United States Government Accountability Office

GAO Report to Congressional Committees

PUBLIC 

TRANSPORTATION 

New Starts Program Is 

in a Period of 

Transition 

August 2006 

 

GAO-06-819 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

August 2006

PUBLIC TRANSPORTATION 

New Starts Program Is in a Period of 

Highlights of GAO-06-819, a report to Transition 

congressional committees 

The Safe, Accountable, Flexible, 

Efficient Transportation Equity 

Act: A Legacy for Users (SAFETEALU) authorized about $7.9 billion in 

commitment authority, through 

fiscal year 2009, for the Federal

Transit Administration’s (FTA) 

New Starts program, which is used 

to select fixed guideway transit 

projects, such as rail and trolley 

projects, and to award full funding

grant agreements (FFGAs). The

New Starts program serves as an 

important source of federal funding 

for the design and construction of 

transit projects throughout the 

country. 

SAFETEA-LU requires GAO to 

report each year on FTA’s New 

Starts process. As such, GAO 

examined (1) the number of

projects that were evaluated, rated,

and proposed for FFGAs for the 

fiscal year 2007 evaluation cycle

and the proposed funding

commitments for the fiscal year

2007 budget; (2) procedural

changes that FTA proposed for the 

New Starts program beginning with 

the fiscal year 2008 evaluation 

cycle; and (3) changes SAFETEALU made to the New Starts

program and FTA’s implementation 

of these changes. GAO reviewed

New Starts documents and

interviewed FTA officials and 

project sponsors, among other 

things, as part of its review. GAO is

not making recommendations in 

this report. In commenting on a 

draft of this report, FTA provided 

technical clarifications, which we

incorporated as appropriate. 

For the fiscal year 2007 evaluation cycle, FTA evaluated and rated 20 

projects, recommended 5 projects for new FFGAs and 2 projects with 

pending FFGAs. FTA also identified 5 other projects that may be eligible for 

funding outside of FFGAs. The administration’s fiscal year 2007 budget 

proposal requests $1.47 billion for the New Starts program, which is about 

$200 million more than the amount received last year. 

FTA proposed nine procedural, or nonregulatory, changes for the New Starts 

program beginning with the fiscal year 2008 evaluation cycle that were 

generally intended to improve the management of the New Starts process. 

These changes include linking the New Starts and National Environmental 

Policy Act planning requirements and processes and capping New Starts 

funding when projects enter the final design phase. As required by 

SAFETEA-LU, FTA published these proposals in policy guidance and sought 

public input. Members of the transit community supported changes that 

they thought would make the New Starts process more efficient, but many 

commenters expressed strong opposition to other changes, citing, for 

example, the time and resources required to analyze ridership and cost 

uncertainties. Consequently, FTA implemented only 4 of the proposed 

procedural changes, but indicated that a final decision on the other 5 

proposed changes would be made through the rulemaking process. 

 

SAFETEA-LU introduced eight statutory changes to the New Starts program 

that include establishing the Small Starts program and identifying new 

evaluation criteria. FTA has taken some initial steps to implement these 

changes, including issuing an Advanced Notice of Proposed Rulemaking 

(ANPRM) for the Small Starts program and proposed policy guidance for the 

New Starts program, both in January 2006. The Small Starts program is a 

new component of the New Starts program and is intended to offer an 

expedited and streamlined application and review process for small projects. 

The transit community, however, questioned whether the Small Starts 

program, as outlined in the ANPRM, would provide such a process. In July 

2006, FTA introduced a new eligibility category called Very Small Starts, 

which is for the simplest and least costly projects. Very Small Starts projects 

will qualify for an even simpler and more expedited evaluation process. FTA 

also identified and sought public input on possible changes to the New Starts 

program that would have an impact on traditional New Starts projects, such 

as revising the evaluation process to incorporate the new evaluation criteria

identified by SAFETEA-LU. According to FTA, a potential challenge in 

moving forward is incorporating both land use and economic development 

as separate criteria in the evaluation process, including developing 

appropriate measures for the criteria and avoiding duplication in counting 

benefits. www.gao.gov/cgi-bin/getrpt?GAO-06-819.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Katherine 

Siggerud at (202) 512-2834 or 

siggerudk@gao.gov. 
Contents 

Letter 1

Results in Brief 3 

Background 5

FTA Proposed Five New Projects for FFGAs and Requested $1.47 

Billion for the New Starts Program in Fiscal Year 2007 10 

FTA Proposed Nine Procedural Changes to the New Starts 

Program and Adopted Four after Considering Comments from

the Transit Community 16 

SAFETEA-LU’s Changes to the New Starts Program Include 

Identifying New Evaluation Criteria to Establishing the Small

Starts Program 21 

Concluding Observations 34 

Agency Comments 34 

Appendix I Scope and Methodology 36 

Appendix II FTA’s Proposed Changes to the New Starts Program 38 

Tables 

Table 1: Comparison of the Fiscal Year 2006 and Fiscal Year 2007

Rating Scales 12 

Table 2: Projects Proposed for FFGAs and Other Funding, Fiscal 

Year 2007 13 

Table 3: Procedural Changes Proposed by FTA 16 

Table 4: Summary of Common Transit Community Concerns and 

FTA’s Responses to the New Starts Procedural Changes 19 

Table 5: Comparison of SAFETEA-LU’s and TEA-21’s New Starts 

Provisions 22

Table 6: Comparison of Small Starts and New Starts Program 

Statutory Requirements 26 

Table 7: Changes to the New Starts Program Proposed by FTA and 

the Transit Community’s Response 38 

Figures 

Figure 1: New Starts Planning and Development Process 7 

Figure 2: New Starts Project Evaluation Criteria 9 

Page i GAO-06-819 New Starts Program
Figure 3: New Starts Projects in Final Design and Preliminary 

Engineering, Fiscal Year 2007 11 

Figure 4: Planned Uses of Administration’s Proposed Fiscal Year 

2007 Budget for New Starts 15 

Figure 5: Time Line for Implementing SAFETEA-LU Changes to the 

New Starts Program 25 

Figure 6: FTA’s “Option 1” for Revising the New Starts Evaluation 

and Ratings Framework 30 

Figure 7: FTA’s “Option 2” for Revising the New Starts Evaluation 

and Ratings Framework 31 

Page ii GAO-06-819 New Starts Program
Abbreviations 

ANPRM Advanced Notice of Proposed Rulemaking 

BRT bus rapid transit 

DOT Department of Transportation 

FD Final design

FEIS Final environmental impact statement 

FFGA full funding grant agreement 

FHWA Federal Highway Administration 

FONSI Finding of no significant impact 

FTA Federal Transit Administration 

HOV High-occupancy vehicle 

LPA locally preferred alternative 

LRT light rail transit 

MOS minimum operable segment 

MPO Metropolitan Planning Organization 

NEPA National Environmental Policy Act 

NPRM Notice of Proposed Rulemaking 

PDA Project development agreements 

PE Preliminary engineering

PMP Project Management Plans 

ROD Record of decision 

ROW right-of-way 

SAFETEA-LU Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for Users 

TEA-21 Transportation Equity Act for the 21st Century 

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page iii GAO-06-819 New Starts Program
United States Government Accountability Office

Washington, DC 20548 

August 30, 2006 

The Honorable Richard C. Shelby 

Chairman 

The Honorable Paul S. Sarbanes 

Ranking Minority Member 

Committee on Banking, Housing, and Urban Affairs 

United States Senate 

The Honorable Richard C. Shelby 

Chairman 

The Honorable Paul S. Sarbanes 

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 

The Honorable Don Young 

Chairman 

The Honorable James L. Oberstar 

Ranking Democratic Member 

Committee on Transportation and Infrastructure 

House of Representatives 

A significant portion of the federal government’s share of new capital 

investment in mass transportation since the early 1970s has come through 

the Federal Transit Administration’s (FTA) New Starts program, which 

awards full funding grant agreements (FFGAs) for fixed guideway 

projects, including rail, bus rapid transit, and ferry systems across the 

country.1

 An FFGA establishes the terms and conditions for federal 

participation in a project, including the maximum amount of federal funds 

available for the project, which by statute cannot exceed 80 percent of its 

net cost. Since fiscal year 1998, the New Starts program has provided state 

and local agencies with more than $10.4 billion to help design and 

construct transit projects throughout the country.

2

A significant portion of the federal government’s share of new capital 

investment in mass transportation since the early 1970s has come through 

the Federal Transit Administration’s (FTA) New Starts program, which 

awards full funding grant agreements (FFGAs) for fixed guideway 

projects, including rail, bus rapid transit, and ferry systems across the 

country.1

 An FFGA establishes the terms and conditions for federal 

participation in a project, including the maximum amount of federal funds 

available for the project, which by statute cannot exceed 80 percent of its 

net cost. Since fiscal year 1998, the New Starts program has provided state 

and local agencies with more than $10.4 billion to help design and 

construct transit projects throughout the country.

2

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 

Legacy for Users (SAFETEA-LU) authorized the New Starts program 

through fiscal year 2009 and provided approximately $7.9 billion in 

commitment authority3

 from fiscal year 2005 through fiscal year 2009. 

The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 

Legacy for Users (SAFETEA-LU) authorized the New Starts program 

through fiscal year 2009 and provided approximately $7.9 billion in 

commitment authority3

 from fiscal year 2005 through fiscal year 2009. 

 1

Fixed guideway systems use and occupy a separate right-of-way for the exclusive use of 

public transportation services. These systems include fixed rail, exclusive lanes for buses 

and other high-occupancy vehicles, and other systems.

2

This is the amount appropriated through fiscal year 2006, according to FTA. 

3

Commitment authority is the amount of funding Congress has authorized FTA to commit 

to New Starts projects for a given period of time. 

Page 1 GAO-06-819 New Starts Program
Competition for New Starts funds continues to grow: According to FTA, 

SAFETEA-LU identified over 300 projects as eligible to compete for New 

Starts funding, compared with 190 such projects identified by the previous 

authorization legislation, the Transportation Equity Act for the 21st 

Century (TEA-21). For that reason, SAFETEA-LU, like TEA-21, directs FTA 

to continue to prioritize projects for funding by evaluating, rating, and 

recommending potential projects on the basis of specific financial and

project justification criteria including mobility improvements, costeffectiveness, environmental benefits, and operating efficiencies. 

However, SAFETEA-LU made several changes to the New Starts 

evaluation and rating process, including identifying a new eligibility 

category for smaller fixed guideway projects and establishing new 

evaluation criteria. FTA is currently implementing these changes. 

SAFETEA-LU also requires us to report each year on FTA’s processes and 

procedures for evaluating, rating, and recommending New Starts projects 

for funding and on FTA’s implementation of these processes and 

procedures. This report discusses (1) the number of projects that were 

evaluated, rated, and proposed for FFGAs for the fiscal year 2007 

evaluation cycle4

 and the proposed funding commitments for the fiscal 

year 2007 budget; (2) procedural changes that FTA proposed for the New 

Starts program beginning with the fiscal year 2008 evaluation cycle; and

(3) changes SAFETEA-LU made to the New Starts program and FTA’s 

implementation of these changes. To address these objectives, we 

reviewed SAFETEA-LU; FTA guidance and regulations governing the New 

Starts program; and other relevant FTA documents, including the annual

New Starts report. We also interviewed FTA officials, project sponsors 

from five projects in preliminary engineering and final design that were 

rated in the fiscal year 2007 evaluation cycle, and representatives from the 

American Public Transportation Association and the New Starts Working 

Group.5

 In addition, we reviewed comments to FTA’s docket on New Starts 

and Small Starts and the Advanced Notice of Proposed Rulemaking 

(ANPRM) for Small Starts. Finally, we attended one of FTA’s three 

meetings with project sponsors—the New Starts/Small Starts Seminar and 

 4

The fiscal year 2007 evaluation cycle began in May 2005 with the issuance of the New 

Starts reporting instructions. Applications were due in August 2005, and FTA evaluated the 

applications in the fall of 2005. The annual report was published in February 2006 and

included funding recommendations for fiscal year 2007. 

