Public Transportation: Preliminary Analysis of Changes to and Trends in FTA's New Starts and Small Starts Programs
Published: 2007-05-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Through the New Starts program, the Federal Transit Administration (FTA) identifies and recommends new fixed-guideway transit projects for funding--including heavy, light, and commuter rail; ferry; and certain bus projects. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) authorized the New Starts program through fiscal year 2009 and made a number of changes to the program, including creating a separate program commonly called Small Starts. This program is intended to offer an expedited and streamlined evaluation and rating process for smaller-scale transit projects. FTA subsequently introduced a separate eligibility category within the Small Starts program for "Very Small Starts" projects. Very Small Starts projects are simple, low-risk projects that FTA has determined qualify for a simplified evaluation and rating process. This testimony discusses GAO's preliminary findings on (1) FTA's implementation of SAFETEA-LU changes to the New Starts program, (2) the extent to which the New Starts pipeline (i.e., projects in the preliminary engineering and final design phases) has changed over time, and (3) future trends for the New Starts and Small Starts pipelines. To address these objectives, GAO surveyed 215 project sponsors and interviewed FTA officials, 15 project sponsors, and 3 industry groups. Our survey response rate was 77 percent.
section_title: What GAO Found
paragraphs: FTA has made progress in implementing SAFETEA-LU changes, but more work remains. Project sponsors frequently identified two key issues for FTA to consider as it moves forward in implementing SAFETEA-LU changes: (1) further streamline the Small Starts program and (2) fully incorporate economic development as a criterion in the New Starts and Small Starts evaluation and rating processes. According to our analysis of the number and types of requirements for New Starts and Small Starts application processes, the Small Starts process has fewer requirements. However, project sponsors said that FTA should further streamline the process by, for example, eliminating requests for duplicate information requested in required worksheets. SAFETEA-LU added economic development to the list of project justification evaluation criteria that FTA must use to evaluate and rate projects. However, FTA currently assigns a weight of 50 percent each to cost-effectiveness and land use in calculating a project's overall rating--the other 4 statutorily identified criteria, including economic development, are not weighted. We previously reported that FTA's reliance on two evaluation criteria to calculate a project's overall rating is drifting away from the multiple-measure evaluation and rating process outlined in statute. Further, without a weight for economic development, project sponsors say, the evaluation and rating process does not reflect an important benefit of certain projects. FTA officials said they are currently working to develop an appropriate economic development measure as part of their upcoming rulemaking. The New Starts pipeline--that is, projects in different stages of planning--has changed in size and composition since the fiscal year 2001 evaluation and rating cycle, and a variety of factors have contributed to these changes. Since then, the number of projects in the New Starts pipeline has decreased by more than half. Additionally, the types of projects in the pipeline have changed during this time frame, as bus rapid transit projects are now more common than commuter or light rail projects. FTA officials attributed the decrease in the pipeline to their increased scrutiny of applications to help ensure that only the strongest projects enter the pipeline, and to their efforts to remove projects from the pipeline that were not advancing or did not adequately address identified problems. Project sponsors GAO interviewed provided other reasons for the pipeline's decrease, including that the New Starts process is too complex, time-consuming, and costly. Our survey results reflect many of these same reasons for the decline in the pipeline. Despite these concerns, GAO's survey of project sponsors indicates future demand for New Starts, Small Starts, and Very Small Starts funding. The sponsors GAO surveyed reported having 137 planned projects and intend to seek New Starts, Small Starts, or Very Small Starts funding for almost three-fourths of these projects. Project sponsors GAO surveyed also reported considering a range of project type alternatives in their planning. The most commonly cited alternatives were bus rapid transit and light rail.

section_title: Letter
paragraphs: We appreciate the opportunity to provide testimony on the Federal Transit  Administration’s (FTA) New Starts and Small Starts programs. As you  know, since the early 1970s, a significant portion of the federal  government’s share of new capital investment in mass transportation has  come through the New Starts program. Through the New Starts program,  FTA identifies and recommends new fixed-guideway transit projects for  funding—including heavy, light, and commuter rail; ferry; and certain bus  projects. Over the last decade, the New Starts program has provided state  and local agencies with over $10 billion to help design and construct  transit projects throughout the country.
More recently, the Safe, Accountable, Flexible, Efficient Transportation  Equity Act: A Legacy for Users (SAFETEA-LU) created, and FTA  implemented, what is commonly called the Small Starts program. This  program is intended to advance smaller-scale projects through an  expedited and streamlined evaluation and rating process. Small Starts  projects are defined as those with a total cost of less than $250 million,  and which require less than $75 million in funding from this program. FTA  subsequently introduced a new eligibility category within the Small Starts  program called Very Small Starts, which is for projects that have a total  capital cost of less than $50 million. Very Small Starts projects will qualify  for an even simpler and more expedited evaluation and rating process than  Small Starts projects. In July 2006, FTA issued interim guidance on the  Small Starts and Very Small Starts programs to govern the administration  of the programs until the final rule is issued. FTA expects the final rule to  be issued April 2008.
