**Schuylkill Valley MetroRail**

**Philadelphia - Reading, Pennsylvania**

(November 2003)

# 

# Description 

The Southeastern Pennsylvania Transportation Authority (SEPTA) and the
Berks Area Reading Transportation Authority (BARTA) propose to develop
the Schuylkill Valley MetroRail (SVM) project extending northwest from
downtown Philadelphia approximately 74 route-miles to Reading. The
alignment of the proposed rail project would generally parallel the
Schuylkill Expressway (I-76), the Route 422 Expressway and the
Schuylkill River along existing SEPTA and Norfolk Southern Railroad
right-of-way. The SVM corridor is comprised of 52 municipalities in four
counties, including the smaller cities of Norristown, Pottstown, and
Phoenixville, suburban centers at King of Prussia and Great Valley, and
regional activity centers and attractions such as Center City
Philadelphia, King of Prussia Mall, Valley Forge National Park, and the
Reading Outlet Stores Mall. The proposed project would provide
intermodal connections to all major transportation corridors in the
region. The proposed project would utilize an innovative technology
consisting of conventional commuter rail car design modified to permit
single person operation. SVM would operate on shared track with regional
rail, Amtrak and freight trains and would use Philadelphia's Center City
Tunnel. SEPTA is also examining a possible linkage to the proposed Cross
County Metro project between King of Prussia and Norristown.

  ------------------------------------- ---------------------------------
  **Summary Description**               

  **Proposed Project:**                 Hybrid Commuter Rail

  ** **                                 74 Miles, 34 Stations

  **Total Capital Cost (\$YOE):**       \$2,588.9 Million

  **Section 5309 New Starts Share       \$2,071.1 Million (80%)
  (\$YOE):**                            

  **Annual Operating Cost (2020         \$65.2 Million
  \$YOE):**                             

  **Ridership Forecast (2020):**        47,800 Average Weekday Boardings

  ** **                                 27,400 Daily New Riders

  **Opening Year Ridership Forecast     41,200 Average Weekday Boardings
  (2012)**                              

  **FY 2005 Finance Rating:**           **Low**

  **FY 2005 Project Justification       **Not Rated**
  Rating:**                             

  **FY 2005 Overall Project Rating:**   **Not Recommended**
  ------------------------------------- ---------------------------------

The overall project rating of ***Not Recommended*** is based upon the
project's *Low* financial rating. This rating is based on the greater
than 60 percent New Starts share of project costs. The conference report
accompanying the FY 2002 Department of Transportation Appropriations Act
directs that, as of October 1, 2002, no new Full Funding Grant Agreement
may be executed with a Federal New Starts share greater than 60 percent.
The project\'s *Low* share rating and summary financial rating reflect
this Congressional direction. Although FTA is reporting SEPTA's
ridership forecasts for the project, FTA continues to have concerns
about the ridership levels anticipated by these estimates and is thus
not rating the project justification criteria. The overall project
rating applies to this *Annual Report on New Starts* and reflects the
information available 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
costs, 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.

In the coming months, FTA intends to work with SEPTA to improve its
ability to more accurately portray project benefits; identify a minimum
operating segment (MOS) which is fundable with local and Federal
resources; and develop a financial plan that reflects SEPTA's ability to
build and operate a major transit capital investment.

# Status 

FTA approved the project's entry into preliminary engineering (PE) in
January 2002, following the December 2001 publication of the Draft
Environmental Impact Statement (EIS). Although the project has been
approved for PE for nearly two years, SEPTA has yet to award a contract
for the PE work. The project's cost estimate increased by 45 percent
since last year due primarily to the inclusion of finance charges. FTA
continues to note concern with the proposed level (80 percent) of
Section 5309 New Starts funding and the need to identify an MOS as a
more practical project to pursue. Within the next few months, FTA
expects SEPTA to define an MOS, refine its travel forecasts, revise its
financial plan to be consistent with Federal funding constraints and
policies, and submit these to FTA for evaluation. Accordingly, a
Supplemental Draft EIS reflecting these revisions must be developed
before the project will be allowed to proceed.

TEA-21 Section 3030(a)(61) authorized the Philadelphia -- Schuylkill
Valley Metro for final design and construction. Through FY 2003,
Congress has appropriated \$34.57 million in Section 5309 New Starts
funds 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 an MOS is
defined (and a request for PE on the MOS is submitted to FTA) and for
next year's *Annual Report on New Starts*.

