**Desire Streetcar Line**

**New Orleans, Louisiana**

(November 2003)

# Description 

The New Orleans Regional Transportation Authority (NORTA) is proposing
to construct a 2.9‑mile extension of its at-grade urban streetcar system
along North Rampart Street and St. Claude Avenue just east of downtown
New Orleans and parallel to the nearby Mississippi River. The Desire
Streetcar project is intended to provide low-income populations living
within the corridor with improved access to employment activities
downtown, the French Quarter, and the nearby Medical Center district,
and to promote economic re-development in adjacent historic
neighborhoods.

Since the project's last evaluation in November 2002, NORTA has changed
the Desire Streetcar Line's operating plan to extend service an
additional 0.7 miles to the Canal Streetcar Line currently under
construction. This improvement eliminates the need to transfer at North
Rampart and Canal Streets, thus providing a one-seat ride between the
low-income neighborhoods of Treme, Fauborg Marigny, St. Roch, and
Bywater and the city's Riverfront and central business district (CBD).
While NORTA estimates an additional 3,400 project boardings due to
visitors accessing the line between Canal Street and the Louis Armstrong
Heritage Park on North Rampart Street, the project is estimated to
produce only 650 hours of daily travel-time benefits in 2025. The Desire
Streetcar Line provides 24 stops along the alignment, with operating
speeds comparable to conventional bus service; consequently, the project
would not greatly reduce transit travel times for corridor residents and
would generate very short trips for non-residents.

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Streetcar                       |
+------------------------------------+---------------------------------+
| ** **                              | 3.6 Miles (2.9 new alignment),  |
|                                    | 24 Stations                     |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$121.2 Million                 |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$68.7 Million (57%)            |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Operating Cost (2025      | \$7.5 Million                   |
| \$YOE):**                          |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2025):**     | 20,200 Average Weekday          |
|                                    | Boardings                       |
+------------------------------------+---------------------------------+
| ** **                              | 3,700 Daily New Riders          |
+------------------------------------+---------------------------------+
| **Opening Year Ridership Forecast  | 20,100 Average Weekday          |
| (2006):**                          | Boardings                       |
+------------------------------------+---------------------------------+
| **FY 2005 Finance Rating:**        | # Medium                        |
+------------------------------------+---------------------------------+
| **FY 2005 Project Justification    | **Low-Medium**                  |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2005 Overall Project          | **Not Recommended**             |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

The overall project rating of ***Not Recommended*** is based upon the
project's poor cost effectiveness. 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.

##### Status

The Desire Streetcar project was approved into preliminary engineering
in February 2001. Project costs have increased by 20 percent since then,
due primarily to the acquisition of additional vehicles to interline
with the Canal Streetcar service and the inclusion of finance charges in
the capital cost estimate. At the same time, modest alignment changes
have resulted in some cost savings. NORTA and the Norfolk Southern
Railroad have not yet reached agreement on how to accommodate both
freight and streetcar service at the Press Street grade crossing in the
eastern portion of the corridor. Because the surrounding community has
rejected above- or below-grade alternatives at this crossing, any
failure to reach such an agreement would significantly hamper NORTA's
ability to move forward with the project.

The project is anticipated to receive a NEPA Record of Decision in
spring 2004. Through FY 2003, Congress has appropriated \$7.16 million
in Section 5309 New Starts funding for this project.