Although SAFETEA-LU made a number of changes to the New Starts  program, including the creation of the Small Starts program, it also  maintained many program requirements imposed by previous authorizing  legislation. For example, SAFETEA-LU, like the Transportation Equity Act  for the 21st Century, directs FTA to prioritize projects for funding by  evaluating, rating, and recommending potential projects on the basis of  specific financial commitment and project justification criteria—including  mobility improvements, cost-effectiveness, economic development, land  use, environmental benefits, and operating efficiencies. Using these  statutorily identified criteria, FTA evaluates potential projects annually  and as a condition for advancement into each phase of the process,  including preliminary engineering, final design, and construction. FTA  refers to projects in the preliminary engineering or final design phases as  the “pipeline” through which successful projects advance to receive  funding.
My testimony today examines (1) FTA’s implementation of SAFETEA-LU  changes to the New Starts program, (2) the extent and nature of changes  in the New Starts pipeline since the fiscal year 2001 evaluation and rating  cycle, and factors that have contributed to trends in the program; and (3)  projected trends for the New Starts and Small Starts pipelines. My  comments are based on our ongoing work for the House Committee on  Transportation and Infrastructure and the Senate Committee on Banking,  Housing, and Urban Affairs as well as our body of work on the New Starts  program. We plan to complete our ongoing work and report in full to the  Committees this summer. For our ongoing work, we surveyed all project  sponsors that are located in urbanized areas with populations over 200,000  and that have an annual ridership of over 1 million. In total, we surveyed  215 project sponsors, asking them about their past experiences with the  New Starts program and plans to apply to the program in the future. Of the  215 project sponsors, 166 project sponsors responded to the survey—for a  survey response rate of 77 percent. We also interviewed 15 project  sponsors, including all 10 sponsors who applied for the Small Starts and  Very Small Starts programs for the fiscal year 2008 evaluation cycle. The  other 5 project sponsors were selected on the basis of their agencies’  experience with the New Starts process, size, and location. In addition, we  interviewed FTA officials and representatives from industry associations.  We also reviewed FTA’s guidance on the New Starts and Small Starts  programs, the Advanced Notice of Proposed Rule Making (ANPRM) for  Small Starts, and the provisions of SAFETEA-LU and of its predecessor,  the Transportation Equity Act for the 21st Century (TEA-21), that address  the New Starts program. We conducted our work from November 2006  through April 2007 in accordance with generally accepted government  auditing standards.
FTA has made progress in implementing SAFETEA-LU changes, including  issuing guidance for the New Starts program and interim guidance for the  Small Starts program. However, work remains in implementing these  changes. Project sponsors frequently identified two key implementation  issues: further streamlining the Small Starts program and fully  incorporating economic development into the New Starts and Small Starts  evaluation and rating process. According to our analysis of the number  and types of requirements for the New Starts and Small Starts application  processes, the Small Starts process has fewer requirements. However,  project sponsors said that despite the fewer requirements, FTA should  further streamline the Small Starts application process. For example,  project sponsors suggested eliminating requests for duplicate information  requested in required worksheets. In addition, project sponsors noted that  FTA has not fully incorporated economic development—a new project  justification evaluation criterion identified by SAFETEA-LU—into the New  Starts and Small Starts evaluation and rating processes. Specifically, FTA  currently assigns a weight of 50 percent each to cost-effectiveness and  land use in calculating a project’s overall rating, but does not assign a  weight to the other four statutorily identified criteria, including economic  development. FTA officials noted that they do not weight economic  development given the difficulties they have experienced in developing  measures that both accurately quantifies the benefits and distinguishes  competing projects. However, we previously reported that FTA’s reliance  on two evaluation criteria to calculate a project’s overall rating is drifting  away from the multiple-measure evaluation and rating process outlined in  statute. In addition, without a weight for economic development, project  sponsors say, the evaluation and rating process does not reflect an  important benefit of certain projects. FTA officials told us that they  understand the importance of economic development to the transit  community and the concerns raised by project sponsors, and said they are  currently working to develop an appropriate economic development  measure. FTA stated that these issues would be addressed as part of its  upcoming rulemaking process.
