Public Transportation: Opportunities Exist to Improve the Communication and Transparency of Changes Made to the New Starts Program
Released: 2005-06-28T00:00:00

Letter

Background

TEA-21 authorized a total of $36 billion in “guaranteed” funding for a variety of transit programs, including financial assistance to states and localities to develop, operate, and maintain transit systems. Under one of these programs, 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). 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.

To obtain an FFGA, a project must progress through a local or regional review of alternatives and meet a number of federal requirements, including providing information for the New Starts evaluation and rating process (see fig. 1). As required by TEA-21, 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. We have recognized the New Starts program as a good model that the federal government could use for approving other transportation projects.

To help inform administration and congressional decisions about which projects should receive federal funds, FTA assigns ratings based on a variety of financial and project justification criteria, as defined by its program regulations, and then assigns an overall rating. These criteria are identified in TEA-21 and 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 of high, medium-high, medium, low-medium, or low for each criterion, then assigns a summary rating for local financial commitment and project justification. Finally, FTA develops an overall project rating of “highly recommended,” “recommended,” “not recommended,” or “not rated.” (See table 1 for the criteria FTA uses to evaluate projects.) The exceptions to this process are statutorily “exempt” projects, which are those that request less than $25 million in New Starts funding. These projects are not required to submit project justification information—although FTA encourages them to do so—and do not receive ratings from FTA; 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 an overall rating of “recommended” or “highly recommended,” only a few are proposed for FFGAs in a given fiscal year. FTA proposes “recommended” or “highly recommended” projects for FFGAs when it believes that the projects will be able to meet certain conditions during the fiscal year that the proposals are made. 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 there are no cost, project scope, or local financial commitment issues remaining.

FTA Identified Four New Projects for FFGAs and Requested $1.5 Billion for Fiscal Year 2006

Of the 34 projects in preliminary engineering or final design for the fiscal year 2006 cycle, 27 were evaluated and rated and 7 were statutorily exempt from the rating process. Four projects were recommended for funding with the expectation that they would be ready for new FFGAs before the end of fiscal year 2006, and an additional 6 projects were identified as potentially receiving a recommendation for New Starts funding outside of FFGAs. The administration’s fiscal year 2006 budget proposal requests a total of $1.5 billion for the New Starts program, an amount similar to requests for the past 2 fiscal years. (See app. II for the administration’s 2006 budget proposal and FTA’s project ratings.)

FTA Evaluated and Rated 27 Projects and Proposed 4 for FFGAs in Fiscal Year 2006

FTA’s Annual Report on New Starts: Proposed Allocations of Funds for Fiscal Year 2006 (“annual report”) listed a total of 34 projects in preliminary engineering and final design, and FTA evaluated and rated 27 of them. Seven were statutorily exempt from being rated because they requested less than $25 million in New Starts funding. Of the 27 projects that were rated, 2 were highly recommended, 12 were recommended, 8 were not recommended, and 5 were designated “not rated.” In its annual report, FTA said that projects were designated as “not rated” because they did not submit the required information or because of FTA’s continuing concerns about the reliability of the transportation benefits forecast for these projects. According to FTA, a principal source of these concerns was inconsistent assumptions used in defining the baseline alternative and the proposed New Starts project, making it difficult to isolate the impacts of the proposed project. In some cases, the local travel demand models were inconsistent with FTA guidance and good planning practice. FTA is currently working with the sponsors of these projects to improve the forecasts.

As shown in figure 3, the combined number of recommended and highly recommended projects declined sharply from 27 in the fiscal year 2003 evaluation cycle to 14 in the fiscal year 2004 evaluation cycle, while the combined number of not recommended and not rated projects rose from 6 to 18. As we previously reported, this was primarily due to difficulties project sponsors encountered when implementing the new cost- effectiveness measure—the Transportation System User Benefits (TSUB) measure—and adjusting to FTA’s preference policy that favors projects that seek a federal New Starts share of no more than 60 percent of the total project costs. According to FTA, the information that was provided by project sponsors in their reports on TSUB highlighted previously unknown problems with many local models that forecast travel demand. FTA first incorporated both of these changes beginning with the fiscal year 2004 evaluation cycle. Project ratings generally improved (i.e., there were more projects with recommended ratings and fewer with not recommended ratings) in the fiscal year 2005 evaluation cycle as project sponsors improved their financial plans, grew more comfortable with the new cost- effectiveness measure, and made corrections and improvements to their models that forecast travel demand, according to FTA. While the combined number of not rated and not recommended projects was approximately the same in the fiscal year 2005 and 2006 evaluation cycles, the number of projects receiving ratings of at least recommended has decreased slightly again. Unlike in previous years, however, there was no obviously identifiable reason for this change, except for the fact that some projects moved out of the ratings pool and into construction, according to FTA.

