Public Transportation: New Starts Program Is in a Period of Transition
Released: 2006-08-30T00:00:00

Letter

Background

SAFETEA-LU authorized a total of $45.3 billion for a variety of transit programs, including financial assistance to states and localities to develop, operate, and maintain transit systems from fiscal year 2005 through fiscal year 2009. Under one program, New Starts, FTA identifies and selects fixed guideway transit projects for funding—including heavy, light, and commuter rail; ferry; and certain bus projects (such as bus rapid transit). The New Starts program serves as an important source of federal funding for the design and construction of transit projects throughout the country. FTA generally funds New Starts projects through FFGAs, which establish the terms and conditions for federal participation in a New Starts project and also define a project’s scope, including the length of the system and the number of stations; its schedule, including the date when the system is expected to open for service; and its cost.

For a project to obtain an FFGA, it must progress through a local or regional review of alternatives and meet a number of federal requirements, including requirements for information used in the New Starts evaluation and rating process (see fig. 1). As required by SAFETEA-LU, New Starts projects must emerge from a regional, multimodal transportation planning process. The first two phases of the New Starts process—systems planning and alternatives analysis—address this requirement. The systems planning phase identifies the transportation needs of a region, while the alternatives analysis phase provides information on the benefits, costs, and impacts of different corridor-level options, such as rail lines or bus routes. The alternatives analysis phase results in the selection of a locally preferred alternative—which is intended to be the New Starts project that FTA evaluates for funding, as required by statute. After a locally preferred alternative is selected, project sponsors submit a request to FTA for entry into the preliminary engineering phase. Following completion of preliminary engineering and federal environmental requirements, the project may be approved by FTA to advance into final design, after which the project may be approved by FTA for an FFGA and proceed to construction, as provided for in statute. FTA oversees grantee management of projects from the preliminary engineering phase through construction and evaluates the projects for advancement into each phase of the process, as well as annually for the New Starts report to Congress.

To help inform administration and congressional decisions about which projects should receive federal funds, FTA assigns ratings on the basis of various financial and project justification criteria, and then assigns an overall rating. For the fiscal year 2007 evaluation cycle, FTA primarily used the financial and project justification criteria identified in TEA-21. These criteria reflect a broad range of benefits and effects of the proposed project, such as cost-effectiveness, as well as the ability of the project sponsor to fund the project and finance the continued operation of its transit system (see fig. 2). Projects are rated at several points during the New Starts process—as part of the evaluation for entry into preliminary engineering and final design, and yearly for inclusion in the New Starts annual report.

FTA assigns the proposed project a rating for each criterion and then assigns a summary rating for local financial commitment and project justification. Finally, FTA develops an overall project rating. The exceptions to this process are statutorily “exempt” projects, which are those with requests for less than $25 million in New Starts funding. These projects do not have requirements for submitting project justification information—although FTA encourages their sponsors to do so—do not receive ratings from FTA and are not eligible for FFGAs; thus, the number of projects in preliminary engineering or final design may be greater than the number of projects evaluated and rated by FTA.

As required by statute, the administration uses the FTA evaluation and rating process, along with the stage of development of New Starts projects, to decide which projects to recommend to Congress for funding. Although many projects receive a summary rating that would make them eligible for FFGAs, only a few are proposed for FFGAs in a given fiscal year. FTA proposes projects for FFGAs when it believes that the projects will be able to meet certain conditions during the fiscal year for which funding is proposed. These conditions include the following: All non-New Starts funding must be committed and available for the project.

The project must be in the final design phase and have progressed to the point where uncertainties about costs, benefits, and impacts (e.g., environmental or financial) are minimized.

The project must meet FTA’s tests for readiness and technical capacity, which confirm that there are no cost, project scope, or local financial commitment issues remaining.