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

+---------------------------------------+---------------+--------------+
| **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  | 12,130        |              |
| Per Project Passenger Mile            |               |              |
| (Minutes)**                           | 835           |              |
|                                       |               |              |
|                                       | 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 Savings]{.underline} | N/A           |              |
| (millions of BTU)**                   |               |              |
|                                       | N/A           |              |
+---------------------------------------+---------------+--------------+
| **Cost Effectiveness Rating: Not      |               |              |
| Rated**                               |               |              |
+---------------------------------------+---------------+--------------+
| **Cost per Transportation System User | **[New Start  |              |
| Benefit (current year dollars/hour)** | vs.           |              |
|                                       | 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          |
+---------------------------------------+---------------+--------------+

######## 

# Project Justification 

# [Rating: Not Rated]{.underline} 

The project is *Not Rated* for project justification because FTA could
not evaluate the benefits of the project. SEPTA calculated the project's
cost effectiveness at \$33.24 per hour of transportation system user
benefit. However, FTA has concerns about the information submitted for
this measure. FTA will continue to work with SEPTA to improve its travel
demand projections. FTA further notes that unless SEPTA improves the
cost effectiveness of the project, its ability to advance into final
design may be jeopardized.

Based on 1990 Census data, there are an estimated 28,400 low-income
households, 39 percent of total households, and 379,360 jobs within a
½-mile radius of the proposed stations. The
Philadelphia-Wilmington-Trenton area is designated as a severe
non-attainment area for ozone.

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

# [Rating: Medium-High]{.underline} 

This *Medium-High* land use rating reflects strong existing land use and
transit-supportive policies in the corridor. The region's growth
management policies have worked well in creating transit-supportive
communities throughout the corridor. Development is continuing in the
corridor at a steady pace; many of the proposed developments provide a
transit-supportive mix of residential, office and commercial space.

Existing Conditions: The Schuylkill Valley MetroRail (SVM) study area
includes Center City Philadelphia that contains major concentrations of
office employment, two of the largest universities in the city of
Philadelphia, the University of Pennsylvania Hospital, Allegheny
University Hospital, and the University Science Center. Employment in
the Philadelphia CBD was approximately 290,000 in 1998. Employment
densities within the CBD are approximately 65,900 jobs per square mile,
whereas the density of the employment within ½ mile of the stations
throughout the corridor is approximately 15,900 jobs per square mile.
Total population within ½ mile of proposed stations in 1998 was over
181,700. Residential development ranges from high-rise projects to
traditional low-rise neighborhoods. Downtown Philadelphia has
residential densities of almost 17,900 people per square mile, with an
average population density throughout the corridor of approximately
7,600 people per square mile.

The majority of stations are located in urbanized settings with
extensive pedestrian facilities. Parking is constrained in Center City
Philadelphia, with approximately 0.15 parking spaces per employee. The
30^th^ Street Station in Center City Philadelphia serves as an
intermodal connection point between Amtrak and New Jersey Transit trains
and SEPTA Regional Rail system lines.

Future Plans, Policies, and Performance: The Commonwealth of
Pennsylvania and the Delaware Valley Regional Planning Commission have
transportation and growth management policies that focus development in
existing and emerging centers and corridors and maintain existing rural
areas. The Commonwealth's *Municipal Planning Code* provides for the
creation of Locally Designated Growth Areas as part of their
comprehensive plans. The Schuylkill Valley Metro corridor is the subject
of a Transportation and Community and System Preservation (TCSP) Pilot
Program grant that includes a regional Location Efficient Mortgage (LEM)
product, a regional transit-oriented development advocacy and
educational support campaign, and a prototype corridor case study to
prepare area plans for five stations.

The region and corridor are expected to continue to grow substantially
over the next 20 years, with total employment projected to reach
approximately 315,000 and 412,000 in the Philadelphia CBD and corridor
station areas, respectively. Key areas in the corridor that are expected
to contain a large percentage of the growth include Center City, which
continues to experience a strong upward trend in office and housing
(including a 93 percent office occupancy rate and an even higher
residential occupancy rate); Conshohocken, which has numerous
developments under construction and more planned; the King of Prussia
area; and several of the suburban townships such as Limerick and Upper
Providence which are successfully attracting biotech and pharmaceutical
industries. Recently, over 550,000 square feet of office space has been
built in Conshohocken along the Schuylkill Valley MetroRail corridor.

####### Local Financial Commitment 

# [Rating: Low]{.underline}

The *Low* local financial commitment rating was determined by the very
low non-Section 5309 New Starts share of the project capital cost.