The fiscal year 2006 rating cycle saw the smallest total number of projects in preliminary engineering and final design during the TEA-21 period. The number of projects evaluated and rated has decreased slightly every year, from 42 projects in the fiscal year 2000 rating cycle to 27 projects in the most recent cycle. During this same time frame, the number of exempt projects grew steadily through the fiscal year 2004 cycle but has been declining ever since. FTA officials suggested that these trends could be the result of a combination of factors. First, many of the projects that TEA-21 authorized have worked their way through the New Starts process and obtained FFGAs, and thus are not subject to the annual evaluation and rating process. At the same time, new projects entered preliminary engineering each year and were rated for the first time. FTA officials speculated that additional projects would be included in reauthorization legislation and would enter the New Starts pipeline over the course of the reauthorization period. Second, FTA has increased the level of scrutiny it applies to projects attempting to advance from alternatives analysis to preliminary engineering to help ensure that only the strongest projects enter the New Starts pipeline. Third, FTA has worked with project sponsors to reduce the number of inactive projects in the New Starts pipeline. Fourth, since the time TEA-21 was enacted, some state and local transportation agencies have been feeling the impact of local budget constraints, making it more difficult to secure local funding for proposed New Starts projects. This could be exacerbated by FTA’s policy of favoring projects that seek a federal New Starts share of no more than 60 percent of the total project costs. As we reported in 2004, several project sponsors told us that FTA’s push for a lower federal New Starts share would likely affect their decision to advance future transit projects. Therefore, we recommended that FTA examine the impact of the preference policy on projects in the evaluation process. FTA is considering how to conduct such an examination.

FTA’s evaluation process informed the administration’s recommendation to fund four projects that are expected to be ready for new FFGAs before the end of fiscal year 2006, including Charlotte, South Corridor Light Rail Transit; New York, Long Island Rail Road East Side Access; Phoenix, Central Phoenix/East Valley Light Rail Transit Corridor; and Pittsburgh, North Shore Light Rail Transit Connector. The total capital cost of these four projects is estimated to be $9.9 billion, of which the total federal New Starts share is expected to be $3.6 billion. FTA executed an FFGA for the Phoenix project in January 2005 and for the Charlotte project in May 2005. The other two projects are expected to be ready for FFGAs before the end of fiscal year 2006. According to FTA, the remaining projects that received overall ratings of recommended or highly recommended do not yet pass FTA’s readiness tests for FFGAs.

The administration also proposed reserving $158.6 million in New Starts funding for final design and early construction activities for as many as six “other projects,” including San Diego, Mid-Coast Light Rail Transit Extension; Denver, West Corridor Light Rail Transit; New York, Second Avenue Subway; Washington County (Oregon), Wilsonville to Beaverton Commuter Rail; Dallas, Northwest-Southeast Light Rail; and Salt Lake City, Weber County to Salt Lake City Commuter Rail. These six projects were in or nearing final design, received overall highly recommended or recommended ratings, and had cost-effectiveness ratings above “low.” According to FTA officials, no other projects met these criteria. The annual report did not specify amounts for particular projects to ensure that the project is moving forward as anticipated prior to making specific funding recommendations to Congress, according to FTA officials, because projects may encounter unexpected financial or other obstacles that slow their progress. For example, FTA told us that the sponsor for one of the projects is considering a significant expansion of the project scope, which would put it back in preliminary engineering and render it ineligible for the funds FTA proposed reserving for the “other projects” for fiscal year 2006. 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 anticipate that all of the six projects will be recommended for funding in fiscal year 2006.

