Mass Transit: FTA's Progress in Developing and Implementing a New Starts Evaluation Process
Published: 1999-04-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a legislative requirement, GAO provided information on the Federal Transit Administration's (FTA) efforts to develop and implement evaluation and rating processes and procedures for evaluating new start transit projects for federal funding, focusing on: (1) the status of FTA's efforts; (2) how FTA implemented the Transportation Equity Act for the 21st Century (TEA-21) requirements for evaluating, rating, and recommending projects; and (3) open issues that FTA needs to resolve to fully satisfy TEA-21 requirements.
section_title: What GAO Found
paragraphs: GAO noted that: (1) FTA has made substantial progress in developing and implementing a new starts evaluation and rating process, as required by TEA-21; (2) FTA had already revised its new starts evaluation process, since the criteria and most of the factors that TEA-21 requires FTA to consider while applying the criteria were also contained in the Intermodal Surface Transportation Efficiency Act of 1991; (3) in 1997, FTA first applied these criteria for its fiscal year (FY) 1999 project evaluations; (4) in 1998, FTA expanded its evaluation process to include the TEA-21 requirement to rate projects as either highly recommended, recommended, or not recommended and to provide individual ratings on each criterion; (5) the evaluation process FTA followed to prepare its FY 2000 new starts report uses ratings based on specific financial and project justification criteria to build toward an overall project rating; (6) FTA uses this rating information in deciding which projects will receive full funding grant agreements and to make funding recommendations to the Congress in its annual new starts report; (7) while FTA has implemented a new starts evaluation and rating process for FY 2000 that addressed TEA-21 requirements, it has not issued final regulations on the evaluation and rating process, as required by the legislation; and (8) FTA issued a proposed rule on April 7, 1999, and plans to issue final regulations in summer 1999.

section_title: Letter
paragraphs: Since the early 1970s, the federal government has provided a large share of the nation’s capital investment in urban mass transportation. Much of this investment has come through the Federal Transit Administration’s (FTA) “new starts” program, which funds major new rail, bus, and trolley transit projects that use separate and exclusive rights-of-way. In the last 5 years, this program has provided state and local transit agencies with about $3.8 billion to help design and construct such projects throughout the country.
The Transportation Equity Act for the 21st Century (TEA-21), enacted in June 1998, authorizes $8.2 billion for new starts transit projects through fiscal year 2003. However, FTA has already entered into full funding grant agreements totaling $3.73 billion for 14 projects under construction. The remaining $4.47 billion falls far short of the $12.1 billion FTA estimates will be needed to construct 42 additional projects currently in the preliminary engineering and final design phases. FTA also expects that over $40 billion in federal funding will be requested to fund approximately 100 projects currently in the early planning stages. To prioritize funding, TEA-21 directs FTA to evaluate, rate, and recommend potential new starts projects on the basis of specific financial and project justification criteria. TEA-21 also requires FTA to issue regulations for the evaluation and rating process.
TEA-21 also requires GAO to report by April 30, 1999, and annually thereafter, on FTA’s processes and procedures for evaluating, rating, and recommending new starts transit projects for federal funding and on FTA’s implementation of these processes and procedures. As agreed with your offices, this report discusses (1) the status of FTA’s efforts to develop and implement the evaluation and rating processes and procedures, (2) how FTA implemented the TEA-21 requirements for evaluating, rating, and recommending projects, and (3) open issues that FTA needs to resolve to fully satisfy TEA-21 requirements.
subsections: section_title: Background
paragraphs: TEA-21 requires that before FTA may approve a grant or loan for a proposed new starts project, it must determine that the proposed project is based upon the results of an alternatives analysis and preliminary engineering and justified by a comprehensive review of the proposed project’s mobility improvements, environmental benefits, cost-effectiveness, and operating efficiencies. Under TEA-21, in applying these justification criteria, FTA must consider a number of factors, including land-use policies and congestion relief.
In addition, a project must be supported by an acceptable degree of local financial commitment, including evidence of stable and dependable financing sources to construct, maintain, and operate the system or extension. In evaluating this commitment, FTA is required to determine whether (1) the proposed project plan provides for contingencies in order to cover unanticipated cost increases; (2) each proposed local source of capital and operating funds is stable, reliable, and available within the timetable for the proposed project; and (3) local resources are available to operate the overall proposed mass transportation system without requiring a reduction in existing mass transportation services. FTA is also required to consider a number of additional factors when evaluating a project’s local financial commitment.