FTA Proposed Five New Projects for FFGAs and Requested $1.47 Billion for the New Starts Program in Fiscal Year 2007

FTA’s Annual Report on New Starts: Proposed Allocations of Funds for Fiscal Year 2007 (annual report) identified 24 projects in preliminary engineering and final design (see fig. 3). FTA evaluated and rated 20 of these projects, and 4 projects were statutorily exempt from being rated because their sponsors requested less than $25 million in New Starts funding. FTA evaluated and rated fewer projects during the fiscal year 2007 cycle than in fiscal year 2006. According to FTA, this decrease occurred because 12 proposed projects are no longer in preliminary engineering or final design. FTA stated in its annual report that the sponsors of these projects have either (1) fully implemented the project; (2) received the total New Starts funding requested to implement the project; (3) terminated or suspended project development activities; (4) withdrawn from the New Starts process while they address outstanding issues; or (5) decided not to pursue New Starts funding.

Of the 20 projects that were rated in the fiscal year 2007 evaluation cycle, 1 was rated as “high,” 17 were rated as “medium,” and 2 were rated as “low.” Under TEA-21, during fiscal years 2000 through 2006, FTA designated projects as highly recommended, recommended, or not recommended, based on the results of FTA’s evaluation of each of the criteria for project justification and local financial commitment. SAFETEA-LU replaced this rating scale with a 5-point scale of high, medium-high, medium, medium- low, and low. To help transition to the new rating scale, FTA used a 3-point scale of high, medium, and low for the fiscal year 2007 evaluation cycle, but used the same decision rules to determine overall project ratings as it did in previous years (see table 1). According to FTA officials, FTA intends to work closely with the industry to implement the SAFETEA-LU provisions so that they can be applied in subsequent annual project evaluation cycles. In addition, FTA’s current schedule anticipates that the final rule will be completed in time to use the 5-point scale for the fiscal year 2010 evaluation cycle.

FTA’s evaluation process informed the administration’s recommendation to fund 12 projects. FTA recommended five projects for new FFGAs. The total capital cost of these five projects is estimated to be $3.3 billion, of which the total federal New Starts share is expected to be $1.9 billion. In addition, FTA recommended funding for two projects with pending FFGAs. The total capital cost of these two projects is estimated to be $8.2 billion, of which the total federal New Starts share is expected to be $2.8 billion. FTA also recommended reserving $101.9 million in New Starts funding for five “other projects.” In its annual report, FTA stated that four of the five other projects (1) were in or nearing final design, (2) received overall medium or higher ratings, and (3) had medium or better cost- effectiveness ratings, or (4) were exempt from the requirement to achieve a medium cost-effectiveness rating. According to FTA, no other project in preliminary engineering or final design met these criteria. The fifth project—Washington, D.C., Largo Metrorail Extension—did not meet these criteria but was congressionally designated for funding in SAFETEA- LU. Similar to last year, FTA did not specify funding levels for the five other projects because it wanted to ensure that the projects were moving forward as anticipated before making specific funding recommendations to Congress. FTA also notes in its annual report that some projects may encounter unexpected obstacles that slow their progress. For example, FTA stated that some of the projects must still complete the environmental planning process and address FTA-identified concerns related to capital costs or project scope. Reserving funds for these projects without specifying a particular amount for any given project will allow the administration to make “real time” funding recommendations when Congress is making appropriations decisions. FTA does not expect that all five other projects will be recommended for funding in fiscal year 2007. (See table 2 for more information about the 12 projects recommended for funding.)

The administration’s fiscal year 2007 budget proposal requests that $1.47 billion be made available for the New Starts program. This total includes funding for 16 projects already under an FFGA. Figure 4 illustrates the planned uses of the administration’s proposed fiscal year 2007 budget for New Starts, including the following: $571.9 million would be shared among the 16 projects with existing $355 million would be shared between the 2 projects with pending FFGAs, $302.6 million would be shared by the 5 projects proposed for new FFGAs, $101.9 million would be shared by as many as 5 “other” projects to continue their development, and $100 million would be used for new Small Starts projects.