5

The New Starts Working Group is an organization of New Starts project sponsors, 

metropolitan planning organizations, and private industry transit firms that advocate on

behalf of the New Starts program and specific projects. 

Page 2 GAO-06-819 New Starts Program
Listening Sessions—in March 2006. We conducted our work from 

February 2006 through August 2006 in accordance with generally accepted 

government auditing standards. (See app. I for more information on our 

scope and methodology.) 

For the fiscal year 2007 evaluation cycle, FTA evaluated and rated 20

projects, proposed 5 projects for new FFGAs, and requested $1.47 billion 

for the New Starts program. Of the 20 projects rated, 1 was rated as “high,” 

17 were rated as “medium,” and 2 were rated as “low.” FTA recommended 

12 of the 20 projects for funding. Specifically, FTA recommended 5 

projects for new FFGAs and 2 projects with pending FFGAs.6

 In addition, 

FTA identified 5 other projects that may be eligible for funding outside of

FFGAs. The administration’s budget request of $1.47 billion for the New 

Starts program is about $200 million more than the amount received last 

year. The majority of the $1.47 billion would be allocated to projects with 

existing and pending FFGAs and projects proposed for new FFGAs. 

Results in Brief 

FTA proposed nine procedural changes for the New Starts program, 

beginning with the fiscal year 2008 evaluation cycle that were generally 

intended to improve the management of the New Starts process. These 

changes include linking the New Starts and the National Environmental 

Policy Act (NEPA) planning requirements and processes and capping New 

Starts funding when projects enter the final design phase. As required by 

SAFETEA-LU, FTA published these proposals in policy guidance and

sought public input. A total of 41 transit agencies, government entities, 

consultants, associations, and organizations submitted written comments 

to FTA’s docket in response to the proposed procedural changes. Project 

sponsors and other members of the transit community supported changes 

that they thought would make the New Starts process more efficient, but 

many commenters expressed strong opposition to other changes. For 

example, many commenters opposed FTA’s proposal that project sponsors 

analyze ridership and cost uncertainties, citing concerns about the lack of 

guidance on how to conduct the analysis as well as about the time and 

resources required to perform such an analysis. FTA implemented four of 

the nine proposed procedural changes and, on the basis of the comments 

 6

Projects with pending FFGAs have been previously recommended for FFGAs by FTA; 

however, the FFGAs have not been executed. FTA expects to execute both pending FFGAs 

by the end of fiscal year 2006. 

Page 3 GAO-06-819 New Starts Program
received, did not implement the other five changes. FTA, however, noted

that it may revisit these proposed changes in the future. 

SAFETEA-LU introduced eight changes to the New Starts program, such 

as establishing the Small Starts program and identifying new evaluation 

criteria. FTA has taken some initial steps to implement these changes, 

including issuing an ANPRM for the Small Starts program and guidance for 

the New Starts program, both in January 2006. The Small Starts program is 

a component of the New Starts program and is intended to offer an 

expedited and streamlined application and review process for small 

projects. The transit community, however, questioned whether the Small 

Starts program, as outlined in the ANPRM, would provide such a process. 

In July 2006, FTA simplified how Small Starts projects would be evaluated 

and rated and introduced a new eligibility category within the Small Starts 

program called Very Small Starts, which is for the least costly projects.7

Very Small Starts projects will qualify for an even simpler and more 

expedited evaluation process. FTA’s actions appear to have streamlined 

the Small Starts program more than was originally proposed in the 

ANPRM. FTA will have the opportunity to make additional modifications,

as appropriate, as it works to develop the final rule for the Small Starts 

program over approximately the next 18 months. In its January 2006 

guidance, FTA also identified and sought public input on possible changes 

to the New Starts program that would have an impact on traditional New 

Starts projects, such as revising the evaluation process to incorporate the

new evaluation criteria identified by SAFETEA-LU. According to FTA, 

potential challenges in moving forward are incorporating both land use 

and economic development as separate criteria in the evaluation process, 

as required by the statute—including developing appropriate measures for 

these criteria and avoiding duplication in counting benefits. We have also

previously reported similar challenges in measuring these types of benefits

and noted that experts have suggested potential solutions, such as using 

qualitative information about the benefits rather than relying strictly on 

quantitative information and expanding the use of risk assessment or 

probability analysis in conjunction with economic analysis.8

 Some of FTA’s 

proposed changes to the New Starts process, which would consider 

 7

In July 2006, FTA issued final interim guidance that will govern the Small Starts evaluation 

and rating process until the final rule is issued in early 2008. 

8

GAO, Highway and Transit Investments, Options for Improving Information on 

Projects’ Benefits and Costs and Increasing Accountability for Results, GAO-05-172

(Washington, D.C.: Jan. 24, 2005). 

Page 4 GAO-06-819 New Starts Program
qualitative information about the project and the project’s uncertainties,

appear to be in line with these suggestions. 

The Department of Transportation, including FTA, reviewed a draft of this

report. FTA officials provided technical clarifications, which we 

incorporated as appropriate. 

SAFETEA-LU authorized a total of $45.3 billion for a variety of transit 

programs, including financial assistance to states and localities to develop, 

operate, and maintain transit systems from fiscal year 2005 through fiscal 

year 2009. Under one program, New Starts, FTA identifies and selects 

fixed guideway transit projects for funding—including heavy, light, and 

commuter rail; ferry; and certain bus projects (such as bus rapid transit). 

The New Starts program serves as an important source of federal funding 

for the design and construction of transit projects throughout the country. 

FTA generally funds New Starts projects through FFGAs, which establish 

the terms and conditions for federal participation in a New Starts project 

and also define 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. 

Background 

For a project to obtain an FFGA, it must progress through a local or 

regional review of alternatives and meet a number of federal requirements, 

including requirements for information used in the New Starts evaluation

and rating process (see fig. 1). As required by SAFETEA-LU, New Starts 

projects must emerge from a regional, multimodal transportation planning 

process. The first two phases of the New Starts process—systems 

planning and alternatives analysis—address this requirement. The systems 

planning phase identifies the transportation needs of a region, while the 

alternatives analysis phase provides information on the benefits, costs, 

and impacts of different corridor-level options, such as rail lines or bus 

routes. The alternatives analysis phase results in the selection of a locally 

preferred alternative—which is intended to be the New Starts project that

FTA evaluates for funding, as required by statute. After a locally preferred

alternative is selected, project sponsors submit a request to FTA for entry 

Page 5 GAO-06-819 New Starts Program
into the preliminary engineering phase.9

 Following completion of 

preliminary engineering and federal environmental requirements, the 

project may be approved by FTA to advance into final design,10 after which 

the project may be approved by FTA for an FFGA and proceed to 

construction, as provided for in statute. FTA oversees grantee 

management of projects from the preliminary engineering phase through 

construction and evaluates the projects for advancement into each phase

of the process, as well as annually for the New Starts report to Congress. 

 9

During the preliminary engineering phase, project sponsors refine the design of the

proposal, taking into consideration all reasonable design alternatives and estimating their 

costs, benefits, and impact (e.g., financial or environmental). According to FTA officials, to 

gain approval for entry into preliminary engineering, a project must (1) be identified 

through the alternatives analysis process, (2) be included in the region’s long-term 

transportation plan, (3) meet the statutorily defined project justification and financial 

criteria, and (4) demonstrate that the sponsors have the technical capability to manage the 

project during preliminary engineering. Some federal New Starts funding is available to 

projects for preliminary engineering activities, if so appropriated by Congress. 

10Final 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. 

Page 6 GAO-06-819 New Starts Program
Figure 1: New Starts Planning and Development Process 

Planning

Preliminary

Engineering

Final Design

Final Design

Commitment of nonfederal 

funding, construction plans, 

ROW acquisition, before-after 

data collection plan, FTA 

evaluation for FFGA, begin 

negotiations

Systems

Planning

Alternatives

Analysis

Select LPA,

MPO action, develop

criteria, PMP

FTA decision 

on entry into PE

FTA decision

on entry into final

design

Full funding 

grant agreement

Preliminary Engineering

Complete NEPA process,

refinement of financial plan

Construction

Project 

management 

oversight

Construction

Source: FTA.

Major development stage

Decision point

Page 7 GAO-06-819 New Starts Program
Legend: 

LPA = locally preferred alternative 

MPO = Metropolitan Planning Organization 

NEPA = National Environmental Policy Act 

PE = Preliminary engineering

PMP = Project Management Plans 

ROW = right-of-way 

Note: NEPA requires federal agencies to prepare detailed statements assessing the environmental 

impact of and alternatives to major federal actions significantly affecting the environment. In the 

transportation context, the NEPA evaluation measures the impact of different alternatives by the 

extent to which the alternative meets the project purpose, need, and consistency with the goals and 

objectives of any local urban planning. 

To help inform administration and congressional decisions about which 

projects should receive federal funds, FTA assigns ratings on the basis of 

various financial and project justification criteria, and then assigns an 

overall rating. For the fiscal year 2007 evaluation cycle, FTA primarily 

used the financial and project justification criteria identified in TEA-21.11

These criteria reflect a broad range of benefits and effects of the proposed

project, such as cost-effectiveness, as well as the ability of the project 

sponsor to fund the project and finance the continued operation of its 

transit system (see fig. 2). Projects are rated at several points during the 

New Starts process—as part of the evaluation for entry into preliminary 

engineering and final design, and yearly for inclusion in the New Starts 

annual report. 

 11As will be discussed later in this report, SAFETEA-LU identified additional criteria for 

FTA to use in its evaluation and rating process. However, according to FTA’s January 2006

proposed guidance, FTA does not plan to change the current framework and methodology

for evaluating and rating New Starts projects before publishing the new final rule for its 

New Starts program, which is expected in January 2008. However, FTA did incorporate

several SAFETEA-LU changes in the fiscal year 2007 evaluation and rating process, 

including using a revised rating scale and downgrading the emphasis placed on the federal 

share. These changes will be discussed later in this report. 

Page 8 GAO-06-819 New Starts Program
Figure 2: New Starts Project Evaluation Criteria 

FTA assigns the proposed project a rating for each criterion and then 

assigns a summary rating for local financial commitment and project 

justification. Finally, FTA develops an overall project rating. The 

exceptions to this process are statutorily “exempt” projects, which are 

those with requests for less than $25 million in New Starts funding. These 

projects do not have requirements for submitting project justification 

information—although FTA encourages their sponsors to do so—do not 

receive ratings from FTA and are not eligible for FFGAs; thus, the number 

of projects in preliminary engineering or final design may be greater than 

the number of projects evaluated and rated by FTA. 