Administration’s Proposed Fiscal Year 2006 Budget Requests Similar Amount of Funding to Previous Years

The administration’s fiscal year 2006 budget proposal requests that $1.5 billion be made available for the New Starts program, an amount similar to that requested in the last two fiscal years. Figure 4 illustrates the specific budget allocations the administration has proposed for fiscal year 2006, including the following: $634.6 million would be allocated among the 16 projects with existing grant agreements, $590 million would be allocated to four projects expected to be proposed for new FFGAs, $158.6 million would be allocated to as many as six “other” projects to continue project development, and $122.5 million is reserved to be allocated among projects in preliminary engineering, at the discretion of Congress and as provided in law.

Anticipated FFGAs ($590 million)

Existing FFGAs ($635 million) extensions to existing systems that are ferry boats or ferry terminal facilities or that are approaches to ferry terminal facilities.

FTA had approximately $2.2 billion in commitment authority—that is, the amount of funding authorized for New Starts projects—remaining as of May 2005. TEA-21 and subsequent amendments and legislation provided FTA the authority to make about $13.5 billion in funding commitments for New Starts projects. Surface transportation programs, including the New Starts program, were scheduled to expire in September 2003, but have subsequently been extended through June 2005. According to FTA officials, the commitment authority for fiscal year 2006 and beyond will be addressed in the next surface transportation authorization legislation. However, FTA officials told us that there will not be sufficient commitment authority remaining to execute all four proposed FFGAs until additional commitment authority is provided through congressional authorization.

FTA Has Implemented a Number of Changes to the New Starts Program, Some Without Project Sponsors’ Input

FTA has made 16 changes to the New Starts application, evaluation, rating, and project development oversight processes since the fiscal year 2001 evaluation cycle—the first full evaluation and rating cycle after the enactment of TEA-21. FTA has used a variety of written and electronic methods to communicate information about these changes, although it primarily relies on reporting instructions, roundtables, and workshops. For nine of these changes, FTA did not publish information about the change in the Federal Register or institute a rulemaking process and for six of these nine changes did not provide any avenues for public review and comment prior to implementing the changes. FTA has said that all of the changes it has made are consistent with the evaluation framework outlined in the existing regulations governing the New Starts process. Some project sponsors we interviewed thought certain changes helped to improve the process; however, a considerable number of project sponsors expressed concern that they did not have an opportunity to comment on many of the changes before they were implemented and have experienced considerable challenges while attempting to incorporate some of the changes. For example, some changes have required project sponsors to devote additional agency resources, as well as time.

FTA Has Made 16 Changes Intended to Improve the Application, Evaluation, Rating, and Project Development Oversight Processes since the Fiscal Year 2001 Evaluation Cycle

We identified 16 changes that FTA made to the New Starts application, evaluation, rating, and project development oversight processes since the fiscal year 2001 evaluation cycle. These changes range from requiring that projects undergo a risk assessment to instituting new practices for funding recommendations. (See table 2 for complete list of changes.) For example, FTA made two significant changes to the evaluation and rating process for the fiscal year 2004 evaluation cycle. First, FTA implemented the TSUB measure as a variable in the calculation of cost-effectiveness and mobility improvements. The new measure is intended to calculate the change in the amount of travel time and costs that people incur for taking a trip. This is a more comprehensive measure than the old “cost per new rider” measure because it takes into account a broader set of benefits to transit riders, including new and existing transit riders. Second, in response to language contained in appropriations committee reports, FTA instituted a preference policy favoring projects that seek a federal New Starts share of no more than 60 percent of the total project cost. As shown in table 2, FTA implemented changes for a variety of reasons, including simplifying the New Starts process and focusing more on results and performance. Although the impetus for each change varied, FTA officials stated that, in general, all the changes were intended to make the process more rigorous, systematic, and transparent. For example, the requirement for project sponsors to develop a plan for evaluating the impacts of the project and the accuracy of travel forecasts—that is, a Before and After study—will identify lessons learned and hold transit agencies accountable for results. In our previous work we have commented on a number of these changes and made some recommendations for improving the New Starts process. (See app. III for a list of recommendations from previous reports.)