####### Evaluation 

The following criteria have been estimated in conformance with FTA\'s
*Reporting Instructions for the Section 5309 New Starts Criteria*,
updated in June 2003. The project will be re-evaluated 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:      |               |               |
| Low-Medium**                         |               |               |
+--------------------------------------+---------------+---------------+
| **Average Employment Per Station**   | **[New Start  |               |
|                                      | vs.           |               |
| **Average Low Income Households Per  | Baseline]{    |               |
| Station**                            | .underline}** |               |
|                                      |               |               |
| **Transportation System User Benefit | 4,430         |               |
| Per Project Passenger Mile           |               |               |
| (minutes)**                          | 207           |               |
|                                      |               |               |
|                                      | 1.24          |               |
+--------------------------------------+---------------+---------------+
| **Environmental Benefits Rating:     |               |               |
| Medium**                             |               |               |
+--------------------------------------+---------------+---------------+
| **[Criteria Pollutant                | **[New Start  |               |
| Reduced]{.underline} (tons)**        | vs.           |               |
|                                      | Baseline]{    |               |
| **Carbon Monoxide (CO)**             | .underline}** |               |
|                                      |               |               |
| **Nitrogen Oxide (NO~x~)**           | 9             |               |
|                                      |               |               |
| **Volatile Organic Compounds**       | 3             |               |
|                                      |               |               |
| **Particulate Matter (PM~10~)**      | 1             |               |
|                                      |               |               |
| **Carbon Dioxide (CO~2~)**           | 2             |               |
|                                      |               |               |
| **[Annual Energy                     | \[1,263\]     |               |
| Savings]{.underline} (millions of    |               |               |
| BTU)**                               | \[21,795\]    |               |
+--------------------------------------+---------------+---------------+
| **Cost Effectiveness Rating: Low**   |               |               |
+--------------------------------------+---------------+---------------+
| **Cost per Transportation System     | **[New Start  |               |
| User Benefit (current year           | vs.           |               |
| dollars/hour)**                      | Baseline]{    |               |
|                                      | .underline}** |               |
|                                      |               |               |
|                                      | \$55.48       |               |
+--------------------------------------+---------------+---------------+
| **Operating Efficiencies Rating:     |               |               |
| Medium**                             |               |               |
+--------------------------------------+---------------+---------------+
| **System Operating Cost per**        | >             | **[New        |
|                                      | **[Baseline]{ | Start]{       |
| **Passenger Mile (current year       | .underline}** | .underline}** |
| dollars)**                           | >             |               |
|                                      | > \$0.73      | \$0.76        |
+--------------------------------------+---------------+---------------+

\[ \] indicate an increase in emissions.

# 

# Project Justification 

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

The *Low-Medium* project justification rating balances the generally
transit supportive land use in the corridor with the project's poor cost
effectiveness. FTA notes that unless NORTA improves the cost
effectiveness of the Desire Streetcar Line, its ability to advance into
final design could be jeopardized. FTA intends to work with NORTA to
examine strategies to improve the project's cost effectiveness.

Based upon 2000 census data, there are 4,958 low-income households
within ½ mile of the station areas, which are 32 percent of the 15,469
households within ½ mile of the station areas. There are 106,287
employees within ½ mile of the station areas. The incremental cost per
incremental trip for the Desire Streetcar Line is \$9.61.

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

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

The *Medium* land use rating reflects moderate existing densities and
the pedestrian orientation of the corridor; the adoption of a
transit-supportive comprehensive land use plan for the city in 1999; and
the modest amount of redevelopment expected in the corridor.

**Existing Conditions: ** The Desire Streetcar corridor serves the New
Orleans CBD and adjacent historic residential neighborhoods.  The CBD
contains a high-density mix of employment, hotel, retail, and tourist
destinations, with a total of 96,000 jobs.  Outside the CBD, the
corridor serves a mix of neighborhood commercial uses surrounded by
residential areas.  Population densities are relatively high, averaging
7,700 persons per square mile.  The entire corridor is laid out on a
walkable street grid system, although some areas suffer from blight and
a general lack of landscaping and urban design elements.  Parking supply
in the CBD is fairly restrictive, and most parking in the residential
neighborhoods is on-street.

**Future Plans, Policies, and Performance: ** *The* *New Orleans Land
Use Plan*, adopted in 1999, addresses the primary issues faced by the
city including the need to stabilize population and spur re-investment
and redevelopment.  It has led to a complete overhaul of the city's
zoning code.  The current draft of this code, pending adoption in fall
2003, includes neighborhood mixed-use categories applicable to much of
the Desire corridor, which would assist in preserving and enhancing the
existing desirable elements of the corridor.  Other proposed changes to
the zoning code would streamline the development process.  The city's
design review authority for large projects and conditional-use projects
is an existing tool for ensuring that major new development is
transit-supportive; the city has demonstrated its use of this
authority.  Much of the corridor is eligible for city and State economic
development incentives, including tax exemptions or credits for
construction, rehabilitation, and job creation.   While such incentives
exist, regionally-adopted land use forecasts indicate a decrease in
corridor employment and only a modest increase in population.

