```
                                                                 
Mass Transit: FTA's New Starts Commitments for Fiscal Year 2003  
(30-APR-02, GAO-02-603).					 
                                                                 
Since the early 1970's, the federal government has provided a	 
large share of the nation's capital investment in urban mass	 
transportation. Much of this funding has come through the Federal
Transit Administration's (FTA) New Starts Program, which helps	 
pay for rail, bus, and trolley projects. The Transportation	 
Equity Act for the 21st Century authorized about $6 billion in	 
"guaranteed" funding for the New Starts program through fiscal	 
year 2003. FTA's evaluation process assigns candidate projects	 
individual ratings for project justification and local financial 
commitments. The process also assigns an overall rating intended 
to reflect the project's merit. FTA recommended four projects for
funding commitments for fiscal year 2003 in its New Starts report
and budget proposal. FTA evaluated 50 proposed projects for	 
fiscal year 2003 and developed ratings for 31 of them.		 
Twenty-seven of these projects were rated as "highly recommended"
or "recommended." Although FTA has faced transit budget crunches 
for years, the agency will end the act's authorization period	 
with $310 million in unused commitment authority. Proposals to	 
limit the amount of New Starts funds would allow more projects to
receive such funding, but could harm specific projects being	 
developed and the local transportation planning process. For	 
example, limiting New Starts funds to 60 percent of a project's  
cost for the 49 projects now in final design or preliminary	 
engineering would "free up" $500 million for additional projects.
However, only 20 percent of these projects plan to use New Starts
funds for more than 60 percent of projected costs and would be	 
affected by such a cap. 					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-603 					        
    ACCNO:   A03192						        
  TITLE:     Mass Transit: FTA's New Starts Commitments for Fiscal    
Year 2003							 
     DATE:   04/30/2002 
  SUBJECT:   Construction grants				 
	     Federal aid for transportation			 
	     Federal grants					 
	     Mass transit funding				 
	     Mass transit operations				 
	     FTA New Starts Program				 

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GAO-02-603
     
A

Report to Congressional Committees

April 2002 MASS TRANSIT FTA?s New Starts Commitments for Fiscal Year 2003

GAO- 02- 603

Letter 1 Results in Brief 2 Background 5 FTA?s Evaluation and Rating Process
for New Starts Proposals Finalized 7

FTA Proposes Four Projects for New Starts Funding in Fiscal Year 2003 13 FTA
Ends TEA- 21 Authorization Period with Unused Commitment

Authority 17 Proposals to Cap New Starts Funding May Bring Mixed Results 22
Concluding Observations 27 Agency Comments 27 Scope and Methodology 27

Appendixes

Appendix I: FTA?s Fiscal Year 2003 New Starts Ratings and Funding
Recommendations 29

Appendix II: Projects Proposing a New Starts Share of Over 50 Percent 32

Appendix III: Transit Agencies and Metropolitan Planning Organizations
Contacted by GAO 33

Tables Table 1: Projects Recommended for New Starts Funding in Fiscal Year
2003 15 Table 2: FTA?s New Starts Commitment Authority and Funding

Commitments, March 2002 19 Figures Figure 1: FTA?s New Starts Evaluation and
Rating Process 8

Figure 2: New Starts Funding Proposals, Fiscal Year 2003 14

Abbreviations

BRT Bus Rapid Transit DOT Department of Transportation FFGA Full funding
grant agreement FTA Federal Transit Administration ISTEA Intermodal Surface
Transportation Efficiency Act of 1991 LRT Light Rail Transit MOS Minimal
Operating Segment MPO Metropolitan Planning Organization P. L. Public Law
TEA- 21 Transportation Equity Act for the 21 st Century TSM Transportation
System Management

Lett er

April 30, 2002 The Honorable Paul S. Sarbanes Chairman The Honorable Phil
Gramm Ranking Minority Member Committee on Banking, Housing,

and Urban Affairs United States Senate

The Honorable Don Young Chairman The Honorable James L. Oberstar Ranking
Democratic Member Committee on Transportation and Infrastructure House of
Representatives

Since the early 1970s, the federal government has provided a large share of
the nation?s capital investment in urban mass transportation. Much of this
investment has come through the Federal Transit Administration?s (FTA) New
Starts program, which helps pay for certain rail, bus, and trolley projects
through full funding grant agreements. 1 The maximum amount of federal funds
available to a project cannot exceed 80 percent of the estimated net cost.
In the last 9 years, this program has provided state and local agencies with
over $7 billion to help design and construct transit projects throughout the
country.

The Transportation Equity Act for the 21 st Century (TEA- 21), 2 enacted in
1998, authorized about $6 billion in ?guaranteed? funding for the New Starts
program through fiscal year 2003. Although the level of New Starts funding

is higher than it has ever been, the demand for these resources is also
extremely high. TEA- 21 identified over 190 projects nationwide as eligible
to compete for New Starts funding. FTA was directed to prioritize projects
for funding by evaluating, rating, and recommending potential projects on 1
A full funding grant agreement establishes the terms and conditions of
federal financial participation in the project and the maximum amount of
federal New Starts financial assistance for the project. FTA considers
projects for full funding grant agreements after they have progressed from
the initial planning and preliminary engineering phases to the

final design and construction phases. 2 Public Law 105- 178 (June 9, 1998).

the basis of specific financial and project justification criteria.
Furthermore, TEA- 21 required FTA to issue regulations for the evaluation
and rating process. The final rule became effective in 2001.

In addition, TEA- 21 requires us to report each year on FTA?s processes and
procedures for evaluating, rating, and recommending New Starts projects for
federal funding and on the implementation of these processes and procedures.
3 In light of what we saw as an impending ?budget crunch,? we recommended in
March 2000 that the Department of Transportation (DOT) further prioritize
among the projects it rates as ?highly recommended? and

?recommended? for funding purposes. 4 DOT has not fully implemented this
recommendation. This report discusses (1) FTA?s evaluation and rating
process, including its implementation of the final rule; (2) FTA?s fiscal
year 2003 New Starts report and budget proposal, including new projects that
FTA is proposing for grant agreements; (3) FTA?s remaining New Starts
commitment authority, and (4) the impact of imposing a cap of 50 or 60

percent of project costs on New Starts funding for transit projects. Results
in Brief FTA?s finalized New Starts evaluation process assigns candidate
projects individual ratings for project justification and local financial
commitment criteria contained in TEA- 21. The process also assigns an
overall rating

that is intended to reflect the project?s overall merit. FTA considers these
overall ratings to decide which projects will proceed to the preliminary
engineering and final design phases, be recommended for funding, and receive
full funding grant agreements. Although FTA?s New Starts project evaluation
and rating process for fiscal year 2003 was very similar to that of fiscal
year 2002, the agency made a number of refinements to the process. For
instance, for fiscal year 2003, potential grantees were more strictly
assessed on their ability to build and operate proposed projects than in the

past. Such assessments are meant to ensure that no outstanding issues
concerning a project?s scope or cost or a locality?s financial commitment
could jeopardize the project once a full funding grant agreement is signed.
3 See Mass Transit: FTA?s Progress in Developing and Implementing a New
Starts

Evaluation Process (GAO/ RCED- 99- 113, Apr. 26, 1999), Mass Transit:
Implementation of FTA?s New Starts Evaluation Process and FY 2001 Funding
Proposals (GAO/ RCED- 00- 149, Apr. 28, 2000), and Mass Transit: FTA Could
Relieve New Starts Program Funding Constraints (GAO/ GAO- 01- 987, Aug. 15,
2001).

4 Mass Transit: Challenges in Evaluating, Overseeing, and Funding Major
Transit Projects (GAO/ T- RCED- 00- 104, Mar. 8, 2000).

In addition, FTA made a number of technical changes in its evaluation of
proposed projects based on the final rule for the New Starts evaluation
process, which became effective in 2001. For example, FTA has replaced the
?cost per new rider? measure of cost effectiveness with a new measure of
?transportation system user benefits,? which emphasizes the potential
reduction in the amount of travel time and out- of- pocket costs that people
would incur taking a trip. FTA is currently in the process of phasing in
this measure.