FTA Proposed Nine Procedural Changes to the New Starts Program and Adopted Four after Considering Comments from the Transit Community

In January 2006, FTA proposed nine procedural changes for the New Starts program beginning with the fiscal year 2008 evaluation cycle. These changes include linking the New Starts and NEPA planning requirements and processes and capping New Starts funding when projects enter the final design phase. FTA’s guidance states that these procedural changes are generally intended to improve the management of the New Starts process and to ensure the accuracy and consistency of the information submitted to the agency as part of the New Starts evaluation and rating process. According to FTA, these procedural changes do not alter the New Starts evaluation and rating framework, and they are not subject to the formal rule-making process. Table 3 summarizes the proposed procedural changes and FTA’s rationale for proposing these changes.

As we have previously recommended and SAFETEA-LU now requires, FTA published its proposed procedural changes in policy guidance and sought public comments on them. FTA obtained comments on its proposals by asking sponsors to submit comments to the docket for up to 60 days. In addition, FTA held three New Starts/Small Starts Seminar and Listening Sessions (“listening sessions”) across the country. The listening sessions were intended to solicit comments from attendees on the implementation of New Starts and Small Starts provisions of SAFETEA- LU, as well as to share information about planning and project development activities for projects seeking New Starts funding. FTA received 41 written comments in response to these changes, including submissions from 33 transit agencies and government entities and 8 consultants, associations, and organizations. Most of the project sponsors and industry representatives we interviewed told us that they appreciated FTA’s efforts to obtain their input and to encourage an open discussion about the proposed changes. Similarly, FTA officials said that they were pleased with the volume of written comments they received from the docket and the strong attendance at the three listening sessions conducted in February and March 2006.

Although the project sponsors and industry representatives were supportive of some proposals that they thought would improve the New Starts program, they also expressed a number of concerns about all of the changes. (See table 4 for a summary of these concerns.) For example, the commenters were generally supportive of FTA’s proposal to require sponsors to keep and update the information produced during alternatives analysis prior to each phase of project development until the FFGA is awarded, since this information is necessary for the before-and-after study. In contrast, most project sponsors and transit industry groups opposed FTA’s proposed certification of technical methods, planning assumptions, and project development procedures, citing concerns that such a certification would raise questions about professional liability and lead to potential federal prosecution, and noting that a single individual is typically not responsible for producing all the underlying assumptions used to develop cost estimates and ridership forecasts. On the basis of the comments received, FTA adopted four proposals, including the mandatory completion of NEPA scoping before entry into preliminary engineering (PE), the presentation of the New Starts information in the NEPA documents, the preservation of information for the before and after study, and the capping of New Starts funds upon approval into final design. For two of the four adopted proposals, FTA slightly revised its original proposals on the basis of the comments received. FTA did not adopt five proposals; however, FTA noted that it may revisit these proposed changes in the future.

More recently, FTA hired a consulting firm to conduct an assessment of the New Starts project development process. According to FTA’s Deputy Administrator, the impetus for the review is to streamline the project development process while still ensuring that projects recommended for funding are delivered in a timely manner and stay within budget. We have previously reported that project sponsors have raised concerns about the number of changes FTA has made to the New Starts process, such as requiring project sponsors to prepare risk assessments, and the time and cost associated with implementing these changes. According to FTA, the results of the review may help inform the development of the Notice of Proposed Rulemaking (NPRM) for the New Starts program.

SAFETEA-LU’s Changes to the New Starts Program Include Identifying New Evaluation Criteria to Establishing the Small Starts Program

SAFETEA-LU made a number of changes to the New Starts program, including establishing a new eligibility category, the Small Starts program, and identifying new evaluation criteria. The Small Starts program is intended to expedite and streamline the application and review process for small projects, but the transit community has questioned whether FTA would implement the program in a way that would do so. FTA has also proposed and sought public input on the new evaluation criteria and other possible changes to the New Starts program that would affect traditional New Starts projects. In addition, FTA identified possible implementation challenges, including how to distinguish between land use and economic development criteria in the evaluation framework.