The New Starts pipeline has changed in size and composition since the  fiscal year 2001 evaluation and rating cycle, and a variety of factors have  contributed to these changes. Since the fiscal year 2001 evaluation and  rating cycle, the number of projects in the New Starts pipeline has  decreased by more than half. In addition, the types of projects in the  pipeline have changed, as bus rapid transit projects are now more  common than commuter or light rail projects, although they still represent  a small amount of the total cost for all projects in the pipeline. FTA  officials and project sponsors offered different reasons for the decrease in  the New Starts pipeline. FTA officials said that they had increased their  scrutiny of applications to help ensure that only the strongest projects  enter the pipeline. According to these officials, they took steps to remove  projects from the pipeline that were not advancing or that did not  adequately address identified problems—although the officials noted that  most project sponsors voluntarily withdrew projects from the pipeline  rather than having FTA remove them. Project sponsors we interviewed  provided other reasons for the decrease in the New Starts pipeline. In  particular, they maintained that the New Starts process is too complex,  time-consuming, and costly. Our survey results confirm some of the  reasons offered by project sponsors. Among the project sponsors we  surveyed with completed transit projects, the most common reasons given  for not applying to the New Starts program was that the process is too  lengthy or that the sponsor wanted to move the project along faster than  could be done in the New Starts process. About two-thirds of these project  sponsors reported that their most recent project was eligible for the New  Starts program, yet more than one-fourth of them did not apply to the  program. The lengthy nature of the New Starts process is due, at least in  part, to the rigorous and systematic evaluation and rating process  established by law—which we have previously noted could serve as a  model for other transportation programs. FTA has recognized that the  process can be lengthy and in 2006, FTA commissioned a study to  examine, among other issues, opportunities for accelerating and  simplifying the process for implementing the New Starts program. FTA is  currently reviewing the study’s findings and recommendations.
Despite these concerns, our survey of project sponsors indicates that there  will be a future demand for New Starts, Small Starts, and Very Small Starts  funding. The project sponsors we surveyed reported having 137 planned  projects—that is, projects currently undergoing an alternative analysis or  other corridor-based planning study. According to the project sponsors,  they plan to seek New Starts, Small Starts, or Very Small Starts funding for  almost three-fourths (73 percent) of these 137 projects. Project sponsors  we surveyed also indicated that they were considering a range of project  type alternatives in their planning. The most commonly cited alternatives  were bus rapid transit and light rail. Our survey results also indicate that,  through its Small Starts and Very Small Starts programs, FTA is attracting  project sponsors that would not otherwise apply for the New Starts  program or have not previously applied to the New Starts program. For  example, of 28 project sponsors that intend to seek Small Starts or Very  Small Starts funding for their planned projects, 13 have not previously  applied for New Starts, Small Starts, or Very Small Starts funding.
subsections: section_title: Background
paragraphs: SAFETEA-LU authorized over $45 billion for federal transit programs,  including $8 billion for the New Starts program, from fiscal year 2005  through fiscal year 2009. Under New Starts, FTA identifies and  recommends fixed-guideway transit projects for funding—including heavy,  light, and commuter rail; ferry; and certain bus projects (such as bus rapid  transit). FTA generally funds New Starts projects through full funding  grant agreements (FFGA), which establish the terms and conditions for  federal participation in a New Starts project. FFGAs also define a project’s  scope, including the length of the system and the number of stations; its  schedule, including the date when the system is expected to open for  service; and its cost.
For a project to obtain an FFGA, it must progress through a local or  regional review of alternatives and meet a number of federal requirements,  including requirements for information used in the New Starts evaluation  and rating process (see fig. 1). New Starts projects must emerge from a  regional, multimodal transportation planning process. The first two phases  of the New Starts process—systems planning and alternatives analysis— address this requirement. The systems planning phase identifies the  transportation needs of a region, while the alternatives analysis phase  provides information on the benefits, costs, and impacts of different  options, such as rail lines or bus routes. The alternatives analysis phase  results in the selection of a locally preferred alternative, which is intended  to be the New Starts project that FTA evaluates for funding, as required by  statute. After a locally preferred alternative is selected, the project sponsor  submits an application to FTA for the project to enter the preliminary  engineering phase. When this phase is completed and federal  environmental requirements are satisfied, FTA may approve the project’s  advancement into final design, after which FTA may approve the project  for an FFGA and proceed to construction, as provided for in statute. FTA  oversees grantees’ management of projects from the preliminary  engineering through construction phases and evaluates the projects for  advancement into each phase of the process, as well as annually for the  New Starts report to Congress.
To help inform administration and congressional decisions about which  projects should receive federal funds, FTA assigns ratings on the basis of  various statutorily defined evaluation criteria—including both financial  commitment and project justification criteria—and then assigns an overall  rating. These evaluation criteria reflect a broad range of benefits and  effects of the proposed project, such as cost-effectiveness, as well as the  ability of the project sponsor to fund the project and finance the continued  operation of its transit system. FTA assigns the proposed project a rating  for each criterion and then assigns a summary rating for local financial  commitment and project justification. Finally, FTA develops an overall  project rating. Projects are rated at several points during the New Starts  process—as part of the evaluation for entry into the preliminary  engineering and final design phases, and yearly for inclusion in the New  Starts annual report.