As required by statute, the administration uses the FTA evaluation and 

rating process, along with the stage of development of New Starts 

projects, to decide which projects to recommend to Congress for 

funding.12 Although many projects receive a summary rating that would 

make them eligible for FFGAs, only a few are proposed for FFGAs in a 

given fiscal year. FTA proposes projects for FFGAs when it believes that 

the projects will be able to meet certain conditions during the fiscal year 

for which funding is proposed. These conditions include the following: 

 12The administration’s funding recommendations are made in the President’s budget and

are included in FTA’s annual New Starts report to Congress, which is released each

February in conjunction with the President’s budget. 

Page 9 GAO-06-819 New Starts Program
• All non-New Starts funding must be committed and available for the 

project. 

• The project must be in the final design phase and have progressed to the 

point where uncertainties about costs, benefits, and impacts (e.g., 

environmental or financial) are minimized. 

• The project must meet FTA’s tests for readiness and technical capacity, 

which confirm that there are no cost, project scope, or local financial 

commitment issues remaining. 

FTA’s Annual Report on New Starts: Proposed Allocations of Funds for 

Fiscal Year 2007 (annual report) identified 24 projects in preliminary 

engineering and final design (see fig. 3). FTA evaluated and rated 20 of

these projects,13 and 4 projects were statutorily exempt from being rated 

because their sponsors requested less than $25 million in New Starts 

funding.14 FTA evaluated and rated fewer projects during the fiscal year 

2007 cycle than in fiscal year 2006. According to FTA, this decrease 

occurred because 12 proposed projects are no longer in preliminary 

engineering or final design.15 FTA stated in its annual report that the 

sponsors of these projects have either (1) fully implemented the project; 

(2) received the total New Starts funding requested to implement the 

project; (3) terminated or suspended project development activities; (4) 

withdrawn from the New Starts process while they address outstanding 

issues; or (5) decided not to pursue New Starts funding. 

FTA Proposed Five 

New Projects for 

FFGAs and Requested 

$1.47 Billion for the 

New Starts Program 

in Fiscal Year 2007 

 13FTA does not evaluate and rate projects that already have FFGAs or that are in 

alternatives analysis. 

14Projects with requests for less than $25 million in New Starts funding were not evaluated 

and rated during the fiscal year 2007 cycle; however, these projects will be evaluated and 

rated as “Small Starts” once the final rule for the Small Starts program is in place, as 

specified in section 5309(e)(B) of SAFETEA-LU. 

15These projects include Boston, Silver Line Phase III; El Paso, Starter Line; Ft. Collins, 

Mason Transportation Corridor; Kansas City, Southtown BRT; Las Vegas, Resort Corridor 

Downtown Monorail; Los Angeles, Exposition Corridor; New Orleans, Desire Streetcar;

Orange County, CenterLine LRT; San Diego, Mid-Coast LRT; San Jose, Silicon Valley Rapid 

Transit Corridor; South Wasilla, Track Realignment; and Tampa Bay, Regional Rail System. 

Page 10 GAO-06-819 New Starts Program
Figure 3: New Starts Projects in Final Design and Preliminary Engineering, Fiscal Year 2007 

Source: FTA.

Seattle, WA -

University Link LRT Extension

Portland, OR -

South Corridor I-205 / Portland Mall LRT

Washington County, OR -

Wilsonville to Beaverton

Commuter Rail

Dallas, TX -

Northwest / Southeast

LRT MOS

Houston, TX -

North Corridor

Rapid Transit MOS

Houston, TX -

Southeast Corridor

Rapid Transit MOS

Miami, FL - 

North Corridor

Metrorail Extension

Raleigh-Durham, NC -

Regional Rail System

Norfolk, VA -

Norfolk LRT

Northern VA -

Dulles Corridor Metrorail Project -

Extension to Wiehle Avenue

Harrisburg, PA -

CORRIDORone Rail MOS

Hartford, CT -

New BritainHartford Busway

New York, NY -

Second Avenue Subway MOS

Philadelphia - Reading, PA -

Schuylkill Valley MetroRail

Wilmington, DE -

Wilmington to Newark

Commuter Rail Improvements

Providence, RI -

South County Commuter Rail

New York, NY -

Long Island Rail Road

Pittsburgh, PA - East Side Access

North Shore LRT Connector

LRT = Light Rail Transit 

MOS = Minimum Operable Segment 

Nashville, TN -

East Corridor

Commuter Rail

Denver, CO -

West Corridor LRT 

Salt Lake City -

Weber County to Salt Lake

City Commuter Rail

Minneapolis - Big Lake, MN -

North Star Corridor Rail

San Francisco, CA -

Central Subway

Sacramento, CA -

South Corridor LRT

Extension

Of the 20 projects that were rated in the fiscal year 2007 evaluation cycle, 1 

was rated as “high,” 17 were rated as “medium,” and 2 were rated as “low.” 

Under TEA-21, during fiscal years 2000 through 2006, FTA designated 

projects as highly recommended, recommended, or not recommended, 

based on the results of FTA’s evaluation of each of the criteria for project

justification and local financial commitment. SAFETEA-LU replaced this 

rating scale with a 5-point scale of high, medium-high, medium, mediumlow, and low. To help transition to the new rating scale, FTA used a 

3-point scale of high, medium, and low for the fiscal year 2007 evaluation 

cycle, but used the same decision rules to determine overall project ratings 

as it did in previous years (see table 1). According to FTA officials, FTA 

intends to work closely with the industry to implement the SAFETEA-LU 

Page 11 GAO-06-819 New Starts Program
provisions so that they can be applied in subsequent annual project 

evaluation cycles. In addition, FTA’s current schedule anticipates that the

final rule will be completed in time to use the 5-point scale for the fiscal 

year 2010 evaluation cycle. 

Table 1: Comparison of the Fiscal Year 2006 and Fiscal Year 2007 Rating Scales 

Decision rule 

Fiscal year 2006 

evaluation cycle rating

scale 

Fiscal year 2007 

evaluation cycle rating

scale 

At least “medium-high” for 

finance and project 

justification 

Highly recommended High 

At least “medium” for 

finance and project 

justification 

Recommended Medium

Not rated at least “medium” 

for finance and project 

justification 

Not recommended Low 

Source: FTA’s New Starts annual report.

FTA’s evaluation process informed the administration’s recommendation 

to fund 12 projects. FTA recommended five projects for new FFGAs. The 

total capital cost of these five projects is estimated to be $3.3 billion, of 

which the total federal New Starts share is expected to be $1.9 billion. In 

addition, FTA recommended funding for two projects with pending 

FFGAs. The total capital cost of these two projects is estimated to be $8.2 

billion, of which the total federal New Starts share is expected to be $2.8 

billion. FTA also recommended reserving $101.9 million in New Starts 

funding for five “other projects.” In its annual report, FTA stated that four 

of the five other projects (1) were in or nearing final design, (2) received 

overall medium or higher ratings, and (3) had medium or better costeffectiveness ratings, or (4) were exempt from the requirement to achieve

a medium cost-effectiveness rating.16 According to FTA, no other project in

preliminary engineering or final design met these criteria. The fifth 

project—Washington, D.C., Largo Metrorail Extension—did not meet 

these criteria but was congressionally designated for funding in SAFETEALU.17 Similar to last year, FTA did not specify funding levels for the five 

 16SAFETEA-LU exempted four projects from a requirement to have a medium costeffectiveness rating. 

17SAFETEA-LU, section 3043(a) (31) and 3043(j). 

Page 12 GAO-06-819 New Starts Program
other projects because it wanted to ensure that the projects were moving 

forward as anticipated before making specific funding recommendations 

to Congress. FTA also notes in its annual report that some projects may 

encounter unexpected obstacles that slow their progress. For example, 

FTA stated that some of the projects must still complete the 

environmental planning process and address FTA-identified concerns 

related to capital costs or project scope. Reserving funds for these projects 

without specifying a particular amount for any given project will allow the 

administration to make “real time” funding recommendations when 

Congress is making appropriations decisions. FTA does not expect that all 

five other projects will be recommended for funding in fiscal year 2007.

(See table 2 for more information about the 12 projects recommended for 

funding.) 

Table 2: Projects Proposed for FFGAs and Other Funding, Fiscal Year 2007 

Dollars in millionsa

Project name Location 

New Starts

project category

Total capital 

cost 

New Starts share 

of capital cost

West Corridor LRT Denver, CO New FFGA $593.0 49%

South Corridor I-205/Portland Mall LRT Portland, OR New FFGA 557.4 60

Wilsonville to Beaverton Commuter Rail Washington County, OR New FFGA 117.3 50

Northwest/Southeast LRT MOS Dallas, TX New FFGA 1,406.2 50

Weber County to Salt Lake City

Commuter Rail

Salt Lake City, UT New FFGA 611.7 80

Long Island Rail Road East Side Access New York, NY Pending FFGA 7,779.3 34

North Shore LRT Connector Pittsburgh, PA Pending FFGA 393.0 55

Second Avenue Subway MOS New York, NY Other 4,947.8 26

Norfolk LRT Norfolk, VA Other 203.7 49

Dulles Corridor Metrorail Project – 

Extension to Wiehle Avenue 

Northern VA Other 1,840.1 50

University Link LRT Extension Seattle, WA Other 1,720.0 41

Largo Metrorail Extension Washington, D.C. Other 433.87 60

Source: GAO summary of information in the New Starts annual report. 

Legend: 

LRT = Light rail transit 

MOS = Minimum operable segment 

a

The numbers included in this table are what was recommended by FTA in the New Starts annual 

report but the actual total capital cost and percent of New Starts share is subject to change at the 

time FTA executes the FFGA. 

Page 13 GAO-06-819 New Starts Program
The administration’s fiscal year 2007 budget proposal requests that $1.47

billion be made available for the New Starts program. This total includes 

funding for 16 projects already under an FFGA. Figure 4 illustrates the 

planned uses of the administration’s proposed fiscal year 2007 budget for 

New Starts, including the following: 

• $571.9 million would be shared among the 16 projects with existing 

FFGAs, 

• $355 million would be shared between the 2 projects with pending FFGAs, 

• $302.6 million would be shared by the 5 projects proposed for new FFGAs, 

• $101.9 million would be shared by as many as 5 “other” projects to 

continue their development, and 

• $100 million would be used for new Small Starts projects. 

Page 14 GAO-06-819 New Starts Program
Figure 4: Planned Uses of Administration’s Proposed Fiscal Year 2007 Budget for 

New Starts 

Note: FTA is authorized to use up to 1 percent of amounts made available for the New Starts/Small 

Starts program for project management oversight activities. SAFETEA-LU also authorized New Starts

funds to be set aside for each fiscal year from 2006 through 2009 for projects in Alaska and Hawaii, 

for fixed guideway systems and extension projects utilizing ferry boats, ferry boat terminals, or 

approaches to ferry boat terminals. Finally, FTA is also authorized to provide $5 million for each fiscal

year from 2006 through 2009 for the Denali Commission, which provides critical utilities,

infrastructure, and economic support throughout Alaska, particularly in remote communities. 

According to FTA, the Small Starts program, authorized in SAFETEA-LU, does not go into effect until 

fiscal year 2007, and FTA had no projects in the pipeline when this report was prepared. 

7%

1% 

Ferry Capital Projects (AK or HI)

and Denali Commission

$20.0 million

1%

Oversight activities

$14.7 million

7%

21%

39%

24%

Source: GAO analysis of FTA data.