FTA?s evaluation process led it to recommend four projects for funding
commitments for fiscal year 2003 in its New Starts report and budget
proposal. FTA evaluated 50 proposed projects for fiscal year 2003 and
developed ratings for 31 of them. 5 Twenty- seven of these projects were
rated as highly recommended or recommended. FTA proposed grant agreements
for two of these projects because they met its ?readiness? 6 and technical
capacity criteria. The remaining 25 highly recommended or recommended
projects were not proposed for grant agreements for several reasons.
According to FTA, the majority of these projects did not meet tests for
readiness and technical capacity. FTA is recommending two

additional projects for funding commitments in fiscal year 2003 that were
rated last year and proposed for grant agreements. FTA considers these

?pending federal commitments.? Although FTA has been faced with an impending
transit budget crunch for several years, the agency will end the TEA- 21
authorization period with $310 million in unused commitment authority for
several reasons. First, in fiscal year 2001, the Congress substantially
increased FTA?s authority to make contingent commitments, subject to future
authorizations and appropriations. Second, to preserve commitment authority
for future projects, FTA did not request any funding for preliminary
engineering activities in the fiscal year 2002 and 2003 budget proposals- a
routine practice in prior years. Third, in determining which projects are
ready for

5 Seventeen projects were not rated because projects with anticipated New
Starts funding of less than $25 million are exempt from the evaluation and
rating process. FTA strongly encourages sponsors who believe their projects
to be exempt to nonetheless submit information for evaluation. Two other
projects were not rated because they submitted insufficient information for
a complete evaluation. 6 In determining which projects can be expected to be
ready for grant agreements and thus be recommended for funding, FTA applies
tests for readiness and technical capacity. FTA

ensures that no outstanding project scope or cost issues remain and that
there are no outstanding local financial commitment issues.

grant agreements, FTA has applied strict tests for readiness and technical
capacity. As a result, fewer projects than expected were recommended for New
Starts funding for fiscal years 2002 and 2003. For instance, only 2 of the
14 projects that FTA officials estimated last year would be ready for grant
agreements are being proposed for funding commitments in fiscal year 2003.
We note, however, that the timing and magnitude of New Starts projects
dictates how much commitment authority is available for future projects.
Finally, about half of the unused commitment authority ($ 157

million) results from FTA?s response to the recommendation in our August
2001 report to ?release? the commitment authority reserved for a Los Angeles
subway project for which the federal funding commitment had been withdrawn.
Proposals to limit the amount of New Starts funds that could be applied to
projects would allow more projects to receive such funding, but could

negatively affect specific projects being developed and the local
transportation planning process. For example, based on current estimates of
project costs, limiting New Starts funds to 60 percent of a project?s cost
for the 49 projects 7 currently in final design or preliminary engineering
would ?free up? about $500 million for additional projects. However, only

20 percent of these projects currently being developed plan to use New
Starts funds for over 60 percent of project costs and would be affected by
such a cap. While some project officials indicated that they may be able to
make up for the reduced New Starts commitment with other federal or

local funds, others would not be able to tap into any other funding sources
and therefore would have to modify their scope or schedule or even terminate
the project. Furthermore, any decision to make up the difference with
additional federal or local funds could affect other transportation
projects. For example, one project official indicated that redirecting funds
from highway or other transit projects would indefinitely delay these
projects until additional funding is available. Finally, officials from
several Metropolitan Planning Organizations (MPO) stated that a cap on New

Starts funds could influence their selection of highway over transit
projects since the decisions are often affected by the availability of funds
from various federal programs and which projects will receive the highest
federal share.

7 Alaska Marine Highway System has already received its federal funding and
therefore was not included in our analysis.

Background TEA- 21 authorized a total of $36 billion in ?guaranteed? funding
8 through 2003 for a variety of transit programs, including financial
assistance to states and localities to develop, operate, and maintain
transit systems. One of these programs, the New Starts program, provides
funds to transit

providers for constructing or extending certain types of mass transit
systems. 9 A full funding grant agreement (FFGA) establishes the terms and
conditions for federal participation, including the maximum amount of
federal funds available for the project, which by statute cannot exceed 80
percent of its estimated net cost. The grant agreement also defines a
project?s scope, including the length of the system and the number of
stations; its schedule, including the date when the system is expected to
open for service; and its cost. To obtain a grant agreement, a project must
first progress through a local or regional review of alternatives, develop
preliminary engineering plans, and obtain FTA?s approval for final design.
10 8 ?Guaranteed? funds are subject to a procedural mechanism designed to
ensure that minimum amounts of funding are available each year.

9 Other federal funds available through DOT highway and transit programs can
be used to develop, plan, or construct these projects. 10 The alternatives
analysis stage provides information on the benefits, costs, and impacts of
alternative strategies leading to the selection of a locally preferred
solution to the community?s mobility needs. During the preliminary
engineering phase, project sponsors refine the design of the proposal,
taking into consideration all reasonable design alternatives- which results
in estimates of costs, benefits, and impacts. Final design is the last phase
of project development before construction and may include right- of- way
acquisition, utility relocation, and the preparation of final construction
plans and cost estimates.

TEA- 21 requires that FTA evaluate projects against ?project justification?
and ?local financial commitment? criteria contained in the act. FTA assesses
the project justification or technical merits of a project proposal by
reviewing the project?s mobility improvements, environmental benefits, cost-
effectiveness, and operating efficiencies. In assessing the stability of a
project?s local financial commitment, FTA assesses the project?s finance
plan for evidence of stable and dependable financing sources to construct,
maintain, and operate the proposed system or extension. In evaluating this
commitment, FTA is required to determine whether (1) the proposed

project?s finance plan incorporates reasonable contingency amounts to cover
unanticipated cost increases; (2) each proposed local source of capital and
operating funds is stable, reliable, and available within the timetable for
the proposed project; and (3) local resources are available to operate the
overall proposed mass transportation system without requiring

a reduction in existing transportation services. 11 Although these
evaluation requirements existed prior to the enactment of the act, TEA- 21
requires FTA to (1) develop a rating for each criterion as well as an
overall rating of highly recommended, recommended, or not recommended and
use these evaluations and ratings in approving projects? advancement to the
preliminary engineering and final design phases and approving grant
agreements; and (2) issue regulations on the evaluation and rating process.
TEA- 21 also directs FTA to use these evaluations and ratings to decide
which projects to recommend to the Congress for funding in a report due each
February. 12 These funding recommendations are also

reflected in the department?s annual budget proposal. In addition, TEA- 21
requires FTA to issue a supplemental report to the Congress each August that
updates information on projects that have advanced to the preliminary

engineering or final design phases since the annual report. 11 FTA?s fiscal
year 2003 evaluations were supported by reviews conducted by FTA
contractors. 12 In the annual appropriations act for DOT, the Congress
specifies amounts of funding for individual New Starts projects.

FTA?s Evaluation and In April 2000, we reported that FTA had made
substantial progress in developing and implementing an evaluation process
that included the Rating Process for New

individual criterion ratings and overall project ratings required by TEA-
21. 13 Starts Proposals Before TEA- 21 was enacted, FTA had already taken
steps to revise its Finalized evaluation process of the New Starts program
because most of the evaluation requirements contained in the act were
introduced by the Intermodal Surface Transportation Efficiency Act of 1991
(ISTEA). FTA uses the results to approve projects for the preliminary
engineering and

final design phases, to execute grant agreements, and to make annual funding
recommendations to the Congress. FTA?s final rule, issued in December 2000,
formalized the evaluation and rating process. 14 This year?s process used
most of the procedures set forth in the final rule. New Starts Evaluation
and

FTA?s current New Starts evaluation process assigns candidate projects
Rating Process Assesses individual ratings for each TEA- 21 criterion to
assess each project?s Project?s Justification and

justification and local financial commitment. The process also assigns an
Local Financial

overall rating that is intended to reflect the project?s overall merit. FTA
considers these overall ratings to decide which projects will proceed to the
Commitment

preliminary engineering and final design phases, be recommended for funding,
and receive full funding grant agreements (see fig. 1 for an illustration of
the process). 13 See Mass Transit: Implementation of FTA?s New Starts
Evaluation Process and FY 2001 Funding Proposals (GAO/ RCED- 00- 149, Apr.