While these evaluation requirements existed prior to the enactment of TEA-21, TEA-21 requires FTA, for the first time, to (1) develop a rating for each criterion as well as an overall rating of highly recommended, recommended, or not recommended for each project and to include this information in its annual new starts report due to the Congress each February, and (2) issue regulations on the manner in which it will evaluate and rate potential new starts projects. TEA-21’s deadline for the regulations was October 7, 1998.
TEA-21 also directs FTA to use these evaluations and ratings in approving projects’ advancement to the preliminary engineering and final design phases and in deciding which projects will be recommended to the Congress for funding or receive full funding grant agreements. In addition, TEA-21 requires FTA to issue a supplemental report to its annual report to the Congress each August that updates information on projects that have advanced to the preliminary engineering or final design phases since the annual report.
section_title: FTA Has Made Substantial Progress in Developing and Implementing a New Starts Evaluation Process That Reflects TEA-21 Requirements
paragraphs: FTA has made substantial progress in developing and implementing an evaluation process that includes the individual criterion ratings and overall project ratings required by TEA-21. Before TEA-21 was enacted in June 1998, FTA had already taken significant steps to revise its new starts evaluation process, since most of the evaluation requirements contained in TEA-21 were introduced by ISTEA. In March 1999, FTA issued its fiscal year 2000 new starts report, which included project evaluations and ratings based upon the revised process.
Table 1 highlights key dates in the chronology of FTA’s development of its new starts evaluation process.
In response to ISTEA’s expansion of the evaluation criteria, FTA issued a policy paper in September 1994 proposing its overall assessment strategy and criteria measures. FTA circulated this paper among interested parties, including state and local governments, transit agencies, metropolitan planning organizations, and consultants. In December 1996, after reviewing the comments received, FTA issued a notice describing the revised criteria it would use in 1997 to evaluate candidate new starts projects for fiscal year 1999. The notice also introduced measures for mobility improvements, environmental benefits, operating efficiencies, cost-effectiveness, and transit-supportive land use. FTA’s existing process for assessing and rating a project’s local financial commitment did not change.
In September 1997, FTA issued technical guidance on the ISTEA new starts criteria to assist project sponsors in submitting the information and documentation that the agency needed to prepare the fiscal year 1999 evaluations. The guidance identified the new starts criteria, documented the reporting procedures for the criteria, and outlined how FTA would apply each of the criteria in evaluating candidate projects. For example, in evaluating mobility improvements, FTA said it would look at the expected savings in travel time. FTA also conducted workshops at which the new criteria and reporting requirements were discussed in detail with grantees. FTA’s fiscal year 1999 new starts report, submitted to the Congress in May 1998, included evaluations that were based upon these criteria.
The supplemental report to the fiscal year 1999 annual report, required by TEA-21, was issued in January 1999. That report did not include the individual ratings on each criterion and overall project ratings required by TEA-21 because FTA had not yet incorporated these requirements at the time the report was prepared. According to FTA officials, the fiscal year 2000 supplemental report will include these ratings.
Noting that TEA-21 made no changes to the existing new starts criteria and added relatively few factors for consideration in applying the criteria, FTA completed the fiscal year 2000 project evaluations using its existing new starts criteria. However, as described in more detail in the next section of this report, FTA revised its evaluation process to provide for the individual criterion ratings and overall ratings required by TEA-21. In September 1998, at the start of the fiscal year 2000 process, FTA used letters and a series of outreach sessions to explain to its grantees how it planned to rate projects for the fiscal year 2000 evaluations. It also issued an addendum to its technical guidance to assist grantees in submitting the required information for the fiscal year 2000 process. In its fiscal year 2000 new starts report submitted to the Congress on March 23, 1999, FTA provided evaluations, individual criterion ratings, and an overall project rating for 39 projects in the final design and preliminary engineering phases. FTA rated 8 projects as highly recommended, 11 projects as recommended, and 20 projects as not recommended. The report also included funding recommendations for 11 of the 39 projects that FTA rated.
section_title: FTA’s Evaluation and Rating Process Assigns Individual Ratings on TEA-21 Criteria and Provides for Overall Project Ratings
paragraphs: FTA’s current new starts evaluation process, which it followed to prepare its fiscal year 2000 new starts report, assigns candidate projects individual ratings for each TEA-21 criterion in order to assess each project’s justification and local financial commitment. The process also assigns an overall rating for each project. FTA considers these overall ratings in deciding which projects will be recommended for funding or receive full funding grant agreements.