FTA Has Started to Implement SAFETEA-LU Changes and Will Continue to Do So through the Rule- making Process

SAFETEA-LU introduced eight changes to the New Starts program, codified an existing practice, and clarified federal funding requirements. The changes include the creation of the Small Starts program and the introduction of new evaluation criteria, such as economic development. In addition, SAFETEA-LU codified FTA’s requirement that project sponsors conduct before and after studies for all completed projects. SAFETEA-LU also clarified the federal share requirements for New Starts projects. Specifically, SAFETEA-LU continues to require that the federal share for a New Starts project may be up to 80 percent of the project’s net capital project cost, unless the project sponsor requests a lower amount, and prohibits the Secretary of Transportation from requiring a nonfederal share of more than 20 percent of the project’s total net capital cost. This language changes FTA’s policy of rating a project as low if it seeks a federal New Starts share of more than 60 percent of the total cost. FTA had instituted this policy beginning with the fiscal year 2004 evaluation cycle in response to language contained in appropriation committee reports. Table 5 describes SAFETEA-LU provisions for the New Starts program and compares them with TEA-21’s requirements.

FTA has taken some initial steps in implementing SAFETEA-LU changes. For example, in January 2006, FTA published the proposed New Starts policy guidance and, as will be discussed later in this report, the ANPRM for the Small Starts program. In addition, in the final policy guidance published in May 2006, FTA took steps to support its use of incentives for accurate cost and ridership forecasts and assessing contractors’ performance by requiring that projects requesting entry into PE submit information on the variables and assumptions used to prepare forecasts and the parties responsible for developing the different elements of the forecasts. FTA will continue to implement the changes outlined in SAFETEA-LU through the rule-making process over the next 1½ years. Specifically, in response to SAFETEA-LU changes, FTA is developing the NPRM for the New Starts and Small Starts programs. FTA plans to issue the NPRM in January 2007, with the goal of implementing the final rule in January 2008. Figure 5 shows a time line of FTA’s actual and planned implementation of SAFETEA-LU changes.

Small Starts Program Is Intended to Offer a Streamlined Process, but Transit Community Members Question Whether It Will Do So

The creation of the Small Starts program was a significant change made by SAFETEA-LU. The Small Starts program is a discretionary grant program for public transportation capital projects that (1) have a total cost of less than $250 million and (2) are seeking less than $75 million in federal Small Starts program funding. The Small Starts program is a component of the existing New Starts program that, according to the conference reports accompanying SAFETEA-LU, is intended to provide project sponsors with an expedited and streamlined evaluation and ratings process. Table 6 compares New Starts and Small Starts program statutory requirements.

In January 2006, FTA published an ANPRM to give interested parties an opportunity to comment on the characteristics of and requirements for the Small Starts program. In its ANPRM, FTA suggested that the planning and project development process for proposed Small Starts projects could be simplified by allowing analyses of fewer alternatives for small projects, allowing the development of evaluation measures for mobility and cost- effectiveness without the use of complicated travel demand modeling procedures in some cases, and possibly defining some classes of preapproved low-cost improvements as effective and cost-effective in certain contexts. FTA also sought the transit community’s input on three key issues in its ANPRM, including eligibility, the rating and evaluation process, and the project development process. For each of these issues, FTA outlined different options for how to proceed and then posed questions for public comment.

FTA’s ANPRM for Small Starts generated a significant volume of public comment. Members of the transit community were supportive of some proposals for the Small Starts program, but also had a number of concerns. In particular, the transit community questioned whether FTA’s proposals would, as intended, provide smaller projects with a more streamlined evaluation and rating process. As a result, some commenters recommended that FTA simplify some of its original proposals in the NPRM to reflect the smaller scope of these projects. For example, several project sponsors and industry representatives thought that FTA should redefine the baseline alternative as the “no-build” option and make the before-and-after study optional for Small Starts projects to limit the time and cost of their development. In addition, others were concerned that FTA’s proposals minimized the importance of the new land use and economic development evaluation criteria introduced by SAFETEA-LU, and they recommended that the measures for land use and economic development be revised.

