Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment _Apportionment_Net Change
Middletown, OH 502,173 820,501 (318,328)
Newark, OH 930,126 499,922 430,205
Parkersburg, WV-OH 33,608 74,027 (40,419)
Sharon, PA-OH 22,162 48,815 (26,653)
Springfield, OH 625,315 949,098 (323,782)
Steubenville-Weirton, OH-WV-PA 155,018 341,450 (186,432)
Wheeling, WV-OH 113,134 260,685 (147,553)
OKLAHOMA 407,981 898,637 (490,656)
Fort Smith, AR-OK 7,157 15,765 (8,608)
Lawton, OK 400,824 882,872 (482,048)
OREGON 8,637,188 4,686,368 3,950,820
Eugene-Springfield, OR 3,876,315 2,205,976 1,670,339
Longview, WA-OR 6,157 14,671 (8,513)
Medford, OR 752,181 681,748 70,432
Salem, OR 4,002,535 1,783,973 2,218,562
PENNSYLVANIA 12,080,092 12,250,999 (170,907)
Altoona, PA 732,346 836,913 (104,567)
Erie, PA 2,217,067 2,152,942 64,126
Hagerstown, MD-PA-WV 2,789 7,375 (4,586)
Johnstown, PA 833,239 771,765 61,474
Lancaster, PA 2,424,434 1,946,538 477,896
Monessen, PA 556,968 529,730 27,238
Pottstown, PA 228,219 502,685 (274,466)
Reading, PA 1,987,855 2,272,243 (284,388)
Sharon, PA-OH 159,775 351,927 (192,152)
State College, PA 807,264 732,444 74,821
Steubenville-Weirton, OH-WV-PA 1,161 2,558 (1,397)
Williamsport, PA 653,053 613,984 39,068
York, PA 1,475,921 1,529,894 (53,973)
PUERTO RICO 5,138,068 411,317,331 (6,179,263)
Aguadilla, PR 449,512 990,114 (540,602)
Arecibo, PR 420,013 925,138 (605,125)
Caguas, PR 1,099,953 2,422,805 (1,322,851)
Cayey, PR 325,215 716,333 (391,118)
Humacao, PR 281,468 619,973 (338,505)
Mayaguez, PR 604,733 4,332,011 (727,278)
Ponce, PR 1,345,712 2,964,123 (1,618,411)
Vega Baja-Manati, PR 611,463 1,346,835 (735,372)
RHODE ISLAND 1,091,321 720,380 370,941
Fall River, MA-RI 74,974 165,142 (90,167)
Newport, RI 1,016,347 555,238 461,108
SOUTH CAROLINA 8,699,091 3,050,730 5,648,360
Anderson, SC 186,276 410,299 (224,023)
Florence, SC 5,146,960 422,024 4,724,936
Myrtle Beach, SC 897,760 442,572 455,189
Rock Hill, SC 213,342 469,916 (256,574)
Spartanburg, SC 976,122 819,167 156,955

21


Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment ___Apportionment_Net Change
Boulder, CO 2,370,193 1,196,211 1,173,982
Fort Collins, CO 1,074,973 996,330 78,643
Grand Junction, CO 334,554 567,271 (232,717)
Greeley, CO 644,783 796,881 (152,098)
Longmont, CO 565,624 726,189 (160,565)
Pueblo, CO 873,861 1,092,986 (219,125)
CONNECTICUT 8,007,269 9,503,988 (1,496,719)
Bristol, CT 384,683 847,319 (462,636)
Danbury, CT-NY 1,068,398 920,575 147,823
New Britain, CT 1,171,424 1,586,597 (415,173)
New London-Norwich, CT 952,359 1,276,746 (324,387)
Norwalk, CT 1,214,664 1,094,124 120,540
Stamford, CT-NY 1,818,012 1,946,476 (128,464)
Waterbury, CT 1,397,729 1,832,150 (434,421)
DELAWARE 1,407,634 405,570 1,002,064
Dover, DE 1,407,634 405,570 1,002,064
FLORIDA 11,562,698 12,360,873 (798,174)
Deltona, FL 802,387 410,994 391,392
Fort Pierce, FL 851,569 984,528 (132,959)
Fort Walton Beach, FL 743,596 954,371 (210,775)
Gainesville, FL 1,583,890 1,223,088 360,803
Kissimmee, FL 258,633 569,676 (311,043)
Lakeland, FL 1,426,388 1,250,368 176,021
Naples, FL 373,602 822,912 (449,310)
Ocala, FL 250,966 552,788 (301,822)
Panama City, FL 818,009 829,583 (11,575)
Punta Gorda, FL 246,294 542,498 (296,204)
Spring Hill, FL 188,279 414,710 (226,432)
Stuart, FL 485,708 723,599 (237,892)
Tallahassee, FL 1,822,037 1,394,259 427,779
Titusville, FL 699,885 399,118 300,768
Vero Beach, FL 656,013 505,468 150,545
Winter Haven, FL 355,442 782,912 (427,470)
GEORGIA 5,179,441 5,411,902 (232,461)
Albany, GA 665,701 670,332 (4,631)
Athens, GA 659,845 642,694 17,151
Brunswick, GA 167,911 369,849 (201,937)
Macon, GA 545,466 1,201,466 (656,000)
Rome, GA 469,321 377,040 92,281
Savannah, GA 2,408,544 1,571,991 836,553
Warner Robins, GA 262,653 578,530 (315,878)
HAWAII 877,059 1,438,341 (561,282)
Kailua, HI 877,059 1,438,341 (561,282)
IDAHO 2,393,797 2,846,734 (452,937)
Boise City, ID 1,419,704 1,741,957 (322,253)
idaho Falls, !D 518,536 624,457 (105,922)
Pocatello, !D 455,557 480,320 (24,763)

7


Exhibit 5

Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment Apportionment. Net Change

ILLINOIS 10,536,649 13,039,476 — (2,502,827)
Alton, IL 540,425 704,693 (164,268)
Aurora, IL 1,375,048 1,973,637 (598,589)
Beloit, WI-IL 29,668 90,065 (60,398)
Bloomington-Normal, IL 832,715 1,135,262 (302,547)
Champaign-Urbana, IL 2,046,267 1,602,075 444,193
Crystal Lake, IL 514,791 643,251 (128,460)
Decatur, IL 803,172 901,814 (98,642)
Dubuque, JA-IL 6,686 21,007 (14,321)
Elgin, IL 1,135,785 1,423,686 (287,901)
Joliet, IL 1,348,649 1,646,194 (297,544)
Kankakee, IL 292,529 646,084 (353,555)
Round Lake Beach-McHenry, IL-WI 457,458 937,528 (480,071)
Springfield, IL 1,153,457 1,314,182 (160,724)
INDIANA 5,928,933 7,605,189 (1,676,256)
Anderson, IN 493,486 614,716 (121,229)
Bloomington, IN 722,107 917,307 (195,200)
Elkhart-Goshen, IN 600,053 919,374 (319,321)
Evansville, IN-KY 1,314,484 1,703,133 (388,649)
Kokomo, IN 387,437 619,041 (231,604)
Lafayette-West Lafayette, IN 1,109,569 1,230,688 (121,120)
Muncie, IN 862,306 904,711 (42,405)
Terre Haute, IN 439,491 696,219 (256,728)
IOWA 3,957,922 4,140,176 (182,255)
Cedar Rapids, 1A 1,130,674 1,286,628 (155,954)
Dubuque, IA-IL 447,073 626,250 (179,177)
lowa City, IA 958,584 741,322 217,262
Sioux City, IA-ANE-SD 681,425 684,686 (3,261)
Waterloo-Cedar Falls, IA 740,165 801,290 (61,125)
KANSAS. 1,430,882 2,010,184 (579,302)
Lawrence, KS 339,996 761,215 (421,219)
St. Joseph, MO-KS 2,639 6,283 (3,644)
Topeka, KS 1,088,248 1,242,686 (154,438)
KENTUCKY 612,210 1,584,354 (972,143)
Clarksville, TN-KY 74,908 193,324 (118,416)
Evansville, IN-KY 77,300 237,396 (160,096)
Huntington-Ashland, WV-KY-OH 154,260 473,409 (319,149)
Owensboro, KY 305,742 680,224 (374,482)
LOUISIANA 3,074,657 4,692,211 (1,617,554)
Alexandria, LA 333,177 684,727 (351,550)
Houma, LA 339,755 481,636 (141,881)
Lafayette, LA 900,453 1,184,744 (284,291)
Lake Charles, LA 462,602 951,685 (489,082)
Monroe, LA 809,808 904,907 (95,098)
Slidell, LA 228,862 484,512 (255,650)
MAINE 1,896,483 2,042,135 (145,652)
Bangor, ME 419,897 419,625 273

26


viii


The 2000 Census of Population will have a significant impact on the formula
apportionments in both the urbanized and nonurbanized formula grants programs. These
changes, likely effective in FY 2002, will lead into the discussion and debate surrounding
the reauthorization of the federal transit program following the expiration of TEA-21

in 2003. FTA does not support reopening the current authorization and addressing
formula program issues before then.

Some possible changes to federal transit assistance programs have been raised and
analyzed in this report. The Federal Transit Administration views these proposals as a
starting point for discussions of how to maintain a federal transit assistance program that
continues to reflect and meet the needs of our Nation’s mass transit systems. We
welcome comments on this study and look forward to a continuing dialogue with
Congress, the public transit industry, and the general public.

36


will thus be subject to the formula provisions applied to large urbanized areas. Some of
these will likely be areas that are now considered small transit intensive cities; the new
census counts will push them into the higher category, allowing their formula
apportionments to reflect the high levels of service that they provide. New urbanized
areas will be created, increasing the number of potential recipients of Section 5307 funds
and increasing the competition for those funds. At the same time, population growth may
lead to some urbanized areas being combined together. This is particularly likely for
small urbanized areas adjacent to major urbanized areas. Such combinations will create
an entirely new structure for the way in which transit operators in these (currently) small
urbanized areas receive and spend their formula allocations.'*!

7.3, Reporting Requirements

The Federal Transit Administration is concerned about the reporting requirements that it
imposes upon the recipients of federal transit assistance as the agency attempts to collect
data to support the policy formation and decision-making process. Indeed, a review of the
National Transit Database program is currently underway to determine what changes
might be made to the information that local operators and agencies are required to report,
with an eye toward limiting this burden. Any increase in the number of factors considered
in the formula for small urbanized areas would lead to some additional reporting
requirements that are not currently faced by operators in small urbanized areas,
particularly small operators. This concern was raised by a number of commenters to the
study. One advantage of using discretionary program funds to assist small transit
intensive cities is that only the applicants for such funds would bear additional reporting
requirements.

7.4 Small Operators in Large Urbanized Areas

One commenter on the study noted that small transit operators in large urbanized areas
have issues that are in some ways the reverse of those faced by small transit intensive
cities. These small operators are frequently located in smaller population clusters near
large cities that have grown together with the larger urbanized area. As noted above,
recent urban growth patterns are likely to result in some currently small urbanized areas

"4 A search of the Catalog of Domestic Federal Assistance found that the Section 5307 program is the only
federal grant program apportioning funds to specific urbanized areas. Formula funding programs in other
agencies, such as the Federal Highway Administration, Environmental Protection Agency, and the
Department of Health and Human Services, allocate funds to states based on their urbanized area
ulations.
Evie FTA uses the urbanized area definitions created by the Census Bureau, it is not strictly bound to
do so. In 49 U.S.C. 5302(a)(17), an urbanized area is defined as “(A) encompassing at /east an urbanized
area within a State that the Secretary of Commerce designates; and (B) designated as an urbanized area
within boundaries fixed by State and local officials and approved by the Secretary [of Transportation].”
Thus, for purposes of the formula programs, an urbanized area could be defined to encompass a larger area
(and thus more population, but a lower overall population density) than the corresponding Census-defined
urbanized area (but not a smaller area, per the statute), Such adjustments in urbanized area definitions are in
fact made by the Federal Highway Administration, which uses its own “Federal Aid Urbanized Area”
definitions rather than those designated by the Census Bureau.

34


Exhibit A-3
Small Transit Intensive Cities
Transit Service Provision
Average Annual Vehicle Revenue Hours Per Capita 1996-98

Average for urbanized areas 200,000-1 million 0.770)
Florence, SC 3.793) Charleston, WV 7.027
Olympia, WA. 2.860 New Bedford, MA 1.003)
Bellingham, WA 2.407 Palm Springs, CA 1.001
Richland-Kennewick-Pasco, WA 2.335 Redding, CA 0.987
Bremerton, WA 2.239 Davis, CA 0.956
Santa Fe, NM 1,948) Sumter, SC 0.939
lowa City, IA 1.794) Vero Beach, FL 0.929)
Champaign-Urbana, IL 1.719) Santa Barbara, CA 0.926
Hyannis, MA 1.614) Fayetteville-Springdale, AR 0.919}
Santa Cruz, CA 1.569} Myrtle Beach, SC 0.906
Eugene-Springfield, OR 1,531 Lafayette-West Lafayette, IN 0.902
Newark, OH 1.480} Springfield, IL 0.892
Fitchburg-Leominster, MA 1.444 Muncie, IN 0.888
Ithaca, NY 1.389 ‘Santa Rosa, CA 0.885
‘Seaside-Monterey, CA 1.313 Johnstown, PA 0.865
Duluth, MN-WI 1.295) Burlington, VT 0.865
Port Huron, MI 1.230 Erie, PA 0.864
Galveston, TX 1.201 Lancaster, PA 0.854
Laredo, TX 1.187 Norwalk, CT 0.848
Elmira, NY 1.171 Winston-Salem, NC 0.845)
Oshkosh, WI 1.125 Portland, ME 0.824)
Sheboygan, WI 1,124) Pittsfield, MA 0.821
State College, PA 1.094 Salem, OR 0.812
Racine, WI 1.089} Binghamton, NY 0.810
Bay City, MI 1.083 Eau Claire, WI 0.804
Tallahassee, FL 1,078 Jackson, MI 0.803
St. Cloud, MN 1.057 York, PA 0.803
Savannah, GA 1.046 Charlottesville, VA 0.780
Brockton, MA 1.038 La Crosse, WI-MN 0.772
Gainesville, FL 1.030

A-4



are then allocated according to ridership and revenue miles. The factor weights are
different for rural and urban systems:

Regional Urban
Revenue miles 60% Revenue miles 50%
Ridership 40% Ridership 50%

Section 5307 funds for small urbanized areas are allocated on both a formula and
discretionary basis. Eighty percent of the funds are allocated based on the federal formula
apportionments for each small urbanized area, while the remaining 20 percent are
allocated based on peer pool recommendations and on scoring through the state’s Public
Transportation Management System (PTMS).