Some project sponsors we interviewed thought that certain changes helped to improve the process. For instance, seven project sponsors stated that the “make the case” document helped them focus on the key benefits of the projects and three said it helped them “sell” the project to local decisionmakers or the public. In addition, many project sponsors acknowledged that the TSUB measure is more comprehensive than the old “cost per new rider” measure. However, project sponsors expressed a variety of concerns about the effects the changes had on the steps required to complete the application process and about FTA’s implementation of the changes. For instance, for the “make the case” document, 15 project sponsors stated that FTA did not create clear expectations, 10 noted that FTA prepared no written guidance, and 5 indicated that FTA did not provide specific examples or templates. A few of these project sponsors also stated that they did not feel like they understood what FTA wanted for the “make the case” document, and eight said that they had to produce multiple iterations of the document. Twelve project sponsors also mentioned they were not clear about how FTA was using the document. In addition, when asked what effect the implementation of the TSUB measure had on their project, 13 of 26 project sponsors said it made the application process more expensive, and 20 of 26 said that this measure required them to spend significantly more time to complete the application. Similar comments were made by project sponsors about other changes, including the risk assessment and Before and After study requirements. For example, when asked what effect the risk assessment requirement has had on their project, 4 of the 26 project sponsors said it resulted in a more rigorous or systematic evaluation and rating process, 7 said it made the process more expensive, and 5 said it delayed their project. Three project sponsors noted that each of the individual requirements add to the overall workload and eventually result in the application process becoming a full-time project. However, some project sponsors observed that as they become more familiar with each change and as FTA issues more guidance, such as for using FTA’s software to calculate the TSUB value, the change has become less burdensome.

In Spring 2005 FTA Introduced New Cost-Effectiveness Practice and Technical Changes to the Cost-Effectiveness Calculation

In March 2005, FTA announced a new practice for the New Starts program whereby the administration will generally target funding recommendations to projects able to achieve at least a medium or higher cost-effectiveness rating. FTA announced this change through a “Dear Colleague” letter sent to FTA grantees, including current New Starts project sponsors. The letter was also posted on the home page of FTA’s Web site. The administration’s previous policy had been to recommend projects for funding that received at least a medium-low cost-effectiveness rating, provided that they met all other criteria and project readiness requirements. In the letter to project sponsors, FTA explained that the impetus for change was the concerns that GAO, the Office of Management and Budget, the Department of Transportation’s Inspector General, and Congress raised about recommending projects for funding that had medium-low cost- effectiveness ratings. In the letter, and in subsequent communication to project sponsors, FTA also stated that the practice applies to a recommendation for funding and not to the way the project’s overall rating is determined. For example, a project can still receive an overall recommended project rating with a medium-low cost-effectiveness rating and can advance from preliminary engineering to final design with this rating; however, as a general rule, the project would not be recommended for funding by the administration. FTA has said that this new practice will help it to further prioritize and distinguish among projects for federal funding, which is important given current fiscal challenges and the resulting need to maximize the benefit of every federal dollar invested in transportation.

According to FTA officials, the four New Starts projects with anticipated FFGAs for the fiscal year 2006 cycle (see app. II) will not be affected by the new practice. However, FTA has said that the six New Starts projects that are categorized as “other projects” in the fiscal year 2006 annual report— and therefore eligible for a portion of the $158.6 million in New Starts funds FTA reserved—will be subject to the new cost-effectiveness funding recommendation practice and will continue to be subject to this practice when they apply for an FFGA. According to FTA, two of the six “other projects” currently do not meet this standard, and FTA is working with them to improve their cost-effectiveness rating. Six project sponsors we interviewed expressed concern as to whether they would be able to make the necessary modifications to their projects in order to earn a higher cost- effectiveness rating by the next evaluation cycle—which begins in August 2005. Also, seven project sponsors commented that FTA puts too much emphasis on the cost-effectiveness measure, and four indicated that the new cost-effectiveness practice increases this emphasis. FTA officials stated that FTA and the administration consider more than just cost- effectiveness in making funding recommendations, noting that every project that received a not recommended rating in the last 2 years did so because of its poor financial summary rating.