Since FTA does not plan to issue its final rule for the New Starts and Small Starts programs until early 2008, FTA issued final interim guidance for the Small Starts program in July 2006 to ensure that project sponsors would have an opportunity to apply for Small Starts funding and proposed projects could be evaluated in the upcoming cycle (i.e., the fiscal year 2008 evaluation cycle). The final interim guidance describes the process that FTA plans to evaluate proposed Small Starts projects to support (1) the decision to approve or disapprove their advancement to project development and (2) decisions on project construction grant agreements, including whether proposed projects are part of a broader strategy to reduce congestion. In addition, FTA introduced a separate eligibility category within the Small Starts program for “Very Small Starts” projects in the final interim guidance. Small Starts projects that qualify as Very Small Starts are projects that have all of the following elements: have substantial transit stations; include traffic signal priority and preemption, where appropriate; provide low-floor vehicles or level boarding; include branding of the proposed service; offer 10 minute peak and 15 minute off-peak headways or better while operating at least 14 hours per weekday; are in corridors with existing riders who will benefit from the proposed project and number more than 3,000 on an average weekday; and have a total capital cost of less than $50 million (including all project elements) and less than $3 million per mile (excluding rolling stock).

According to the final interim guidance, FTA intends to scale the planning and project development process to the size and complexity of the proposed projects. Therefore, Very Small Starts projects will undergo a very simple and streamlined evaluation and rating process. For instance, according to the guidance, Very Small Starts projects are cost-effective and produce land use and economic development benefits commensurate with their costs; thus, if a project meets the Very Small Starts eligibility criteria, it will automatically receive “medium” ratings for land use and cost-effectiveness. Small Starts projects that do not meet all of the criteria for Very Small Starts projects will be evaluated and rated using a framework similar to that used for traditional New Starts projects, with the exception that fewer measures are required and their development is simplified. In particular, FTA’s evaluation and rating process for Small Starts will diverge from the traditional New Starts process in several ways. For example, the project’s cost-effectiveness will be rated based on a shorter time frame (i.e., opening year); other technically acceptable ridership forecasting procedures, besides traditional “four-step” travel demand models can be used; the opening year’s estimate of user benefits will be adjusted upward when determining a project’s cost-effectiveness; the financial and land use reporting requirements have been simplified; and the project’s economic development benefits and inclusion in a congestion reduction strategy will be considered an “other factor” in the evaluation process.

FTA Also Identified Possible Changes to the New Starts Program in Response to SAFETEA-LU as Well as Implementation Challenges

In response to SAFETEA-LU, FTA identified possible changes to the New Starts program that would affect traditional New Starts projects in its January 2006 guidance. According to FTA, some SAFETEA-LU provisions could lead to changes in the definition of eligibility, the evaluation and rating process, and the project development process. (See app. II for a description of the different changes FTA is considering.) In the guidance, FTA outlined changes it is considering and solicited public input, through a series of questions, on the potential changes. For example, FTA identified two options for revising the evaluation and rating process to reflect SAFETEA-LU’s changes to the evaluation criteria. The first option would extend the current process to include economic development impacts and the reliability of cost and ridership forecasts. (See fig. 6.)

Specifically, FTA suggested that economic development impacts and the reliability of forecasts simply be added to the list of criteria considered in developing the project justification rating. The second option would be to develop a broader process to include the evaluation criteria identified by SAFETEA-LU and to organize the measures to support a more analytical discussion of the project and its merits. (See fig. 7.) According to FTA, the second option would broaden the evaluation process beyond a computation of overall ratings based on individual evaluation measures and develop better insights into the merit of a project than are possible from using the quantified evaluation measures alone. In addition, the second option would also consider the major uncertainties associated with any of the information used to evaluate the project, such as ridership forecasts, cost estimates, projected land use, and other assumptions. According to FTA, understanding a project’s uncertainties is needed for informed decision making.