New York

The State of New York provides operating assistance to local transit operators through
the State Mass Transportation Operating Assistance (STOA) Program. STOA funds are
allocated both to “Specified” systems (large systems whose funding is a specific line item
in the state budget) and “Formula” systems (other, smaller systems receiving funding on
the basis of a formula). The formula program has separate tiers for Downstate (New York
City metropolitan region) and Upstate systems. Formula funding is based on a fixed
amount per vehicle revenue mile and per passenger, and is adjusted quarterly. For the
quarter from July-September 1999, the rates were $0.405 per passenger and $0.69 per
vehicle mile. The formula also has components for costs related to the implementation of
the Americans with Disabilities Act of 1990 (ADA) (based on passengers and population)
and for bus systems that interline passengers with commuter rail operations (50 percent
of the lost revenue due to free rail/bus transfers). New York State also provides capital
assistance for local transit operators. Capital assistance for non-Metropolitan Transit
Authority operators has two components. The first provides 50 percent of the local match
for FTA-funded capital projects, while the second provides additional capital assistance
to local operators based on a state assessment of transit capital needs.



6.2 Alternative Proposal: Targeting Section 5309 Bus Program
Funding to Small Transit Intensive Cities

An alternative mechanism to changing the Section 5336 formula, suggested by
commenters on this study, involves a takedown from the Section 5309 Bus Program.
Such an approach would be consistent with the stated concerns of operators in small
transit intensive cities that their needs are primarily on the capital side, rather than on the
operating side. It would also have the advantage of only imposing new data reporting
requirements on operators that would apply for the funding, rather than subjecting
operators in all small urbanized areas to the same requirements faced by transit operators
in large urbanized areas.

Some broad outlines for how such a program could be structured were suggested. First,
funding would come from a takedown from the total amount available for the bus portion
of Section 5309, which would be reserved exclusively for use in small urbanized areas.
Two options for distributing this funding were suggested. In one, a formula, similar in
spirit to the Fixed Guideway Modernization Program of Section 5309, would be applied
to all small urbanized areas. The formula might include the service factor components of
the Section 5336 formula, or something relating to vehicle utilization rates. Small transit
intensive cities would obviously be the prime beneficiaries of such a formula. Another
option for distributing the takedown funds would be through discretionary grants to a
criteria-limited applicant pool. Such criteria might include minimum vehicle utilization or
service intensity rates. Other criteria, such as the creation of a Transportation
Management Area in the small urbanized area or minimum uses of flexible funding”? for
mass transit (where applicable) might also be applied.

7 Other Issues

7.1 The Role of the States

State governments play a key role in providing public funding for mass transit, both in
the administration of the Federal formula programs for small and nonurbanized areas and
through their own transit assistance programs. The role played by the states has several
features that are relevant to the discussion of the formula program.

7.1.1 The Governor’s Apportionment

As noted in the description of the formula programs, one important difference between
large urbanized areas (those over 200,000 in population) and small urbanized areas is that
large urbanized areas receive their formula allocations directly, while the formula
allocations attributable to small urbanized areas are apportioned to the Governor of the
respective state. The exception for small urbanized areas occurs when they are part of a

'S Surface Transportation Program (STP) and Congestion Mitigation and Air Quality Program (CMAQ)
funds.

32


whatsoever. Areas that provide a high level of transit service will naturally have greater
needs for both operating assistance (to make up for the gap between passenger fares and
operating costs) and capital funding (to replace and rehabilitate vehicles, guideways, and
support structures which deteriorate from use). Areas with high levels of vehicle
utilization by transit passengers will have needs to expand their systems to relieve
crowding and excessive wear and tear on their transit vehicles. High levels of existing
transit service also typically reflect a local commitment to transit through both funding
and land use planning, as well as local geographic and demographic factors. Federal
assistance in this case can be seen as reinforcing such local commitment. Formula factors
intended to reflect existing needs include route mileage and vehicle revenue miles
(service provision) and passenger miles (service consumption).”

3.2 Potential Need

Urbanized areas also vary widely in their potential for mass transit usage. Larger cities
tend to have more urban travel, some of which could be best served by mass transit.
Cities with more compact land use have greater potential for effective and efficient public
transit service as residential and activity locations are more concentrated, making mass
transit an effective alternative to the private automobile. Federal assistance in such
instances can be seen as helping local governments to tap into such potential needs. Many
urbanized areas, particularly those that have grown rapidly in recent decades, lack a
strong post-war local tradition of transit service. Federal assistance helps such areas to
build and sustain a minimal transit service level, enabling them to build local support of
and for mass transit to achieve the potential transit service that could be sustained in such
areas. Many local governments also find that local funding sources for transit are limited
by constitutional or legal factors, thereby increasing their reliance on federal assistance.
Such potential transit needs are reflected in the formula by population and population
density factors.

? One frequently expressed concern regarding needs-based federal subsidy programs is that they may
encourage inefficiency in the provision of local public services. For example, it has often been argued that
the inclusion of service provision factors in the formula encourages local transit operators to inefficiently
run transit vehicles regardless of ridership. There are several ways in which this issue can be addressed.
First, under TEA-21, operators in large urbanized areas (whose formula allocations are based in part on
service levels) are no longer eligible for federal operating assistance, which had been declining in real
terms for several years. Since the funds can only be used for capital and preventive maintenance
expenditures, their effect on operations is limited. Second, the formula includes a so-called incentive tier, in
which transit service consumption (passenger miles) is weighted by the average operating cost per
passenger mile. This provides an incentive for efficient service provision, since an operator that provides
service at a lower average operating cost can receive more federal capital assistance. Finally, it can be
argued that a high level of transit service provision is a worthy public policy goal in its own right. High-
frequency service, even in off-peak hours, provides a significant quality of life benefit to those who are
dependent on public transit for their mobility needs. High frequency, reliable transit service also provides
an incentive for efficient, transit-supportive land use. For these reasons, the socially optimal level of transit
service provision may be higher than would be dictated by a strict economic efficiency calculation, and this
is reflected in the formula’s use of service level factors.



Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas

Fiscal Year 2000
Hypothetical Actual

Urbanized Area/State Apportionment__ Apportionment_Net Change
Sumter, SC 1,278,631 486,753 791,878
SOUTH DAKOTA 1,431,949 1,514,777 (82,828)
Rapid City, SD 409,742 482,434 (72,692)
Sioux City, IA-NE-SD 6,406 13,526 (7,120)
Sioux Falls, SD 1,015,801 1,018,817 (3,016)
TENNESSEE 2,054,001 2,344,390 (290,389)
Bristol, TN-VA 99,485 219,130 (119,645)
Clarksville, TN-KY 598,115 534,276 63,839
Jackson, TN 502,278 404,396 97,882
Johnson City, TN 486,941 616,431 (129,490)
Kingsport, TN-VA 367,182 570,156 (202,974)
TEXAS 17,578,506 21,706,887 (4,128,381)
Abilene, TX 721,458 770,125 (48,668)
Amarillo, TX 1,171,848 1,428,410 (256,562)
Beaumont, TX 899,448 982,435 (82,988)
Brownsville, TX 1,719,833 1,427,936 291,897
Bryan-College Station, TX 795,863 956,487 (160,624)
Denton, TX 419,047 516,668 (97,621)
Galveston, TX 1,274,300 548,067 726,233
Harlingen, TX 318,614 701,792 (383,178)
Killeen, TX 609,420 1,342,335 (732,915)
Laredo, TX 2,035,609 1,695,320 340,289
Lewisville, TX 270,788 596,449 (325,661)
Longview, TX 266,421 586,831 (320,410)
Lubbock, TX 2,188,053 1,671,261 516,792
Midland, TX 332,447 732,263 (399,816)
Odessa, TX 368,805 812,346 (443,541)
Port Arthur, TX 576,470 886,146 (309,676)
San Angelo, TX 578,940 761,463 (182,523)
Sherman-Denison, TX 396,590 381,161 15,428
Temple, TX 230,790 432,724 (201,934)
Texarkana, TX-AR 158,525 349,174 (190,649)
Texas City, TX 421,389 928,170 (506,781)
Tyler, TX 329,514 725,803 (396,288)
Victoria, TX 228,427 503,143 (274,716)
Waco, TX 868,991 1,096,112 (227,122)
Wichita Falls, TX 396,917 874,266 (477,349)
UTAH 451,290 433,852 17,437
Logan, UT 451,290 433,852 17,437
VERMONT 901,040 761,283 139,757
Burlington, VT 901,040 761,283 139,757
VIRGINIA 4,693,084 5,053,356 (360,272)
Bristol, TN-VA 70,826 156,005 (85,179)
Charlottesville, VA 793,373 726,621 66,751
Danville, VA 352,849 412,634 (59,785)
Fredericksburg, VA 219,937 484,443 (264,506)
Kingsport, TN-VA 8,375 29,453 (21,078)

22


Q

Deputy Administrator 400 Seventh St., S.W.
of Trancvoration Washington, D.C. 20590
i
Federal Transit
Administration September 29, 2000
Dear Colleague:

I am pleased to provide you with a copy of the Federal Transit Administration’s (FTA) report on
The Urbanized Area Formula Program and the Needs of Small Transit Intensive Cities, which we
have prepared in accordance with Section 3033 of the Transportation Equity Act for the

21* Century (TEA-21). This report was approved by Secretary of Transportation

Rodney E. Slater on September 29, 2000.

As required under TEA-21, this report is the product of a study to determine whether the needs of
small urbanized areas with unusually high levels of transit service are reflected in the Urbanized
Area Formula Program established by 49 USC §5307. The study concludes that sufficient issues
exist to suggest that changes to the FTA formula program should be considered as part of the next
reauthorization cycle; however, the basic formula apportionments should continue to reflect
underlying transit needs.

If you have any questions regarding the content of this report, please do not hesitate to contact
me.

Sincerely,

Nia sb. Fhe

Nuria I. Fernandez
Acting Administrator


The same data caveats discussed above in the section on Small Transit Intensive Cities
apply here. The data reported by operators in small urbanized areas may include service
provided in nonurbanized areas and/or in other urbanized areas, thereby inflating the
formula apportionments attributed to that urbanized area relative to what they would
actually receive if the data were reported in the same way as it is for large urbanized
areas. See Appendix A for more detail on the data and methodology used in this section.

6.1.1 Applying Service Factors to Small Urbanized Areas as a Group

Exhibit 4 shows the net effect on each small urbanized area’s FY 2000 formula
apportionment of applying service factors to small urbanized areas in their own tier. The
urbanized areas are grouped and their apportionments totaled by state, as in FTA’s annual
funding notice.'' As expected, urbanized areas with very high transit service levels would
gain considerably under such an approach, while densely populated small urbanized areas
with no currently reported transit service would see large decreases in Section 5307
funding. The 20 small transit intensive cities identified in the previous section would see
their combined share of formula funding double, from $26.2 million to $52.4 million, and
their share of formula funding among all small urbanized areas would rise from

10.17 percent to 20.34 percent.

6.1.2 Applying the Bus Formula to All Urbanized Areas in a Single Tier

Exhibit 5 shows what the effect on small urbanized areas would be if the current bus
formula were applied to all urbanized areas as a single tier. As a group, small urbanized
areas would receive $33.5 million less in formula funding under this scenario than they
actually did.'? However, most small transit intensive cities would still gain, even when
competing in the same pool as larger urbanized areas. Of the 20 small transit intensive
cities, 17 would increase their funding levels, and their combined total would rise from
$26.2 million to $41.1 million. Their overall share of bus formula money would rise from.
1.4 percent to 2.1 percent.

1! ‘The state totals are the actual apportionments made by FTA to the governors. The actual formula funding
allocated to each small urbanized area may or may not equal the totals listed here. Any minor differences
between the amounts calculated here and those reported in the apportionments notice are due to rounding.
"2 Major urbanized areas over | million would gain $74.8 million, while urbanized areas between 200,000
and | million in population would lose $41.4 million. Incidentally, every major urbanized area would gain,
while every other large urbanized area would lose. This is due to the current two-tier structure in the Bus
Non-Incentive tier.

15


1 Introduction

This Report to Congress fulfills the requirements of Section 3033 of the Transportation
Equity Act for the 21 Century (TEA-21), which called for a study of the Urbanized Area
Formula Program administered by the Federal Transit Administration (FTA), focusing on
the needs of small urbanized areas that provide unusually intensive transit service.
Specifically, Section 3033 directs the Secretary of Transportation to “conduct a study to
determine whether the formula for apportioning funds to urbanized areas under section
5336 of title 49, United States Code, accurately reflects the transit needs of the urbanized
areas and, if not, whether any changes should be made either to the formula or through
some other mechanism to reflect the fact that some urbanized areas with a population
between 50,000 and 200,000 have transit systems that carry more passengers per mile or
hour than the average of those transit systems in urbanized areas with a population

over 200,000.”

A Federal Register Notice announcing the study, along with a request for comments on
its design, was published on July 9, 1999. Outreach sessions were held in Sacramento,
CA, and Washington, DC, during that same month. Many helpful written and oral
comments, received from parties interested in the study, have been incorporated into this
report.

The first section of this report outlines the formula grant programs administered by the
Federal Transit Administration. It is followed by a discussion of the existing and potential
transit needs that cities have, and how the formula factors used relate to these needs. The
third section characterizes small, transit intensive cities, which are the focus of the study,
and some of the funding issues that they face.