As required by statute, the administration uses the FTA evaluation and  rating process, along with the phase of development of New Starts  projects, to decide which projects to recommend to Congress for  funding. Although many projects receive a summary rating that would  make them eligible for FFGAs, only a few are proposed for FFGAs in a  given fiscal year. FTA proposes projects for FFGAs when it believes that  the projects will be able to meet the following conditions during the fiscal  year for which funding is proposed:    All non-federal project funding must be committed and available for the  project.
The project must be in the final design phase and have progressed to the  point where uncertainties about costs, benefits, and impacts (i.e.,  environmental or financial) are minimized.
The project must meet FTA’s tests for readiness and technical capacity,  which confirm that there are no remaining cost, project scope, or local  financial commitment issues.
section_title: FTA Has Made Progress in Implementing SAFETEA-LU Changes, but Work Remains
paragraphs: SAFETEA-LU made a number of changes to the New Starts program and  FTA has made progress in implementing some of those changes. However,  FTA has more work to do to implement these changes. In particular,  although the Small Starts program has fewer application and document  submission requirements than the New Starts program, project sponsors  have expressed concern that the Small Starts program could be further  streamlined. In addition, SAFETEA-LU added economic development to  the list of evaluation criteria, but FTA has not fully incorporated this  criterion into the New Starts and Small Starts evaluation and rating  processes.
subsections: section_title: FTA Has Taken Steps to Implement SAFETEA-LU’s Changes to the New Starts Program
paragraphs: SAFETEA-LU introduced a number of changes to the New Starts program.  For example, SAFETEA-LU added economic development to the list of  evaluation criteria that FTA must use in evaluating and rating New Starts  projects and required FTA to issue notice and guidance each time  significant changes are made to the program. In addition, SAFETEA-LU  established the Small Starts program, a new capital investment grant  program to provide funding for lower-cost fixed- and non-fixed-guideway  projects such as bus rapid transit, streetcars, and commuter rail projects.  This program is intended to advance smaller-scale projects through an  expedited and streamlined evaluation and rating process. Small Starts  projects are defined as those that require less than $75 million in federal  funding and have a total cost of less than $250 million. According to FTA’s  guidance, Small Starts projects must (a) meet the definition of a fixed  guideway for at least 50 percent of the project length in the peak period  or (b) be a corridor-based bus project with the following minimum  elements:  traffic signal priority/pre-emption, to the extent, if any, that there are  traffic signals on the corridor, low-floor vehicles or level boarding,   branding of the proposed service, and    10 minute peak/12 minute off-peak running times (i.e., headways) or better  while operating at least 14 hours per weekday.
FTA has made progress in implementing SAFETEA-LU changes. For  example, it published the New Starts policy guidance in January 2006 and  February 2007, and interim guidance on the Small Starts program in July  2006. The July 2006 interim guidance introduced a separate eligibility  category within the Small Starts program for “Very Small Starts” projects.  Small Starts projects that qualify as Very Small Starts are simple, low-cost  projects that FTA has determined qualify for a simplified evaluation and  rating process. These projects must meet the same eligibility requirements  as Small Starts projects and be located in corridors with more than 3,000  existing riders per average weekday who will benefit from the proposed  project. In addition, the projects must have a total capital cost less than  $50 million (for all project elements) and a per-mile cost of less than $3  million, excluding rolling stock (e.g., train cars). Table 1 describes  SAFETEA-LU provisions for the New Starts program and the status of the  implementation of those provisions as of April 2007.
section_title: Work Remains in Implementing SAFETEA- LU Changes
paragraphs: Although FTA has made progress in implementing SAFETEA-LU changes,  more work remains. Project sponsors identified two key issues for FTA to  consider as it moves forward in implementing SAFETEA-LU changes:  further streamline the Small Starts program and fully incorporate  economic development into the New Starts and Small Starts evaluation  and rating processes.  FTA officials agree that the Small Starts program  can be further streamlined.  Further, FTA officials said they understand  the importance of economic development, and are currently working to  develop an appropriate economic development measure.
subsections: section_title: Project Sponsors Would Like FTA to Further Streamline the Small Starts Program
paragraphs: In implementing the Small Starts program, FTA has taken steps to  streamline the application and evaluation and rating process for smaller- scale transit projects, as envisioned by SAFETEA-LU. According to our  analysis of the number and types of requirements for the New Starts and  Small Starts application processes, the Small Starts process has fewer  requirements. For example, in the categories of travel forecasting, project  justification, and local financial commitment, the requirements were  reduced. In addition, FTA developed simplified methods for travel  forecasts that predict transportation benefits and reduced the number of  documents that need to be submitted as part of the Small Starts  application process. For example, the number of documents required for  the Small Starts application is one-quarter fewer than those for the New  Starts program. Furthermore, FTA established the Very Small Starts  program, which has even fewer application and document submission  requirements than the Small Starts program.