Existing FFGAs

$571.9 million

Pending FFGAs

$355.0 million

Proposed FFGAs

$302.6 million

Small Starts

$100.0 million

Other projects

$101.9 million

Page 15 GAO-06-819 New Starts Program
In January 2006, FTA proposed nine procedural changes for the New 

Starts program beginning with the fiscal year 2008 evaluation cycle. These 

changes include linking the New Starts and NEPA planning requirements 

and processes and capping New Starts funding when projects enter the 

final design phase. FTA’s guidance states that these procedural changes 

are generally intended to improve the management of the New Starts 

process and to ensure the accuracy and consistency of the information 

submitted to the agency as part of the New Starts evaluation and rating 

process. According to FTA, these procedural changes do not alter the New 

Starts evaluation and rating framework, and they are not subject to the

formal rule-making process. Table 3 summarizes the proposed procedural 

changes and FTA’s rationale for proposing these changes. 

FTA Proposed Nine 

Procedural Changes 

to the New Starts 

Program and Adopted 

Four after 

Considering 

Comments from the 

Transit Community 

Table 3: Procedural Changes Proposed by FTA 

Proposed procedural change Description FTA’s rationale for change

NEPAa interfaces Sponsors must complete NEPA scoping 

before preliminary engineering (PE). 

To mitigate conflicts between NEPA and 

New Starts by fostering earlier interaction

and general consensus among participants 

about the alternatives considered during

NEPA review. 

NEPA interfaces Sponsors must present New Starts 

evaluation of locally preferred alternative 

with NEPA evaluation of alternatives. 

To ensure the use and disclosure of 

information for decision making. 

NEPA interfaces Sponsors must achieve an acceptable New 

Starts rating before the final environmental

impact statement (FEIS), record of decision 

(ROD), or finding of no significant impact 

(FONSI) is issued. 

To minimize the need for additional 

environmental reviews after a project’s 

scope is changed to improve the New 

Starts ratings, and to ensure the public is 

presented with accurate information on

projects that are acceptable for New Starts 

funding. 

Preservation of information for before and 

after studyb

Sponsors must document the information

produced during the planning phase that 

will be needed for the before-and-after 

study and update the information and 

analysis before entering final design (FD). 

To ensure that information is preserved and 

will be available to be analyzed in the 

before-and-after study required by 

SAFETEA-LU. 

Certification of technical methods, planning 

assumptions, and project development 

procedures 

Individuals must certify the tools and 

techniques used in the analysis to ensure 

that the approaches have been developed 

and applied according to professional 

standards and FTA guidelines. 

To ensure that local and federal decision 

makers are provided with accurate 

information when evaluating New Starts 

projects. 

Analysis of ridership and cost uncertainties Sponsors must analyze uncertainties when

developing ridership forecasts and cost 

estimates. 

To respond to SAFETEA-LU’s emphasis on 

improving the reliability of forecasts used in 

the evaluation process. 

Page 16 GAO-06-819 New Starts Program
Proposed procedural change Description FTA’s rationale for change

Project development agreements FTA will selectively require projects to 

establish a project development agreement 

(PDA). 

To ensure that project sponsors advance 

through phases of project development, to 

focus project sponsors’ effort/FTA oversight 

on principal issues, and to provide basis for 

FTA rescission of PE/FD approval. 

New Starts FFGA funding level set at final 

design approval 

FFGA New Starts funding amount will be 

capped once the project is approved for 

FD. 

To ensure submission of reliable cost and 

ridership forecasts for decision making, to 

minimize cost increases between stages of 

development, and to clarify FTA’s 

participation in project costs. 

Mode-specific constants All sponsors will be allowed to represent 

the benefits from improvements in transit 

service attributes, such as reliability, span 

of service, and passenger amenities, when 

developing their projects. 

To acknowledge and capture previously 

unmeasured attributes of fixed guideway 

projects in areas considering new modes, 

to enhance consistent treatment of projects 

nationally, and to improve the reliability of 

travel forecasts. 

Source: GAO summary of the proposed changes and FTA’s rationale for proposing these changes. 

a

NEPA requires federal agencies to prepare detailed statements assessing the environmental impact 

of and alternatives to major federal actions significantly affecting the environment. In the 

transportation context, the NEPA evaluation measures the impact of different alternatives by the 

extent to which the alternative meets the project purpose, need, and consistency with the goals and 

objectives of any local urban planning. 

b

A before and after study is similar to an outcome evaluation in that it compares the forecasted

benefits and costs of a project with the actual benefits and costs of the project after the project is

completed. 

As we have previously recommended and SAFETEA-LU now requires, 

FTA published its proposed procedural changes in policy guidance and 

sought public comments on them.18 FTA obtained comments on its 

proposals by asking sponsors to submit comments to the docket for up to

60 days. In addition, FTA held three New Starts/Small Starts Seminar and 

Listening Sessions (“listening sessions”) across the country. The listening

sessions were intended to solicit comments from attendees on the 

implementation of New Starts and Small Starts provisions of SAFETEALU, as well as to share information about planning and project 

development activities for projects seeking New Starts funding. FTA 

received 41 written comments in response to these changes, including 

 18GAO, Public Transportation: Opportunities Exist to Improve the Communication and

Transparency of Changes Made to the New Starts Program, GAO-05-674 (Washington, 

D.C.: June 28, 2005). SAFETEA-LU requires that FTA publish, for comment and response, 

policy guidance on the new fixed guideway capital project review and evaluation process

and criteria at the following times: (1) 120 days after the enactment of SAFETEA-LU, (2) 

each time significant changes are made to the process and criteria, and (3) at least every 2

years. 

Page 17 GAO-06-819 New Starts Program
submissions from 33 transit agencies and government entities and 8 

consultants, associations, and organizations. Most of the project sponsors 

and industry representatives we interviewed told us that they appreciated 

FTA’s efforts to obtain their input and to encourage an open discussion 

about the proposed changes. Similarly, FTA officials said that they were 

pleased with the volume of written comments they received from the 

docket and the strong attendance at the three listening sessions conducted 

in February and March 2006. 

Although the project sponsors and industry representatives were 

supportive of some proposals that they thought would improve the New

Starts program, they also expressed a number of concerns about all of the 

changes. (See table 4 for a summary of these concerns.) For example, the 

commenters were generally supportive of FTA’s proposal to require 

sponsors to keep and update the information produced during alternatives 

analysis prior to each phase of project development until the FFGA is 

awarded, since this information is necessary for the before-and-after 

study. In contrast, most project sponsors and transit industry groups 

opposed FTA’s proposed certification of technical methods, planning 

assumptions, and project development procedures, citing concerns that 

such a certification would raise questions about professional liability and 

lead to potential federal prosecution, and noting that a single individual is 

typically not responsible for producing all the underlying assumptions 

used to develop cost estimates and ridership forecasts. On the basis of the 

comments received, FTA adopted four proposals, including the mandatory 

completion of NEPA scoping before entry into preliminary engineering 

(PE), the presentation of the New Starts information in the NEPA 

documents, the preservation of information for the before and after study, 

and the capping of New Starts funds upon approval into final design. For 

two of the four adopted proposals, FTA slightly revised its original 

proposals on the basis of the comments received. FTA did not adopt five 

proposals; however, FTA noted that it may revisit these proposed changes 

in the future. 

Page 18 GAO-06-819 New Starts Program
Table 4: Summary of Common Transit Community Concerns and FTA’s Responses to the New Starts Procedural Changes 

Proposed procedural change

Common concerns expressed by the 

transit community FTA’s response

NEPA interfaces (Sponsors must complete 

NEPA scoping before preliminary 

engineering.) 

• Increases time and cost of project 

development 

• Makes it more difficult to achieve local 

buy-in of the planning process

Adopted. 

NEPA interfaces (Sponsors must present 

New Starts evaluation of locally preferred 

alternative with NEPA evaluation of 

alternatives.) 

• FTA is not using the formal rule-making 

process 

• Subjects FTA to litigation 

Adopted. However, FTA clarified that it will

not develop a new rating for the NEPA 

document, but simply report on the 

project’s most recent rating. 

NEPAinterfaces (Sponsors must achieve 

an acceptable New Starts rating before the 

final environmental impact statement 

(FEIS), record of decision (ROD), or finding 

of no significant impact (FONSI).) 

• Recommended that FTA use the formal 

rule-making process due to the extent of 

changes 

• Could escalate project costs 

• May jeopardize nonfederal funding 

Not adopted. But if FTA needs to issue a 

supplemental document to reflect a scope 

change required to justify a “medium” or 

better rating, then a rating will not be issued 

until this document is completed. FTA will 

also describe the impact that a New Starts 

rating of less than “medium” may have on

advancing projects. 

Preservation of information for before and 

after study 

• The lack of guidance on before and after 

study and data collection methods 

• FTA is not using the formal rule-making 

process 

• Encourages FTA to consider land use 

and economic development in analyses 

Adopted. 

Certification of technical methods, planning 

assumptions, and project development 

procedures 

• Technical information and key

assumptions are often generated by 

multiple individuals or organizations, 

making it difficult to assign responsibility 

for certification

• No industry-accepted standards to use 

for certification

• May create liability concerns for 

companies and consultants 

• Duplicates other FTA reviews 

Not adopted. However, FTA expanded the 

scope of technical procedures and 

assumptions covered by existing Chief 

Executive Officer certification. 

 Analysis of ridership and cost uncertainties • Increases time and cost of project 

development 

• No guidance on characterizing

uncertainties 

• No discussion of how uncertainties will

be addressed in cost-effectiveness 

measure 

Not adopted. FTA plans to issue guidance 

clarifying the information needed to identify 

uncertainties, which will be subject to the 

notice and comment process.

Page 19 GAO-06-819 New Starts Program
Proposed procedural change

Common concerns expressed by the 

transit community FTA’s response

Project development agreements (PDA) • No criteria for when PDAs will be used

• May increase time of project 

development 

• PDAs will be used in a punitive way 

• Process may be duplicative of FTA’s PE 

and FD approval points 

Not adopted. However, FTA will work with

sponsors who request the use of a PDA, 

and this proposal may be revisited during 

the rule-making process. 

New Starts FFGA funding level set at final 

design approval 

• No acknowledgment of increased costs 

due to higher prices of materials or 

unforeseeable circumstances

• Negotiation of FFGA should be moved 

forward to coincide with FD entry 

• May inhibit innovative contracting 

procedures (e.g., design build)

• FTA is not using the formal rule-making 

process 

Adopted. FTA will broaden the scope of PE 

activities and establish PE “exit criteria,” 

consider requests for additional New Starts 

funding for costs out of the sponsor’s 

control, and exempt projects in FD from 

future New Starts policy changes. 

Mode-specific constants • May be unnecessary for areas with 

existing data for different modes 

• Unclear how values were developed 

• Experts need to be involved in

establishing constants and guidance 

Not adopted. FTA will analyze options and 

may set values in the future, which will be

subject to the Notice and Comment 

process. 

Source: GAO summary of public comments and FTA’s response to these comments. 

Note: The concerns summarized in this table reflect the comments submitted by members of the 

transit community and do not necessarily reflect our views or opinions.

More recently, FTA hired a consulting firm to conduct an assessment of 

the New Starts project development process. According to FTA’s Deputy 

Administrator, the impetus for the review is to streamline the project 

development process while still ensuring that projects recommended for 

funding are delivered in a timely manner and stay within budget. We have 

previously reported that project sponsors have raised concerns about the 

number of changes FTA has made to the New Starts process, such as 

requiring project sponsors to prepare risk assessments, and the time and 

cost associated with implementing these changes.19 According to FTA, the 

results of the review may help inform the development of the Notice of

Proposed Rulemaking (NPRM) for the New Starts program. 