The next two sections involve data analysis. The first disaggregates recent federal transit
funding by urbanized area size, showing the differences among size categories in funding
telative to population and service levels. The second analyzes potential changes to the
formula and other funding alternatives that would result in small transit intensive cities
receiving a greater share of federal funding.

The study also includes a discussion of other issues related to the urbanized area formula
program, many of which were raised by commenters on the study. The report concludes
with the findings and recommendations of FTA regarding the Urbanized Area Formula
Program.

2 The Formula Grant Programs of the Federal Transit
Administration
Formula Grant Programs comprise the largest assistance program administered by FTA,

totaling $3.0 billion in FY 2000. The programs provide assistance to local governments
and transit operators for both operating and capital expenditures. The three formula

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1) Bus Incentive Tier (9.2%). Allocated based on:
a) bus passenger miles weighted by passenger-miles per dollar of
operating cost
2) Bus Non-incentive Tier (90.8). This portion of the bus tier is segmented
between urbanized areas above and below 1 million in population. Allocated
based on:
a) population
b) population times population density
c) bus vehicle revenue miles

In sum, funding is allocated to urbanized areas under 200,000 solely on the basis of
population and population density, while funding for areas over 200,000 includes factors
related to the level of transit service provided.

There are two other important distinctions between small and large urbanized areas in the
formula program. The first lies in the method of apportioning funds to the urbanized
areas. In large urbanized areas, formula funds are apportioned directly to the urbanized
area, through a designated recipient agency within the urbanized area. In small urbanized
areas that are not in a transportation management area, however, formula funds
attributable to the area are apportioned to the governor, who acts as the designated
recipient for all of the small urbanized areas within the state. The governor may allocate
these funds without FTA input or involvement. The second distinction between large and
small urbanized areas is that formula funds for small urbanized areas may be used for
operating costs, while this option is no longer available to larger urbanized areas since the
passage of TEA-21.

3 Federal Formula Grant Assistance and Local Transit
Funding Needs

The purpose of using a formula to allocate federal assistance for transit is to ensure that
such funds are distributed in a fair, objective, and equitable manner. Fundamentally, this
means that the formula should allocate more funds to areas that have proportionally
greater transit needs. The factors used in the formula are intended to reflect these
underlying needs while retaining some degree of simplicity and ease of measurement and
reporting.’ The formula is also intended to encourage cost effectiveness in the provision
of transit services. In understanding how the formula reflects these needs, it is important
to understand the difference between two kinds of need: potential need and existing need.

3.1 Existing Need

Urbanized areas within the United States vary considerably in their levels of mass transit
service provision and usage, ranging from large systems utilizing multiple rail and non-
rail modes, to simple bus and/or demand response systems, to no public transit service

' Tt should be noted that no explicit needs assessment is made in allocating formula funding among,
urbanized areas. Instead, the formula factors used can be viewed as surrogates for the basic transit needs of
local communities.



Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment __Apportionment_Net Change
NATIONAL TOTAL 257,568,903 257,568,903 i!)
ALABAMA 3,354,691 4,985,155 (1,630,464)
Anniston, AL 218,307 480,853 (262,546)
Auburn-Opelika, AL 291,347 385,788 (94,441)
Decatur, AL 199,897 440,303 (240,405)
Dothan, AL 167,898 369,820 (201,922)
Florence, AL 494,014 515,217 (21,202)
Gadsden, AL 206,736 455,365 (248,629)
Huntsville, AL 1,169,629 1,445,530 (275,900)
Tuscaloosa, AL 606,861 892,280 (285,419)
ARIZONA 592,422 1,304,894 (712,472)
Flagstaff, AZ 233,060 513,348 (280,288)
Yuma, AZ-CA 359,362 791,546 (432,184)
ARKANSAS 1,604,002 1,904,687 (300,685)
Fayetteville-Springdale, AR 848,732 525,660 323,072
Fort Smith, AR-OK 324,867 715,567 (390,700)
Pine Bluff, AR 348,730 483,565 (134,835)
Texarkana, TX-AR 81,672 179,895 (98,223)
CALIFORNIA 31,281,969 29,175,483 2,106,486
Antioch-Pittsburg, CA 1,856,434 1,649,944 206,491
Chico, CA 625,881 720,399 (94,519)
Davis, CA 830,122 874,519 (44,397)
Fairfield, CA 1,046,979 1,062,135 (15,156)
Hemet-San Jacinto, CA 684,022 886,135 (202,113)
Hesperia-Apple Valley-Victorville, CA 1,385,386 1,130,450 254,937
Indio-Coachella, CA 243,263 535,822 (292,559)
Lancaster-Paimdale, CA 2,636,271 1,901,446 734,825
Lodi, CA 587,388 744,407 (157,019)
Lompoc, CA 352,387 457,181 (104,794)
Merced, CA 924,025 812,779 111,246
Napa, CA 859,999 849,265 10,734
Palm Springs, CA 1,707,974 1,058,042 649,931
Redding, CA 805,995 611,778 194,217
Salinas, CA 730,898 1,609,906 (879,009)
San Luis Obispo, CA 346,127 762,395 (416,267)
Santa Barbara, CA 2,955,688 2,490,601 465,087
Santa Cruz, CA 3,047,659 1,287,861 1,759,797
Santa Maria, CA 767,764 1,171,709 (403,945)
Santa Rosa, CA 2,860,126 2,271,814 588,312
Seaside-Monterey, CA 2,746,924 1,526,612 1,220,312
Simi Valley, CA 908,637 1,445,047 (536,410)
Vacaville, CA 398,271 877,250 (478,978)
Visalia, CA 999,547 1,002,011 (2,464)
Watsonville, CA 250,620 552,025 (301,406)
Yuba City, CA 722,159 880,815 (158,656)
Yuma, AZ-CA 1,424 3,136 (1,712)
COLORADO 5,863,988 5,375,868 488,119

16




A-6


iv


5.1 Small Transit Intensive Cities

Small urbanized areas as a group, then, receive a relatively large share of federal transit
funding compared to their service levels, but do relatively poorly on a per capita basis.
The issue for small transit intensive cities, however, is that they are not like other small
cities, as they provide more transit service and carry more passengers than even much
larger cities. How well do these cities do relative to other small urbanized areas and to
urbanized areas in general in the distribution of federal funding?

In order to examine this issue, it is useful to look at funding from both the Section 5307
program and the Section 5309 Capital Program. The latter program is another significant
source of federal transit funding. For example, in FY 2000, funding for Section 5307
programs totaled $2.77 billion, while Section 5309 funding totaled $2.50 billion. While
most of these funds are designated for fixed guideway system modernization and
expansion, a significant portion’ is available for bus capital needs. Section 5309 Bus
program funds are available for use in both urbanized and nonurbanized areas. Could this
be an additional source of funding for small transit intensive cities?’

Exhibit 3 compares data for 20 small transit intensive cities to totals for small urbanized
areas and for all urbanized areas based on population and density levels, transit service
levels, and Federal Formula and Capital funding levels.* Small urbanized areas as a group
were also compared to urbanized areas as a whole on the same basis. Section 5309 data
were tabulated using program obligations for the period 1995-99.

Exhibit 3
Small Transit Intensive Cities
Shares of Transit Service, Population, and Federal Funding

20 Small Transit Intensive Cities ‘Small Urbanized Areas
Share among small | Share among all |Share among ail urbanized
urbanized areas _| urbanized areas areas
Population 9.0% 1.5% 16.8%|
Population x Density 11.4% 1.2% 10.5%|
Bus Vehicle Revenue Miles 1996-98 26.5%) 2.7% 10.3%|
Bus Passenger Miles 1996-98 39.3%! 2.3% 5.8%
Section 5307 Urbanized Area Formula
Program Bus Apportionments 10.2% 1.2% 12.3%
Section 5309 Bus Program Obligations
1995-99 23.6%) 4.2%| 17.7%

® In FY 2000, funds for the Section 5309 Bus program totaled $540 million. Section 5307 funding allocated
to small urbanized areas and through the bus tiers totaled $1.93 billion.

7 One of the comments submitted to this study, as noted above, was that increased earmarking of the
Capital Program has reduced the availability of these funds to systems in small transit intensive cities.

® The 20 cities examined were those that could be classified as transit intensive by at least 4 of the 8 criteria
presented in Exhibit 1.

9 These tabulations used data from the annual Statistical Summaries of FTA’s Grant Assistance Programs.
Since appropriations under the Section 5309 program are generally less frequent and consistent than are
formula program appropriations, a longer time frame was used in looking at capital program funding. Also
note that obligations were used, rather than apportionments as in Exhibit 2. This is the only level at which
capital program funding can be linked to particular urbanized areas.

13


There are several important caveats in interpreting these measures. The most important
concerns the area served by the transit operators based in each small city. Many transit
operators in small urbanized areas also serve populations outside the primary urbanized
area, either in other urbanized areas or in nonurbanized areas. Unlike transit operators
serving large urbanized areas (over 200,000 in population), however, these transit
operators are not required to break out their formula-related operating statistics
(passenger miles and vehicle revenue miles) by urbanized area. Population figures,
however, are for the primary urbanized area alone. Thus, the per capita intensity
measures may be slightly inflated by service provided outside of the primary urbanized
area. See Appendix A for more detail on the data and methodology used in these
calculations.

4.2 Funding Issues

As currently constituted, the urbanized area formula for small urbanized areas includes
demographic factors (population and population density) but not service factors (vehicle
revenue miles, passenger miles, operating costs), as does the bus formula for large
urbanized areas. In the context of the earlier discussion on needs, this means that the
funding formula for small urbanized areas reflects potential needs but not existing needs.
Small transit intensive cities, however, are precisely those that do offer high levels of
transit service relative to their size. Thus, transit systems in such cities receive less
federal formula funding than they would if the formula also used service levels.

According to commenters on this study, however, such systems were in the past often
able to make use of other sources of federal transit funding whose availability has
diminished in recent years. Among these sources were:

1) Discretionary Capital Grants

Because of their nature and the issues facing them, small transit intensive cities were
often strong candidates for receiving discretionary funds through the Section 5309
Capital Investment Grants program. Increased congressional earmarking of these
funds in recent years, however, has substantially reduced the availability of these
funds on a discretionary basis.

2) Unused Governor’s Apportionment

In some states, transit operators in small transit intensive cities were able to make use
of portions of the Section 5307 Governor’s Apportionment that would otherwise be
unused. The two sources of this unused portion were the operating assistance cap and
cities without transit service.

a) The operating assistance cap

Prior to TEA-21, urbanized area formula funds could be used for either operating
or capital expenditures, subject to a cap on the amount that could be used for

10


The Urbanized Area Formula
Program and the Needs of Small
Transit Intensive Cities

Report to Congress

September 2000

Report Number FTA-TBP 10-00-04

Prepared by:
Federal Transit Administration

Pursuant to:
Public Law 105-178, §3033

PROTECTED UNDER INTERNATIONAL COPYRIGHT
ALL RIGHTS RESERVED

NATIONAL TECHNICAL INFORMATION SERVICE
U.S. DEPARTMENT OF COMMERCE

Cover photo courtesy of Santa Fe Trails Transit (FTA Public Transit Image Gallery)

Reproduced from s
best available copy.




Foreword

Section 3033 of the Transportation Equity Act for the 21“ Century (TEA-21) calls for a
study of the Urbanized Area Formula Program administered by the Federal Transit
Administration (FTA), focusing on the needs of small urbanized areas that provide
unusually high levels of transit service. This Report to Congress fulfills that requirement.

The Urbanized Area Formula Program, authorized in Section 5307 of U.S.C. 49,
allocates funding for mass transit through a statutory formula, which is comprised of
multiple tiers. For small urbanized areas (under 200,000 in population), funds are
apportioned based on potential needs (population and population density). For large
urbanized areas (over 200,000 in population), funds are apportioned based on both
potential needs and existing needs (current transit service levels).

While transit service in most small urbanized areas is minimal compared to larger cities,
there are some “small transit intensive cities” where this is not the case. Since the
formula apportionments for small urbanized areas do not depend on service levels, such
cities receive smaller apportionments than they would if service levels were incorporated
into the formula.

Two hypothetical changes to the urbanized area formula were analyzed, both of which
involved applying service factors in calculating small urbanized area formula
apportionments. In the first case, small urbanized areas remained a distinct tier (as in the
current formula), while in the second case bus formula funds were allocated to all
urbanized areas in a single tier. As is the case with any such formula-based allocation
program, there would be a significant redistribution of formula apportionments, with
transit intensive cities gaining significantly. Additionally, some small urbanized areas
would gain even were they forced to compete with much larger urbanized areas in the
same tier.

The study also analyzes a potential Federal transit funding change involving the
Section 5309 Capital Investment Grants program. Other issues noted in the study include:
the role of state governments, the 2000 Census of Population, and reporting requirements.

The study concludes that sufficient issues exist suggesting that changes to the existing
Urbanized Area Formula Grants Program should be considered as part of the FY 2004
and beyond reauthorization cycle. However, the formula apportionments should continue
to reflect underlying transit needs.

Preceding Page Blank

xiii


ete

eC

Srareg of

THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590

now

i>

SEP 29 2000

The Honorable Phil Gramm

Chairman, Committee on Banking,
Housing, and Urban Affairs

U.S. Senate

Washington, D.C. 20510-6075

Dear Mr. Chairman:

The enclosed report, “The Urbanized Area Formula Program and the Needs of Small Transit
Intensive Cities” completed through the Cooperative Research Program of the Transportation
Research Board, is provided in accordance with Section 3033 of the Transportation Equity Act
for the 21" Century. Section 3033 requires the Secretary to conduct a study of the Urbanized
Area Formula Program established under Section 5307 of title 49, United States Code and the
needs of small urbanized areas with unusually high levels of transit service.

The study concludes that sufficient issues exist suggesting that changes to the existing Urbanized
Area Formula Grants Program should be considered as part of the FY 2004 and beyond
reauthorization cycle. However, the formula apportionments should continue to reflect
underlying transit needs.