Despite these efforts, many of the project sponsors we interviewed find  the Small Starts application process time consuming and costly to  complete, and would like to see FTA further streamline the process.  Frequently, project sponsors said that the current Small Starts application  process takes as long and costs as much to complete as the New Starts  application process, even though the planned projects cost less. For  example, a project sponsor who applied for the Small Starts program told  us that FTA asks its applicants to submit templates used in the New Starts  application process that call for information not relevant for a Small Starts  project. For example, while project sponsors are only required to submit  an opening year travel forecast as part of their Small Starts application, the  template FTA provides project sponsors asks for information on additional  forecasting years. The project sponsor suggested that FTA develop a  separate set of templates for the Small Starts program that would ask only  for Small Starts-related information. FTA officials told us that in these  cases, they would not expect project sponsors to provide the additional  information that is not required. Another project sponsor we interviewed  told us that although FTA tried to streamline the process by requiring  ridership projections only for the opening year of Small Starts projects, the  environmental impact statement still mandates the development of multi- year ridership projections. Such extensive ridership projections take a  considerable amount of work, staff time, and funding to produce. Several  other project sponsors who applied to the Small Starts or Very Small  Starts programs expressed additional concerns about having to provide  duplicate information, such as project finance and capital cost data that  can be found in other required worksheets. FTA officials do not believe  that such duplicate information is burdensome for projects sponsors to  submit. However, because some of the project sponsors are smaller-sized  entities and have no previous experience with the New Starts program, the  concerns expressed by project sponsors likely reflect their inexperience  and lack of in-house expertise and resources.
In reviewing the Small Starts application process requirements, we also  found that the application is not, in some cases, tailored for Small Starts  applicants and, in several instances, requests duplicate information. FTA  officials acknowledged that the Small Starts application process could be  further streamlined and are working to reduce the burden, such as  minimizing the duplicate information project sponsors are currently  required to submit. However, FTA officials noted that some requirements  are statutorily-defined or reflect industry-established planning principles.  For example, SAFETEA-LU requires that projects, even Small Starts  projects, emerge from an alternatives analysis that considered various  options to address the transportation problem at hand. Therefore, only  certain aspects of the process can or should be streamlined.
section_title: Project Sponsors Would Like FTA to Fully Incorporate the Economic Development Criterion into the Evaluation Process
paragraphs: Project sponsors also noted that FTA has not fully incorporated economic  development—a new project justification evaluation criterion identified by  SAFETEA-LU—into the evaluation process. Specifically, FTA currently  assigns a weight of 50 percent each to cost-effectiveness and land use to  calculate a project’s overall rating; the other four statutorily-identified  criteria, including economic development, mobility improvements,  operating efficiencies, and environmental benefits, are not weighted. To  reflect SAFETEA-LU’s increased emphasis on economic development,  FTA has encouraged project sponsors to submit information that they  believe demonstrates the impacts of their proposed transit investments on  economic development. According to FTA, this information is considered  as an “other factor” in the evaluation process, but not weighted. However,  FTA officials told us that few project sponsors submit information on their  projects’ economic development benefits for consideration as an “other  factor.” We previously reported that FTA’s reliance on two evaluation  criteria to calculate a project’s overall rating is drifting away from the  multiple-measure evaluation and rating process outlined in statute and  current New Starts regulations. Thus, we recommended that FTA  improve the measures used to evaluate New Starts projects so that all of  the statutorily-defined criteria can be used in determining a project’s  overall rating, or provide a crosswalk in the regulations showing clear  linkages between the criteria outlined in statute and the criteria and  measures used in the evaluation and rating process in the upcoming  rulemaking process.
Many of the project sponsors and all industry groups we interviewed also  stated that certain types of projects are penalized in the evaluation and  rating process because of the weights assigned to the different evaluation  criteria. Specifically, by not weighting economic development, the project  sponsors and industry groups said that the evaluation and rating process  does not consider an important benefit of some transit projects. They also  expressed concern that the measure FTA uses to determine cost- effectiveness does not adequately capture the benefits of certain types of  fixed guideway projects—such as streetcars—that have shorter systems  and provide enhanced access to a dense urban core rather than transport  commuters from longer distances (like light or heavy rail). Project  sponsors and an industry group we interviewed further noted that FTA’s  cost effectiveness measure has influenced some project sponsors to  change their project designs from more traditional fixed-guideway systems  like light rail or streetcars to bus rapid transit, expressly to receive a more  favorable cost-effectiveness rating from FTA.