 19GAO-05-674. 

Page 20 GAO-06-819 New Starts Program
SAFETEA-LU made a number of changes to the New Starts program, 

including establishing a new eligibility category, the Small Starts program, 

and identifying new evaluation criteria. The Small Starts program is 

intended to expedite and streamline the application and review process 

for small projects, but the transit community has questioned whether FTA 

would implement the program in a way that would do so. FTA has also 

proposed and sought public input on the new evaluation criteria and other 

possible changes to the New Starts program that would affect traditional 

New Starts projects. In addition, FTA identified possible implementation 

challenges, including how to distinguish between land use and economic

development criteria in the evaluation framework. 

SAFETEA-LU’s

Changes to the New 

Starts Program 

Include Identifying 

New Evaluation 

Criteria to 

Establishing the Small 

Starts Program

FTA Has Started to 

Implement SAFETEA-LU 

Changes and Will Continue 

to Do So through the Rulemaking Process 

SAFETEA-LU introduced eight changes to the New Starts program, 

codified an existing practice, and clarified federal funding requirements. 

The changes include the creation of the Small Starts program and the 

introduction of new evaluation criteria, such as economic development. In

addition, SAFETEA-LU codified FTA’s requirement that project sponsors 

conduct before and after studies for all completed projects. SAFETEA-LU 

also clarified the federal share requirements for New Starts projects. 

Specifically, SAFETEA-LU continues to require that the federal share for a 

New Starts project may be up to 80 percent of the project’s net capital 

project cost, unless the project sponsor requests a lower amount, and 

prohibits the Secretary of Transportation from requiring a nonfederal 

share of more than 20 percent of the project’s total net capital cost. This 

language changes FTA’s policy of rating a project as low if it seeks a 

federal New Starts share of more than 60 percent of the total cost. FTA 

had instituted this policy beginning with the fiscal year 2004 evaluation 

cycle in response to language contained in appropriation committee 

reports. Table 5 describes SAFETEA-LU provisions for the New Starts 

program and compares them with TEA-21’s requirements. 

Page 21 GAO-06-819 New Starts Program
Table 5: Comparison of SAFETEA-LU’s and TEA-21’s New Starts Provisions

Provisions SAFETEA-LU TEA-21 Status of implementation 

Establish the Small Starts 

program 

• Projects seeking less than 

$25 million in New Starts 

funds will no longer be

exempt from the ratings 

process once the Small 

Starts rule is finalized. 

• Establishes a new capital 

investment program called 

Small Starts for projects that 

(1) have a total project cost 

of less than $250 million and 

(2) are seeking less than $75 

million in federal Small Starts 

funding. 

• Projects seeking less than 

$25 million in New Starts 

funding were exempt from 

ratings process.

• No separate program for 

small fixed guideway or 

nonfixed guideway projects. 

FTA issued the ANPRM in 

January 2006 and interim final 

guidance in August 2006 for the 

Small Starts program. By law, 

exempt projects will continue to 

be eligible for funding without 

being rated until the final rule on 

Small Starts is issued. 

Codify the before-and-after 

study requirement 

Project sponsors with FFGAs 

must conduct a study that (1) 

describes and analyzes the 

impacts of the new fixed 

guideway capital project on 

transit services and transit 

ridership, (2) evaluates the 

consistency of predicted and 

actual project characteristics 

and performance, and (3) 

identifies sources of differences 

between predicted and actual 

outcomes. Project sponsors 

must prepare an information 

collection and analysis plan, 

which must be approved prior to 

execution of the FFGA. 

Not required under TEA-21, but 

FTA required, as part of its 

December 2000 Final Rule, 

project sponsors to conduct a

before and after study on 

completed projects. 

FTA’s May 2006 guidance 

requires that project sponsors 

document the information 

produced during the planning 

phase that will be needed for 

the before-and-after study and 

update the information and 

analysis before entering FD. 

Revise New Starts overall 

project rating scale 

Overall project rating is based 

on a 5-point scale of “high,” 

“medium-high,” “medium,” 

“medium-low,” and “low;” 

Projects are required to receive 

an overall rating of “medium” or 

higher to be recommended for 

funding. 

Overall project rating was based 

on 3-point scale: “highly 

recommended,” 

“recommended,” and “not 

recommended.” 

FTA used a 3-point scale for the 

fiscal year 2007 evaluation, but 

changed ratings to “high,” 

“medium,” and “low.” 

Identify reliability of cost 

estimate and ridership forecast 

as a consideration in evaluation 

process 

Requires Secretary to analyze, 

evaluate, and consider the 

reliability of the forecasting 

methods used by New Starts 

project sponsors and their 

contractors to estimate costs 

and ridership. 

Not required under TEA-21. FTA identified options for 

incorporating reliability of 

forecasts in the evaluation 

process and sought public input 

in its January 2006 guidance. 

Page 22 GAO-06-819 New Starts Program
Provisions SAFETEA-LU TEA-21 Status of implementation 

Add economic development 

criterion to evaluation process

Projects will be evaluated based 

on a review of their effects on 

local economic development. 

Not required under TEA-21. FTA identified options for 

incorporating economic 

development in the evaluation 

process and sought public input 

in its January 2006 guidance 

and ANPRM for Small Starts. 

Identify land use as a specific 

evaluation criterion 

Projects will be evaluated based 

on a review of their public 

transportation supportive land

use policies and future patterns.

Land use was not identified as

an evaluation criterion by TEA21. However, TEA-21 identified 

land use as a “consideration” in

the evaluation process, and 

FTA incorporated it into the 

evaluation process. 

FTA identified options for 

incorporating land use in the 

evaluation process and sought 

public input in its January 2006

guidance and ANPRM for Small 

Starts. 

Clarify nonfederal financial 

commitment 

The Secretary is not authorized

to require a nonfederal financial 

commitment for a project that is 

more than 20 percent of its net 

capital cost. 

Federal share could not exceed 

80 percent. But, in response to 

language contained in 

appropriations committee 

reports, FTA instituted a 

preference policy favoring 

projects that seek a federal New 

Starts share of no more than 60

percent of the total project cost

beginning with the fiscal year 

2004 evaluation cycle. 

FTA implemented this provision 

in its fiscal year 2007 evaluation 

cycle. 

Establish incentives for 

accurate cost and ridership 

forecasts 

A higher share of New Starts 

funding may be made available 

to project sponsors if project’s

cost is not more than 10 percent 

higher and ridership is not less 

than 90 percent of those 

estimates when project was 

approved for PE. 

No similar provision in TEA-21. FTA’s May 2006 guidance 

requires that projects requesting 

entry into PE submit information 

on the variables and 

assumptions used to prepare 

forecasts and the parties 

responsible for developing the

different elements of the 

forecasts. This information

could potentially be used to 

apply the incentive provision. 

Require FTA to publish policy 

guidance 

New Starts policy guidance 

must be published for notice 

and comment no later than 120 

days after the enactment of 

SAFETEA-LU, each time 

significant changes are made, 

and at least every 2 years. 

Not specifically addressed in 

TEA-21. 

FTA issued draft policy 

guidance in January 2006 and

final guidance in May 2006. 

FTA also issued draft interim 

Small Starts guidance in June 

2006 and final interim guidance 

in July 2006. 

Assess contractors’ 

performance 

The Secretary will submit an 

annual report to congressional

committees analyzing the 

consistency and accuracy of the 

cost and ridership estimates 

made by contractors to public

transportation agencies 

developing new capital projects.

Not required under TEA-21. FTA’s May 2006 guidance 

requires that projects requesting 

entry into PE submit information 

on the variables and 

assumptions used to prepare 

forecasts and the parties 

responsible for developing the

different elements of the 

forecasts. 

Page 23 GAO-06-819 New Starts Program
Source: GAO analysis of SAFETEA-LU and TEA-21. 

FTA has taken some initial steps in implementing SAFETEA-LU changes.

For example, in January 2006, FTA published the proposed New Starts 

policy guidance and, as will be discussed later in this report, the ANPRM 

for the Small Starts program. In addition, in the final policy guidance 

published in May 2006, FTA took steps to support its use of incentives for 

accurate cost and ridership forecasts and assessing contractors’ 

performance by requiring that projects requesting entry into PE submit 

information on the variables and assumptions used to prepare forecasts 

and the parties responsible for developing the different elements of the 

forecasts. FTA will continue to implement the changes outlined in 

SAFETEA-LU through the rule-making process over the next 11⁄2 years. 

Specifically, in response to SAFETEA-LU changes, FTA is developing the 

NPRM for the New Starts and Small Starts programs. FTA plans to issue 

the NPRM in January 2007, with the goal of implementing the final rule in 

January 2008. Figure 5 shows a time line of FTA’s actual and planned 

implementation of SAFETEA-LU changes. 

Page 24 GAO-06-819 New Starts Program
Figure 5: Time Line for Implementing SAFETEA-LU Changes to the New Starts 

Program 

Source: GAO.

2006

January 2006: FTA issued Guidance on New Starts Policies and Procedures, which 

proposes a number of procedural changes and identifies longer-term changes to the 

New Starts program.

FTA released the ANPRM for the Small Starts program.

February and March 2006: FTA conducted three listening sessions to discuss with 

project sponsors the changes proposed in its January guidance on New Starts and 

the ANPRM for Small Starts.

FTA’s docket for public comment on the proposed procedural changes and long-term 

changes for the New Starts program and the ANPRM for the Small Starts program 

closed in mid-March.

May 2006: FTA issued guidance on the New Starts Fiscal Year 2008 evaluation cycle.

June 2006: FTA issued interim guidance on the Small Starts program for public comment, 

and held two listening sessions to discuss these proposals with project sponsors. 

July 2006: FTA reviewed comments and issued final interim guidance on Small Starts

for the fiscal year 2007 budget cycle. 

August 2006: New Starts project applications for the fiscal year 2008 evaluation cycle 

are due.

January 2007: FTA plans to release the final NPRM for Small Starts and New Starts to 

the public for comment.

2005 August 2005: SAFETEA-LU, which reauthorized the New Starts program and required 

a handful of changes to the ratings and evaluation process, is signed into law.

2007

2008 January 2008: FTA plans to issue the final rule for Small Starts and New Starts.

Small Starts Program Is 

Intended to Offer a 

Streamlined Process, but 

Transit Community 

Members Question 

Whether It Will Do So 

The creation of the Small Starts program was a significant change made by

SAFETEA-LU. The Small Starts program is a discretionary grant program 

for public transportation capital projects that (1) have a total cost of less 

than $250 million and (2) are seeking less than $75 million in federal Small

Starts program funding. The Small Starts program is a component of the 

existing New Starts program that, according to the conference reports 

accompanying SAFETEA-LU, is intended to provide project sponsors with 

an expedited and streamlined evaluation and ratings process. Table 6 

compares New Starts and Small Starts program statutory requirements. 

Page 25 GAO-06-819 New Starts Program
Table 6: Comparison of Small Starts and New Starts Program Statutory Requirements 

Program requirements Small Starts New Starts 

Definition of eligibility Projects qualify as Small Starts if less than $75 

million in federal fixed guideway funding is 

sought, provided the total project cost is also less 

than $250 million. 

Provides funding for new fixed guideway systems 

and extensions, as well as corridor-based bus 

capital projects. 

Projects qualify as New Starts if they are 

seeking $75 million or more in federal New 

Starts funding.

Provides funding for new fixed guideway 

systems and extensions. 