Please call either me or Michael Frazier, Assistant Secretary for Governmental Affairs, at
(202) 366-4573, if you have any questions. Identical letters are being sent to the Ranking
Minority Member of the Senate Committee on Banking, Housing, and Urban Affairs, and the
Chairman and Ranking Minority Member of the House Committee on Transportation and
Infrastructure.

Sincerely,

Rodney E. Slater

Enclosure

Preceding Page Blank

iii


4 Small Transit Intensive Cities

The typical transit system serving a small urbanized area generally has somewhat
different characteristics from those serving larger urbanized areas. In small cities, the
focus is generally on providing basic mobility for residents, especially those whose
access to auto transportation is limited by age, income, or disability. Modes provided are
limited to bus and/or demand response services operating at relatively low frequency.
Such low volume systems often have a significant need for operating assistance to pay for
the costs of running the system. By contrast, mass transit in large cities will often play
additional roles in providing relief from traffic congestion and encouraging efficient land
use patterns. Schedule frequencies are high, and bus systems may be supplemented by
high capacity, high-speed rail systems. The greatest funding needs are generally on the
capital side, as transit systems need to replace large, heavily utilized vehicle fleets and
fund service expansions as the urbanized area grows.

As with any such generalization, however, there are some small cities that differ
significantly from such norms. Such cities provide a level of transit service far greater
than their size and density characteristics would typically suggest. In fact, some of these
so-called “small transit intensive cities” operate more vehicles and carry more riders than
do other cities with much larger populations. These cities generally share one or both of
the following characteristics:

¢ Special Populations. Many small transit intensive cities have special characteristics
that encourage high transit usage. One example is college and university towns. The
campus provides a high volume activity center for the community, and nearby
parking may be limited. College students generally have below-average auto
ownership and tend to live in high density housing. Such factors contribute to a
higher level of transit usage than would be typically seen in a community of its size.
Similar factors contribute to high transit usage in other small cities with special
populations, such as resort destinations.

e High Levels of State and Local Transit Funding. States and local governments vary
widely in their commitments to providing public funding for mass transit. In areas
where mass transit is seen as a priority, capital and operating assistance from state
and local governments may allow a transit operator to provide much more service
than is typically provided in other small urbanized areas without such funding.

4.1 Measures of Transit Intensity

The language of Section 3033 of TEA-21 and the discussion above imply that small
transit intensive cities should have certain measurable transit system characteristics. In
order to understand just how extensive the issue of small transit intensive cities is,
measures of transit service intensity were computed for transit operators in urbanized
areas for the period 1996-98. The computed measures of transit service intensity can be
grouped into four categories:



PB2001-102561

AA

@Q
of ranger The Urbanized Area Formula

semnevee" Program and the Needs of
Small Transit Intensive Cities

Report to Congress

September 2000

reprovuceosy: NTIS.
US. Department of Commerce
National Techical Information Service
‘Spenghela, Virginia 22161


Exhibit 5
Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment Apportionment Net Change

NEBRASKA 1,789,391 2,394,728 (605,337)
Lincoln, NE 1,746,583 2,291,136 (544,553)
Sioux City, |A-NE-SD 42,809 103,592 (60,784)
NEW HAMPSHIRE 1,750,025 2,908,063 (1,158,038)
Lowell, MA-NH 1,921 5,952 (4,031)
Manchester, NH 761,294 1,219,106 (457,812)
Nashua, NH 629,253 974,879 (345,626)
Portsmouth-Dover-Rochester, NH-ME 357,557 708,126 (350,568)
NEW JERSEY 1,243,427 2,203,395 (959,968)
Atlantic City, NJ 742,749 1,588,141 (845,393)
Vineland-Millville, NJ 500,678 615,253 (114,575)
NEW MEXICO 1,697,177 1,199,868 497,309
Las Cruces, NM 551,022 666,532 (115,510)
Santa Fe, NM 1,146,155 533,336 612,818

NEW YORK 6,752,114 6,657,248 94,867

Binghamton, NY 1,761,932 1,670,995 90,937

Danbury, CT-NY 10,500 22,649 (12,149)
Elmira, NY 902,639 686,164 216,476

Glens Falls, NY 362,575 471,864 (109,289)
Ithaca, NY 770,414 476,242 294,172

Newburgh, NY 294,711 618,415 (323,704)
Poughkeepsie, NY 1,444,411 1,299,062 145,348

Stamford, CT-NY 55 154 (99)
Utica-Rome, NY 1,204,877 1,411,704 (206,826)
NORTH CAROLINA 7,695,187 10,807,410 (3,112,222)
Asheville, NC 738,390 834,195 (95,805)
Burlington, NC 292,463 605,137 (312,674)
Gastonia, NC 433,536 886,065 (452,529)
Goldsboro, NC 226,384 460,155 (233,771)
Greensboro, NC 1,471,609 1,905,751 (434,143)
Greenville, NC 246,945 529,819 (282,873)
Hickory, NC. 252,438 505,301 (252,863)
High Point, NC 663,196 852,125 (188,930)
Jacksonville, NC 398,240 822,694 (424,454)
Kannapolis, NC 292,637 593,914 (301,278)
Rocky Mount, NC 222,092 474,762 (252,671)
Wilmington, NC 610,595 776,539 (165,944)
Winston-Salem, NC 1,846,663 1,560,950 285,713

NORTH DAKOTA 1,708,434 2,099,862 (391,428)
Bismarck, ND 552,387 605,512 (53,125)
Fargo-Moorhead, ND-MN 670,467 875,725 (205,258)
Grand Forks, ND-MN 485,580 618,625 (133,046)
OHIO 3,565,567 5,773,647 (2,208,080)
Hamilton, OH 548,523 1,193,362 (644,839)
Huntington-Ashland, WV-KY-OH 99,023 303,894 (204,870)
Lima, OH 303,816 652,210 (348,394)
Mansfield, OH 434,539 629,684 (195,144)

28




OF Tt
Ton,

& "h
i % THE SECRETARY OF TRANSPORTATION
4% é WASHINGTON, D.C. 20590
NS
States oF
SEP 29 2000
The Honorable Paul S. Sarbanes
Ranking Minority Member
Committee on Banking,
Housing, and Urban Affairs
USS. Senate

Washington, D.C. 20510-6075

Dear Senator Sarbanes:

The enclosed report, “The Urbanized Area Formula Program and the Needs of Small Transit
Intensive Cities” completed through the Cooperative Research Program of the Transportation
Research Board, is provided in accordance with Section 3033 of the Transportation Equity Act
for the 21" Century. Section 3033 requires the Secretary to conduct a study of the Urbanized
Area Formula Program established under Section 5307 of title 49, United States Code and the
needs of small urbanized areas with unusually high levels of transit service and report the results
to the Committee on Transportation and Infrastructure of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate by December 31, 1999.

The study concludes that sufficient issues exist suggesting that changes to the existing Urbanized
Area Formula Grants Program should be considered as part of the FY 2004 and beyond
reauthorization cycle. However, the formula apportionments should continue to reflect
underlying transit needs.

Please call either me or Michael Frazier, Assistant Secretary for Governmental Affairs, at

(202) 366-4573, if you have any questions. Identical letters are being sent to the Chairman of the
Senate Committee on Banking, Housing, and Urban Affairs, and the Chairman and Ranking
Minority Member of the House Committee on Transportation and Infrastructure.

Sincerely,
Rodney E. Slater “( {
Enclosure

Preceding Page Blank



Exhibit A-4

Small Transit Intensive Cities
Transit Service Consumption

Average Annual Passenger Miles and Unlinked Passenger Trips Per Capita 1996-

98

Passenger Miles Per Capita

Unlinked Passenger Trips Per Capita

Average for urbanized areas

(Average for urbanized areas

200,000-1 million 81.14) |200,000-1 million 17.97]
Richland-Kennewick-Pasco, WA 425.36) Champaign-Urbana, IL 77.94)
Bremerton, WA 358.20} lowa City, IA 70.64}
Florence, SC 307.27 Bellingham, WA 49.52
Santa Cruz, CA 231.84] Bremerton, WA 47.99
Boulder, CO 223.92 Santa Cruz, CA 43.21
|Champaign-Urbana, IL 219.16) Eugene-Springfield, OR 41.02
Olympia, WA 189.60) Davis, CA 40.00
Eugene-Springfield, OR 176.96) Olympia, WA 39.91
Bellingham, WA 164.19) Richland-Kennewick-Pasco, WA 39.59)
Newport, RI 150.21 ‘State College, PA 38.81
Seaside-Monterey, CA 145.22 Santa Barbara, CA 37.05)
Laredo, TX 140.71 Laredo, TX 36.23
Brownsville, TX 140.08 Seaside-Monterey, CA 29.08 '
Monessen, PA 139.24) Duluth, MN-WI 25.66)
Santa Barbara, CA 130.20) Tallahassee, FL 24.79
‘Taunton, MA 115.71 Ithaca, NY 24.74
New Bedford, MA 115.19) New Bedford, MA 24.68)
Brockton, MA 110.27) Galveston, TX 24.67)
Santa Rosa, CA 108.54, Palm Springs, CA 24.25)
Fitchburg-Leominster, MA 105.06] Brockton, MA. 22.77)
Palm Springs, CA 102.99) Port Huron, MI 22.61
Ithaca, NY 101.97) St. Cloud, MN 22.49)
Davis, CA 93.31 Salem, OR 22.21
lowa City, IA 91.70 Williamsport, PA 21.34)
Winston-Salem, NC 88.56] Fayetteville-Springdale, AR 21.14)
Lancaster-Palmdale, CA 86.83} Gainesville, FL 20.04:

Logan, UT 19.87

Binghamton, NY 19.76

Lubbock, TX 19.00

Oshkosh, WI 18.87)

Burlington, VT 18.53

Johnstown, PA 18.21

Winston-Salem, NC 18.12

Savannah, GA 18.00}



Exhibit 5
Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment Apportionment Net Change

NATIONAL TOTAL 224,094,365 257,568,903 (33,474,539)
ALABAMA 3,302,676 4,985,155 (1,682,479)
Anniston, AL 241,872 480,853 (238,980)
Auburn-Opelika, AL 287,779 385,788 (98,009)
Decatur, AL 222,634 440,303 (217,668)
Dothan, AL 192,653 369,820 (177,167)
Florence, AL 445,640 515,217 (69,576)
Gadsden, AL 236,274 455,365 (219,091)
Huntsville, AL 1,094,397 1,445,530 (351,133)
Tuscaloosa, AL 581,425 892,280 (310,854)
ARIZONA 594,348 1,304,894 (710,546)
Flagstaff, AZ 238,462 513,348 (274,885)
Yuma, AZ-CA 355,885 791,546 (435,661)
ARKANSAS 1,489,233 1,904,687 (415,454)
Fayetteville-Springdale, AR 713,758 525,660 188,098

Fort Smith, AR-OK 350,805 715,567 (364,762)
Pine Bluff, AR 337,608 483,565 (145,958)
Texarkana, TX-AR 87,0614 179,895 (92,833)
CALIFORNIA 26,236,874 29,175,483 (2,938,609)
Antioch-Pittsburg, CA 1,595,060 1,649,944 (54,884)
Chico, CA 548,297 720,399 (172,102)
Davis, CA 670,923 874,519 (203,596)
Fairfield, CA 910,179 1,062,135 (151,956)
Hemet-San Jacinto, CA 623,549 886,135 (262,586)
Hesperia-Apple Valley-Victorville, CA 1,235,915 1,130,450 105,466
Indio-Coachella, CA 249,255 535,822 (286,566)
Lancaster-Palmdale, CA 1,956,797 1,901,446 55,351

Lodi, CA 518,960 744,407 (225,447)
Lompoc, CA 332,185 457,181 (124,996)
Merced, CA 792,845 812,779 (19,933)
Napa, CA 737,573 849,265 (111,692)
Palm Springs, CA 1,483,252 1,058,042 425,210
Redding, CA 717,720 611,778 105,942

Salinas, CA 701,913 1,609,906 (907,993)
San Luis Obispo, CA 324,686 762,395 (437,708)
Santa Barbara, CA 2,320,887 2,490,601 (169,714)
Santa Cruz, CA 2,368,295 1,287,861 1,080,434

Santa Maria, CA 697,134 1,171,709 (474,575)
Santa Rosa, CA 2,313,565 2,271,814 41,751

Seaside-Monterey, CA 2,168,202 1,526,612 641,590

Simi Valley, CA 848,836 1,445,047 (596,211)
Vacaville, CA 387,502 877,250 (489,748)
Visalia, CA 837,610 1,002,011 (164,401)
Watsonville, CA 250,322 552,025 (301,703)
Yuba City, CA 644,000 880,815 (236,814)
Yuma, AZ-CA 1,410 3,136 (1,726)
COLORADO 5,003,870 5,375,868 (371,998)

or


total formula funds. Other large urbanized areas (200,000-1 million), small urbanized
areas (50,000-200,000), and nonurbanized areas (under 50,000) receive decreasingly
smaller shares by population size.

Exhibit 2 also compares these funding levels relative to population and transit service

levels. In FY 2000, major urbanized areas received $21.27 per person in formula

assistance, while small urbanized areas received $9.95 per person and nonurbanized areas
just $2.09 per person. This great disparity in per capita funding, however, reflects the

substantially greater transit service provision and usage in larger cities. On a service level
basis, larger urbanized areas receive relatively less funding than do small urbanized areas.