According to FTA officials, they understand the importance of economic  development to the transit community and the concerns raised by project  sponsors, and said they are currently working to develop an appropriate  economic development measure. FTA is currently soliciting input from  industry groups on how to measure economic development, studying  possible options, and is planning to describe how it will incorporate  economic development into the evaluation criteria in its upcoming  rulemaking. FTA officials also stated that incorporating economic  development into the evaluation process prior to the issuance of a  regulation would have the potential of creating significant evaluation and  rating uncertainty for project sponsors. Furthermore, they agreed with our  previous recommendation that this issue should be addressed as part of  their upcoming rulemaking, which they expect to be completed in April  2008.
FTA officials noted that they have had difficulty developing an economic  development measure that both accurately measures benefits and  distinguishes competing projects. For example, FTA officials said that  separating economic development benefits from land use benefits— another New Starts evaluation criterion—is difficult. In addition, FTA  noted that many economic development benefits result from direct  benefits (e.g., travel time savings), and therefore, including them in the  evaluation could lead to double counting the benefits FTA already  measures and uses to evaluate projects. Furthermore, FTA noted that  some economic development impacts may represent transfers between  regions rather than a net benefit for the nation, raising questions about the  usefulness of these benefits for a national comparison of projects. We  have also reported on many of the same challenges of measuring and  forecasting indirect benefits, such as economic development and land use  impacts. For example, we noted that certain benefits are often double  counted when evaluating transportation projects. We also noted that  indirect benefits, such as economic development, may be more correctly  considered transfers of direct user benefits or economic activity from one  area to another. Therefore, estimating and adding such indirect benefits to  direct benefits could constitute double counting and lead to  overestimating a project’s benefits. Despite these challenges, we have  previously reported that it is important to consider economic development  and land use impacts, since they often drive local transportation  investment choices.
section_title: FTA Officials and Project Sponsors Attribute Changes in the Size and Composition of the New Starts Pipeline to Different Factors
paragraphs: The number of projects in the New Starts pipeline has decreased since the  fiscal year 2001 evaluation and rating cycle, and the types of projects in the  pipeline have changed. FTA and project sponsors ascribed these changes  to different factors, with FTA officials citing their increased scrutiny of  applications and projects, and the project sponsors pointing to the  complex, time-consuming, and costly nature of the New Starts process.  FTA is considering different ideas on how to improve the New Starts  process, some of which may address the concerns identified by project  sponsors.
subsections: section_title: The Number of Projects in the New Starts Pipeline Has Decreased, and the Types of Projects Have Changed
paragraphs: Since the fiscal year 2001 evaluation cycle, the number of projects in the  New Starts pipeline—which includes projects that are in the preliminary  engineering or final design phases—has decreased by more than half, from  48 projects in the fiscal year 2001 evaluation cycle to 19 projects in the  fiscal year 2008 evaluation cycle. Similarly, the number of projects FTA  has evaluated, rated, and recommended for New Starts FFGAs has  decreased since the fiscal year 2001 evaluation and rating cycle.  Specifically, as shown in table 2, the number of projects that FTA  evaluated and rated decreased by about two-thirds, from 41 projects to 14  projects.
The composition of the pipeline—that is, the types of projects in the  pipeline—has also changed since the fiscal year 2001 evaluation cycle.  During fiscal years 2001 through 2007, light rail and commuter rail were  the more prevalent modes for projects in the pipeline. In fiscal year 2008,  bus rapid transit became the most common transit mode for projects in  the pipeline. Overall, heavy rail has become a less common mode for  projects in the pipeline since fiscal year 2001 (see fig. 2). The increase in  bus rapid transit projects is likely due to a number of factors, including  SAFETEA-LU’s expanded definition of fixed guideways and foreign  countries’ positive experiences with this type of transit system. In  particular, SAFETEA-LU expanded the definition of fixed guideways for  the Small Starts program to include corridor-based bus projects. To be  eligible, a corridor-based bus project must (1) operate in a separate right- of-way dedicated for public transit use for a substantial portion of the  project, or (2) represent a substantial investment in a defined corridor.
section_title: FTA and Project Sponsors Attributed the Decrease in the New Starts Pipeline to Different Factors
paragraphs: FTA and project sponsors identified different reasons for the decrease in  the New Starts pipeline. FTA officials cited their increased scrutiny of  applications to help ensure that only the strongest projects enter the  pipeline, and said they had taken steps to remove projects from the  pipeline that were inactive, not advancing, or did not adequately address  identified problems. FTA officials told us that they believe projects had  been progressing too slowly through the pipeline in recent years and  therefore needed encouragement to move forward or be removed from the  pipeline. Along these lines, since fiscal year 2004, FTA has issued warnings  to project sponsors that alert them to specific project deficiencies that  must be corrected by a specified date in order for the project to advance  through the pipeline. If the deficiency is not corrected, FTA removes the  project from the pipeline. To date, FTA has issued warnings for 13  projects. Three projects have only recently received a warning and their  status is to be determined; 3 projects have adequately addressed the  deficiency identified by FTA; 1 project was removed by FTA for failing to  address the identified deficiency; and 6 projects were withdrawn from the  pipeline by the projects’ sponsor. FTA officials told us that project  sponsors are generally aware of FTA’s efforts to better manage the  pipeline.