In addition to the new cost-effectiveness practice in the March “Dear Colleague” letter, FTA also proposed five technical changes to the way cost- effectiveness is calculated and asked for industry comment on these proposed changes by April 1, 2005. All comments were posted on the Department of Transportation’s online docket and were available for public review. The proposed changes included (1) adjusting the cost- effectiveness rating breakpoints (i.e., low, low-medium, medium, medium- high, high) for inflation, and possibly applying a regional index in an effort to address cost differences across the country; (2) permitting project sponsors to utilize either a 2025 or 2030 planning horizon to be consistent with metropolitan planning organizations’ regional planning processes; (3) permitting standardized costs and the proposed adjustments to useful life estimates, which clarify and lengthen these estimates for a number of assets; (4) permitting modal constants for new guideway modes as a means of enabling travel models to estimate the effect of improvements to transit service quality beyond the time and cost measures already accounted for in the travel models (such as comfort and reliability); and (5) excluding some soft costs (e.g., administrative expenses) from the calculation of annualized capital costs for the purpose of calculating cost-effectiveness. FTA officials told us that they wanted to obtain industry comment on the proposed changes and to use this feedback to help decide which proposed changes to adopt. Officials from FTA also said the deadline for industry comments was driven by the reporting deadlines for the New Starts annual evaluations and the need to promptly release reporting instructions for the News Starts program. On the basis of FTA’s review of the proposed changes and project sponsor responses, FTA announced in an April 29th “Dear Colleague” letter its decision to incorporate three of the five proposed changes for the fiscal year 2007 cycle—adjusting rating breakpoints for inflation, permitting the 2030 design year forecast, and permitting the use of the standardized cost categories’ useful life assumptions to calculate annualized capital costs for the purpose of calculating cost-effectiveness. FTA stated that further research is needed on the other two proposed changes. FTA incorporated the three technical changes into its fiscal year 2007 reporting instructions, which were released to project sponsors on May 3, 2005.

FTA Uses Multiple Methods to Communicate Information about Changes

FTA communicates information about changes to project sponsors through a variety of different methods, including annual reporting instructions, “Dear Colleague” letters to project sponsors, conversations with project sponsors, roundtables and workshops with FTA officials and project sponsors, and the FTA Web site. FTA officials indicated that they most heavily rely on regulations, reporting instructions, and roundtables and workshops to communicate information about changes to the New Starts application, evaluation, rating, and project development oversight processes. In particular, FTA officials told us that they use the workshops as a two-way communication vehicle, during which they can explain the New Starts application and evaluation process to project sponsors. The workshops are usually held two to four times a year in conjunction with a transit industry conference. For example, during the American Public Transportation Association (APTA) legislative conference in early March 2005, FTA officials held a workshop to discuss the New Starts process as well as the administration’s new cost-effectiveness funding recommendation practice. The agency also holds two New Starts roundtables each year to explain the application and evaluation process and allow project sponsors the opportunity to have an open discussion with FTA officials as well as share information on best practices. FTA used this year’s New Starts roundtables in New York and San Francisco to, among other things, respond to questions about the recently introduced changes. FTA’s annual reporting instructions also describe changes to the application and evaluation process, in addition to providing guidance to project sponsors on preparing their New Starts submittal. For instance, in the reporting instructions for the New Starts report for the fiscal year 2005 evaluation cycle, FTA introduced the change to the weighting system used to calculate the project justification rating.

Project sponsors told us that they generally learn about changes through one or more of FTA’s communication methods, although they have varying views on the effectiveness of the different methods. Most project sponsors we interviewed said that they typically view the roundtables and workshops and conversations with FTA officials as generally or very effective methods for learning about changes. However, some concerns were also raised about these communication methods. First, three project sponsors stated that they feel compelled to attend all of FTA’s workshops and roundtables in order to keep up with the changes to the New Starts process because these meetings are the primary methods FTA uses to introduce changes. Others noted that they have received inconsistent information about changes depending on the source. As a result, 18 of 26 project sponsors stated they prefer to obtain information about the changes directly from FTA officials—and 11 of these project sponsors stated that they prefer to receive the information in writing for documentation purposes. Eleven of the 26 project sponsors we interviewed said that FTA’s Web site was generally or very ineffective as a method for communicating information about changes. Project sponsors cited a variety of challenges in using the Web site as a source of information about changes to the New Starts program. For example, some project sponsors stated the Web site was difficult to navigate and had a poor search engine, while others stated they had difficulty finding information about the New Starts program and that in some cases the information they retrieved from the Web site was not up to date. Several project sponsors indicated that maintaining a central repository for all information related to the New Starts program on FTA’s Web site would be helpful.