Exhibit 2
FTA Formula Apportionments by Urbanized Area Size 1998-2000
Section 5307 Section 5317
Fiscal Over 200, 000- 50,000-
Year | 1 million | 1 million 200,000 |Under 50,000} Total
Number of urbanized areas 34 oT 287 n/a 406
Total Apportionments TOS T,692] 386) 226) T35 2,438)
(millions of $) 1999 1,869} 428) 244 178) 2,718]
2000 2,026} 469 268) 193 2,956
Dollars Per
Capita (1990 Census) T998 17.76] 10.10] 8.37] 7.46) 9.65)
1999 19.62! 11.19} 9.05} 1.93} 10.76}
2000 21.27 12.28} 9.95} 2.09) 11.71
Passenger Mile T998 0.048) 0.752) 0.233) 0.059)
1999 0.051 0.152 0.244 0.063
2000 0.054 0.161 0.268 0.066}
Unlinked Passenger Trip T9988 0.253) 0.603) 0.957, 0.305)
1999 0.266 0.625 1.018) 0.342]
2000 0.282 0.676 1.081 1.039 0.364
Vehicle Revenue Mile 7998 0.774 7.010 7.239) 0.886
1999 0.832 1.029} 1.277 0.953
2000 0.875 1.050} 1.295} 0.995

Major urbanized area apportionments in 2000 amounted to 87.5 cents per vehicle revenue

mile, 28.2 cents per passenger trip, and 5.4 cents per passenger mile, while small

urbanized area apportionments were $1.30 per vehicle revenue mile, $1.08 per passenger
trip, and 26.8 cents per passenger mile. Nonurbanized areas received slightly less per
passenger ($1.04) than do small urbanized areas. For each size category, however,
formula funding increased between 1998 and 2000, both in absolute dollar amounts and
relative to population and service levels.

5 The service level data used in each fiscal year’s formula apportionments are derived from data in the
reporting year two years prior. The funding ratios reported in Exhibit 2 are calculated in the same way.
Thus, FY 2000 apportionments use 1998 data, FY 1999 uses 1997 data, and so on.

12


Exhibit 5
Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas

Fiscal Year 2000
Hypothetical Actual

Urbanized Area/State Apportionment __ Apportionment_Net Change

Middletown, OH 492,519 820,501 (327,982)
Newark, OH 783,166 499,922 283,244
Parkersburg, WV-OH 33,838 74,027 (40,189)
Sharon, PA-OH 24,061 48,815 (24,755)
Springfield, OH 580,361 949,098 (368,736)
Steubenville-Weirton, OH-WV-PA 164,387 341,450 (177,063)
Wheeling, WV-OH 101,333 260,685 (159,352)
OKLAHOMA 418,732 898,637 (479,905)
Fort Smith, AR-OK 7,729 15,765 (8,036)
Lawton, OK 411,004 882,872 (471,869)
OREGON 6,413,731 4,686,368 1,727,363
Eugene-Springfield, OR 3,064,163 2,205,976 858,188

Longview, WA-OR 5,538 14,671 (9,133)
Medford, OR 662,366 681,748 (19,382)
Salem, OR 2,681,663 1,783,973 897,690
PENNSYLVANIA 10,466,545 12,250,999 (1,784,454)
Altoona, PA 647,789 836,913 (189,125)
Erie, PA 1,899,904 2,152,942 (253,038)
Hagerstown, MD-PA-WV 2,576 7,375 (4,800)
Johnstown, PA 733,811 771,765 (37,954)
Lancaster, PA 2,050,373 1,946,538 103,836
Monessen, PA 443,076 529,730 (86,655)
Pottstown, PA 234,654 502,685 (268,031)
Reading, PA 1,738,763 2,272,243 (533,480)
Sharon, PA-OH 173,462 351,927 (178,464)
State College, PA 684,901 732,444 (47,543)
Steubenville-Weirton, OH-WV-PA 1,232 2,558 (1,327)
Williamsport, PA 556,904 613,984 (57,080)
York, PA 1,299,100 1,529,894 (230,794)
PUERTO RICO 4,980,089 11,317,331 (6,337,242)
Aguadilla, PR 456,905 990,114 (533,209)
Arecibo, PR 422,429 925,138 (502,708)
Caguas, PR 1,063,443 2,422,805 (1,359,361)
Cayey, PR 311,871 716,333 (404,462)
Humacao, PR 280,566 619,973 (339,407)
Mayaguez, PR 590,708 1,332,011 (741,303)
Ponce, PR 1,256,749 2,964,123 (1,707,375)
Vega Baja-Manati, PR 597,418 1,346,835 (749,417)
RHODE ISLAND 906,375 720,380 185,995
Fall River, MA-RI 72,968 165,142 (92,173)
Newport, RI 833,407 555,238 278,169

SOUTH CAROLINA 6,858,771 3,050,730 3,808,041

Anderson, SC 200,621 410,299 (209,678)
Florence, SC 3,777,982 422,024 3,355,958
Myrtle Beach, SC 762,364 442,572 319,792

Rock Hill, SC 228,385 469,916 (241,531)
Spartanburg, SC 838,823 819,167 19,656

29


operating assistance in each urbanized area. Many transit operators, especially in
small cities, had funding needs that were primarily on the operations side, rather
than capital needs. As a result, they were unable to use the full amount of the
formula funding attributable to their particular area, and the “excess” was made
available for reallocation to transit operators in other areas with capital needs.
Many small transit intensive cities were able to obtain additional capital funding
in this way. TEA-21, however, gave full flexibility to small urbanized areas on
how formula funds could be allocated to capital or operating use. As a result,
small urbanized areas with operating assistance needs are able to devote their full
allocation to operations, and the excess is no longer available for redistribution.

b) Unserved urbanized areas

In some large states, there are small urbanized areas which do not have any transit
service that is eligible for Section 5307 funding. Such states are able to
redistribute the portion of the Governor’s Apportionment attributable to such
areas among cities that do have transit service. As more small urbanized areas
initiate service, however, these unallocated funds are reduced.*

The result of these reductions in available funding sources has left operators in small
transit intensive cities with more limited resources for capital needs even as they face
pressures from their communities and customers to expand and improve existing service.

5 Federal Transit Assistance for Large, Small, and
Nonurbanized Areas

The Urbanized Area Formula Program, with its multiple tiers and formula factors, does
not allocate funds on a strict per capita basis. The allocations are also targeted to
urbanized areas, though the states do play a role in the allocations to urbanized areas
under 200,000, as discussed above. This often raises questions about the shares of federal
funding received by urbanized areas of different sizes. As discussed in the previous
section, small transit intensive cities receive less formula funding relative to their service
levels than do other small urbanized areas. More generally, however, how does funding
for small urbanized areas compare to funding for large urbanized areas and to
nonurbanized areas?

Exhibit 2 shows total FTA formula apportionments by urbanized area size for 1998-2000,
including both the Section 5307 (Urbanized) and 5311 (Nonurbanized) programs. The
majority of FTA formula funding is clearly targeted to transit operators in major
urbanized areas (population over 1 million), who receive approximately two-thirds of

3 While the operating assistance cap was only phased out under TEA-21, it had been raised in the years just
prior such that the cap was rarely binding for small urbanized areas. Thus, this avenue of additional funding
was primarily available in the more distant past (ca. 1995 and earlier).

* Between 1996 and 1998, the number of small urbanized areas with a transit system reporting operational
data increased from 196 to 206 (out of 281 total urbanized areas between 50,000 and 200,000 in
population).

11




programs are authorized in Sections 5307, 5310, and 5311 of 49 U.S.C., which can be
briefly summarized as follows:

2.1 Nonurbanized Area Formula Program (Section 5311)

The Nonurbanized Area Formula Program allocates funding to states to be used to
support the operations and capital needs of transit operators serving residents outside of
urbanized areas. The formula allocates funds to states based solely on their nonurbanized
area population, using Census data. The Section 5311 program receives 6.37 percent of
the funds available for formula programs.

2.2 Elderly and Persons with Disabilities Formula Program
(Section 5310)

The Elderly and Persons with Disabilities Formula Program allocates funding to states to
be used to provide capital assistance (including purchase of service arrangements) to
providers of specialized transit services for the elderly and disabled. The funds are
allocated based on each state’s population of elderly persons and persons with
disabilities. The Section 5310 program receives 2.4 percent of the funds available for
formula programs.

2.3. Urbanized Area Formula Program (Section 5307)

The vast majority of funding for the formula programs, 91.23 percent, is dedicated for
use in urbanized areas. The Urbanized Area Formula Grants Program, Section 5307 of
Title 49 of the United States Code, allocates funds to urbanized areas for capital and
planning costs associated with mass transit. Operating assistance is also available for
urbanized areas under 200,000 in population. The actual apportionment formula for the
program is found in 49 U.S.C. 5336. The formula allocates section 5307 funds through a
series of hierarchical tiers. The first division establishes two separate tiers of urbanized
areas:

1) 9.32% is allocated to small urbanized areas (population 50,000 to 199,999)

2) 90.68% is allocated to large urbanized areas (population 200,000 and above).
For small urbanized areas, the formula apportionments are based solely on two factors:

1) population

2) population times population density

For large urbanized areas, however, the formula is applied through multiple tiers:
A) The Fixed Guideway Tiers (33.29%)
1) Fixed Guideway Incentive Tier (4.39%). Allocated based on:
a) fixed guideway passenger miles weighted by passenger-miles per dollar
of operating cost
2) Fixed Guideway Non-incentive Tier (95.61%). Allocated based on:
a) fixed guideway route miles
b) fixed guideway vehicle revenue miles

B) The Bus Tiers (66.71%).



Exhibit A-2
Small Transit Intensive Cities
Transit Service Provision
Average Annual Vehicle Revenue Miles Per Capita 1996-98

erage for urbanized areas 200,000-T million TTS
Florence, SC 87.97 Dover, DE 16.39
Richland-Kennewick-Pasco, WA 46.23 Pittsfield, MA 15.72
Bremerton, WA 44.20 Oshkosh, WI 15.33
Olympia, WA 44.07 Port Huron, MI 15.32
Bellingham, WA 33.39 Redding, CA 15.28
Hyannis, MA 31.95 Taunton, MA 14.26
Santa Fe, NM 31.38} St. Cloud, MN 14.25
Boulder, CO 25.90) Racine, WI 14.09
Ithaca, NY 23.65 Savannah, GA 13.91
‘Sumter, SC 22.53) Brockton, MA 13.67
Santa Cruz, CA 22.23 Sheboygan, WI 13.35
Newark, OH 21.81 Fayetteville-Springdale, AR 13.35
Eugene-Springfield, OR 21.32 Gainesville, FL 13.09
Newport, RI 20.85) Santa Rosa, CA 12.89
Champaign-Urbana, IL 20.83! Tallahassee, FL 12.72
Fitchburg-Leominster, MA 20.65 Binghamton, NY 12.56
Seaside-Monterey, CA 20.63 Laredo, TX 12.19
Elmira, NY 20.38 Winston-Salem, NC 12.16
Myrtle Beach, SC 19.78) Santa Barbara, CA 12.14
lowa City, IA 19.71 Erie, PA 12.04
Deltona, FL 17.84 Lancaster, PA 11.87
Duluth, MN-WI 16.90 Salem, OR 11.70
Bay City, MI 16.80 Vero Beach, FL 11.64
Charleston, WV 16.69 Jackson, MI 11.63
Galveston, TX 16.55 State College, PA 11.62
Palm Springs, CA 16.55 Muncie, IN 11.39
New Bedford, MA 16.48 Lafayette-West Lafayette, IN 11.28

A-3


Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas

Fiscal Year 2000
Hypothetical Actual

Urbanized Area/State Apportionment Apportionment Net Change
Lewiston-Auburn, ME 519,615 487,597 32,018
Portland, ME 1,044,968 1,042,595 2,373
Portsmouth-Dover-Rochester, NH-ME 41,913 92,319 (50,406)
MARYLAND 1,934,727 2,270,953 (336,226)
Annapolis, MD 644,025 739,653 (95,627)
Cumberland, MD-WV 178,598 393,388 (214,790)
Frederick, MD 603,453 533,696 69,757
Hagerstown, MD-PA-WV 508,650 604,217 (95,566)
MASSACHUSETTS 11,403,157 8,994,013 2,409,144
Brockton, MA 2,301,973 1,642,939 659,034
Fall River, MA-RI 727,489 4,602,399 (874,910)
Fitchburg-Leominster, MA 1,483,937 649,363 834,574
Hyannis, MA 1,454,279 463,715 990,564
Lowell, MA-NH 1,610,026 2,033,701 (423,674)
New Bedford, MA 2,225,034 1,762,301 462,733
Pittsfield, MA 648,106 419,770 228,337
Taunton, MA 952,312 419,826 532,486
MICHIGAN 8,149,957 7,675,132 474,825
Battle Creek, MI 642,104 641,018 1,086
Bay City, MI 1,017,267 716,120 301,147
Benton Harbor, MI 442,267 517,989 (75,721)
Holland, MI 434,467 581,348 (146,881)
Jackson, MI 852,131 715,727 136,404
Kalamazoo, Ml 1,585,035 1,545,579 39,456
Muskegon, MI 783,814 942,740 (158,925)
Port Huron, MI 1,167,648 620,436 547,213
Saginaw, MI 41,225,223 1,394,176 (168,954)
MINNESOTA 3,723,057 2,735,192 987,865
Duluth, MN-WI 1,445,535 665,591 779,944
Fargo-Moorhead, ND-MN 379,042 384,849 (5,807)
Grand Forks, ND-MN 32,014 84,346 (52,332)
La Crosse, WI-MN 20,122 41,318 (21,196)
Rochester, MN 818,168 750,719 67,449
St. Cloud, MN 4,028,176 808,369 219,807
MISSISSIPPI 1,880,791 2,348,218 (467,427)
Biloxi-Gulfport, MS 1,474,748 1,453,849 20,898
Hattiesburg, MS 205,717 453,122 (247,405)
Pascagoula, MS 200,326 441,246 (240,921)
MISSOURI 2,828,404 3,235,877 (407,472)
Columbia, MO 636,218 638,845 (2,627)
Joplin, MO 203,685 448,646 (244,961)
Springfield, MO 1,325,931 1,507,106 (181,175)
St. Joseph, MO-KS 662,571 641,280 21,291
MONTANA 2,021,774 2,154,127 (132,353)
Billings, MT 835,475 830,760 4715
Great Falls, MT 608,975 774,700 (165,725)
Missoula, MT 677,324 548,667 28,657

19


Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment __ Apportionment _Net Change