The city's planning process and its land use plan have also greatly
improved public and neighborhood participation.  There is evidence of
increases in property values and reinvestment in buildings along Canal
Street, where a streetcar line is currently under construction. While
net growth forecast for the region in the near future is minimal, a
regional growth management outreach project is leading to the
development of parish comprehensive plans.

#### Local Financial Commitment 

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

The *Medium* rating for local financial commitment was determined by the
strong commitment of funds to the project, tempered by the use of
somewhat optimistic assumptions in the operating financial plan.

**Proposed Non-Section 5309 New Starts Share of Total Project Costs:
43%**

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

Just under 57 percent of funding for the Desire Streetcar Line project
would come from Section 5309 New Starts funds, with the balance coming
from NORTA dedicated tax revenues.

+------------------------+----------------------+----------------------+
| **Locally Proposed     |                      |                      |
| Financial Plan**       |                      |                      |
+------------------------+----------------------+----------------------+
| **[Proposed Source of  | **[Total Funding     | **[Percent of        |
| Funds]{.underline}**   | (\$mil               | Total]{.underline}** |
|                        | lion)]{.underline}** |                      |
+------------------------+----------------------+----------------------+
| **Federal:**           | \$68.7               | 56.7 %               |
|                        |                      |                      |
| Section 5309 New       |                      |                      |
| Starts                 |                      |                      |
+------------------------+----------------------+----------------------+
| **Local:**             | \$52.5               | 43.3 %               |
|                        |                      |                      |
| Regional Transit       |                      |                      |
| Authority              |                      |                      |
+------------------------+----------------------+----------------------+
| **Total:**             | **\$121.2**          | 100.0 %              |
+------------------------+----------------------+----------------------+

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

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

## Rating: Medium-High

The capital plan is rated *Medium-High* based on NORTA's adequate
financial capacity to implement a modest streetcar project and its
strong commitment of funds.

**Agency Capital Financial Condition:** The capital financial condition
of the agency is stable. NORTA's bus fleet average age is 6.2 years,
which is just below the national average. NORTA received a Baa3 rating
from Moody's for a lease purchase agreement.

### Capital Cost Estimate and Contingencies: The capital cost for the Desire Streetcar project increased from last year's cost estimate, and now includes \$7.1 million in finance charges. NORTA's capital cost estimate and 13.5 percent contingency estimate are both reasonable for this type of project at this stage of development. The agency demonstrates the financial capacity to absorb some cost increases.

Existing and Committed Funding: The non-New Starts funding share
consists of NORTA dedicated taxes, which are currently being collected
and are considered committed. This revenue source is projected to cover
the 43 percent of Desire Streetcar capital costs not covered by proposed
New Starts funding.

New and Proposed Funding Sources: There are no new or uncommitted
funding sources.

# Stability and Reliability of Operating Finance Plan 

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

The *Medium* operating plan rating reflects the high level of commitment
of funding sources and NORTA's overall adequate financial operating
capacity, tempered by the use of somewhat optimistic assumptions in the
financial plan with regards to operating costs and fare increases.

**Agency Operating Financial Condition:** The operating condition of
NORTA is fair. The ratio of current assets to current liabilities
according to the most recent audited financial statement submitted by
NORTA is 1.2, which is considered adequate. Historical data shows minor
service cutbacks in recent years.

**Operating Cost Estimates and Contingencies:** NORTA's rail operating
cost model considers revenue car miles, revenue train hours, and peak
rail cars. Streetcar and systemwide operating costs are projected to
increase at levels slightly lower than what has been experienced
historically. Bus and rail fares are assumed to grow at the rate of
inflation, with adjustments occurring every two years beginning in 2004.
The farebox recovery ratio for the NORTA system during the first full
year of the Desire Streetcar operation (FY 2007) is forecast at 36.7
percent and remains fairly stable throughout the 30-year time period.
According to the financial plan, NORTA's cash balances are projected to
cover a minimum of three months of operating expenses.

Existing and Committed Funding: Committed sources of operating and
maintenance funding include dedicated tax revenues, interest on NORTA's
capital reserve, passenger revenues from bus and rail, and other transit
revenues such as advertising revenue and State transit subsidies. All of
these funding sources are existing and committed. Committed operating
revenues account for 91 percent of NORTA system operating costs.

New and Proposed Funding Sources: Section 5307 Urbanized Formula funds
used for preventative maintenance are considered planned and account for
nine percent of NORTA operating costs.

MAP