28, 2000). 14 Most provisions of the final rule became effective in April
2001. Provisions regarding the measurement of transportation system user
benefits took effect on September 1, 2001.

Figure 1: FTA?s New Starts Evaluation and Rating Process a The local share
is the percentage of a project?s capital cost to be funded from sources
other than federal funds. b According to FTA, this optional criterion gives
grantees the opportunity to provide additional information about a project
that may add confidence of the project?s overall success.

Source: FTA.

A project?s overall rating is a combination of the project?s justification
and local financial commitment ratings. With respect to project
justification, FTA provides individual ratings for the four criteria
identified by TEA- 21-

mobility improvements, environmental benefits, operating efficiencies, and
cost- effectiveness- as well as the degree to which existing development
patterns and local land- use policies are likely to foster transit-
supportive land use. According to FTA, the agency also considers a variety
of other

factors when evaluating the project?s justification, including the degree to
which policies and programs are in place as assumed in the forecasts, the
project?s management capability, and additional factors relevant to local
and national priorities. To evaluate a project?s local financial commitment,
FTA rates the project on its capital and operating finance plans and the
local share of its costs. 15 Due to the competitive nature of the New Starts
program, FTA is continuing to encourage project sponsors to lower the

requested New Starts funding. After analyzing the documentation submitted by
the project?s sponsors, FTA assigns a descriptive rating (high, medium-
high, medium, medium- low, or low) for each of the project justification and
local financial commitment criteria. As figure 1 shows, once the individual
criterion ratings are

completed, FTA assigns summary project justification and local financial
commitment ratings by combining the individual criterion ratings. In
developing the summary project justification rating, FTA gives the most
weight to the criteria for transit- supportive land use, cost-
effectiveness, and mobility improvements. 16 The summary local financial
commitment ratings, the measures for the proposed local share of capital
costs and the strength of the capital and operating financial plans are
given equal consideration. FTA combines the summary project justification
and local financial commitment ratings to create an overall rating for the
project of highly recommended, recommended, or not recommended. To receive a

highly recommended rating, a project must have summary ratings of at least
medium- high for the project justification and local financial commitment.
To receive a rating of recommended, the project must have

summary ratings of at least medium. A project is rated as not 15 In addition
to the local share proposed to satisfy federal requirements, FTA considers
additional commitments of local funds because they indicate a strong local
commitment to the project. Previous nonfederal support for other significant
fixed guideway systems implemented in the area is also considered.

16 According to FTA, it attempts to reflect the unique characteristics and
objectives of each New Starts project in consideration of the project
justification criteria and other factors.

recommended when either summary rating is lower than medium. FTA has also
added one- letter indicators to the not recommended rating that explain
where an improvement is needed-? j? for project justification, ?o? for the
operating finance plan, and ?c? for the capital finance plan.

In preparing its New Starts funding proposal each year, FTA first accounts
for projects with existing grant agreements. Consideration is then given to
projects with an overall rating of recommended or higher. However, some
projects rated as highly recommended or recommended may not meet FTA?s
readiness test for funding. A project passes the readiness test when

there is a minimum of risk associated with the project being constructed on
time and within budget. FTA uses a number of milestones to make this
determination. For example, FTA determines whether the necessary real estate
has been acquired, utility arrangements have been made, and local funding
sources are in place. According to an FTA official, this ensures that there
are no ?red flags? signaling that the project has outstanding issues it must
address. In addition, FTA considers the following issues in evaluating
grantees:

 the degree to which the transit agency has a satisfactory plan to manage
an existing bus fleet to ensure no degradation of service for users of a
current system;

 compliance with the Americans with Disabilities Act of 1990, including
obtaining financial commitments necessary to maintain accessible service,
make necessary improvements, and comply with key requirements for stations;
and

 compliance with air quality standards in the region. For its New Starts
report for fiscal year 2003, FTA evaluated a total of 50 projects and
provided overall ratings for 31 of these projects. 17 Of the 31 projects
that were rated, 25 were rated as recommended, 2 projects were rated as
highly recommended, and 4 projects received not recommended

ratings. According to FTA, few projects received highly recommended 17
Seventeen projects were not rated because projects with anticipated New
Starts funding of less than $25 million are exempt from the evaluation and
rating process. FTA strongly encourages sponsors who believe their projects
to be exempt to nonetheless submit information for evaluation. Two other
projects were not rated because they submitted

insufficient information for a complete evaluation.

ratings because FTA has set the bar high for such ratings. 18 Projects must
have a good strong rating for justification (i. e., at least a medium) and a
strong local financial commitment rating (i. e., at least a medium- high) to
receive such ratings. FTA believes that few projects received a not
recommended rating because project officials have a better understanding

of the evaluation and rating process and criteria being used to assess a
project?s justification and local financial commitment. In assigning overall
project ratings, FTA emphasized the continuous nature of project evaluation.
Throughout the New Starts report, FTA underscored

the fact that as candidate projects proceed through the final design stage,
information concerning costs, benefits, and impacts will be refined.
Consequently, FTA updates its ratings and recommendations at least annually
to reflect this new information, changing conditions, and refined

financing plans. Thus, a project that is rated as recommended in the fiscal
year 2003 report could receive a higher or lower rating in the fiscal year
2004 report to reflect changes in the project. For example, in the fiscal
year 2002 report, the Charlotte (South Corridor Light Rail Transit) project
received a recommended rating. However, this year the project received a
highly recommended rating. FTA attributed the project?s improved rating to
strong transit- supportive land- use policies in place to support the
proposed light rail project and an improved finance plan.

Final Rule Refines New Although the criteria and measures in the New Starts
evaluation and rating

Starts Evaluation Process process have not changed, FTA?s final rule, issued
in December 2000, made

a number of refinements to the process. The final rule was used as FTA
considered its New Starts proposals for fiscal year 2003. The most
significant changes to FTA?s evaluation process focus on four key issues:

 the measure of cost- effectiveness,

 the use of a no- build and Transportation System Management (TSM)
alternative for evaluation purposes,

 the overall project rating, and

 the measure for mobility improvements. 18 In its fiscal year 2002 New
Starts report, FTA rated 2 projects as highly recommended, 21 projects as
recommended, and 3 projects as not recommended.

Historically, FTA used a cost per new rider measure to indicate the
costeffectiveness of a proposed project. The consensus of commenters on the
proposed rule was that the focus on new riders ignores benefits provided to
other riders, which may bias the measure against cities with ?mature?
transit systems, where the focus of a proposed project may be to improve

service, not attract new riders. In response to comments on the proposed
rule, FTA replaced the cost per new rider measure with a new measure of
transportation system user benefits. According to FTA, this measure is based
on the basic goals of any major transportation investment- to reduce the
amount of travel time and out- of- pocket costs that people incur for taking
a trip (i. e., the cost of mobility). This approach deemphasizes the number
of new riders by measuring not only the benefits to people who change
transportation modes (e. g., highways to transit) but also benefits to
existing riders and highway users. FTA no longer evaluates a proposed
project (such as light rail) against both

a separate no- build and TSM alternatives. For fiscal year 2003, FTA
evaluated proposed New Starts projects against a single ?baseline

alternative? agreed upon by project sponsors and FTA. The baseline
alternative involves transit improvements that are lower in cost than the
proposed New Start project, which result in improved transit mobility
compared to the no- build alternative. The purpose of the baseline
comparison is to isolate the costs and benefits of the proposed major

transit investment. FTA has also added one- letter indicators to the not
recommended rating to explain where improvement is needed- j for project
justification, o for the operating funding plan, and c for the capital
finance plan. For example, in the fiscal year 2003 New Starts report, the
Cincinnati (Interstate 71 Corridor Light Rail) project was found to need
improvement in the capital finance plan and was rated as not recommended
(c).