FTA Has Not Consistently Used the Public Notice or Rulemaking Process to Introduce Changes or Solicit Industry Comment on Proposed Changes

Of the 16 changes that FTA has made to the New Starts application, evaluation, rating, and project development oversight processes since the fiscal year 2001 evaluation cycle, seven underwent rulemaking, including providing formal notice to the transit industry and soliciting public comment, while nine changes did not (see table 2). The Freedom of Information Act requires federal agencies to publish in the Federal Register notice of changes to programs and the Administrative Procedure Act sets out the rulemaking process—which would include notifying the public and soliciting and considering comments, among other things—required to make changes to agencies’ rules and procedures. FTA last undertook rulemaking for the New Starts program in 1999 at the direction of TEA-21 and issued regulations in December 2000. Officials from FTA told us that they have not amended their regulations to incorporate the nine changes made to the New Starts process since that time because, in their opinion, the changes are within the framework of the current regulations. FTA officials also said that some of the changes—such as the risk assessment requirement—involve project development oversight and do not affect the evaluation and rating process; therefore, in their view, the changes do not need to be included in program regulations. However, by making changes outside of the regulatory process, FTA has missed an opportunity to obtain formal public input on the proposed changes, which would increase the transparency of the agency’s decision-making process and ensure that the views of project sponsors and other interested parties are considered. There are a range of options available to FTA for obtaining industry input, from the more formal rulemaking process to less formal ways of soliciting comment. In those instances where FTA determines that a formal rulemaking process is unnecessary, it could provide project sponsors an informal opportunity to review and comment on any substantive changes proposed for the New Starts program, as FTA recently did when it solicited public comment on proposed technical changes to the rating process.

Of the nine changes that were not published in the Federal Register and did not undergo rulemaking, six were made without providing other avenues for public review and comment prior to their implementation. For example, FTA did not seek industry input before implementing the risk assessment requirement, project justification criteria weights, and the “make the case” changes to the document. The limited opportunities to review and comment on proposed changes have resulted in implementation problems, according to some project sponsors. In addition, FTA did not provide project sponsors the opportunity to comment on the administration’s recently announced cost-effectiveness funding recommendation practice. Many project sponsors expressed concern about the way FTA has developed and implemented changes to the New Starts process. For example, 14 of the 26 project sponsors with whom we spoke said that they have generally not been given an opportunity to offer input into prospective changes before they are implemented. Many project sponsors noted that the March “Dear Colleague” letter was a step in the right direction in that it was one of the first times since the last rulemaking that FTA had sought their input on proposed changes. However, five project sponsors commented that FTA did not give them sufficient time to review and comment on the proposed changes. In addition, FTA did not publish these changes in the Federal Register and provide at least 30 days’ notice, the minimum time typically required when changes are subject to the Administrative Procedure Act. Congressional committees have also expressed concerns about the transparency by which FTA makes changes to the evaluation and rating process, as shown by the bills to reauthorize surface transportation programs—introduced in early 2005—that offer a more formalized approach for providing notice to and soliciting comment from project sponsors. In particular, the House reauthorization bill would require that FTA provide notice and an opportunity for comment at least 60 days before issuing any “nonregulatory substantive changes.” The Senate proposal states that FTA should issue periodic descriptions of the rating criteria and allow for public comment. (See app. IV for information about other changes proposed by the House and Senate.)

Project sponsors offered a number of suggestions for improving FTA’s communication about changes to the New Starts process. For example, nine project sponsors told us that FTA should provide them with an opportunity to offer input into a change before it is made. Thirteen project sponsors mentioned that FTA should provide them with more lead time when the agency requires them to implement a change. For example, a number of project sponsors expressed concern that the recent technical changes to the cost-effectiveness calculation announced in April 2005 were made too close to when New Starts information is due—June for travel forecasts and “make the case” documents and August for the remaining application materials. In addition, eight project sponsors expressed that FTA should develop a standard schedule for when it announces and implements changes to the New Starts process. For example, one project sponsor suggested that FTA announce all changes at its New Starts roundtable a year before the changes are to be implemented.