NEBRASKA 2,057,165 2,394,728 (337,563)
Lincoln, NE 2,008,105 2,291,136 (283,031)
Sioux City, |A-NE-SD 49,060 103,592 (54,532)
NEW HAMPSHIRE 1,828,101 2,908,063 (1,079,962)
Lowell, MA-NH 2,136 5,952 (3,816)
Manchester, NH 825,478 1,219,106 (393,628)
Nashua, NH 678,999 974,879 (295,881)
Portsmouth-Dover-Rochester, NH-ME 321,489 708,126 (386,637)
NEW JERSEY 1,234,989 2,203,395 (968,406)
Atlantic City, NJ 721,016 1,588,141 (867,125)
Vineland-Millville, NJ 513,973 615,253 (101,281)
NEW MEXICO 1,978,437 1,199,868 778,569
Las Cruces, NM 604,795 666,532 (61,737)
Santa Fe, NM 1,373,642 533,336 840,306
NEW YORK 7,901,715 6,657,248 1,244,467
Binghamton, NY 2,078,234 1,670,995 407,240
Danbury, CT-NY 11,776 22,649 (10,873)
Elmira, NY 1,069,007 686,164 382,844
Glens Falls, NY 394,749 471,864 (77,115)
Ithaca, NY 937,735 476,242 461,493
Newburgh, NY 280,760 618,415 (337,654)
Poughkeepsie, NY 1,778,461 1,299,062 479,398
Stamford, CT-NY 65 154 (88)
Utica-Rome, NY 1,350,928 1,411,704 (60,776)
NORTH CAROLINA 8,278,666 10,807,410 (2,528,744)
Asheville, NC 820,315 834,195 (13,880)
Burlington, NC 274,732 605,137 (330,405)
Gastonia, NC 402,274 886,065 (483,792)
Goldsboro, NC 208,910 460,155 (251,245)
Greensboro, NC 1,626,658 1,905,751 (279,093)
Greenville, NC 240,538 529,819 (289,281)
Hickory, NC 229,407 505,301 (275,895)
High Point, NC 718,025 852,125 (134,100)
Jacksonville, NC 373,503 822,694 (449,191)
Kannapolis, NC 269,637 593,914 (324,277)
Rocky Mount, NC 215,542 474,762 (259,220)
Wilmington, NC 661,649 776,539 (114,890)
Winston-Salem, NC 2,237,474 1,560,950 676,524
NORTH DAKOTA 1,918,091 2,099,862 (181,771)
Bismarck, ND 614,104 605,512 8,592
Fargo-Moorhead, ND-MN 748,295 875,725 (127,430)
Grand Forks, ND-MN 555,693 618,625 (62,933)
OHIO 3,782,328 5,773,647 (1,991,319)
Hamilton, OH 541,786 1,193,362 (651,576)
Huntington-Ashland, WV-KY-OH 107,968 303,894 (195,926)
Lima, OH 296,103 652,210 (356,107)
Mansfield, OH 454,936 629,684 (174,748)

20


becoming part of larger urbanized areas once 2000 Census figures have been
incorporated into the formula apportionments.

The issue faced by many such operators is that their system and operating characteristics
are more similar to those of small urbanized areas than they are to those of large
urbanized areas. The formula apportionments that they receive, however, are based on
and follow the restrictions of the large urbanized area formula program (e.g., the
prohibition on using formula funds for operations). These small operators may also be
disadvantaged by their size relative to other operators in the urbanized area when local
decisions are made on the disbursement and uses of urbanized area formula funds. It
should be noted, however, that the local decision-making process is strictly the province
of state and local governments.

7.5 Large Operators in Nonurbanized areas

The issues faced by small transit intensive cities may also apply to some systems in non-
urbanized areas. Such systems are typically found in resort areas with small year-round
populations but substantial seasonal populations and transit usage. Such systems carry far
more passengers and provide much more service than is typical for nonurbanized areas,
but this is not captured by the strictly population-based allocation of Section 5311 funds.
The seasonal population variation also means that potential needs for such areas might
not be well captured by census population statistics alone.

8 Conclusion

Sufficient issues exist to suggest that changes to the existing Urbanized Area Formula
Grants Program should be considered in 2002-2003 as part of the FY 2004 and beyond
reauthorization cycle, when population data from the 2000 Census and the resulting
urbanized area redefinitions will be available.

The Section 5307, 5310, and 5311 formula apportionments should continue to reflect
transit needs. Unlike many other interjurisdictional assistance programs of the federal
government, existing and potential mass transit needs are not distributed evenly across
the states, but instead tend to be much more concentrated. Any movement toward
allocating federal transit formula funds on a basis unrelated to need would run counter to
the purpose of the program.

As currently constituted, the Section 5307 formula program as applied to small urbanized
areas reflects potential need but does not explicitly reflect existing need. This is in
contrast to large urbanized areas--where existing needs are captured by the use of service
level factors in the formula, and nonurbanized areas--where states allocate their
apportionments on a discretionary or formula basis that does take account of existing
need. This latter fact runs counter to the argument that only large cities (which generally
have higher transit service levels) should have service factors applied in determining their
allocations. The end result of the existing formula structure is that small transit intensive
cities, which have above-average existing needs relative to their size, receive less formula
funding than they would if the formula included service level factors.

35


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The actual service level measures used to identify small transit intensive cities in

Exhibit 1 are shown in the following tables:

Exhibit A-7
Small Transit Intensive Cities
Vehicle Utilization
Average Annual Passenger Miles Per Vehicle Revenue Mile and Per Vehicle Revenue
Hour 1996-98

Passenger Miles Per Vehicle Revenue Mile Passenger Miles Per Vehicle Revenue Hour
[Average Tor urbanized areas (Average for urbanized areas:

'200,000-1 million 7.29 200,000-1 million 95.54)
[Brownsville TX 22.73 Tancaster-Palmdale, CA 346.53}
Monessen, PA 17.05| Brownsville, TX 256.61
Lancaster-Palmdale, CA 12.84] Monessen, PA 242.50}
Kailua, HI 12.82| Richland-Kennewick-Pasco, WA 182.13
Laredo, TX 11.55 Bremerton, WA 159.96
Santa Barbara, CA 10.73} Santa Cruz, CA 147.72
Champaign-Urbana, IL 10.52 Poughkeepsie, NY 141.72
Santa Cruz, CA 10.43) Santa Barbara, CA 140.57
Lubbock, TX 9.42 Lubbock, TX 131.84
Richland-Kennewick-Pasco, WA 9.20 Champaign-Urbana, IL 127.47
Davis, CA 9.13 Santa Rosa, CA 122.70
Boulder, CO 8.65 Laredo, TX 118.51
‘Stamford, CT-NY 8.61 Eugene-Springfield, OR 115.58)
Lafayette, LA 8.50] Monroe, LA 111.98
[Santa Rosa, CA 8.42) [Seaside-Monterey, CA 110.59
Eugene-Springfield, OR 8.30) Brockton, MA 106.21
‘Taunton, MA 8.12| Winston-Salem, NC 104.78
Bremerton, WA 8.10 Paim Springs, CA 102.88
Brockton, MA. 8.07 Lafayette, LA 100.62
New London-Norwich, CT 8.00 Stamford, CT-NY 100.16
Monroe, LA 7.92) Davis, CA 97.64
Beaumont, TX 7.62) Beaumont, TX 96.90

A-2





Exhibit 5
Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas
Fiscal Year 2000

Hypothetical Actual
Urbanized Area/State Apportionment ___ Apportionment _Net Change
Lewiston-Auburn, ME 482,392 487,597 (5,206)
Portland, ME 947,579 1,042,595 (95,015)
Portsmouth-Dover-Rochester, NH-ME 46,615 92,319 (45,704)
MARYLAND 1,770,380 2,270,953 (500,573)
Annapolis, MD 575,526 739,653 (164,127)
Cumberland, MD-WV 194,367 393,388 (199,021)
Frederick, MD 530,708 533,696 (2,988)
Hagerstown, MD-PA-WV 469,779 604,217 (134,438)
MASSACHUSETTS 9,564,431 8,994,013 570,418
Brockton, MA 1,868,264 1,642,939 225,325
Fall River, MA-RI 708,024 1,602,399 (894,375)
Fitchburg-Leominster, MA 1,188,633 649,363 539,270
Hyannis, MA 1,208,581 463,715 744,867
Lowell, MA-NH 1,447,875 2,033,701 (585,826)
New Bedford, MA 1,846,068 1,762,301 83,767
Pittsfield, MA 561,566 419,770 141,796
Taunton, MA 735,420 419,826 315,594
MICHIGAN 7,222,306 7,675,132 (452,826)
Battle Creek, MI 577,897 641,018 (63,122)
Bay City, MI 875,082 716,120 158,961
Benton Harbor, MI 407,579 517,989 (110,410)
Holland, MI 406,809 581,348 (174,538)
Jackson, Ml 748,770 715,727 33,044
Kalamazoo, MI 1,401,875 1,545,579 (143,704)
Muskegon, MI 721,859 942,740 (220,881)
Port Huron, MI 981,502 620,436 361,067
Saginaw, Ml 1,100,933 1,394,176 (293,243)
MINNESOTA 3,177,205 2,735,192 442,013
Duluth, MN-WI 1,229,893 665,591 564,302
Fargo-Moorhead, ND-MN 339,619 384,849 (45,230)
Grand Forks, ND-MN 27,975 84,346 (56,371)
La Crosse, WI-MN 17,559 41,318 (23,758)
Rochester, MN 699,425 750,719 (51,294)
St. Cloud, MN 862,733 808,369 54,364
MISSISSIPPI 1,773,300 2,348,218 (574,918)
Biloxi-Gulfport, MS 1,331,179 1,453,849 (122,670)
Hattiesburg, MS 223,379 453,122 (229,743)
Pascagoula, MS 218,742 441,246 (222,505)
MISSOURI 2,588,766 3,235,877 (647,110)
Columbia, MO 571,535 638,845 (67,310)
Joplin, MO 222,233 448,646 (226,413)
Springfield, MO 41,198,588 1,507,106 (308,518)
St. Joseph, MO-KS 596,410 641,280 (44,869)
MONTANA 1,801,671 2,154,127 (352,456)
Billings, MT 741,591 830,760 (89,169)
Great Falls, MT 544,972 774,700 (229,728)
Missoula, MT 515,107 548,667 (33,559)

27


Exhibit 5
Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment Apportionment Net Change

Boulder, CO 1,866,909 1,196,211 670,697
Fort Collins, CO 934,816 996,330 (61,514)
Grand Junction, CO 336,943 567,271 (230,328)
Greeley, CO 578,978 796,881 (217,903)
Longmont, CO 498,862 726,189 (227,327)
Pueblo, CO 787,362 1,092,986 (305,624)
CONNECTICUT 7,071,024 9,503,988 (2,432,964)
Bristol, CT 398,031 847,319 (449,288)
Danbury, CT-NY 952,666 920,575 32,091

New Britain, CT 1,043,615 1,586,597 (542,983)
New London-Norwich, CT 832,067 1,276,746 (444,679)
Norwalk, CT 1,056,926 1,094,124 (37,198)
Stamford, CT-NY 1,524,242 1,946,476 (422,234)
Waterbury, CT 1,263,476 1,832,150 (568,674)
DELAWARE 1,161,619 405,570 756,050

Dover, DE 1,161,619 405,570 756,050

FLORIDA 10,435,544 12,360,873 (1,925,329)
Deltona, FL 670,407 410,994 259,412

Fort Pierce, FL 801,261 984,528 (183,267)
Fort Walton Beach, FL 700,344 954,371 (254,027)
Gainesville, FL 1,352,780 1,223,088 129,692

Kissimmee, FL 260,768 569,676 (308,908)
Lakeland, FL 1,248,331 1,250,368 (2,037)
Naples, FL 391,238 822,912 (431,674)
Ocala, FL 267,526 552,788 (285,262)
Panama City, FL 751,046 829,583 (78,537)
Punta Gorda, FL 262,846 542,498 (279,651)
Spring Hill, FL 201,760 414,710 (212,951)
Stuart, FL 465,273 723,599 (258,326)
Tallahassee, FL 1,556,908 1,394,259 162,650

Titusville, FL 552,244 399,118 153,126

Vero Beach, FL 583,983 505,468 78,515

Winter Haven, FL 368,829 782,912 (414,084)
GEORGIA 4,669,895 5,411,902 (742,007)
Albany, GA 606,942 670,332 (63,391)
Athens, GA 589,112 642,694 (53,582)
Brunswick, GA. 183,642 369,849 (186,207)
Macon, GA 562,815 1,201,466 (638,651)
Rome, GA 407,355 377,040 30,315

Savannah, GA 2,050,426 1,571,991 478,435

Warner Robins, GA 269,603 578,530 (308,928)
HAWAI 781,977 1,438,341 (656,363)
Kailua, HI 781,977 1,438,341 (656,363)
IDAHO 2,137,971 2,846,734 (708,763)
Boise City, ID 1,271,620 1,741,957 (470,336)
Idaho Falls, ID 466,709 624,457 (157,749)
Pocatello, ID 399,642 480,320 (80,678)



m1
oS TRANS,

CG

ey a
Hy 3 THE SECRETARY OF TRANSPORTATION
a Is WASHINGTON, D.C. 20590

%
Snares oF

SEP 29 2000

The Honorable James L. Oberstar

Ranking Minority Member

Committee on Transportation and Infrastructure
U.S. House of Representatives

Washington, D.C. 20515-6256

Dear Congressman Oberstar:

The enclosed report, “The Urbanized Area Formula Program and the Needs of Small Transit
Intensive Cities” completed through the Cooperative Research Program of the Transportation
Research Board, is provided in accordance with Section 3033 of the Transportation Equity Act
for the 21" Century. Section 3033 requires the Secretary to conduct a study of the Urbanized
Area Formula Program established under Section 5307 of title 49, United States Code and the
needs of small urbanized areas with unusually high levels of transit service and report the results
to the Committee on Transportation and Infrastructure of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate by December 31, 1999.