As figure 1 illustrates, FTA evaluates and rates projects in three stages. First, FTA evaluates and rates projects on each new starts criterion. Second, FTA uses these individual ratings on each criterion to assign summary project justification and local financial commitment ratings for each project. Finally, FTA then combines these two ratings to assign an overall project rating.
As figure 1 shows, FTA’s current process provides for individual ratings for the four project justification criteria identified by TEA-21 (mobility improvements, environmental benefits, operating efficiencies, and cost-effectiveness) as well as for transit-supportive land-use policies.Similarly, to evaluate a project’s financial commitment, the project is rated on its capital and operating finance plans and the local share of project costs. According to FTA, the process also takes into account the factors for consideration identified in TEA-21, such as congestion relief. For example, FTA considers this factor in evaluating and rating a project’s cost-effectiveness.
To develop and assign individual ratings on each criterion, FTA holds a series of meetings to review and analyze information submitted by project sponsors. For the fiscal year 2000 process, participants in these meetings included officials and staff from FTA’s Offices of Planning, Budget and Policy, and Program Management, and contractors who made the initial financial and land-use assessments. On the basis of an analysis of the documentation submitted by project sponsors, FTA assigns each project a descriptive rating of high, medium-high, medium, low-medium or low for each project justification and local financial commitment criterion. Appendix I summarizes the measures that FTA uses in applying the criteria to develop these ratings.
Once the individual criterion ratings are completed, FTA assigns summary ratings of project justification and local financial commitment by combining the individual criterion ratings. In developing the summary project justification ratings, FTA gives the most weight to the criteria for transit-supportive land use, cost-effectiveness, and mobility improvements. For the summary local financial commitment rating, the project’s capital plan is given the most consideration. In assigning a summary financial commitment rating, FTA will not give a project a rating higher than low-medium if its capital finance plan received a low-medium or low rating.
FTA combines these summary ratings to assign an overall project rating of highly recommended, recommended, or not recommended. To receive the highly recommended rating, a project must have summary ratings of at least medium-high for project justification and local financial commitment. To receive a rating of recommended, the project must have summary ratings of at least medium. A project is rated as not recommended when either summary rating is less than medium.
In its fiscal year 2000 new starts report, as noted previously, FTA rated 8 projects as highly recommended, 11 projects as recommended, and 20 projects as not recommended. Of the 20 projects rated as not recommended, 18 received financial commitment ratings of less than medium. In assigning overall project ratings, however, FTA emphasized the continuous nature of project evaluation. Throughout the report, FTA underscored the fact that as candidate projects proceed through the project development process, information concerning costs, benefits, and impacts will be refined. Consequently, FTA will update its ratings and recommendations at least annually to reflect new information, changing conditions, and refined financing plans. Thus, a project that received a not recommended rating in the fiscal year 2000 report could receive a higher rating in the fiscal year 2001 report to reflect project changes.
According to FTA, the overall project rating in the new starts report is intended to reflect a project’s merits at a particular point in time and does not translate directly into a funding recommendation or commitment in a given year. In deciding which projects will be recommended for funding or receive a full funding grant agreement, FTA considers projects with an overall rating of recommended or better. However, some projects rated as highly recommended or recommended may not be ready for funding because they are still in the early stages of preliminary engineering. In making funding recommendations, FTA gives first priority to projects with existing grant agreements. After these projects are accounted for, priority is given to projects that are ready to begin final design or construction.