Project justification criteria • Cost-effectiveness 

• Public transportation supportive land-use 

policies 

• Economic development 

• Reliability of forecasting 

• Mobility improvements 

• Environmental benefits 

• Operating efficiencies 

• Cost-effectiveness 

• Public transportation supportive land-use 

policies 

• Economic development 

• Reliability of forecasting 

Local financial commitment criteria • Stability and reliability of financial plan for 

capital costs 

• Stability and reliability of financial plan for 

operating and maintenance costs 

• Level of non-Small Starts funding 

• Stability and reliability of financial plan for 

capital costs 

• Stability and reliability of financial plan for 

operating and maintenance costs 

• Level of non-New Starts funding 

Project development process • Alternatives analysis 

• Project development 

• Construction 

• Alternatives analysis 

• Preliminary engineering 

• Final design

• Construction 

Funding instrument Project will use a Project Construction Grant

Agreement. 

Project requires a signed FFGA, which sets 

scope, cost, and schedule for the project, as 

well as the maximum New Starts share, 

source of other funds, and schedule for 

obligating funds. 

Source: GAO analysis of FTA data. 

In January 2006, FTA published an ANPRM to give interested parties an 

opportunity to comment on the characteristics of and requirements for the 

Small Starts program. In its ANPRM, FTA suggested that the planning and 

project development process for proposed Small Starts projects could be 

simplified by allowing analyses of fewer alternatives for small projects, 

allowing the development of evaluation measures for mobility and costeffectiveness without the use of complicated travel demand modeling 

procedures in some cases, and possibly defining some classes of 

preapproved low-cost improvements as effective and cost-effective in 

certain contexts. FTA also sought the transit community’s input on three 

Page 26 GAO-06-819 New Starts Program
key issues in its ANPRM, including eligibility, the rating and evaluation 

process, and the project development process. For each of these issues, 

FTA outlined different options for how to proceed and then posed 

questions for public comment. 

FTA’s ANPRM for Small Starts generated a significant volume of public 

comment. Members of the transit community were supportive of some 

proposals for the Small Starts program, but also had a number of 

concerns. In particular, the transit community questioned whether FTA’s 

proposals would, as intended, provide smaller projects with a more 

streamlined evaluation and rating process. As a result, some commenters 

recommended that FTA simplify some of its original proposals in the 

NPRM to reflect the smaller scope of these projects. For example, several

project sponsors and industry representatives thought that FTA should 

redefine the baseline alternative as the “no-build” option20 and make the 

before-and-after study optional for Small Starts projects to limit the time 

and cost of their development. In addition, others were concerned that 

FTA’s proposals minimized the importance of the new land use and 

economic development evaluation criteria introduced by SAFETEA-LU, 

and they recommended that the measures for land use and economic 

development be revised.

Since FTA does not plan to issue its final rule for the New Starts and Small 

Starts programs until early 2008, FTA issued final interim guidance for the 

Small Starts program in July 2006 to ensure that project sponsors would 

have an opportunity to apply for Small Starts funding and proposed 

projects could be evaluated in the upcoming cycle (i.e., the fiscal year 2008 

 20FTA requires that the benefits and costs of the proposed New Starts project be assessed 

in comparison with a baseline alternative defined as the best that can be done without 

building a new fixed guideway. The purpose of the baseline alternative is to distill the 

benefits (and costs) of the proposed New Starts project from the benefits that could be 

achieved through low-cost improvements, such as route realignments and increases in 

service frequency, that would not entail the significant cost of a New Starts project’s 

infrastructure. FTA defines the no-build alternative in two ways: (1) an alternative that 

incorporates “planned” improvements that are included in the fiscally constrained longrange plan for which need, commitment, financing, and public and political support are

identified and are reasonably expected to be implemented or (2) an alternative that adds 

only “committed” improvements together with minor transit service expansions or

adjustments that reflect a continuation of existing service policies in newly developed 

areas. 

Page 27 GAO-06-819 New Starts Program
evaluation cycle).21 The final interim guidance describes the process that 

FTA plans to evaluate proposed Small Starts projects to support (1) the 

decision to approve or disapprove their advancement to project 

development and (2) decisions on project construction grant agreements, 

including whether proposed projects are part of a broader strategy to 

reduce congestion.22 In addition, FTA introduced a separate eligibility 

category within the Small Starts program for “Very Small Starts” projects 

in the final interim guidance. Small Starts projects that qualify as Very 

Small Starts are projects that have all of the following elements: 

• have substantial transit stations; 

• include traffic signal priority and preemption, where appropriate; 

• provide low-floor vehicles or level boarding; 

• include branding of the proposed service; 

• offer 10 minute peak and 15 minute off-peak headways or better while 

operating at least 14 hours per weekday;23

• are in corridors with existing riders who will benefit from the proposed 

project and number more than 3,000 on an average weekday; and 

• have a total capital cost of less than $50 million (including all project 

elements) and less than $3 million per mile (excluding rolling stock). 

According to the final interim guidance, FTA intends to scale the planning

and project development process to the size and complexity of the 

 21Prior to the issuance of the final interim guidance, FTA issued proposed interim guidance

on the Small Starts program in June 2006 for review and comment. FTA received comments

from members of the transit community. A concern expressed in the comments was that 

Very Small Starts projects unfairly favored bus projects, due to the exclusion of fixed

guideway as a criterion for eligibility. Based on the comments received, FTA made several

changes to the final interim guidance, including eliminating the requirement that Very Small 

Starts projects do not include the construction of a new fixed guideway. 

22FTA’s emphasis on congestion relief reflects DOT’s ongoing efforts to reduce the nation’s

congestion. Specifically, in May 2006, DOT issued the National Strategy to Reduce 

Congestion on America’s Transportation Network, which outlines a six-point plan for 

reducing congestion. To implement this plan, DOT states that it will use discretionary

resources, potentially including Small Starts funds, to the maximum extent possible. 

23This feature is not required for commuter rail or ferries. 

Page 28 GAO-06-819 New Starts Program
proposed projects. Therefore, Very Small Starts projects will undergo a 

very simple and streamlined evaluation and rating process. For instance, 

according to the guidance, Very Small Starts projects are cost-effective 

and produce land use and economic development benefits commensurate 

with their costs; thus, if a project meets the Very Small Starts eligibility 

criteria, it will automatically receive “medium” ratings for land use and 

cost-effectiveness. Small Starts projects that do not meet all of the criteria

for Very Small Starts projects will be evaluated and rated using a 

framework similar to that used for traditional New Starts projects, with 

the exception that fewer measures are required and their development is 

simplified. In particular, FTA’s evaluation and rating process for Small 

Starts will diverge from the traditional New Starts process in several ways. 

For example, 

• the project’s cost-effectiveness will be rated based on a shorter time frame 

(i.e., opening year); 

• other technically acceptable ridership forecasting procedures, besides 

traditional “four-step” travel demand models can be used; 

• the opening year’s estimate of user benefits will be adjusted upward when 

determining a project’s cost-effectiveness; 

• the financial and land use reporting requirements have been simplified; 

and 

• the project’s economic development benefits and inclusion in a congestion 

reduction strategy will be considered an “other factor” in the evaluation 

process. 

In response to SAFETEA-LU, FTA identified possible changes to the New 

Starts program that would affect traditional New Starts projects in its 

January 2006 guidance. According to FTA, some SAFETEA-LU provisions 

could lead to changes in the definition of eligibility, the evaluation and 

rating process, and the project development process. (See app. II for a 

description of the different changes FTA is considering.) In the guidance,

FTA outlined changes it is considering and solicited public input, through 

a series of questions, on the potential changes. For example, FTA 

identified two options for revising the evaluation and rating process to 

reflect SAFETEA-LU’s changes to the evaluation criteria. The first option 

would extend the current process to include economic development 

impacts and the reliability of cost and ridership forecasts. (See fig. 6.) 

FTA Also Identified 

Possible Changes to the 

New Starts Program in 

Response to SAFETEA-LU 

as Well as Implementation 

Challenges 

Page 29 GAO-06-819 New Starts Program
Figure 6: FTA’s “Option 1” for Revising the New Starts Evaluation and Ratings Framework

Source: GAO analysis of FTA data.

Summary rating

Financial rating Project justification

rating

Non-New

Starts share

Capital

finances

Operating

finances

Mobility

improvements

Environmental

benefits

Operating

efficiencies

Costeffectiveness

Land

use

Other

factors

Economic

development

Reliability of

forecasting

User

benefits

Low-income

households

Employment

User

benefits

Capital

cost

O&M

cost

Specifically, FTA suggested that economic development impacts and the 

reliability of forecasts simply be added to the list of criteria considered in

developing the project justification rating. The second option would be to 

develop a broader process to include the evaluation criteria identified by

SAFETEA-LU and to organize the measures to support a more analytical 

discussion of the project and its merits. (See fig. 7.) According to FTA, the 

second option would broaden the evaluation process beyond a 

computation of overall ratings based on individual evaluation measures 

and develop better insights into the merit of a project than are possible 

from using the quantified evaluation measures alone. In addition, the 

second option would also consider the major uncertainties associated with 

any of the information used to evaluate the project, such as ridership 

forecasts, cost estimates, projected land use, and other assumptions. 

According to FTA, understanding a project’s uncertainties is needed for 

informed decision making. 

Page 30 GAO-06-819 New Starts Program
Figure 7: FTA’s “Option 2” for Revising the New Starts Evaluation and Ratings Framework

Source: FTA.

Project merit

Nature/extent of

problem or opportunity

Costeffectiveness

Mobility

Capital

cost

O&M

cost

Economic

development

Environmental

benefits

Mobility

Transit

dependents

Effectiveness

Financial

capability

Capital

funding

Non-New Starts

share

O&M

funding

Project uncertainty

Land use:

current vs.

plans and policies

Reliability of forecasting

methods for ridership,

costs, and funding

Adjusted project

merit rating

Merit

uncertainty profile

Financial

uncertainty profile

Adjusted financial 

rating

In its guidance, FTA also identified potential challenges in implementing 

some SAFETEA-LU changes. In particular, FTA described the challenges

of incorporating and distinguishing between two measures of indirect 

Page 31 GAO-06-819 New Starts Program
benefits24 in the New Starts evaluation process—land use and economic 

development impacts.25 For example, FTA noted that its current land-use 

measures (e.g., land-use plans and policies) indicate the transitfriendliness of a project corridor both now and in the future, but do not 

measure the benefits generated by the proposed project. Rather, the 

measures describe the degree to which the project corridor provides an 

environment in which the proposed project can succeed. According to 

FTA’s guidance, FTA’s evaluation of land use does not include economic 

development benefits because FTA has not been able to find reliable 

methods of predicting these benefits. FTA further stated that because 

SAFETEA-LU introduces a separate economic development criterion, the 

potential role for land use as a measure of development benefits becomes 

even less clear, given its potential overlap with the economic development 

criterion. In addition, FTA noted that many economic development 

benefits result from direct benefits (e.g., travel time savings), and 

therefore including them in the evaluation could lead to double counting 

the benefits FTA already measures and uses to evaluate projects. 

Furthermore, FTA noted that some economic development impacts may 

represent transfers between regions rather than a net benefit for the 

nation,26 raising questions of whether these impacts are useful for a 

national comparison of projects. To address some of the challenges, FTA 

suggested that an appropriate strategy might be combining land use and 

economic development into a single measure. 