In its guidance, FTA also identified potential challenges in implementing some SAFETEA-LU changes. In particular, FTA described the challenges of incorporating and distinguishing between two measures of indirect benefits in the New Starts evaluation process—land use and economic development impacts. For example, FTA noted that its current land-use measures (e.g., land-use plans and policies) indicate the transit- friendliness of a project corridor both now and in the future, but do not measure the benefits generated by the proposed project. Rather, the measures describe the degree to which the project corridor provides an environment in which the proposed project can succeed. According to FTA’s guidance, FTA’s evaluation of land use does not include economic development benefits because FTA has not been able to find reliable methods of predicting these benefits. FTA further stated that because SAFETEA-LU introduces a separate economic development criterion, the potential role for land use as a measure of development benefits becomes even less clear, given its potential overlap with the economic development criterion. In addition, FTA noted that many economic development benefits result from direct benefits (e.g., travel time savings), and therefore including them in the evaluation could lead to double counting the benefits FTA already measures and uses to evaluate projects. Furthermore, FTA noted that some economic development impacts may represent transfers between regions rather than a net benefit for the nation, raising questions of whether these impacts are useful for a national comparison of projects. To address some of the challenges, FTA suggested that an appropriate strategy might be combining land use and economic development into a single measure.

In our January 2005 report on the costs and benefits of highway and transit investments, we identified many of the same challenges of measuring and forecasting indirect benefits, such as economic development and land-use impacts. For example, we noted that it is challenging to predict changes in land use because current transportation demand models are unable to predict the effect of a transportation investment on land-use patterns and development, since these models use land-use forecasts as inputs into the model. In addition, we noted that certain benefits are often double counted when evaluating transportation projects. In particular, indirect benefits, such as economic development, may be more correctly considered transfers of direct user benefits or economic activity from one area to another. Therefore, estimating and adding such benefits to direct benefits could constitute double counting and lead to overestimating a project’s benefits. Despite these challenges, experts told us that evaluating land use and economic development impacts is important since they often drive local transportation investment choices. To help overcome some of the challenges, experts suggested several potential solutions, including using qualitative information about the benefits rather than relying strictly on quantitative information and expanding the use of risk assessment or probability analysis in conjunction with economic analysis. For example, weather forecasters talk about the probability of rain rather than suggesting that they can accurately predict what will happen. This approach could illustrate that projects with similar rates of return have very different risk profiles and different probabilities of success. FTA’s second option for revising the New Starts evaluation process, which would consider qualitative information about the project and the project’s uncertainties, appear to be in line with these suggestions.

FTA received a large number of written comments on its online docket in response to its proposed changes. (See app. II for common comments submitted for each proposed change.) While members of the transit community were supportive of some proposals, they expressed concerns about a number of FTA’s proposed changes. For example, a number of commenters expressed concerns about FTA’s options for revising the evaluation process, noting that both proposals deemphasized the importance of economic development and land use. For example, as described in FTA’s January 2006 guidance, land use would receive less weight in calculating the overall project rating in both proposals than it receives in the current process. Some commenters also noted that land use and economic development should not be combined into a single measure and that they should receive the same weight as cost-effectiveness in the evaluation and rating process. These commenters argued that combining land use and economic development into a single measure or assigning them less weight than cost-effectiveness serves to deemphasize these benefits.

Concluding Observations

FTA’s New Starts program is in a period of transition. SAFETEA-LU made a number of significant changes to the program, and FTA is off to a good start in implementing these changes. Tough decisions and implementation challenges remain, however. For example, FTA must determine how to incorporate economic development into the evaluation process and implement the Small Starts program in the upcoming evaluation cycle. Through the issuance of the final interim guidance on the Small Starts program, FTA has acted to provide a streamlined evaluation process for small projects by simplifying the evaluation measures and introducing the Very Small Starts eligibility category. As the Small Starts program is implemented in the upcoming cycle, FTA officials will have the opportunity to determine whether the Small Starts program is sufficiently streamlined and whether the streamlined evaluation process provides adequate information to differentiate among projects for funding purposes. FTA will also have the opportunity to make necessary modifications to the Small Starts program as it learns through its experience in implementing the program and working to develop the final rule. Thus, the coming months will be a critical period for the New Starts program, as FTA works through these remaining decisions and implementation challenges to fully incorporate SAFETEA-LU changes.

Agency Comments

We provided a draft of this report to the Department of Transportation, including FTA, for review and comment. FTA officials provided technical clarifications, which we incorporated as appropriate.

