnel and station
elements, and reducing the number of right-of-way takings. The estimated
capital cost for the project has subsequently decreased from \$951.9
million \$756.0 million in escalated dollars.

TEA-21 Section 3030(a)(86) authorized the South Boston - Piers
Transitway for final design and construction. No Section 5309 New Starts
funds have been appropriated for the Silver Line Phase III project.

####### 

####### Evaluation 

The following criteria have been estimated in conformance with FTA\'s
*Reporting Instructions for the Section 5309 New Starts Criteria*,
updated in June 2003. The project will be re-evaluated when it is ready
to advance to final design and for next year's *Annual Report on New
Starts*.

+--------------------------------------+---------------+---------------+
| **Project Justification Quantitative |               |               |
| Criteria**                           |               |               |
+--------------------------------------+---------------+---------------+
| **Mobility Improvements Rating: Not  |               |               |
| Rated**                              |               |               |
+--------------------------------------+---------------+---------------+
| **Average Employment Per Station**   | **[New Start  |               |
|                                      | vs.           |               |
| **Average Low Income Households Per  | Baseline]{    |               |
| Station**                            | .underline}** |               |
|                                      |               |               |
| **Transportation System User Benefit | 65,961        |               |
| Per Project Passenger Mile           |               |               |
| (Minutes)**                          | 1,008         |               |
|                                      |               |               |
|                                      | N/A           |               |
+--------------------------------------+---------------+---------------+
| **Environmental Benefits Rating:     |               |               |
| High**                               |               |               |
+--------------------------------------+---------------+---------------+
| **[Criteria Pollutant                | **[New Start  |               |
| Reduced]{.underline} (Tons)**        | vs.           |               |
|                                      | Baseline]{    |               |
| **Carbon Monoxide (CO)**             | .underline}** |               |
|                                      |               |               |
| **Nitrogen Oxide (NO~x~)**           | N/A           |               |
|                                      |               |               |
| **Volatile Organic Compounds**       | N/A           |               |
|                                      |               |               |
| **Particulate Matter (PM~10~)**      | N/A           |               |
|                                      |               |               |
| **Carbon Dioxide (CO~2~)**           | N/A           |               |
|                                      |               |               |
| **[Annual Energy                     | N/A           |               |
| Savings]{.underline} (millions of    |               |               |
| BTU)**                               | N/A           |               |
+--------------------------------------+---------------+---------------+
| **Cost Effectiveness Rating: Not     |               |               |
| Rated**                              |               |               |
+--------------------------------------+---------------+---------------+
| **Cost per Transportation System     | **[New Start  |               |
| User Benefit (current year           | vs.           |               |
| dollars/hour)**                      | Baseline]{    |               |
|                                      | .underline}** |               |
|                                      |               |               |
|                                      | N/A           |               |
+--------------------------------------+---------------+---------------+
| **Operating Efficiencies Rating: Not |               |               |
| Rated**                              |               |               |
+--------------------------------------+---------------+---------------+
| **System Operating Cost per**        | >             | **[New        |
|                                      | **[Baseline]{ | Start]{       |
| **Passenger Mile (current year       | .underline}** | .underline}** |
| dollars)**                           | >             |               |
|                                      | > N/A         | N/A           |
+--------------------------------------+---------------+---------------+

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

# 

# Project Justification 

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

This project is *Not Rated* for project justification because FTA could
not evaluate the benefits of the project. The project sponsor calculated
the project's cost effectiveness at \$16.51 per hour of transportation
system user benefit. However, FTA has concerns about the information
submitted for this measure. FTA will continue to work with MBTA to
improve its travel demand projections.

Based on 2000 Census data, there are an estimated 2,023 low-income
households within a ½‑mile radius of affected stations, representing
roughly 44 percent of the total households within ½ mile of the
stations. There are an estimated 197,883 jobs located within ½ mile of
affected stations. The Boston metropolitan area is designated as a
serious non-attainment area for ozone.

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

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

The *High* land use rating reflects strong existing land use and
favorable transit-supportive policies in the corridor. Existing and
planned development is transit-supportive with pedestrian-minded designs
in place.

Existing Conditions: The Silver Line study area connects the Washington
Street corridor to the downtown financial district and the South Boston
Waterfront. The Silver Line Phase III portion is located in an
established urban environment limited to redevelopment and infill
opportunities while a portion of the remainder of the corridor in the
Waterfront area has more development opportunities. Washington Street
links multiple distinct neighborhoods with a variety of high-density
residential and commercial uses, with one in four Boston residents
living within five blocks of the corridor. Many of Boston's existing and
proposed activity centers are located within and adjacent to the Silver
Line corridor. Downtown Boston encompasses major concentrations of
office employment, the retail shopping core, most of the major hotels,
tourist destinations, major transportation facilities and residential
areas. Estimates indicate an average population density of 11,687
persons per square mile and 175,519 employees served by the system (base
year 2000). Downtown Boston has a high volume of pedestrian traffic with
a high quality of pedestrian and bicycle access and facilities and
conformance of facilities to ADA requirements.