Finally, FTA refined the measure for mobility improvements. In the past,
this measure was based on (1) projected savings in travel time and (2) the
number of low- income households within a half- mile of the proposed
stations. In response to concerns about the scope of this measure, FTA added
a new factor for destinations of jobs within a half- mile of boarding

points on the new systems. This new factor complements the existing factor
of low- income households within a half- mile of boarding points.

FTA Proposes Four FTA?s New Starts report and budget for fiscal year 2003
requests that $1. 21

Projects for New Starts billion be made available for the construction of
four new transit systems

and expansions of existing systems through the New Starts program (see
Funding in Fiscal Year

app. I for FTA?s 2003 budget proposal and project ratings). After amounts
2003

for FTA oversight activities and for other purposes specified by TEA- 21 19
are subtracted, a total of $1. 19 billion would remain available for
projects in fiscal year 2003. Of this amount, a total of $1. 03 billion
would be allocated among 25 projects with existing grant agreements. An
additional $134.1 million would be allocated to the four projects proposed
for grant agreements. 20 The remaining $31 million would be allocated to
five ?meritorious? projects to continue project development. 21 (See fig.
2.) 19 The Department of Transportation and Related Agencies Appropriations
Act for fiscal year 2002 authorized FTA to use up to 1 percent of amounts
made available for the New Starts program for project management oversight
activities rather than .75 percent as under prior

law. TEA- 21 requires that specified amounts of New Starts funds be set
aside annually for projects in Alaska and Hawaii, for new fixed guideway
systems and extensions to existing systems that are ferry boats or ferry
terminal facilities, or that are approaches to ferry terminal facilities.

20 About $79.10 million would be allocated between two projects for which
funding commitments are currently pending, and $55 million would be
allocated between the two projects that are expected to be ready for funding
commitments before the end of fiscal year 2003. 21 These five projects were
selected to receive 1 year of funding because they are located in a highly
congested or rapidly growing area, have a high level of local financial
commitment, and are expected to progress to final design and construction by
the end of fiscal year 2003.

Figure 2: New Starts Funding Proposals, Fiscal Year 2003

Source: GAO?s analysis of FTA data.

For fiscal year 2003, FTA evaluated 50 projects and prepared ratings for 31
of them. Of the 31 projects that received ratings, FTA rated 27 projects as
highly recommended or recommended, and proposed executing new grant
agreements for 2 projects that are expected to meet the readiness criteria

by the end of fiscal year 2003. In addition, FTA is proposing two other
projects for grant agreements for fiscal year 2003. These two projects- New
Orleans (Canal Street Spine) and San Diego (Oceanside- Escondido Rail
Corridor) were not rated this year. Although they were proposed for funding
commitments last year, the grant agreements were not executed, and FTA
characterizes the projects as pending federal commitments. According to FTA,
the ratings for these two projects from last year are still valid. 22 (Table
1 shows the ratings for the four projects recommended for New Starts funding
in fiscal year 2003.) Table 1: Projects Recommended for New Starts Funding
in Fiscal Year 2003

Source: FTA?s New Starts report for fiscal years 2002 and 2003.

22 The New Orleans (Canal Street Spine) project received an overall rating
of recommended; the San Diego (Oceanside- Escondido Rail Corridor) project
was rated as highly recommended. FTA is proposing these projects again for
fiscal year 2003.

As table 1 shows, one of the four proposed projects received a highly
recommended rating on the basis of its strong cost- effectiveness rating,
good mobility improvement rating, and a demonstrated local financial
commitment to build and operate the project. The proposed San Diego
(Oceanside- Escondido Rail Corridor) project received a medium- high rating
in mobility improvement because it is expected to serve 15, 100 average
weekday boardings in 2015, and 8,600 new daily riders. According to FTA, it
will also help to eliminate the heavy congestion of northern San Diego
County along the Route 78 corridor, saving 700,000 hours of travel time a
year compared to the TSM alternative. In addition, according to FTA, the
high ratings for the proposed project?s capital and operating

financing plans reflect the solid financial condition of the transit agency
and the other funding partners, as well as the sufficient projected revenue
growth and contingencies. The other three projects proposed for grant
agreements received overall

ratings of recommended. All were rated medium or medium- high on the project
justification and local financial commitment criteria. For instance, the New
Orleans (Canal Street Spine) project?s recommended rating was based on its
strong cost- effectiveness rating and demonstrated local financial
commitment. According to FTA?s New Starts report, the transit

agency has committed 100 percent of its local capital and operating funds
through funding sources such as a loan that would be paid back by a new
sales tax on hotels and motels. In contrast, the sponsor of another project
that was not recommended for funding in 2003 has been unable to

designate specific capital funds or identify specific revenue sources for
operating the proposed project. The New Orleans (Canal Street Spine)
project?s strong financial rating also reflects FTA?s favorable assessment
of the transit agency?s action to reduce recent deficits through fare
increases, tax increases, and use of leases for new buses.

Twenty- five other New Starts projects received highly recommended or
recommended ratings but were not proposed for grant agreements. Two of these
projects, San Diego (Mid- Coast Corridor) and Charlotte (South Corridor
LRT), received highly recommended ratings based on their strong cost-
effectiveness, transit- supportive land- use, and local financial commitment
ratings but were not proposed for funding. Charlotte did not meet FTA?s
?readiness? test. FTA officials told us that the San Diego (MidCoast)
project met FTA?s evaluation and rating criteria as well as its readiness
test but was not selected because completing the San Diego (Mission Valley
East LRT) extension (an ongoing project) is the transit authority?s top
priority, and FTA officials believe that the authority may not

have the financial capacity to fund both projects at this time. The other 23
projects were rated overall as recommended. Many of these projects were not
proposed for grant agreements in fiscal year 2003 because they are in the
early stages of development and are not ready for final design or
construction. Finally, FTA rated four proposed projects as not recommended
primarily

because of low local financial commitment summary ratings due to the lack of
committed local funding to build and operate the systems or the lack of
clearly defined cost estimates and contingencies. For instance, one of the

four projects received low ratings for the stability and reliability of its
capital and operating finance plans, reflecting FTA?s concern about the
large share of uncommitted and/ or unidentified local funding, and the
absence of an operating plan. Other reasons for receiving a not recommended
rating include a lack of demonstrated progress since last year?s rating, the
relatively high level of New Starts funding proposed, and the reliance on
the passage of a sales tax referendum for a portion of the local share.

FTA Ends TEA- 21 Implementing FTA?s New Starts report and budget proposal
for fiscal year Authorization Period

2003 would leave FTA with about $310 million in unused commitment authority.
Although FTA has been faced with an impending transit budget with Unused
crunch for several years, the agency would end the TEA- 21 authorization

Commitment Authority period with unused commitment authority for several
reasons. First, the

Congress in fiscal year 2001 substantially increased FTA?s authority to make
contingent commitments, subject to future authorizations and appropriations.
Second, to preserve commitment authority for future projects, FTA did not
request any funding for preliminary engineering activities in the fiscal
year 2002 and 2003 budget proposals- a routine practice in prior years.
Third, in determining which projects are ready for a grant agreement, FTA
has applied stricter tests for readiness and technical capacity. As a
result, fewer projects than expected were recommended for New Starts funding
for 2002 and 2003. For instance, only 2 of the 14 projects that FTA
estimated last year would be ready for grant agreements in fiscal year 2003
are being proposed for funding commitments. Finally, about half of the
unused commitment authority results from FTA?s response

to the recommendation in our August 2001 report to release $157 million in
commitment authority reserved for a Los Angeles subway project for which the
federal funding commitment had been withdrawn.

Record Amounts Provided FTA was authorized to make a record level of funding
commitments-

for New Starts Program about $10 billion- for the New Starts program from
1998 through 2003.

TEA- 21 provided the majority of FTA?s commitment authority, authorizing $6.