######## 

# Proposed Non-Section 5309 New Starts Share of Total Project Costs: 20% 

# [Rating: Low]{.underline}

SEPTA and BARTA propose to use Section 5309 New Starts funds to cover 80
percent of project costs. State funding appropriations are proposed to
fund the balance of construction costs.

+------------------------+----------------------+----------------------+
| **Locally Proposed     |                      |                      |
| Financial Plan**       |                      |                      |
+------------------------+----------------------+----------------------+
| **[Proposed Source of  | **[Total Funding     | **[Percent of        |
| Funds]{.underline}**   | (\$mil               | Total]{.underline}** |
|                        | lion)]{.underline}** |                      |
+------------------------+----------------------+----------------------+
| **Federal:**           | \$2,071.1            | 80.0 %               |
|                        |                      |                      |
| Section 5309 New       |                      |                      |
| Starts                 |                      |                      |
+------------------------+----------------------+----------------------+
| **State:**             | \$431.5              | 16.7 %               |
|                        |                      |                      |
| Act 26 Bonds           | \$86.3               | 3.3 %                |
|                        |                      |                      |
| Infrastructure Safety  |                      |                      |
| Renewal Program (ISRP) |                      |                      |
+------------------------+----------------------+----------------------+
| **Total:**             | **\$2,588.9**        | 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 is based on the commitment of local funding for the
project but notes that SEPTA does not have the capacity to fund the
project if the New Starts share is significantly reduced.

**Agency Capital Financial Condition:** The current capital condition of
SEPTA is stable; however, the probability of experiencing funding
shortfalls in the near future is significant, as the plan assumes an
annual \$25 million grant from Homeland Security that remains uncertain.
The average age of the bus fleet is seven years, which is consistent
with the national average. Moody's rates SEPTA bonds as Aaa.

### Capital Cost Estimate and Contingencies: The Schuylkill Valley MetroRail project capital cost estimate includes a 20 percent contingency, which is reasonable. An inflation factor of three percent was applied to the estimated year of expenditure costs for the different cost categories. The project capital cost increased significantly from last year's cost estimate because: i) \$617.1 million in finance charges was added to the project capital cost; ii) the project schedule has been delayed; and iii) a slight change was made in the annual distribution of costs.

Existing and Committed Funding: About 16.7 percent of the non-Section
5309 New Starts funding sources (3.3 percent of total project costs) are
committed and come from an existing source, the State Infrastructure
Safety Renewal Program. Revenues from Act 26 funds, a State
transportation bond program from which SEPTA currently receives funds,
would provide the balance of the non-Section 5309 New Starts funding.
The Act 26 funds represent 16.7 percent of total project costs, which is
the statutory limit of funding assistance to be provided by the State.

New and Proposed Funding Sources: The plan assumes that \$431.5 million
will come from additional allocations from Act 26, of which \$300
million are budgeted and \$131.5 million are planned.

# Stability and Reliability of Operating Finance Plan 

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

The *Low-Medium* rating for the operating plan reflects the anticipated
operating funding shortfall resulting from the project and the
uncertainty of planned State and local operating assistance to cover
that shortfall.

**Agency Operating Financial Condition:** The current operating
financial condition of SEPTA is poor. The current ratio (assets divided
by liabilities) is estimated at 0.72, which is poor. While no service
cutbacks or budget deficits have been experienced in recent years, the
plan shows that the agency has a significant dependence on State
assistance to balance its operating budget. The financial plan indicates
that SEPTA has the capacity to cover operating cost increases of less
than 1.5 months up to FY 2029, and no capacity to cover operating cost
increases thereafter.

**Operating Cost Estimates and Contingencies:** Project operating and
maintenance expenditures for the project are projected at 3.7 percent of
the agency's total operating and maintenance expenditures throughout the
financial analysis period. Operating and maintenance costs for the
Schuylkill Valley MetroRail were developed using historical cost data
from similar transit services operated by SEPTA. The operating plan
suggests that any gap between revenues and expenditures will be covered
with a supplemental operating subsidy.

**Existing and Committed Funding:** The financial plan forecasts a 40.9
percent commitment of operating and maintenance funds in FY 2013,
including systemwide fares, senior reimbursements, and other operating
income. Although 81 percent of the operating funding sources exist,
almost half of these funding sources are considered planned since they
are subject to annual appropriations. The financial plan indicates that
SEPTA has minimal- to no-capacity to cover operating cost increases.

New and Proposed Funding Sources: New funding sources would include a
project-specific State subsidy and additional State transit assistance.
These sources are considered to be either planned or uncertain.

MAP