We are sending copies of this report to the congressional committees with responsibilities for transit issues; the Secretary of Transportation; the Administrator, Federal Transit Administration; and the Director, Office of Management and Budget. We also will make copies available to others upon request. In addition, this report will be available at no charge on GAO’s Web site at http://www.gao.gov.

If you or your staff have any questions on matters discussed in this report, please contact me on (202) 512-2834 or at siggerudk@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Individuals making key contributions to this report were Nikki Clowers, Assistant Director, Vidhya Ananthakrishnan, and Daniel Hoy.

Appendix I: Scope and Methodology

To address our objectives, we reviewed the administration’s fiscal year 2007 budget request, the Federal Transit Administration’s (FTA) annual New Starts report, FTA’s New Starts policy guidance and Small Starts Advanced Notice of Proposed Rulemaking (ANPRM), public comments received on FTA’s docket on New Starts and Small Starts, FTA’s fiscal year 2008 reporting instructions for the New Starts program, federal statutes pertaining to the New Starts program, and previous GAO reports. We also interviewed FTA officials and representatives from the American Public Transportation Association and the New Starts Working Group. In addition, we attended FTA’s New Starts/Small Starts Seminar and Listening Session with project sponsors in Washington, D.C., in March 2006.

We also conducted semistructured interviews with the sponsors of five projects that were evaluated and rated in the fiscal year 2007 evaluation cycle, including Raleigh, Regional Rail System; Dallas, Northwest/Southeast Light Rail Transit MOS; Minneapolis, Northstar Corridor Rail; Philadelphia, Schuylkill Valley Metrorail; and Seattle, University Link Light Rail Transit Extension. We selected these projects because they represent different phases of project development (preliminary engineering and final design), received different overall project justification and finance ratings, varied in size based on the project’s total capital cost, received different levels of New Starts funding, and are geographically diverse. We obtained this information from FTA’s annual New Starts report for fiscal year 2007. Our interviews were designed to gain project sponsors’ perspectives on three main topics, including the impact of FTA’s proposed changes to the New Starts application and project development process during the fiscal year 2008 evaluation cycle, FTA’s implementation of the newly established Small Starts program, and FTA’s plans to align and revise its evaluation and ratings process with the changes required by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Specifically, we asked for their opinions on how FTA plans to measure and weight new criteria in its evaluation framework. We provided all project sponsors with a list of topics and questions prior to our interviews, and we reviewed the comments they submitted to FTA’s docket. Because the five projects were selected as part of a nonprobability sample, the results cannot be generalized to all projects.

In addition to our interviews, we analyzed the content of the comments submitted to FTA’s docket on the New Starts policy guidance and the Small Starts ANPRM to systematically determine the project sponsors’ views on key issues and identify common themes in their responses to different questions. We received from FTA a summary of all the written comments submitted to the docket on both the Small Starts ANPRM and the New Starts guidance on policies and procedures. These comments were organized by topic. To verify the accuracy of the summaries, we checked 20 percent of the comments against the original source documents. Two analysts reached consensus on the coding of the responses, and a third analyst was consulted in case of disagreement to ensure that our codes were reliable.

To ensure the reliability of the information presented in this report, we interviewed FTA officials about FTA’s policies and procedures for compiling the New Starts annual reports, including FTA’s data collection and verification practices for New Starts information. Specifically, we asked the officials whether their policies and procedures had changed significantly since we reviewed them for our 2005 report on New Starts. FTA officials told us that there were no significant changes in their data collection and verification policies and procedures for New Starts information. Therefore, we concluded that the FTA information presented is sufficiently reliable for the purposes of this report.

We conducted our work from February 2006 through August 2006 in accordance with generally accepted auditing standards, including standards for data reliability.

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

In its January 2006 guidance, FTA identified possible long-term changes to the New Starts program. According to FTA, some of these changes were driven by SAFETEA-LU, while others were designed to improve the New Starts program or correct past problems. Table 7 summarizes FTA’s proposed changes to the definition of eligibility, the evaluation and rating process, and the project development process as well as FTA’s rationale for the proposed changes and the transit community’s response to the proposed changes.