09 billion in ?guaranteed? funding for the New Starts program. In addition,
TEA- 21 and the Department of Transportation?s Appropriation Act for fiscal
year 2001 authorized FTA to make an additional $3.4 billion in contingent
commitments, subject to future authorizations and appropriations. Contingent
commitment authority is designed to allow FTA to execute grant agreements
that extend beyond the 6- year period of TEA- 21. TEA- 21 authorized
contingent commitments in an amount equivalent to the last two years of
?guaranteed? funding authorized by the

act. The fiscal year 2001 appropriations act increased FTA?s contingent
commitment authority to an amount equivalent to the last 3 fiscal years of
funding. According to FTA officials, after accounting for required projects

for Dulles, Chicago, and Minneapolis, this ?extra year? of contingent
commitment authority provided FTA with about $500 million beyond that
provided by TEA- 21 that could be used to fund additional projects.

According to FTA, it has already committed approximately $8.9 billion for
New Starts projects and program activities. Specifically, about $7.2 billion
is committed to the 25 23 projects with existing grant agreements. 24 After
accounting for other requirements (such as the cost of project management
oversight), which are expected to total about $1.7 billion, about $1.1
billion remains for new grant agreements in fiscal year 2003. (Table 2
summarizes

FTA?s commitment authority and funding commitments, as of March 2002.) 23 As
of November 2001. 24 FTA will enter the period covered by the next
authorization legislation with significant outstanding commitments (about
$2. 6 billion), as at the beginning of the 6- year period covered by TEA-
21.

Tabl e 2: FTA?s New Starts Commitment Authority and Funding Commitments,
March 2002

Dollars in millions

Commitment authority Amount

TEA- 21 $6, 092. 40 Contingent commitment authority 3,409.20 Commitment
authority for Bay Area Rapid Transit (BART) a 453.56 Other b 35. 99

Total commitment authority $9,991.15 Funding commitments

ISTEA FFGAs ($ 3, 086.50) TEA- 21 FFGAs (4, 150.92) Project management
oversight (48.15) Mandated projects c (468. 42) Other d (1, 141. 83)

Total funding commitments ($ 8, 895.82) Remaining commitment authority
$1,095.33

Note: Numbers do not add due to rounding. a ISTEA provided $272.95 million
of commitment authority for BART and the fiscal year 2001 DOT appropriations
act provided an additional $180. 61 million.

b Includes reallocated funds from unobligated balances of fiscal year 2000
appropriations ($ 26.99 million), $4 million in appropriations beyond the
?guaranteed? authorization in fiscal year 2001, and $5 million in
appropriations from P. L. 106- 246. c Includes congressionally mandated
capital projects for Alaska, Hawaii, Chicago, and Dulles.

d Includes all project costs not covered by grant agreements, such as
preliminary engineering costs. Source: FTA.

Implementing FTA?s New Starts report and budget proposal for fiscal year
2003 would leave FTA with about $310 million in unused commitment authority.
The budget proposes $55 million for two new projects and $79.1 million for
the two projects with pending grant agreements for fiscal year 2003.
However, the $134. 1 million requested for these projects for 2003 will only
be a ?down payment? on what would amount to a total federal commitment of
$785 million 25 for these four projects over the next several years, if no
changes were made to the current project proposals. This

amount also includes $27 million for four meritorious projects without 25 Of
this amount, $785 million, $36. 15 million was provided to several of the
projects in this category in fiscal years 2001 and 2002.

grant agreements, as well as a fifth project that was mandated by the
Congress in fiscal year 2001 with funding of $4 million. Therefore, FTA ends
the TEA- 21 authorization period with $310 million in unused

commitment authority. To preserve commitment authority, FTA did not request
any funding for preliminary engineering activities in the fiscal year 2002
and 2003 budgets. 26 According to FTA, it has provided an average of $150
million a year from fiscal year 1998 through fiscal year 2001 for projects?
preliminary engineering activities. However, FTA did not recommend any funds
for preliminary engineering activities in fiscal years 2002 and 2003.
According to a senior FTA official, this approach allowed the agency to
conserve

funds for existing and new grant agreements and ensured that funds were only
provided to projects that were ready to move forward. The official further
noted that projects may use other federal funding for preliminary
engineering activities and no project should be negatively impacted if New
Starts funding was not provided for these activities in 2002 and 2003.
Officials from several transit projects in the preliminary engineering phase
that we contacted in 2001 indicated that they would use other federal funds

and/ or state and local funds to pay for their preliminary engineering work.
Fewer Projects Than

More state and local transit agencies than ever are competing for New
Anticipated Receive Grant

Starts funds. However, FTA?s stricter tests for readiness and technical
Agreements

capacity resulted in fewer projects that were ready for a grant agreement
and thus recommended for funding for 2002 and 2003. As mentioned earlier,
FTA uses a number of milestones to determine whether a project is
sufficiently developed to be considered for a grant agreement. For example,
FTA determines whether the necessary real estate has been

acquired, utility arrangements have been made, and local funding sources are
in place. According to an FTA official, this ensures that there are no red
flags signaling that the project has outstanding issues it must address. For
instance, only 2 of the 14 projects that FTA estimated last year would be in
or ready to enter the final design phase at the end of fiscal year 2002-

signaling that they were ready to execute a grant agreement- are being
proposed for funding commitments in fiscal year 2003. Several of these
projects have not yet been approved to enter the final design phase. Like
the approval to enter preliminary engineering, FTA reviews the project?s

26 Under TEA- 21, no more than 8 percent of the amounts made available each
year for New Starts projects shall be available for activities other than
final design and construction.

costs, benefits, and impacts under the project evaluation criteria to
determine when a project is ready to enter the final design phase. FTA
identified five meritorious projects that it is recommending for $31 million
in funding in fiscal year 2003 to continue their development. 27 These
projects have met the planning requirements of the New Starts program and
have strong local financial commitments. However, they all

have outstanding issues, such as environmental and financing concerns, which
prevented them from passing FTA?s readiness test. For instance, one project
must resolve technology issues that relate to bus rapid transit buses- 60-
foot hybrid- electric buses with left and right side doors for

access. Another project is addressing historic preservation issues related
to several stations that would be reconstructed as part of the project.
Finally, the scale of one project requires further work before a federal
commitment can be made. The project is too large (estimated total project
cost of $4. 4 billion) for the normal minimum operable segment concept on

which a grant agreement is based to work and is expected to require funding
over several authorization periods. According to a senior FTA official, the
project?s sponsors and FTA need to determine how to resolve

this issue and proceed forward. In addition, the timing and magnitude of
individual New Starts projects dictates how much commitment authority is
available for future projects. For example, the total New Starts share for
the five meritorious projects is about $2. 8 billion. If one or two of these
projects had matured faster and been ready for a grant agreement, FTA would
have essentially exhausted its commitment authority. A senior FTA official
acknowledged that it would have been ?a very different ball game? if more
projects had been ready for a grant agreement this year or if one large
project, such as New York (Long Island Railroad East Side Access)- with a
New Starts share of $2. 2

billion- had matured faster. 27 These projects may be ready to progress to
final design and construction by the end of fiscal year 2003.

Finally, FTA recently increased its available commitment authority by $157
million by releasing amounts associated with a project for which the federal
funding commitment had been withdrawn. As of August 2001, FTA had reserved
$647 million in commitment authority for a New Starts project in Los
Angeles. At that time, we reported that two segments of that project had
been suspended for over 3 years and that FTA had informed the project
sponsors that it no longer had funding commitments for these segments. We
also stated that releasing the commitment authority attributable to projects
for which the federal funding commitment had been withdrawn

would significantly increase FTA?s flexibility to execute grant agreements
for additional projects. Therefore, we recommended that FTA adopt the
practice of releasing such commitment authority and, specifically, that it
release the $647 million reserved for the two segments of the Los Angeles
project. 28 In its New Starts report and budget proposal for fiscal year
2003, FTA has proposed a funding commitment for one of the previously
suspended segments (Eastside); however, because the other suspended segment
(Mid- City) is not a candidate for a funding commitment at this time, FTA
has released the associated commitment authority, increasing its

available commitment authority by $157 million. 29 Proposals to Cap New
Since the potential demand for New Starts funding is extremely high, the
Starts Funding May

administration and others have proposed limiting the amount of New Starts
funds to less than the authorized 80 percent share. A cap on New Starts
Bring Mixed Results funds would allow more projects to receive funding but
could have an effect on specific projects that are currently being
developed. For example, based on current project cost estimates, a 60-
percent cap on New Starts funds for the 49 projects currently in final
design or preliminary engineering would result in about $500 million that
could be used to fund additional projects. 30 Two projects that currently
have a New Starts share

28 We acknowledged that this action would not preclude projects for which
the funding commitment had been withdrawn from securing New Starts funding
in the future, competing with other projects eligible for such commitments.