Future Plans, Policies and Performance: By 2025, population density
within the Silver Line Phase III area is projected to increase to 17,382
persons per square mile and total employment to rise to 190,879.
Development in suburban areas and the urban fringe of Boston is limited
in many areas by local land conservation policies and a general lack of
developable land. The Boston Redevelopment Agency is working to
encourage greater density in commercial and residential development near
public transportation, as evidenced by the Downtown Interim Planning
Overlay District. *The Seaport Public Realm Plan* provided a master plan
for the Seaport District (including South Boston Waterfront and Fort
Point areas) that incorporated a greater focus on mixed-use development
with hotels located near the new Boston Convention and Exhibition
Center. The *Fort Point District Plan*, the *South Boston Transportation
Study* and the *Municipal Harbor Plan* refine area development with
pedestrian-oriented layout. Within the Silver Line corridor three
downtown zoning districts regulate and support increased development
density around the transit stations. The city of Boston and Logan
Airport have instituted freezes on commercial parking spaces in the
vicinity of both the CBD and the airport. Recently completed
developments demonstrating a strong orientation toward transit and
pedestrian access include the John Joseph Moakley United States
Courthouse, the Millennium Development, an air-rights complex directly
over South Station, the renovation of the Liberty Tree site for
occupancy by the Massachusetts Registry of Motor Vehicles, and the new
Suffolk Law School facility.

#### Local Financial Commitment

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

#### The *Low-Medium* local financial commitment rating reflects MBTA's stable revenue sources but is based primarily on the overly optimistic operating costs estimates and planning assumptions included in the financial plan.

**Proposed Non-Section 5309 New Starts Share of Total Project Costs:
50%**

###### Rating: Medium 

MBTA proposes to use Section 5309 New Starts funds to fund 50 percent of
project capital costs, with the balance of funding to come from local
bond proceeds.

+-----------------------+----------------------+----------------------+
| **Locally Proposed    |                      |                      |
| Financial Plan**      |                      |                      |
+-----------------------+----------------------+----------------------+
| **[Proposed Source of | **[Total Funding     | **[Percent of        |
| Funds]{.underline}**  | (\$mil               | Total]{.underline}** |
|                       | lion)]{.underline}** |                      |
+-----------------------+----------------------+----------------------+
| **Federal:**          | \$378.0              | 50.0 %               |
|                       |                      |                      |
| Section 5309 New      |                      |                      |
| Starts                |                      |                      |
+-----------------------+----------------------+----------------------+
| **Local:**            | \$378.0              | 50.0 %               |
|                       |                      |                      |
| Bond Proceeds         |                      |                      |
+-----------------------+----------------------+----------------------+
| **Total:**            | **\$756.0**          | 100.0 %              |
+-----------------------+----------------------+----------------------+

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

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

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

The *Medium* rating reflects the strong dedicated revenue streams
available to MBTA and the very conservative 50 percent construction cost
contingency, tempered by its only fair capital condition.

**Agency Capital Financial Condition:** MBTA's capital financial
condition is below average. The average age of the bus fleet is 13
years, which is very old. MBTA's most recent bond ratings were AAA by
Standard and Poor's and Aa2 by Moody's, which are positive.

**Capital Cost Estimate and Contingencies:** The capital cost of the
project is based on preliminary estimates primarily taken from MBTA's
experience with the construction of the South Boston Piers Transitway
and Silver Line Phase II projects. MBTA maintains a conservative 50
percent contingency on construction costs, the equivalent of a 24
percent contingency on the total cost of the project.

The Massachusetts Department of Environmental Protection and Executive
Office of Transportation Construction entered into a consent order that
obligates the region to complete approximately \$2 billion in capital
projects within specific time frames, including the Silver Line Phase
III project. The capital costs of all the projects from the consent
order are not included in MBTA's capital financial plan, based on the
assumption that the State will fund the capital cost of several of the
projects. Should the State not make funding available, MBTA may be
required to alter its capital financial plan.

Existing and Committed Funding: All local funding is from existing
sources and will be derived from bond proceeds backed by dedicated sales
tax revenues and assessments paid by the municipalities served by MBTA.
This is the traditional methodology MBTA has used since new enabling
legislation was passed in 2000 that provided MBTA with these dedicated
funding sources.

New and Proposed Funding Sources: No new sources of funding are proposed
for this project.

# Stability and Reliability of Operating Finance Plan 

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

The *Low-Medium* rating reflects the overly optimistic operating cost
estimates and planning assumptions included in the financial plan.

**Agency Operating Financial Condition:** The operating condition of
MBTA is fair. The most recent audited financial statement indicates the
current ratio (ratio of assets to liabilities) is slightly above one.
There have not been any recent significant service cutbacks made by
MBTA.

**Operating Cost Estimates and Contingencies:** Annual operating and
maintenance expenses for the proposed project are estimated to be \$11.0
million in the first year of revenue operations. Systemwide operating
and maintenance costs are assumed to increase at less than the rate of
inflation (2% assumed versus a Consumer Price Index of 3%), which is
overly optimistic. Furthermore, this rate of growth in costs is well
below the historical experience of MBTA (5%). In addition, the plan does
not account for any real growth in wages, since the 2% growth in costs
is intended to cover both inflationary increases as well as wage
increases. The plan includes a fare increase of 25 percent in 2004, 15
percent in 2007, and 10 percent in 2010. These increases are both more
frequent and higher than fare increases have been historically.

Existing and Committed Funding: All of the operating and maintenance
funding for the project is existing and committed. Funding would be
drawn from the dedicated revenues that are currently already available
to the agency, including dedicated sales tax revenues, local assessments
paid by the municipalities served by MBTA, and advertising revenues.

New and Proposed Funding Sources: No new sources of operating funding
are proposed.

MAP