In our January 2005 report on the costs and benefits of highway and transit 

investments, we identified many of the same challenges of measuring and 

forecasting indirect benefits, such as economic development and land-use 

impacts.27 For example, we noted that it is challenging to predict changes 

 24Direct benefits of transportation investments, such as lowered transportation costs and

improved access to goods and services, result in individuals, households, and firms acting 

to take advantage of those benefits. These actions can then lead to several types of indirect

benefits, such as increased property values and new development. 

25SAFETEA-LU added economic development to the list of evaluation criteria; it also 

identified land use as a specific evaluation criterion. Under TEA-21, land use was not

identified as an evaluation criterion, but rather as a “consideration” in the evaluation 

process, and FTA incorporated it into the evaluation process. 

26Indirect benefits, such as economic development, may represent transfers of economic 

activity from one area to another; and, while such a transfer may represent real benefits for 

the jurisdiction making the transportation investment, it is not a real economic benefit 

from a national perspective because the economic activity is simply occurring in a different 

location. 

27GAO-05-172. 

Page 32 GAO-06-819 New Starts Program
in land use because current transportation demand models are unable to 

predict the effect of a transportation investment on land-use patterns and

development, since these models use land-use forecasts as inputs into the 

model. In addition, we noted that certain benefits are often double 

counted when evaluating transportation projects. In particular, indirect 

benefits, such as economic development, may be more correctly 

considered transfers of direct user benefits or economic activity from one 

area to another. Therefore, estimating and adding such benefits to direct 

benefits could constitute double counting and lead to overestimating a 

project’s benefits. Despite these challenges, experts told us that evaluating 

land use and economic development impacts is important since they often 

drive local transportation investment choices.28 To help overcome some of 

the challenges, experts suggested several potential solutions, including 

using qualitative information about the benefits rather than relying strictly

on quantitative information and expanding the use of risk assessment or 

probability analysis in conjunction with economic analysis. For example, 

weather forecasters talk about the probability of rain rather than 

suggesting that they can accurately predict what will happen. This 

approach could illustrate that projects with similar rates of return have 

very different risk profiles and different probabilities of success. FTA’s 

second option for revising the New Starts evaluation process, which would 

consider qualitative information about the project and the project’s 

uncertainties, appear to be in line with these suggestions. 

FTA received a large number of written comments on its online docket in

response to its proposed changes. (See app. II for common comments 

submitted for each proposed change.) While members of the transit 

community were supportive of some proposals, they expressed concerns 

about a number of FTA’s proposed changes. For example, a number of 

commenters expressed concerns about FTA’s options for revising the 

evaluation process, noting that both proposals deemphasized the 

importance of economic development and land use. For example, as 

described in FTA’s January 2006 guidance, land use would receive less 

weight in calculating the overall project rating in both proposals than it 

 28For our January 2005 report on the costs and benefits of highway and transit investments,

we contracted with the National Academy of Sciences to convene a balanced, diverse panel 

of experts to discuss the use of benefit-cost analysis in highway and transit decision 

making and gather views about options to improve the information available to decision 

makers. The experts selected for the panel were knowledgeable about benefit-cost

analysis, transportation policy and planning, highway and transit use and transportation

decision making. For more information about our expert panel, see GAO-05-172. 

Page 33 GAO-06-819 New Starts Program
receives in the current process. Some commenters also noted that land use

and economic development should not be combined into a single measure 

and that they should receive the same weight as cost-effectiveness in the 

evaluation and rating process. These commenters argued that combining 

land use and economic development into a single measure or assigning 

them less weight than cost-effectiveness serves to deemphasize these 

benefits. 

FTA’s New Starts program is in a period of transition. SAFETEA-LU made 

a number of significant changes to the program, and FTA is off to a good

start in implementing these changes. Tough decisions and implementation

challenges remain, however. For example, FTA must determine how to 

incorporate economic development into the evaluation process and 

implement the Small Starts program in the upcoming evaluation cycle. 

Through the issuance of the final interim guidance on the Small Starts 

program, FTA has acted to provide a streamlined evaluation process for 

small projects by simplifying the evaluation measures and introducing the 

Very Small Starts eligibility category. As the Small Starts program is 

implemented in the upcoming cycle, FTA officials will have the 

opportunity to determine whether the Small Starts program is sufficiently 

streamlined and whether the streamlined evaluation process provides 

adequate information to differentiate among projects for funding 

purposes. FTA will also have the opportunity to make necessary 

modifications to the Small Starts program as it learns through its 

experience in implementing the program and working to develop the final 

rule. Thus, the coming months will be a critical period for the New Starts 

program, as FTA works through these remaining decisions and 

implementation challenges to fully incorporate SAFETEA-LU changes. 

We provided a draft of this report to the Department of Transportation, 

including FTA, for review and comment. FTA officials provided technical 

clarifications, which we incorporated as appropriate. 

Concluding 

Observations 

Agency Comments 

We are sending copies of this report to the congressional committees with 

responsibilities for transit issues; the Secretary of Transportation; the 

Administrator, Federal Transit Administration; and the Director, Office of

Management and Budget. We also will make copies available to others 

upon request. In addition, this report will be available at no charge on 

GAO’s Web site at http://www.gao.gov. 

Page 34 GAO-06-819 New Starts Program
If you or your staff have any questions on matters discussed in this report, 

please contact me on (202) 512-2834 or at siggerudk@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Individuals making key 

contributions to this report were Nikki Clowers, Assistant Director, Vidhya 

Ananthakrishnan, and Daniel Hoy. 

Katherine Siggerud 

Director, Physical Infrastructure 

Page 35 GAO-06-819 New Starts Program
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To address our objectives, we reviewed the administration’s fiscal year 

2007 budget request, the Federal Transit Administration’s (FTA) annual 

New Starts report, FTA’s New Starts policy guidance and Small Starts 

Advanced Notice of Proposed Rulemaking (ANPRM), public comments 

received on FTA’s docket on New Starts and Small Starts, FTA’s fiscal year 

2008 reporting instructions for the New Starts program, federal statutes 

pertaining to the New Starts program, and previous GAO reports. We also 

interviewed FTA officials and representatives from the American Public

Transportation Association and the New Starts Working Group. In 

addition, we attended FTA’s New Starts/Small Starts Seminar and 

Listening Session with project sponsors in Washington, D.C., in March 

2006. 

We also conducted semistructured interviews with the sponsors of five 

projects that were evaluated and rated in the fiscal year 2007 evaluation 

cycle, including Raleigh, Regional Rail System; Dallas, 

Northwest/Southeast Light Rail Transit MOS; Minneapolis, Northstar 

Corridor Rail; Philadelphia, Schuylkill Valley Metrorail; and Seattle, 

University Link Light Rail Transit Extension. We selected these projects 

because they represent different phases of project development 

(preliminary engineering and final design), received different overall 

project justification and finance ratings, varied in size based on the 

project’s total capital cost, received different levels of New Starts funding, 

and are geographically diverse. We obtained this information from FTA’s 

annual New Starts report for fiscal year 2007. Our interviews were 

designed to gain project sponsors’ perspectives on three main topics, 

including the impact of FTA’s proposed changes to the New Starts 

application and project development process during the fiscal year 2008 

evaluation cycle, FTA’s implementation of the newly established Small 

Starts program, and FTA’s plans to align and revise its evaluation and 

ratings process with the changes required by the Safe, Accountable, 

Flexible, Efficient Transportation Equity Act: A Legacy for Users 

(SAFETEA-LU). Specifically, we asked for their opinions on how FTA 

plans to measure and weight new criteria in its evaluation framework. We 

provided all project sponsors with a list of topics and questions prior to 

our interviews, and we reviewed the comments they submitted to FTA’s 

docket. Because the five projects were selected as part of a nonprobability 

sample, the results cannot be generalized to all projects. 

In addition to our interviews, we analyzed the content of the comments 

submitted to FTA’s docket on the New Starts policy guidance and the 

Small Starts ANPRM to systematically determine the project sponsors’ 

views on key issues and identify common themes in their responses to 

Page 36 GAO-06-819 New Starts Program
Appendix I: Scope and Methodology 

different questions. We received from FTA a summary of all the written 

comments submitted to the docket on both the Small Starts ANPRM and 

the New Starts guidance on policies and procedures. These comments 

were organized by topic. To verify the accuracy of the summaries, we 

checked 20 percent of the comments against the original source 

documents.1

 Two analysts reached consensus on the coding of the 

responses, and a third analyst was consulted in case of disagreement to 

ensure that our codes were reliable.

To ensure the reliability of the information presented in this report, we 

interviewed FTA officials about FTA’s policies and procedures for 

compiling the New Starts annual reports, including FTA’s data collection 

and verification practices for New Starts information. Specifically, we 

asked the officials whether their policies and procedures had changed 

significantly since we reviewed them for our 2005 report on New Starts.2

FTA officials told us that there were no significant changes in their data 

collection and verification policies and procedures for New Starts 

information. Therefore, we concluded that the FTA information presented 

is sufficiently reliable for the purposes of this report. 

We conducted our work from February 2006 through August 2006 in 

accordance with generally accepted auditing standards, including 

standards for data reliability. 

 1

All written comments are available at http://dms.dot.gov. 

2

GAO-05-674. 

Page 37 GAO-06-819 New Starts Program
Appendix II: FTA’s Proposed Changes to the 

New Starts Program 

In its January 2006 guidance, FTA identified possible long-term changes to

the New Starts program. According to FTA, some of these changes were 

driven by SAFETEA-LU, while others were designed to improve the New 

Starts program or correct past problems. Table 7 summarizes FTA’s 

proposed changes to the definition of eligibility, the evaluation and rating 

process, and the project development process as well as FTA’s rationale 

for the proposed changes and the transit community’s response to the 

proposed changes. 

Table 7: Changes to the New Starts Program Proposed by FTA and the Transit Community’s Response 

Proposed change FTA’s rationale for change

Comments submitted by the transit 

community

Definition of Eligibility 

Definition of a fixed guideway: FTA asks 

whether a Bus Rapid Transit project is a 

“fixed guideway” project and whether FTA

should fund high-occupancy vehicle (HOV) 

projects to the degree that they provide 

benefits to public transit riders.

A fixed guideway has not been specifically 

defined in the statute. 

• The current definition of fixed guideway 

works well; thus, FTA should make no 

changes. 

• A minimum percentage of the guideway 

(e.g., 30-75 percent) should be

dedicated in order for a project to get 

funding. 

• HOV projects should be funded by the 

Federal Highway Administration 

(FHWA). 

Project evaluation and ratings process 

Evaluation framework: FTA proposes two 

options for revising the evaluation 

framework. Option 1 would extend the 

current framework to include economic 

development impacts and the reliability of 

forecasting methods for costs and 

ridership. Option 2 would be a broader 

framework that incorporates the new 

evaluation factors specified by SAFETEALU and, according to FTA, organizes the 

measures to better describe the merits of 

the project, its effectiveness, and its costeffectiveness. 

The current evaluation framework can be

restructured to provide a more informative 

analytical discussion of the project and its 

merits for New Starts funding.

• Both proposed options raise concerns 

because they continue to define costeffectiveness only in terms of mobility. 

• Neither proposed option gives enough 

weight to land use and economic 

development. 

Nature of the problem or opportunity 

evaluation measure: FTA asks (1) whether 

measures that represent the nature of the 

problem or the opportunity the proposed 

projects are designed to address should be 

included in the evaluation framework and 

(2) how FTA should evaluate or rate 

projects that address significant 

transportation problems compared with 

projects that take advantage of 

opportunities to improve service. 