29 According to FTA officials, FTA believes that grantees should be allowed
a reasonable amount of time to correct problems with projects before it
releases the associated commitment authority and that the amount of time
allowed for any particular project would depend on the number of other
projects ?ready? for grant agreements. FTA has not released the $409 million
committed to the Seattle (Central Link) project. 30 Alaska Marine Highway
System has already received its federal funding and therefore was not
included in our analysis.

at 80 percent, account for the majority of funds that could be redirected.
According to officials from several transit agencies, the impact of a
proposed cap on individual projects would vary. Some projects would be able
to make up for the reduced New Starts funding while others would not be able
to tap into any other funding sources and would have to modify their
projects? scope or schedule or even terminate them. Finally, several
officials from MPOs pointed out that limiting the New Starts funding share

to 50 or 60 percent could have an affect on the transportation
decisionmaking process. Specifically, officials from several MPOs stated
that a cap on New Starts funds could influence their selection of highway
over transit projects since the decisions are often affected by the
availability of funds from various federal programs and which projects will
receive the highest federal share.

Several Proposals Would In order to manage the increasing demand for New
Starts funding, there Limit New Starts Funding

have been several proposals to limit the amount of New Starts funds that
could be applied to a project. For instance, the president?s fiscal year
2002 budget recommended that New Starts funding be limited to 50 percent of
project costs starting in fiscal year 2004. 31 (Currently, New Starts
funding-

and all federal funding- is capped at 80 percent.) In addition, the
conference report that accompanied the fiscal year 2002 Department of
Transportation appropriations act directs FTA not to sign any new full
funding grant agreement after September 30, 2002, that has a maximum federal
share higher than 60 percent. According to FTA, these proposals are
consistent with its recent practice of seeking a local share of more than 20
percent in order to manage the increasing demand for New Starts funding. 32
FTA officials told us that limiting the New Starts funding to 50 or 60
percent would ensure that local governments play a major role in funding New

31 According to FTA, total federal participation in any given transit
project would remain capped at 80 percent. The proposed cap would limit only
the percentage of New Starts funds available for projects. Transit projects
could use other federal funds available (e. g., flexible highway funding) to
secure total federal support for up to 80 percent of the project?s costs.

32 FTA?s 2003 New Starts report notes that projects? financial plans should
include a maximum New Starts share of 50 percent by fiscal year 2004 to
remain competitive with other projects in the New Starts pipeline and to
meet lower federal share requirements proposed for the reauthorization of
TEA- 21.

Starts projects. Under such a cap, local governments will need to decide to
apply either other federal funds or local funds to proposed New Starts
projects based on their priorities. An FTA official also pointed out that a
50 or 60 percent cap would allow more projects to receive New Starts
funding; however, the official acknowledged that limiting New Starts funding
may prevent some projects from being developed or moving forward because of
limited local funding.

Additional Projects Could Lowering the share to 50 or 60 percent may provide
an opportunity to

Be Funded with A Cap spread available New Starts funds more widely. In the
last 10 years, the New Starts share for projects with a grant agreement has
averaged around

50 percent and has been trending lower. For the 18 grant agreements signed
between October 1999 and November 2001, the overall New Starts share was 46
percent, somewhat below the 56 percent average share of grant agreements
signed in 1992- 1997. 33 For individual projects, the New Starts share has
varied considerably from the mean- from a low of 19 percent to a high of 80
percent. If the 18 grant agreements signed in the 1999- 2002 timeframe had
been capped at 60 percent, $4.05 billion of New Starts funding would have
been committed to these projects instead of $4. 30 billion (a difference of
about $250 million). With a 50- percent cap, the New Starts commitment would
have totaled $3.65 billion (a difference of about $650 million). A cap on
New Starts funds for the 49 projects currently in final design or

preliminary engineering would have a much greater effect. These 49 projects
are currently proposing $20.59 billion in New Starts funding. A 60- percent
cap would result in about $500 million that could be used to fund additional
projects; a 50- percent cap would result in slightly over $1 billion that
could be allocated to other projects. Two projects (Philadelphia Schuylkill
Valley MetroRail and San Juan Tren Urbano Minillas Extension),

that currently have a New Starts share at 80 percent, account for the
majority of funds that could be redirected- 85 percent of the $500 million
and 61 percent of the $1 billion. According to FTA officials, the proposed
projects? local share and percentage of New Starts funds could change as the
projects proceed through the final design stage.

33 No FFGAs were signed in 1998.

Many of the project sponsors that initially proposed a New Starts share of
over 50 percent have responded to FTA?s suggestion to lower their planned
New Starts funding in order to be competitive with other projects. For
example, several projects have adjusted their financial plans for fiscal
year 2003 to reflect a decrease in the New Starts share of their total cost.
Seven projects that initially proposed New Starts shares from 63 percent to
80 percent in fiscal year 2002 lowered them this year to between 32 percent
and 60 percent. Several project officials told us that they lowered their

New Starts proposals to become more competitive in response to FTA?s
suggestions.

A Cap on New Starts Funds The proposed caps could affect a number of
projects currently being

Could Affect Specific developed. For example, 10 of the 49 projects that are
currently in the final Projects and the Planning design or preliminary
engineering stages plan to use New Starts funds to Process pay for over 60
percent of their total costs; an additional 9 projects plan to use over 50
percent (app. II provides a list of the 19 projects). The

projected use of New Starts funds for these 19 projects ranges from 51
percent for Little Rock (River Rail Project) to 80 percent for Galveston
(Trolley Extension), Nashville (East Corridor Commuter Rail Project), Alaska
(Knik River to Wasilla Track Improvements), Philadelphia (Schuylkill Valley
MetroRail) and San Juan (Tren Urbano Minillas Extension). According to
officials from several of these transit agencies,

the impact of a proposed cap would vary. For example, officials from several
projects stated that their projects? scope or schedule would have to be
modified or even terminated because they may not be able to tap into any
other funding sources to account for lower than planned New Starts funding.
An official from one project added that a change in the project?s

scope would also have a negative impact on service, ridership, and overall
cost- effectiveness. In contrast, officials from several projects indicated
that their projects would continue as planned because they would seek other
federal or local funds to make up for reduced New Starts funding. For
example, an official from one project stated that, if necessary, it would
issue bonds to offset any shortfall in New Starts funding.

Any decision to make up the difference with additional federal or local
funds could affect other local transportation projects. For example,
officials from several projects stated that providing additional funds to
their New Starts projects would most likely result in other projects in the
area receiving less funds, being delayed, or terminated. An official from
one project stated that redirecting funds from highway or other transit
projects would indefinitely delay these projects until additional funding is

available. However, according to several project officials, obtaining
additional funding could be difficult since many states and localities are
currently facing significant budget deficits or funding shortfalls. Several
project officials noted that a cap could mean that localities would have to
reevaluate the priority of transportation projects, including New Starts
projects, in the area and make difficult decisions such as delaying or even

terminating projects until the local share is raised. Finally, officials
from several projects noted that the cap would have a greater impact on
areas trying to develop a first time, fixed- guideway or bus rapid transit
system where the benefits of the system have not yet been proven.

Finally, a cap could also affect the transportation decisionmaking process.
For example, several of the MPOs we contacted told us that they are
concerned that having a New Starts match for transit capital projects that
is lower than the match for highway capital projects could affect balanced
transportation decisionmaking and create a bias towards highway projects.