The study concludes that sufficient issues exist suggesting that changes to the existing Urbanized
Area Formula Grants Program should be considered as part of the FY 2004 and beyond
reauthorization cycle. However, the formula apportionments should continue to reflect
underlying transit needs.

Please call either me or Michael Frazier, Assistant Secretary for Governmental Affairs, at
(202) 366-4573, if you have any questions. Identical letters are being sent to the Chairman and
Ranking Minority Member of the Senate Committee on Banking, Housing, and Urban Affairs,
and the Chairman of the House Committee on Transportation and Infrastructure.

Sincerely,
Rodney E. Slater (
Enclosure

Preceding Page Blank

ix


Appendix A
Data and Methodology

Operating data used in this report were drawn from the National Transit Database (NTD)
for 1996-98. This data is required to be reported by all operators in urbanized areas with
more than nine vehicles. Some of the measures used, such as unlinked passenger trips and
vehicle revenue hours, are only available at the operator/mode level. In linking such data
to particular urbanized areas, only the primary urbanized area served by the transit
operator was used. Transit operators in large urbanized areas are further required to
disaggregate data used for formula apportionment purposes, including passenger miles,
vehicle revenue miles, and operating costs, by the urbanized area that is served, including
both large urbanized areas and small urbanized areas.' Thus, the exact area to which the
data applies may vary depending on which measure is being tabulated.

Data on formula funding levels were drawn from FTA statistics. Aggregate amounts by
urbanized area size are based on the primary urbanized area served by the operator, as
was the operating data used in the comparisons in Exhibit 2. Passenger data for
nonurbanized areas were drawn from a recent FTA-commissioned survey.

The statistical outliers were identified by the use of multiple regression analysis. Linear
regressions of passenger miles and vehicle revenue miles on urbanized area population
and population density were performed using data for all small urbanized areas. The
outliers were identified by examining the standardized residuals for each urbanized area
from the regression; areas with a standardized residual greater than two were deemed
outliers. While there are some technical statistical issues associated with this approach, it
does help identify cities that have substantially greater transit service than would be
predicted based on their population and density characteristics alone.

In tabulating the alternative formula funding levels for FY 2000, only bus, demand
response, and vanpool operating statistics were used. All such data were classified as
non-fixed guideway data for formula purposes. Were the formula to actually be applied in
this way, however, it is possible that some of the fixed route bus miles for operations on
HOV lanes would be attributed as fixed guideway operations, as is done in large
urbanized areas. This would be particularly likely for small urbanized areas adjacent to
large cities.

' For example, the Denver Regional Transit District serves the urbanized areas of Denver (large) and
Boulder and Longmont (small).

A-l


Appendix B
Examples of Formula-Based State Transit Funding
Programs

Ohio

The State of Ohio assists local transit operators through the Ohio Public Transportation
Grant Program. The program provides assistance to local transit operators to meet the
local match requirements of Federal Transit Administration grants under the Section
5307, 5311, and 5309 programs. Funding for the program totaled $38 million in FY2000,
of which $25.5 million was allocated on a formula basis, with the remainder allocated for
discretionary capital grants.

Formula funds are first distributed by fixed percentages to five categories of transit
systems: Large Rail/Bus, Large Bus Only, Intermediate Bus, Small Bus, and Non-
urbanized Bus. Within each category, funds are allocated on a formula using 3 factors:

Ridership 50%
Revenue Service Miles 25%
Local Financial Support 25%

Within the Small Bus Systems category, there is significant diversity between fixed route
bus and demand response systems. To account for this, ridership levels and revenue
service miles for demand response systems are multiplied by 2.8 and 0.83, respectively.
These ratios are based on historic state data on relative costs per rider and per revenue
mile between demand response and fixed route bus service.

Iowa

The state of Iowa provides capital and operating assistance to local transit operators
through its State Transit Assistance (STA) Program. STA provides assistance through
both a formula and a discretionary special projects program. The formula program has
separate tiers for regional (rural, multi-county) systems and urban systems (cities over
20,000 in population, which includes both urbanized areas and nonurbanized areas).
Program funds are first divided between regional and urban systems on the basis of
revenue miles. Within each group, funds are then allocated according to three formula
factors:

Revenue miles per dollar of operating cost 25%
Ridership per dollar of operating cost 25%
Locally determined income 50%

The state also uses a formula to distribute the Governor’s Apportionment for Section
5310 and Section 5311 funds. The Governor’s Apportionment is first divided between
regional and urban systems on the basis of the systems’ total “Net Public Deficit.” Funds

B-1


Table of Contents

1 Introduction
2 The Formula Grant Programs of the Federa
2.1 Nonurbanized Area Formula Program (Section 5311)
2.2 Elderly and Persons with Disabilities Formula Program (Section 5310)
2.3 Urbanized Area Formula Program (Section 5307)
3 Federal Formula Grant Assistance and Local Transit Funding Need
3.1 Existing Need... eeseessesteseesesnesseeseeneeee
3.2 Potential Need...............00
4 Small Transit Intensive Citie:
4.1 Measures of Transit Intensity...
Exhibit 1: Small Urbanized Areas Exceeding Large Urbanized Area Averages an and
Statistical Outliers
4.2 Funding Issues ......
5 Federal Transit Assistance for Large, Small, and Nonurbanized Areas
Exhibit 2: FTA Formula Apportionments by Urbanized Area Size 1998-200
5.1 Small Transit Intensive Cities
Exhibit 3: Shares of Transit Service, Population, and Federal Funding.
6 Analysis of Funding Alternatives ...........
6.1 Applying Service Factors to Small Urbanized Area Formula Apportionments
6.1.1 Applying Service Factors to Small Urbanized Areas as a Group..........-10+0
6.1.2 Applying the Bus Formula to All Urbanized Areas in a Single Tier............
Exhibit 4: Net Effect of Applying Service Factors to the Formula
Apportionments to Small Urbanized Areas (Fiscal Year 2000)...........0000 16
Exhibit 5: Net Effect on the Formula Apportionments to Small Urbanized Areas
of Applying the Bus Formula Uniformly to All Urbanized Areas
(Fiscal Year 2000) ......cssscsssssssesessesssesssseesesessssssseseenessssencsesseseseesseeeneneenenses 24
6.2 Alternative Proposal: Targeting Section 5309 Bus Program Funding to Small
Transit Intensive Citie:
7 Other Issues.......
7.1 The Role of the States
7.1.1 The Governor’s Apportionment.
7.1.2 The Nonurbanized Area Formula Program and State Transit Assistance
7.2. The 2000 Census
7.3 Reporting Requirements
7.4 Small Operators in Large Urbanized Areas
7.5 Large Operators in Nonurbanized areas
8 CONCHUSION ......ssssesseneessensensenees
Appendix A: Data and Methodology ..
Exhibit A-1: Average Annual Passenger Miles per Vehicle Revenue Mile
and per Vehicle Revenue Hour 1996-98
Exhibit A-2..
Exhibit A-
Exhibit A-4..
Appendix B: Examples of Formula-Based State Transit Funding Program

Administration

UNRYWNINNES

xi
Preceding Page Blank


Technical Report Documentation Page

Report No. 2. Government Accession No. (NTIS)
FTA-TBP10~00~04

3. Recipient's Catalog No.

|. Tithe end Subsitie

The Urbanized Area Formula Program and the Needs
of Small Transit Intensive Cities. Report to
Congress

5. Report Date
September 2000

6. Performing Orgoni zation Code
TBP1O

Author! x)

8. Performing Organization Report No.

. Performing Organization Nome ond Address

Federal Transit Administration
Office of Policy Development

U.S. Department of Transportation
Washington, DC 20590

10. Work Unit No. (TRAIS)

1. Contract or Grant No.

12.

Sponsoring Agency Name and Address
Federal Transit Administration

400 7th Street, SW

Washington, DC 20590 http://www. fta.dot.gov

13. Type of Report and Period Covered

Report to Congress

14, Sponsoring Agency Code
TBP10, John Day

Supplementary Notes

Visit the FIA Website for additional information [http: I Towa. fta.dot.gov]

Email [research@fta.dot.gov]

16.

Abstract

This report is provided to the United States Congress in accordance with Section 3033 of
the Transportation Equity Act for the 21* Century (TEA-21). Section 3033 requires the
Secretary of Transportation to conduct a study of the Urbanized Area Formula Program
administered by FTA, focusing on the needs of small urbanized areas with unusually high
levels of transit service and report the results to the United States Congress. Since the
formula apportionments for small urbanized areas do not depend on service levels, such
small transit intensive cities receive smaller apportionments of funds than they would if
service levels were incorporated into the formula. This study aims to determine whether
the formula for apportioning funds to urbanized areas under section 5336 of title 49, U.S.
Code, accurately reflects the transit needs of urbanized areas and, if not, whether changes
should be made to reflect that fact. This report outlines the formula grant programs
administered by FTA, discusses existing and potential transit needs of American cities,
and how the current formula factors relate to their needs. The third section of this report
characterizes small transit intensive cities--the main focus of this study along with
funding issues. The study concludes that sufficient issues exist to merit consideration of
changes to the existing Urbanized Area Formula Grants Program as part of the FY 2004
and beyond reauthorization cycle. However, the formula apportionments should continue
to reflect underlying transit needs.

17. Key Words

Transit Intensive

18. Distribution Statement ;
Available from the National Technical
Information Service/NTIS, Springfield,

Small Cities Funding

FTA Urbanized Area Formula Program
Formula Apportionments Assessment

Virginia 22161. 703.605.6000
Policy Needs Small Transit Cities orders@ntis.fedworld.gov

1.

Security Clessif. (of this report) BD. Serurity Clessif. (of this poge)

unclassified unclassified

21 No. of Pages [ 22. Price NTIS

Form DOT F 1700.7 (8-72)

Reproduction of completed page outhorized


Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas
Fiscal Year 2000

Hypothetical Actual
Urbanized Area/State Apportionment Apportionment Net Change
ILLINOIS 12,104,205 13,039,476 (935,271)
Alton, IL 585,451 704,693 (119,241)
Aurora, IL : 1,533,358 1,973,637 (440,279)
Beloit, WI-IL 31,794 90,065 (58,271)
Bloomington-Normal, IL 944,290 41,135,262 (190,971)
Champaign-Urbana, IL 2,653,060 1,602,075 1,050,985
Crystal Lake, IL 560,415 643,251 (82,837)
Decatur, IL 911,724 901,814 9,911
Dubuque, IA-IL 7,348 21,007 (13,659)
Elgin, IL 1,329,144 1,423,686 (94,542)
Joliet, IL 1,507,617 1,646,194 (138,576)
Kankakee, IL 293,322 646,084 (352,762)
Round Lake Beach-McHenry, IL-WI 433,832 937,528 (503,697)
Springfield, IL 1,312,849 41,314,182 (1,333)
INDIANA 6,643,730 7,605,189 (961,458)
Anderson, IN : 529,543 614,716 (85,172)
Bloomington, IN 837,852 917,307 (79,455)
Elkhart-Goshen, IN 632,459 919,374 (286,915)
Evansville, IN-KY 1,455,235 1,703,133 (247,897)
Kokomo, IN 416,787 619,041 (202,253)
Lafayette-West Lafayette, IN 1,324,812 1,230,688 94,124
Muncie, IN 990,064 904,711 85,353
Terre Haute, IN 456,977 696,219 (239,242)
lOWA 4,519,207 4,140,176 379,031
Cedar Rapids, IA 1,282,505 1,286,628 (4,124)
Dubuque, 1A-IL 491,323 626,250 (134,927)
lowa City, IA 1,154,257 741,322 412,935
Sioux City, IA-NE-SD 780,937 684,686 96,251
Waterloo-Cedar Falls, IA 810,185 801,290 8,895
KANSAS. 1,579,657 2,010,184 (430,527)
Lawrence, KS 345,592 761,215 (415,623)
St. Joseph, MO-KS 2,932 6,283 (3,352)
Topeka, KS 1,231,134 1,242,686 (11,552)
KENTUCKY 644,639 1,584,354 (939,714)
Clarksville, TN-KY 82,047 193,324 (111,277)
Evansville, IN-KY 85,578 237,396 (151,819)
Huntington-Ashland, WV-KY-OH 168,193 473,409 (305,216)
Owensboro, KY 308,822 680,224 (371,402)
LOUISIANA 3,276,131 4,692,211 (1,416,080)
Alexandria, LA 310,866 684,727 (373,861)
Houma, LA 349,357 481,636 (132,279)
Lafayette, LA 1,022,620 1,184,744 (162,124)
Lake Charles, LA 432,065 951,685 (519,620)
Monroe, LA 941,254 904,907 36,348
Slidell, LA 219,969 484,512 (264,544)
MAINE 2,073,569 2,042,135 31,434
Bangor, ME 467,074 419,625 47,449

18


1) Vehicle Utilization

Transit intensive cities have transit systems with vehicles that are heavily utilized by
the public. Measures of vehicle utilization include passenger miles per vehicle
revenue mile and passenger miles per vehicle revenue hour. These measures are noted
in the language of Section 3033 of TEA-21, which also makes reference to transit
vehicle utilization levels in small urbanized areas that exceed the averages for such
use by urbanized areas over 200,000 in population.

2) Service Provision

Transit intensive cities provide a high level of transit service to their citizenry. This
can be measured by vehicle revenue miles per capita or vehicle revenue hours per
capita. There are several small cities that can be classified as transit intensive by these
measures.

3) Service Consumption

Transit intensive cities have a high rate of service consumption by their populations.
This can be measured by passenger miles traveled per capita or unlinked passenger
trips per capita.

4) Statistical Outliers

Transit intensive cities have service levels that are significantly greater than would be
predicted given the urbanized area’s population and population density. In the
language of statistical modeling, such cities would be called “outliers.” In the context
of the above discussion of need, these are cities whose existing needs (reflected by
service levels) are not captured by their potential needs (reflected by population and
population density).