Although FTA has taken steps to remove inactive or stalled projects from  the pipeline, FTA officials noted that most projects have been withdrawn  by their project sponsors, not FTA. According to FTA data, 23 projects  have been withdrawn from the New Starts pipeline between 2001 and  2007. Of these, 16 were withdrawn at the request of the project sponsors, 6  were removed in response to efforts initiated by FTA, and 1 was removed  at congressional direction (see fig. 3). Of the projects that were  withdrawn by project sponsors, the most common reasons were that the  projects were either reconfigured (the project scope or design was  significantly changed) or reconsidered, or that the local financial  commitment was not demonstrated. Similarly, FTA initiated the removal  of 4 of the 6 projects for lack of a local financial commitment, often  demonstrated by a failed referendum at the local level. Of the 23 projects  withdrawn from the New Starts pipeline, 3 were expected to reenter the  pipeline at a later date.
The project sponsors we interviewed provided other reasons for the  decrease in the number of projects in the New Starts pipeline. The most  common reasons cited by project sponsors are that the New Starts process  is too complex, costly, and time-consuming:    Complexity and cost of the New Starts process: The majority of  project sponsors we interviewed told us that the complexity of the  requirements, including those for financial commitment projections and  travel forecasts—which require extensive analysis and economic  modeling—create disincentives to entering the New Starts pipeline.  Sponsors also told us that the expense involved in fulfilling the application  requirements, including the costs of hiring additional staff and private  grant consultants, discourages some project sponsors with fewer  resources from applying for New Starts funding.
Time required to complete the New Starts process: More than half of  the project sponsors we interviewed said that the application process is  too time-consuming or leads to project delays. One project sponsor we  interviewed told us that constructing a project with New Starts funding (as  opposed to without) delays the time line for the project by as much as  several years, which in turn leads to increased project costs as inflation  and expenses from labor and materials increase with the delay. The  lengthy nature of the New Starts process is due, at least in part, to the  rigorous and systematic evaluation and rating process established by  law—which we have previously noted could serve as a model for other  transportation programs. In addition, FTA officials noted that most project  delays are caused by the project sponsor, not FTA. Other reasons cited by  project sponsors for the decrease in the pipeline include that project  sponsors are finding other ways to fund projects, such as using other  federal funds or seeking state, local, or private funding. One project  sponsor remarked that sponsors try to avoid the New Starts process by  obtaining a congressional designation, so that they can skip the  cumbersome New Starts application process and construct their project  faster. In addition, three other project sponsors we interviewed said that  since the New Starts process is well-established and outcomes are  predictable, many potential project sponsors do not even enter the  pipeline because they realize their projects are unlikely to receive New  Starts funding.
Our survey results also reflect many of the reasons for the decline in the  New Starts pipeline. Among the project sponsors we surveyed with  completed transit projects, the most common reasons given for not  applying to the New Starts program were that the process is too lengthy or  that the sponsor wanted to move the project along faster than could be  done in the New Starts process. About two-thirds of these project  sponsors reported that their most recent project was eligible for New  Starts, yet more than one-fourth of them did not apply to the program .  Instead, these project sponsors reported using other federal funding and  state, local, and private funding—with other federal and local funding  being the most commonly used and private funding least commonly  used—to fund their most recently completed project. Further, we also  found that two-thirds of the large project sponsors we surveyed applied to  the New Starts program for its most recently completed project while only  about one-third of medium and smaller project sponsors did. Other  reasons these project sponsors cited for not applying include sufficient  funding from other sources to complete the project, concern about  jeopardizing other projects submitted for New Starts funding, and  difficulty understanding and completing the process and the program’s  eligibility requirements.