In addition, according to some MPOs, a cap on the New Starts share could
also influence the planning and selection of transportation projects in
their city or state?s long- range plan. For example, one official indicated
that his

area?s long- range plan would probably move towards more highway
investments. Another official pointed out that a cap could severely hamper
the region?s ability to construct the new transit projects in its long-
range plan, thus endangering its air quality conformity status. In contrast,
some MPOs indicated that their regions prefer a multi- modal system and the
types of projects selected for such plans may not be impacted by a cap on
New Starts funds.

Concluding Although FTA has been faced with an impending transit budget
crunch for Observations several years, the agency will end the TEA- 21
authorization period with unused commitment authority impart because fewer
projects than

expected were ready for grant agreements. FTA proposes projects for funding
after they have met its readiness test. However, in the last several years
only nine projects were determined to be ready and were proposed for New
Starts funding commitments. Given the tremendous pipeline, if more projects
(or a few large ones) had matured faster FTA would have been forced to make
difficult funding decisions. If this were to occur in the future, FTA may
have a difficult time making these decisions because it has not adopted our
recommendation made in 2000 34 to develop a process for further prioritizing
among the projects it rates as recommended or higher. Such a process would
ensure that the ?best? projects receive New Starts funding and allow for a
better understanding of why certain projects with similar ratings may
receive funding while others do not. Finally, if many

projects are ready at the same time for a grant agreement, FTA may also have
to adopt an ongoing practice of releasing the funding set aside for projects
when the federal funding commitments have been withdrawn.

A cap on New Starts funds could allow more projects to receive funding if a
significant number of projects are ready for a grant agreement at the same
time. Since FTA is ending the TEA- 21 authorization period with unused
commitment authority, a cap imposed over the last several years would not

have resulted in funding additional projects. In addition, a cap could have
a negative impact on specific projects that are currently being developed as
well as the transportation decisionmaking process. Agency Comments We
provided the Department of Transportation with a draft of this report for
review and comment. FTA provided some technical comments on the

draft, which we have incorporated where appropriate. Scope and To address
the issues discussed in this report, we reviewed the legislation Methodology

governing New Starts transit projects, FTA?s annual New Starts reports for
fiscal years 2002 and 2003, the new regulations for New Starts transit

34 See Mass Transit: Implementation of FTA?s New Starts Evaluation Process
and FY 2001 Funding Proposals (GAO/ RCED- 00- 149, Apr. 28, 2000).

projects, and documents related to New Starts funding. We also interviewed
appropriate FTA headquarters officials, 22 officials from transit agencies
with New Starts projects currently in the final design or preliminary
engineering phases, and officials from selected MPOs (see app.

III for a complete list of projects and MPOs contacted). We performed our
work in accordance with generally accepted government auditing standards
from February through April 2002.

We are sending copies of this report to the secretary of Transportation, the
administrator of the Federal Transit Administration, the director of the
Office of Management and Budget, and other interested parties. We will make
copies available to others upon request.

If you have questions regarding this report, please contact me or Susan
Fleming on (202) 512- 4431 or at flemings@ gao. gov. Key contributors to
this report were Heather Balent, Helen Desaulniers, Susan Fleming, and Rod
Moore.

JayEtta Z. Hecker Director, Physical Infrastructure Issues

Appendi xes FTA?s Fiscal Year 2003 New Starts Ratings and

Appendi x I

Funding Recommendations Dollars in millions

FY 2003 recommended Location/ project Overall project rating funding

Existing full funding grant agreements a Atlanta - North Springs FFGA $16.
11 Baltimore - Central LRT Double- Tracking FFGA 24. 25 Boston - South
Boston Piers Transitway (Phase I) FFGA 0. 68 Chicago - Douglas Branch
Reconstruction FFGA 55.00 Chicago - Metra North Central Commuter Rail FFGA
20.00 Chicago - Metra South West Corridor Commuter Rail FFGA 20.00 Chicago -
Metra Union Pacific West Line Extension FFGA 12.00 Dallas - North Central
LRT Extension FFGA 70. 00 Denver - Southeast Corridor LRT FFGA 70.00 Ft.
Lauderdale - Tri- Rail Commuter Rail Upgrades FFGA 39. 69 Los Angeles - MOS-
3 North Hollywood FFGA 40.49 Memphis - Medical Center Extension FFGA 15.61
Minneapolis - Hiawatha Corridor LRT FFGA 60.00 Northern New Jersey - Hudson-
Bergen LRT (MOS- 1) FFGA 19.20 Northern New Jersey - Hudson- Bergen (MOS- 2)
FFGA 50.00 Northern New Jersey - Newark Rail Link (MOS- 1) FFGA 60.00
Pittsburgh - Stage II LRT Reconstruction FFGA 26. 25 Por tl and - Interstate
MAX LRT Extension FFGA 70.00 St. Louis - Metrolink St. Clair Extension FFGA
3. 37 Salt Lake City - CBD to University LRT FFGA 68. 76 Salt Lake City -
North- South LRT FFGA 0. 72 San Diego - Mission Valley East LRT Extension
FFGA 65.00 San Francisco - BART Extension to Airport FFGA 100. 00 San Juan -
Tren Urbano FFGA 59.74 Washington, DC/ MD - Largo Extension FFGA 60. 00

Subtotal $1, 026. 87 Proposed full funding grant agreements

Los Angeles - Eastside Corridor LRT Recommended $35.00 New Orleans - Canal
Street b Recommended 37. 10 San Diego - Oceanside- Escondido Rail Corridor b
Highly recommended 42.00 Salt Lake City - Medical Center Extension LRT
Recommended 20. 00

Subtotal $134.10

(Continued From Previous Page)

Dollars in millions

FY 2003 recommended Location/ project Overall project rating funding

Proposed other project funding commitments

Chicago - Ravenswood Line Expansion Recommended $4. 00 Cleveland - Euclid
Corridor Transportation Project Recommended 4.00 Las Vegas - Resort Corridor
Fixed Guideway Recommended 4.00 Minneapolis - Northstar Commuter Rail
Recommended 4.00 New York - Long Island Railroad East Side Access
Recommended 15. 00

Subtotal $31.00 Projects in final design

Alaska Marine Highway System Exempt c $0. 00 Alaska Railroad - South
Anchorage Double Track Exempt c 0.00 Alaska Railroad - Knik River to Wasilla
Track Improvements Exempt c 0.00 Galveston - Trolley Extension Exempt c 0.00
Little Rock - River Rail Project Exempt c 0.00 Los Angeles - San Diego -
LOSSAN Rail Corridor Improvement Exempt c 0.00 Nashville - East Corridor
Commuter Rail Exempt c 0.00 Pawtucket, RI - Commuter Rail Improvement
Program Exempt c 0.00 San Francisco - Third Street Light Rail (Phase I)
Exempt c 0.00 Seattle - Central Link Initial Segment Recommended 0.00

Subtotal $ 0. 00 Projects in preliminary engineering

Austin - Austin Area LRT System d Not rated $0. 00 Bridgeport, CT -
Intermodal Center Exempt c 0.00 Charlotte - South Corridor LRT Highly
recommended 0. 00 Cincinnati - I- 71 Corridor Not recommended 0.00 Columbus
- North Corridor Recommended 0.00 Dallas - Northwest- Southeast Corridor LRT
MOS Recommended 0.00 Denver - West Corrido LRT Recommended 0. 00 Fort
Collins, CO - Mason Street Transportation Corridor Recommended 0.00 Hartford
- New Britain- Hartford Busway Recommended 0.00 Honolulu - Primary
Transportation Corridor Project Recommended 0.00 Kansas City, Johnson
County- I- 35 Commuter Rail Exempt c 0.00 Los Angeles - Mid- City Exposition
LRT Recommended 0.00 Los Angeles - San Fernando Valley East- West Transit
Corridor Recommended 0.00 Louisville - South Central Corridor LRT
Recommended 0.00 Lowell, MA- Nashua, NH - Commuter Rail Exempt c 0.00

(Continued From Previous Page)

Dollars in millions

FY 2003 recommended Location/ project Overall project rating funding

Maryland - MARC Commuter Rail Improvements Exempt c 0.00 Miami - North 27 th
Avenue Not recommended 0.00 New Orleans - Desire Corridor Streetcar
Recommended 0. 00 New York - Second Avenue Subway Recommended 0.00 Orange
County, CA - Centerline LRT Project Recommended 0. 00 Philadelphia -
Schuylkill Valley Metrorail Recommended 0. 00 Phoenix /Central Phoenix -
East Valley Corridor Recommended 0.00 Pittsburgh - North Shore Connector LRT
Recommended 0.00 Raleigh - Regional Transit Plan (Phase I) Recommended 0.00
San Diego - Mid- Coast Corridor Highly recommended 0. 00 San Juan - Tren
Urbano Minillas Extension Not recommended 0.00 Seattle - Everett to Seattle
Commuter Rail Exempt c 0.00 Seattle - Link Extension and North Link Not
rated d 0.00 Seattle- Tacoma - Lakewood to Tacoma Commuter Rail Exempt c
0.00 Stamford, CT - Urban Transitway and Intermodal Transportation Center
Exempt c 0.00 Improvements Tampa - Tampa Bay Regional Rail System Not
recommended 0.00

Washington County, OR - Wilsonville- Beaverton Commuter Rail Exempt c 0.00
Washington, D. C. - Dulles Corridor Bus Rapid Transit Recommended 0.00

Subtotal $0. 00 Other

Ferry Capital Projects in Alaska or Hawaii $10.30 Project management
oversight 12. 14

Subtotal $22.44 Grand total $1, 214. 41

Note: Figures may not add to totals because of rounding. a Projects with
FFGAs were not rated because FTA had found the projects to be justified and
to have adequate local financial commitments at the time the FFGAs were
issued. These projects are being

recommended to receive the fiscal year 2003 amount committed by the FFGA. b
The ratings for New Orleans (Canal Street Spine) and San Diego (Oceanside-
Escondido Rail Corridor) are the ratings they received for fiscal year 2002.