For purposes of measurement, small transit intensive cities were defined as small
urbanized areas whose intensity measure exceed the average for larger urbanized areas
(population between 200,000 and 1,000,000). Such a definition is in keeping with the
language of Section 3033. Statistical outliers were defined as small urbanized areas with
substantially greater service provision (vehicle revenue miles) and service consumption
(passenger miles) than would be expected given their size and density, as determined by a
regression analysis. Exhibit 1 lists the small urbanized areas that can be classified as
transit intensive by one or more of the above criteria.





Exhibit 5
Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment _ Apportionment Net Change

Sumter, SC 1,050,596 486,753 563,843

SOUTH DAKOTA 1,287,869 1,514,777 (226,908)
Rapid City, SD 382,833 482,434 (99,601)
Sioux City, IA-NE-SD 5,590 13,526 (7,937)
Sioux Falls, SD 899,447 1,018,817 (119,370)
TENNESSEE 1,933,398 2,344,390 (410,992)
Bristol, TN-VA 109,865 219,130 (109,265)
Clarksville, TN-KY 546,075 534,276 11,799
Jackson, TN 433,820 404,396 29,423
Johnson City, TN 466,541 616,431 (149,890)
Kingsport, TN-VA 377,098 570,156 (193,059)
TEXAS 15,829,515 21,706,887 (5,877,372)
Abilene, TX 668,644 770,125 (101,481)
Amarillo, TX 1,068,776 1,428,410 (359,634)
Beaumont, TX 806,323 982,435 (176,113)
Brownsville, TX 1,267,628 1,427,936 (160,307)
Bryan-College Station, TX 736,736 956,487 (219,751)
Denton, TX 394,886 516,668 (121,782)
Galveston, TX 1,043,675 548,067 495,608
Harlingen, TX 332,484 701,792 (369,308)
Killeen, TX 621,876 1,342,335 (720,458)
Laredo, TX 1,608,028 1,695,320 (87,292)
Lewisville, TX 294,825 596,449 (301,624)
Longview, TX 288,316 586,831 (298,515)
Lubbock, TX 1,775,529 1,671,261 104,268

Midland, TX 356,335 732,263 (375,928)
Odessa, TX 407,130 812,346 (405,216)
Port Arthur, TX 563,896 886,146 (322,249)
San Angelo, TX 540,909 761,463 (220,554)
Sherman-Denison, TX 365,882 381,161 (15,279)
Temple, TX 242,139 432,724 (190,585)
Texarkana, TX-AR 168,985 349,174 (180,188)
Texas City, TX 463,479 928,170 (464,691)
Tyler, TX 341,497 725,803 (384,306)
Victoria, TX 236,601 503,143 (266,541)
Waco, TX 822,417 1,096,112 (273,695)
Wichita Falls, TX 412,516 874,266 (461,750)
UTAH 395,733 433,852 (38,120)
Logan, UT 395,733 433,852 (38,120)
VERMONT 772,354 761,283 11,071

Burlington, VT 772,354 761,283 11,071

VIRGINIA 4,200,348 5,053,356 (853,008)
Bristol, TN-VA 78,216 156,005 (77,789)
Charlottesville, VA 687,986 726,621 (38,635)
Danville, VA 334,089 412,634 (78,545)
Fredericksburg, VA 231,519 484,443 (252,924)
Kingsport, TN-VA 8,601 29,453 (20,852)

30


The 20 small transit intensive cities represented 9 percent of the total population in small
urbanized areas. Their share of the population x density factor used in the urbanized area
formula is slightly higher, reflecting the greater average density of these cities. The net
effect is that these 20 cities received 10.2 percent of Section 5307 funding for small
urbanized areas in recent years.'° Such cities have a much larger share of transit service
in small urbanized areas, however, befitting their designation as transit intensive. The 20
cities had some 27 percent of vehicle revenue miles and 39 percent of passenger miles in
small urbanized areas in 1996-98. The small transit intensive cities received just under 24
percent of capital program funding in 1995-99. Thus, the 20 cities’ share of capital
funding is much closer to their share of transit service supply and consumption, though it
is still slightly lower.

When compared to all urbanized areas, however, the small transit intensive cities do
relatively well in receiving capital program funds. Their 4.2 percent share of capital
program funding is well above both their population share (1.5 percent) and vehicle
revenue mile and passenger mile shares (2.7 percent and 2.3 percent, respectively). This
is due to the relative funding levels of small urbanized areas in general, whose share of
capital program funding was close to their population share but well above their service
level shares. This naturally raises the next question: what would be the result if formula
funding for small urbanized areas were to be allocated in the same way as funding for
large urbanized areas?

6 Analysis of Funding Alternatives

This section addresses the mandate in Section 3033 of TEA-21 to examine the effects of
changes in the Section 5336 funding formulas or other funding mechanisms that would
assist small transit intensive cities. Two categories of funding changes are addressed. The
first illustrates how formula funding for each small urbanized area would be altered if the
formula included service factors for small urbanized areas as well as large urbanized
areas. The second, originating from members of the transit industry, briefly describes
how the Section 5309 Bus program could be used to steer more funding toward small
transit intensive cities

6.1 Applying Service Factors to Small Urbanized Area Formula
Apportionments

In order to assess the effects of applying service factors to formula apportionments for
small urbanized areas, two alternative scenarios for the FY 2000 apportionments were
generated. In the first scenario, service factors were applied to small urbanized areas as a
separate tier (9.32 percent of the total for Section 5307 funds). In the second, all
urbanized areas were grouped together in a single Bus tier, and the formula was applied
across the board. The service factors used were those from the current Bus incentive and
Bus non-incentive tiers used in the large urbanized area apportionments.

'° Funding shares for the formula program, based on decennial census data, do not change year-to-year, nor
does the small urbanized area share of the overall program, which is fixed in statute.

14


Exhibit 4
Net Effect of Applying Service Factors to the Formula Apportionments to Small
Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment __Apportionment_Net Change
Lynchburg, VA 956,042 691,272 264,770
Petersburg, VA 615,938 876,343 (260,405)
Roanoke, VA 1,675,744 1,676,586 (841)
WASHINGTON 14,574,520 4,775,509 9,799,011
Bellingham, WA 1,455,456 562,649 892,807
Bremerton, WA 3,812,767 1,089,956 2,722,811
Longview, WA-OR 447,525 476,091 (28,567)
Olympia, WA 2,901,230 847,994 2,053,236
Richland-Kennewick-Pasco, WA 5,136,908 884,646 4,252,262
Yakima, WA 820,636 914,174 (93,538)
WEST VIRGINIA 4,307,496 3,670,219 637,276
Charleston, WV 2,280,135 1,476,469 803,667
Cumberland, MD-WV 8,017 17,659 (9,642)
Hagerstown, MD-PA-WV 1,686 4,460 (2,773)
Huntington-Ashland, WV-KY-OH 980,822 828,947 151,875
Parkersburg, WV-OH 242,036 533,119 (291,083)
Steubenville-Weirton, OH-WV-PA 104,135 229,371 (125,237)
Wheeling, WV-OH 690,664 580,194 110,470
WISCONSIN 10,949,318 10,047,371 901,947
Appleton-Neenah, WI 1,790,317 1,839,851 (49,534)
Beloit, WI-IL 344,889 394,376 (49,487)
Duluth, MN-WI 149,187 172,747 (23,560)
Eau Claire, WI 912,945 720,646 192,299
Green Bay, WI 1,556,183 1,397,379 158,804
Janesville, WI 488,892 530,354 (41,462)
Kenosha, WI 1,081,177 965,672 115,505
La Crosse, Wi-MN 846,549 766,631 79,918
Oshkosh, WI 824,996 669,054 155,942
Racine, WI 1,636,895 1,491,481 145,414
Round Lake Beach-McHenry, IL-WI 117 559 (442)
Sheboygan, WI 720,394 630,370 90,024
Wausau, WI 596,777 468,252 128,525
WYOMING 686,493 1,051,862 (365,369)
Casper, WY 219,062 482,515 (263,453)
Cheyenne, WY 467,431 569,347 (101,915)

23


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THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590

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Snares oF

SEP 2. omer

The Honorable Bud Shuster
Chairman, Committee on
Transportation and Infrastructure
U.S. House of Representatives
Washington, D.C. 20515-6256

Dear Mr. Chairman:

The enclosed report, “The Urbanized Area Formula Program and the Needs of Small Transit
Intensive Cities” completed through the Cooperative Research Program of the Transportation
Research Board, is provided in accordance with Section 3033 of the Transportation Equity Act
for the 21" Century. Section 3033 requires the Secretary to conduct a study of the Urbanized
Area Formula Program established under Section 5307 of title 49, United States Code and the
needs of small urbanized areas with unusually high levels of transit service and report the results
to the Committee on Transportation and Infrastructure of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate by December 31, 1999.

The study concludes that sufficient issues exist suggesting that changes to the existing Urbanized
Area Formula Grants Program should be considered as part of the FY 2004 and beyond
reauthorization cycle. However, the formula apportionments should continue to reflect
underlying transit needs.

Please call either me or Michael Frazier, Assistant Secretary for Governmental Affairs, at
(202) 366-4573, if you have any questions. Identical letters are being sent to the Chairman and
Ranking Minority Member of the Senate Committee on Banking, Housing, and Urban Affairs,
and the Ranking Minority Member of the House Committee on Transportation and
Infrastructure.

Sincerely,
Rodney E. Slater ‘ ( f "
Enclosure

Preceding Page Blank

vii


Exhibit 5
Net Effect on the Formula Apportionments to Small Urbanized Areas of Applying the
Bus Formula Uniformly to All Urbanized Areas
Fiscal Year 2000

Hypothetical Actual

Urbanized Area/State Apportionment __ Apportionment Net Change

Lynchburg, VA 810,248 691,272 118,976
Petersburg, VA 586,038 876,343 (290,305)
Roanoke, VA 1,463,651 1,676,586 (212,935)
WASHINGTON 11,221,115 4,775,509 6,445,605
Bellingham, WA 1,179,683 562,649 617,034
Bremerton, WA 2,919,290 1,089,956 1,829,334
Longview, WA-OR 402,520 476,091 (73,571)
Olympia, WA 2,326,804 847,994 1,478,810
Richland-Kennewick-Pasco, WA 3,657,357 884,646 = 2,772,711

Yakima, WA 735,461 914,174 (178,713)
WEST VIRGINIA 3,803,412 3,670,219 133,193
Charleston, WV 1,920,805 1,476,469 444,336
Cumberland, MD-WV 8,725 17,659 (8,934)
Hagerstown, MD-PA-WV 1,558 4,460 (2,902)
Huntington-Ashland, WV-KY-OH 899,569 828,947 70,622
Parkersburg, WV-OH 243,694 533,119 (289,426)
Steubenville-Weirton, OH-WV-PA 110,428 229,371 (118,943)
Wheeling, WV-OH 618,634 580,194 38,440

WISCONSIN 9,525,971 10,047,371 (521,400)
Appleton-Neenah, W! 1,557,842 1,839,851 (282,009)
Beloit, WI-IL 321,820 394,376 (72,556)
Duluth, MN-WI 126,932 172,747 (45,815)
Eau Claire, W! 784,179 720,646 63,533

Green Bay, WI 1,384,368 1,397,379 (13,011)
Janesville, WI 435,425 530,354 (94,929)
Kenosha, WI 927,590 965,672 (38,082)
La Crosse, WI-MN 738,754 766,631 (27,877)
Oshkosh, WI 701,164 669,054 32,110

Racine, WI 1,405,684 1,491,481 (85,797)
Round Lake Beach-McHenry, IL-WI 124 559 (435)
Sheboygan, WI 626,345 630,370 (4,025)
Wausau, WI 515,745 468,252 47,493

WYOMING 658,257 1,051,862 (393,605)
Casper, WY 226,276 482,515 (256,239)
Cheyenne, WY 431,981 569,347 (137,365)

31


designated Transportation Management Area. In this case, formula funds attributed to the
area must be obligated within the small urbanized area. In practice, many states do simply
“pass through” the formula allocations to the small urbanized areas, in part because the
amounts attributable to each small urbanized area are published annually in the Federal
Register. However, this is not required, and some states do allocate the Section 5307
Governor’s Apportionment at least in part according to their own discretion or formulas.
As a result, some commenters raised the possibility that any formula change increasing
the allocations attributable to small transit intensive cities would not necessarily flow
through to the targeted area, but could instead be used by the state in other areas. An
obvious solution to this possibility would be for the small urbanized area to create a
Transportation Management Area.

7.1.2. The Nonurbanized Area Formula Program and State Transit
Assistance

As noted above, states also receive federal formula funding under Section 5311 based on
their nonurbanized area population. Since these funds are not attributable to any specific
sub-state region, states must develop their own mechanisms for transferring them to local
operators. Many states also have their own transit assistance programs, focusing on both
capital and operating needs. Such state programs are generally available for both
urbanized and nonurbanized areas.

These state-administered transit assistance programs (both Section 5311 and state
programs) allocate funds on either a discretionary or formula basis. Under discretionary
programs, transit operators are invited to compete for the available pool of funds by
submitting proposals to a selection committee, which awards funds based on a variety of
factors, including outstanding needs. State funding formulas show enormous variety in
their scope and complexity, but typically include some measures of existing service
levels and/or financial conditions. In either case, whether discretionary or formula-based,
state allocations are based on factors in addition to population and population density.
Examples of three formula-based state transit funding programs and state administration
of Section 5307 and 5311 programs are found in Appendix B.

7.2. The 2000 Census

The population figures used in the Section 5307 and 5311 formula programs are drawn
strictly from the decennial census figures. Urbanized areas are also defined by the Census
Bureau based on the decennial census population counts. As a result, the population and
population density figures used in the formula, as well as the location and number of
urbanized areas eligible for Section 5307 funding, are updated only once every 10 years,
and the resulting changes have a significant effect on the formula programs.

It is expected that population figures from the 2000 Census will be incorporated into the
formula apportionments beginning in FY 2002. Relative changes in population and
density among urbanized areas will cause significant changes in the shares of formula
funds received by each urbanized area. Some urbanized areas which are now classified as
small urbanized areas will have grown to exceed the 200,000 population threshold, and

33