FTA is considering and implementing different ideas on how to improve  the New Starts process—many of which would address the concerns  identified by project sponsors. For example, FTA has recognized that the  process can be lengthy and in 2006, FTA commissioned a study to  examine, among other issues, opportunities for accelerating and  simplifying the process for implementing the New Starts program.  According to FTA officials, one of the study’s recommendations was to  implement project development agreements to solidify New Starts project  schedules and improve FTA’s timeline for reviews. FTA officials told us  that they are implementing this recommendation, and have already  implemented project schedules for three New Starts projects in the  pipeline. In addition, in February 2007, FTA proposed the elimination of a  number of reporting requirements. FTA’s Administrator stated that FTA  will continue to look for ways to further improve the program.
section_title: Future Demand for New Starts and Small Starts Programs Expected
paragraphs: Our survey of project sponsors indicates that there will be a future  demand for New Starts, Small Starts, and Very Small Starts funding. About  forty-five percent (75 of 166) of the project sponsors we surveyed reported  that they had a total of 137 planned transit projects, which we defined as  those currently undergoing an alternatives analysis or other corridor- based planning study. According to the project sponsors, they anticipate  seeking New Starts, Small Starts, or Very Small Starts funding for 100 of  these 137 planned projects. More specifically, they anticipate seeking New  Starts funding for 57 of the planned projects; Small Starts funding for 29 of  the planned projects; and Very Small Starts funding for 14 of the planned  projects (see fig 4). Although the project sponsors we surveyed indicated  that they were considering a range of project type alternatives in their  planning, the most commonly cited alternatives were bus rapid transit and  light rail.
All of the Small Starts and Very Small Starts project sponsors we  interviewed view the new Small Starts and Very Small Starts programs  favorably. These project sponsors told us that they appreciate the  emphasis FTA has placed on smaller transit projects through its new  programs and the steps FTA has taken to streamline the application  process for the programs. The project sponsors also told us that the Small  Starts and Very Small Starts programs address a critical and unmet  funding need, and that they believe their projects will be more competitive  under these programs then under the New Starts program because they  are vying for funding with projects and agencies of similar size. FTA told  us that they have been responsive in providing assistance on the program  when contacted.
Our survey results also indicate that, through its Small Starts and Very  Small Starts programs, FTA is attracting project sponsors that would not  have otherwise applied for the New Starts program or have not previously  applied to the New Starts program. For example, project sponsors  indicated that they would not have applied for New Starts funding for 14 of  the 18 Small Starts and Very Small Starts projects identified in our survey,  if the Small Starts and Very Small Starts programs had not been  established. In addition, of 28 project sponsors that intend to seek Small  Starts or Very Small Starts funding for their planned projects, 13 have not  previously applied for New Starts, Small Starts, or Very Small Starts  funding.
Mr. Chairman, this concludes my statement. I would be pleased to answer  any questions that you or other Members of the Subcommittee may have at  this time.
section_title: Contact Information
paragraphs: For further information on this testimony, please contact Katherine  Siggerud at (202) 512-2834 or siggerudk@gao.gov. Individuals making key  contributions to this testimony include Nikki Clowers, Assistant Director;  Elizabeth Eisenstadt; Carol Henn; Bert Japikse; Amanda Miller; SaraAnn  Moessbauer; Nitin Rao; Tina Won Sherman; Bethany Claus Widick; and  Elizabeth Wood.
section_title: Related GAO Products
paragraphs: Public Transportation: New Starts Program Is in a Period of Transition.  GAO-06-819. Washington, D.C.: August 30, 2006.
Public Transportation: Preliminary Information on FTA’s  Implementation of SAFETEA-LU Changes. GAO-06-910T. Washington,  D.C.: June 27, 2006.
Public Transportation: Opportunities Exist to Improve the  Communication and Transparency of Changes Made to the New Starts  Program. GAO-05-674. Washington, D.C.: June 28, 2005.
Mass Transit: FTA Needs to Better Define and Assess Impact of Certain  Policies on New Starts Program. GAO-04-748. Washington, D.C.: June 25,  2004.
Mass Transit: FTA Needs to Provide Clear Information and Additional  Guidance on the New Starts Ratings Process. GAO-03-701. Washington,  D.C.: June 23, 2003.
Mass Transit: Status of New Starts Program and Potential for Bus Rapid  Transit Projects. GAO-02-840T. Washington, D.C.: June 20, 2002.
Mass Transit: FTA’s New Starts Commitments for Fiscal Year 2003.  GAO-02-603. Washington, D.C.: April 30, 2002.
Mass Transit: FTA Could Relieve New Starts Program Funding  Constraints. GAO-01-987. Washington, D.C.: August 15, 2001.
Mass Transit: Implementation of FTA’s New Starts Evaluation Process  and FY 2001 Funding Proposals. GAO/RCED-00-149. Washington, D.C.:  April 28, 2000.
Mass Transit: Status of New Starts Transit Projects With Full Funding  Grant Agreements. GAO/RCED-99-240. Washington, D.C.: August 19, 1999.
Mass Transit: FTA’s Progress in Developing and Implementing a New  Starts Evaluation Process. GAO/RCED-99-113. Washington, D.C.: April 26,  1999.
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