According to FTA, these ratings are still valid.

c Projects rated ?exempt? (17) were not rated because an exemption is
granted to projects when the anticipated New Starts share of the total
estimated capital cost is $25 million or less. d Projects rated ?not rated?
(2) were not rated because insufficient information precluded a complete
evaluation of these projects.

Source: FTA?s New Starts report for fiscal years 2002 and 2003.

Projects Proposing a New Starts Share of Over

Appendi x II

50 Percent Dollars in millions

New Starts New Starts

share of total Project Tot al cost share

cost Final design

Alaska Railroad (Knik River to Wasilla Track Improvements) $11.3 $9.0 80%
Galveston ( Trolley Extension) 10. 1 8.1 80 Little Rock (River Rail Project)
17. 6 9.0 51 Los Angeles- San Diego (LOSSAN Rail Corridor Improvements) 35.7
24.1 68 Nashville (East Corridor Commuter Rail) 28. 7 23.0 80 Pawtucket, RI
(Commuter Rail Improvement Program) 18. 5 10.0 54 Salt Lake City (Medical
Center Extension LRT) 90. 0 54.0 60

Preliminary engineering

Chicago (Ravenswood Line Expansion) 476.0 245.6 52 Cleveland (Euclid
Corridor Transportation Project) 220.4 135.0 61 Denver (West Corridor LRT)
624.3 366.3 59 Fort Collins, CO (Mason Street Transportation Corridor) 66.0
52.3 79 Los Angeles (Eastside Corridor LRT) 817.9 490.7 60 Louisville (South
Central Corridor LRT) 671.2 380.2 57 Miami (North 27 th Avenue) 87.9 61.5 70
New Orleans (Desire Corridor Streetcar) 93. 5 56.1 60 Philadelphia
(Schuylkill Valley MetroRail) 1, 531.4 1, 225.1 80 Pittsburgh (North Shore
Connector LRT) 389.9 272.9 70 San Juan (Tren Urbano Minillas Extension)
560.0 448.0 80 Washington, D. C. (Dulles Corridor Bus Rapid Transit) 389.1
233.5 60

Source: GAO?s analysis of FTA?s data.

Transit Agencies and Metropolitan Planning

Appendi x II I Organizations Contacted by GAO Project Transit agency
contacted

Alaska Marine Highway System Alaska Marine Highway System Alaska Railroad
(Knik River to Wasilla Track Improvements) Alaska Railroad Corporation
Chicago (Ravenswood Line Expansion) Chicago Transit Authority Cleveland
(Euclid Corridor Transportation Project) Greater Cleveland Regional Transit
Authority Denver (West Corridor LRT) Regional Transportation District Fort
Collins, CO (Mason Street Transportation Corridor) City of Fort Collins
Galveston (Trolley Extension) City of Galveston, Texas Kansas City, Johnson
County (I- 35 Commuter Rail) Johnson County, Kansas Little Rock (River Rail
Project) Central Arkansas Transit Authority Los Angeles (Eastside Corridor
LRT) Los Angeles County Metropolitan Transportation Authority Los Angeles-
San Diego (LOSSAN Rail Corridor Los Angeles- San Diego Rail Corridor Agency
Improvements) Louisville (South Central Corridor LRT) Transit Authority of
River City

Miami (North 27 th Avenue) Miami- Dade Transit Agency Nashville (East
Corridor Commuter Rail) Regional Transportation Authority of Nashville,
Tennessee New Orleans (Desire Corridor Streetcar) Regional Transit Agency
Pawtucket, RI (Commuter Rail Improvement Program) Rhode Island Department of
Transportation Philadelphia (Schuylkill Valley MetroRail) Southeastern
Pennsylvania Transportation Authority Pittsburgh (North Shore Connector LRT)
Port Authority of Allegheny County Salt Lake City (Medical Center Extension
LRT) Utah Transit Authority San Juan (Tren Urbano Minillas Extension) Puerto
Rico Department of Transportation and Public Works Stanford, CT (Urban
Transitway and Intermodal Transportation

City of Stamford, Connecticut Center Improvements) Washington, D. C. (Dulles
Corridor Bus Rapid Transit) Virginia Department of Rail and Public
Transportation

Geographic location Metropolitan Planning Organizations contacted

Albany, New York Capital District Transportation Committee Albuquerque, New
Mexico Middle Rio Grande Council of Governments Atlanta, Georgia Atlanta
Regional Commission Beaumont, Texas South East Texas Regional Planning
Commission Boise, Idaho Community Planning Association of Southwest Idaho
Charlotte, North Carolina Charlotte Area Transit System a Cheyenne, Wyoming
Cheyenne Area Metropolitan Planning Organization Cleveland, Ohio Northeast
Ohio Areawide Coordinating Agency Detroit, Michigan South East Michigan
Council of Governments Fargo, North Dakota Fargo- Moorhead Metro Council of
Governments Honolulu, Hawaii Oahu Metropolitan Planning Organization

(Continued From Previous Page)

Project Transit agency contacted

Indianapolis, Indiana Indianapolis Metropolitan Planning Organization Las
Vegas, Nevada Regional Transportation Commission of Clark County Portland,
Oregon Metro Richmond, Virginia Richmond Regional Planning District
Commission San Joaquin, California San Joaquin Council of Governments
Spokane, Washington Spokane Regional Transportation Council St. Louis,
Missouri East- West Gateway Coordinating Council Tucson, Arizona City of
Tucson Transportation Planning Division b

a The Mecklenburg- Union MPO referred us to the Charlotte Area Transit
System. b Pima Association of Governments referred us to the City of Tucson
Transportation Planning Division.

(544028)

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a

GAO United States General Accounting Office

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Contents

Contents

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Appendix I

Appendix I FTA?s Fiscal Year 2003 New Starts Ratings and Funding
Recommendations

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Appendix I FTA?s Fiscal Year 2003 New Starts Ratings and Funding
Recommendations

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Appendix II

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Appendix III

Appendix III Transit Agencies and Metropolitan Planning Organizations
Contacted by GAO

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