New Starts projects are intended to solve 

specific transportation problems, take 

advantage of opportunities to improve 

transportation services, or support 

economic development. In particular, it is 

important in evaluating projects to 

understand what problem the project is 

intended to solve. 

Funding should be available for projects 

seeking to shape economic development or 

to provide a solution to mobility problems. 

Appendix II: FTA’s Proposed Changes to the 

New Starts Program 

Page 38 GAO-06-819 New Starts Program
Appendix II: FTA’s Proposed Changes to the 

New Starts Program 

Proposed change FTA’s rationale for change

Comments submitted by the transit 

community

Economic development impacts measure: 

FTA identifies two options for 

characterizing economic development 

benefits: (1) regional economic benefits 

and (2) station area development impacts. 

FTA sought comment on whether there 

was preference for either option, as well as 

on how to evaluate economic development 

and land use as distinct and separate 

measures. 

SAFETEA-LU identified economic impacts 

as a new evaluation criterion.

• Station area development benefits better 

isolate the effect of the transit project. 

There are too many other variables 

associated with regional economic 

benefits. 

• FTA should use both regional and 

station area economic benefits. 

• Land use and economic development 

should be separate measures and have 

as much weight as cost-effectiveness 

• Differentiating between land use and 

economic development is difficult. 

Mobility benefits measure: FTA proposes to 

measure mobility by using a combination of 

user benefits per passenger mile and 

project ridership. FTA also asked whether 

other measures of mobility benefits could 

be used. 

The measure of mobility benefits ought to 

capture the number of travelers that will 

benefit as well as the magnitude of the 

benefit. 

• FTA should continue to work toward 

capturing transportation benefits to 

highway users in a project corridor. 

• FTA should analyze the impact of 

nonhome-based trips, trips generated by 

special events, and automobile trips not 

taken because of enhanced pedestrian 

activity established in a project corridor. 

Mobility for transit dependents measure: 

FTA proposes to measure mobility for 

transit dependents by the share of user 

benefits accruing to the passenger in the 

lowest income stratum, compared with the 

regional share of the lowest income 

stratum. FTA asked whether this proposed

measure would cause any implementation 

difficulties and whether there were other 

measures FTA should consider. 

• Since low-income populations and 

households without access to 

automobiles depend critically on the 

public transportation system to provide 

basic mobility, access to jobs, health 

care, and other critical services, projects 

that improve transit services for these 

populations have special merit. 

• FTA’s previous measure—percentage of 

low-income households in the project 

corridor—did not measure whether lowincome riders actually used the system. 

An implementation difficulty would be the 

inconsistencies in regional travel demand 

models—that is, some models are based

on income, others on automobile 

ownership, and some on both.

Environmental benefits measure: FTA 

proposes to continue using the same 

environmental benefits measure, which 

uses the projected change in regional 

vehicle miles traveled, to estimate the 

change in various harmful types of vehicle

emissions and energy consumption. 

No other measures have been identified. FTA should retain its current measure of 

environmental benefits. 

Operating efficiency measure: FTA 

proposes removing this measure as a 

separate evaluation criterion, relying 

instead on an evaluation of costeffectiveness to address the statutory 

criterion. According to FTA, the impact of 

the project on operating and maintenance 

costs is captured in the calculation of costeffectiveness. 

The current measure—projected 

systemwide change in operating cost per 

passenger mile—does not distinguish 

among proposed projects, while the 

projected operating cost of the system is a 

key component in calculating costeffectiveness. 

FTA should use the cost-effectiveness 

evaluation measure to address the 

operating efficiency criterion. 

Page 39 GAO-06-819 New Starts Program
Appendix II: FTA’s Proposed Changes to the 

New Starts Program 

Proposed change FTA’s rationale for change

Comments submitted by the transit 

community

Cost-effectiveness measure: FTA proposes 

to broaden the current cost-effectiveness 

measure to include nontransportation 

benefits, such as economic development 

benefits, land use impacts, and mobility 

benefits to transit dependents. FTA also 

suggests using two cost-effectiveness 

measures—one for the forecast year as is 

done today and the second calculated for 

the year the project opens. 

The current measure reflects breakpoints 

that anticipate nontransportation benefits, 

but this is not readily apparent to the 

industry or decisionmakers. 

• Broadening the cost-effectiveness 

measure would increase the time and 

cost of project development. 

• FTA should use the consumer price 

index, not the gross domestic product 

price index, to adjust the dollar value of 

the cost-effectiveness threshold. 

Financial capabilities measure: FTA 

proposes changing the way the financial 

rating factors related to uncertainty are 

incorporated into the evaluation process. 

Specifically, FTA suggests using the project 

sponsor’s ability to absorb funding 

shortfalls and cost overruns as an explicit 

measure of financial risk. 

SAFETEA-LU identifies the following 

factors that FTA must use in evaluating 

financial capability: (1) the reliability of 

forecasting methods for costs and 

ridership, (2) existing grant commitments, 

(3) the degree to which funding sources are 

dedicated, (4) debt obligations of the 

project sponsor, and (5) the non-New 

Starts funding share. 

• It is unclear from the guidance who is 

responsible for assessing the reliability 

of financial forecasts. 

• The emphasis placed on the reliability of 

the financial forecast should correlate to 

the stage of project development. 

Reliability of forecasts measures: FTA 

proposes to assess the risk and uncertainty 

inherent in project evaluation. Specifically, 

FTA plans to evaluate the uncertainty 

associated with the nature and severity of 

the problem, as well as individual measures

of project merit and cost-effectiveness 

measures. 

SAFETEA-LU requires that the reliability of 

the forecasting methods used to estimate 

costs be considered in the evaluation of 

New Starts projects. The reliability factor is 

a way of assessing the likelihood the cost 

and ridership projections will be achieved. 

• Proposal is confusing. 

• Recent experience with risk 

assessments suggests that the proposal 

would require substantial effort with little 

reduction in uncertainty. 

• FTA should place significant weight on

the project sponsor’s ability to enhance 

the reliability of forecasts through the 

proven quality control methods. 

Development of project ratings: Currently, 

FTA develops separate ratings for project 

justification and local financial commitment, 

and then derives an overall project rating

from these component ratings using 

decision rules. FTA proposes to use a 

similar process for rating projects. 

However, SAFETEA-LU requires that the 

reliability of forecasts be incorporated into 

the ratings process and FTA suggests 

different options for accomplishing this, 

such as using probability weightings or 

using uncertainty indicators to decide the 

outcome for ratings at the margins. FTA

also seeks input about the weights that 

should be assigned to each measure. 

SAFETEA-LU requires that the reliability of 

the forecasting methods used to estimate 

costs be considered in the evaluation of 

New Starts projects. 

Economic development and land use 

should receive the same weight as costeffectiveness. 

Page 40 GAO-06-819 New Starts Program
Appendix II: FTA’s Proposed Changes to the 

New Starts Program 

Proposed change FTA’s rationale for change

Comments submitted by the transit 

community

Project development process

Local endorsement of the financial plan: 

FTA proposes to require that project 

sponsors specify all proposed sources of 

funding in the financial plan, and that the 

sponsoring agency provide a letter 

endorsing the proposed financial strategies 

and amounts of planned funding by those 

agencies identified as funding sources. 

• SAFETEA-LU requires that FTA ensure 

that proposed New Starts projects are 

supported by an acceptable degree of 

local financial commitment and 

resources. 

• FTA has experienced situations in which 

a project’s financial plans state that local 

agencies will provide funding, but in 

reality those local agencies do not 

support the project plan. 

• Securing an endorsement will be overly 

burdensome and delay project 

development. 

• FTA should not dictate when project 

sponsors receive financial commitments.

• It is hard to fully secure funding 

commitments in preliminary engineering 

(PE) and final design (FD). 

Approval of the baseline alternative: FTA 

proposes to maintain the current approval 

process and definition of the baseline 

alternative. However, FTA asks whether 

the baseline can be more clearly defined 

and whether there is a way to report on the 

benefits of the project, including the 

benefits attributable to the difference 

between the no-build and the baseline 

alternatives. 

There has been significant confusion over 

the definition of the baseline alternative. 

• More clarity is needed on how FTA

defines baseline alternative. 

• Selection of baseline alternative should 

not be driven by FTA. 

On-board transit survey: FTA is considering 

requiring that a recent survey of transit 

riders be used to inform the travelforecasting procedures used during 

alternatives analysis. FTA suggests that 

“recent” could be defined as within the 5 

years preceding a request to enter PE. 

Data on current ridership patterns are 

essential to the development of reliable 

forecasts. 

• Surveys are expensive and may be 

unnecessary in some areas. 

• FTA should consider other means of 

collecting data on ridership, such as 

electronic fare collection data and small 

sample surveys. 

Preliminary engineering purpose and exit 

criteria: FTA is considering defining the PE 

phase as the process of finalizing the 

project’s scope, cost, and financial plan

such that (1) all environmental impacts are 

identified and adequate provisions are 

made for their mitigation in accordance with 

the National Environmental Policy Act, (2) 

all major or critical project elements are 

designed to the level that no significant 

unknown impacts relative to their costs will

result, and (3) all cost estimating is 

complete to a level of confidence 

necessary for the sponsor to implement the 

financing strategy. 

FD is intended to be used to develop 

documents for construction. As such, all 

issues related to significant scope and cost 

should be resolved in PE. 

• A clearer definition of the PE phase is 

needed to help project sponsors target 

resources. 

• Design costs will be frontloaded, thereby 

increasing the costs of PE. 

Page 41 GAO-06-819 New Starts Program
Appendix II: FTA’s Proposed Changes to the 

New Starts Program 

Proposed change FTA’s rationale for change

Comments submitted by the transit 

community

Project reaffirmation by the metropolitan 

planning organization (MPO): FTA is

considering requiring that the sponsoring 

agencies reaffirm their adoption of the 

project, in its final configuration and costs, 

in the MPO’s long-range transportation plan 

as part of the application to advance the 

project to FD. 

Before a project is approved for 

advancement into PE, the project must be 

adopted by the MPO into its long-range 

transportation plan. However, a project’s 

scope and costs may change during the PE 

phase. Thus, this requirement would 

ensure that a revised project still conforms 

to the MPO’s transportation plans and 

financial constraint requirements. 

• Creates another step that will increase 

the time and cost of project 

development. 

• Duplicates sponsoring agencies’ 

ongoing work with the MPO and 

provides no added certainty. 

• Will likely have limited impact on local 

financial endorsement. 

• Inconsistent with FHWA regulations. 

New Starts funding share incentives: FTA 

asks how it should implement the provision 

in SAFETEA-LU that would give FTA

discretion to provide a higher percentage of 

New Starts funding than that requested by 

the project sponsor as an incentive to 

produce reliable ridership and cost 

estimates. 

SAFETEA-LU allows the Secretary to 

provide a higher grant percentage than 

requested by the project sponsor if (1) the 

net cost of the project is not more than 10

percent higher than the net cost estimated 

at the time the project was approved for 

advancement into PE, and (2) the ridership 

estimated for the project is not less than 90 

percent of the ridership estimated for the 

project at the time the project was 

approved for advancement into PE. 

• Incentive money should be invested 

back into the New Starts program. 

• Incentive should focus on the project’s 

outcomes like project impacts.

Source: GAO analysis of FTA guidance and public comments posted on FTA’s docket. 

(542086) Page 42 GAO-06-819 New Starts Program
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