In accordance with these funding principles, the President’s fiscal year 2000 budget and FTA’s fiscal year 2000 new starts report recommended $962.72 million in funding for 25 projects. As table 2 shows, these recommendations included $668.18 million for 14 projects currently under construction, $216.11 million for seven projects expected to enter final design by the beginning of fiscal year 2000, and $32 million for four projects in the later stages of preliminary engineering. TEA-21 limits the amount of new starts funds that can be used for activities other than final design and construction to 8 percent of total new starts funding, or $78.43 million for fiscal year 2000. After accounting for the $32 million for the four recommended projects in preliminary engineering, $46.43 million remains available for other projects currently in or approved to enter preliminary engineering by the end of fiscal year 2000. FTA plans to allocate the remaining $46.43 million on the basis of its review of funding applications and project ratings. The seven remaining projects in preliminary engineering that received overall ratings of recommended or highly recommended but no funding recommendation in the fiscal year 2000 report would be eligible to seek this funding. Appendix II presents the ratings and funding recommendations in FTA’s fiscal year 2000 new starts report.
section_title: FTA Needs to Issue Regulations to Satisify TEA-21 Requirements
paragraphs: While FTA has implemented a new starts evaluation process that addresses the TEA-21 requirements, it still needs to issue final regulations to formalize the process. FTA did not meet the TEA-21 deadline of October 7, 1998, for issuing these regulations. According to FTA, priority was given to satisfying the rating requirements in TEA-21 and issuing the fiscal year 2000 report. FTA issued a notice of proposed rulemaking on April 7, 1999. The process described in the proposed rule mirrors the process FTA used to prepare the fiscal year 2000 report.
Comments on the proposed rule are due on July 6, 1999. FTA plans to issue the final regulations in the summer of 1999. FTA has said that any changes resulting from comments on the proposed rule will be incorporated into the evaluation and rating process for the fiscal year 2001 annual report. We will continue to monitor FTA’s efforts to implement TEA-21 and report our results in our next annual report.
section_title: Agency Comments
paragraphs: We provided the Department of Transportation with a draft of this report for review and comment. We met with Federal Transit Administration officials, including the Director for Policy Development and officials from the Offices of Planning and of Budget and Policy. FTA agreed with the report’s contents and provided us with some technical comments, which we have incorporated where appropriate.
section_title: Scope and Methodology
paragraphs: To address the issues discussed in this report, we reviewed the legislation governing new starts transit projects, FTA’s annual new starts reports for fiscal years 1999 and 2000, its technical guidance on the new starts criteria, and other documentation by the agency of its processes and procedures for evaluating projects. We also interviewed appropriate FTA headquarters and regional officials, the contractors who conducted the financial and land-use assessments, and selected grantees whose projects were assessed in 1997 and 1998. In addition, we attended FTA’s outreach sessions, in which officials explained the new TEA-21 requirements and how FTA intended to meet these requirements. We also observed meetings at the agency in which the project ratings on financial commitment and land use were deliberated. We performed our work in accordance with generally accepted government auditing standards from July 1998 through April 1999.
We are sending copies of this report to the Honorable Rodney E. Slater, Secretary of Transportation; the Honorable Gordon J. Linton, Administrator, Federal Transit Administration; the Honorable Jacob Lew, Director, Office of Management and Budget; and other interested parties. We are also making copies available to others on request.
Major contributors to this report are listed in appendix III. Please call me at (202) 512-2834 if you have any questions about this report.
section_title: New Starts Criteria and Related Performance Measures
paragraphs: Table I.1 presents a summary of each of the new starts criteria and the related performance measures that the Federal Transit Administration uses to appraise candidate new starts projects as part of its evaluation and rating process.
section_title: FTA’s Fiscal Year 2000 New Starts Ratings and Funding Recommendations
subsections: section_title: Tacoma-Seattle (Sounder) Commuter Rail
paragraphs: (continued)
Baltimore - Central Corridor LRT Double Track Minneapolis - Hiawatha Corridor Transitway Raleigh-Durham - Research Triangle Regional Rail Austin – Northwest/North Central Corridor New York City - LIRR East Side Access N. New Jersey (Hudson-Bergen MOS-2)
Orange County - Irvine-Fullerton Corridor Pittsburgh - Martin Luther King, Jr., E. Busway Extension Pittsburgh - Stage II LRT Reconstruction San Diego - Oceanside Escondido Corridor San Francisco – Bayshore - Third Street LRT (continued)
Ferry Capital Projects in Alaska or Hawaii (Section 5309(m)(5)(A))
section_title: Major Contributors to This Report
subsections: section_title: Resources, Community, and Economic Development Division, Washington, D.C.
section_title: Atlanta Field Office
paragraphs: Kirk Kiester, Evaluator-in-Charge The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent.
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