Our previous body of work on organizational transformation indicates that communication with stakeholders should be a top priority for any agency, is most effective when done early and often in any process, and is central to forming the partnerships that are needed to develop and implement an organization’s strategies. An effective communication strategy should facilitate an honest two-way exchange with, and allow for feedback from, stakeholders. This communication is central to forming the effective internal and external partnerships that are vital to a program’s success. For the past 2 years, FTA officials have announced at the roundtables that they are planning to develop and implement a strategy for improving communication among FTA offices and between FTA and project sponsors. FTA officials have told us that the strategy could include providing a single FTA point of contact for project sponsors and improving the distribution of policy, guidance, and procedures, perhaps using tools such as a listserve or webinar, as it did when it sought comments from project sponsors on the recent cost-effectiveness changes. FTA has implemented new communications tools, such as the webinar, but has not developed a comprehensive communications strategy.

New Starts Measures Have Evolved Over Time, but Not All Measures Count Toward a Project’s Rating

Many of the measures FTA uses to evaluate and rate New Starts projects predate TEA-21 and have evolved over time. In developing these measures, FTA has historically sought industry input by way of formal rulemaking as well as outreach sessions, workshops, and reports. Although both TEA-21 and FTA’s current New Starts program regulations emphasize the importance of using a multiple-measure approach for evaluating projects, FTA assigns a 50 percent weight to both the cost-effectiveness and the land use criteria when developing the project justification summary rating. The other three project justification criteria are not weighted, although the mobility improvements criterion is used as a “tie-breaker” when the average of the cost-effectiveness and land use ratings falls equally between two ratings (e.g., between “medium” and “medium-high”). According to FTA officials, FTA does not use these criteria because the underlying measures have weaknesses that diminish their use in distinguishing among projects. Project sponsors we interviewed offered suggestions for improving all of the project justification measures.

Congress Directed FTA to Use Multiple Criteria in Evaluating and Rating Projects

Through the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and TEA-21, Congress has directed FTA to use multiple criteria in evaluating and rating New Starts projects. In particular, TEA-21 identifies a series of financial and project justification criteria that reflect a broad range of benefits and effects of the proposed projects. The financial criteria include the share of non-New Starts funding and the capital and operating finance plans. The project justification criteria identified by TEA-21 include mobility improvements, cost-effectiveness, operating efficiencies, and environmental benefits. TEA-21 also identifies several additional statutory “considerations” to the evaluation process, including land use issues. TEA- 21 directs FTA to “evaluate and rate the project as ‘highly recommended,’ ‘recommended,’ or ‘not recommended,’ based on…the project justification criteria,” among other things. FTA has recognized and acknowledged the congressional intent for New Starts projects to be evaluated using multiple measures. For instance, in a January 2005 report to Congress, FTA states that it is “clear that Congress intends FTA to evaluate projects based on more than cost-effectiveness criteria” and that the “statutory framework is consistent with the concept that a wide range of benefits should be considered in evaluating projects.” “It is important to note that the measure for cost-effectiveness is not intended to be a single, stand-alone indicator of the merits of a proposed new starts project. It is but one part of the multiple measure method that FTA uses to evaluate project justification under the statutory criteria. While cost-effectiveness is an important consideration, so are mobility improvements, environmental benefits, and the other factors described both in TEA-21 and elsewhere in this rule.”

FTA has repeated the importance of using a multiple measure approach in many reports and other documents since then, including its annual reports to Congress. The New Starts regulations identify the measures FTA will use to evaluate projects from the project justification criteria outlined in TEA- 21. Figure 5 shows the project justification criteria identified by TEA-21 and the associated measures identified by FTA in the New Starts regulations. (See app. V for more detail on these measures.)

FTA Used Industry Input to Develop Measures for All Criteria Identified in TEA-21

The measures FTA uses to evaluate and rate New Starts projects have evolved over time, beginning years before TEA-21, through an iterative process involving Congress and the transit industry. FTA (then known as UMTA) introduced the first system for rating New Starts projects in 1984. At that time, projects were rated on cost-effectiveness (cost per new rider) and local financial commitment. Through ISTEA in 1991, Congress added mobility improvements, environmental benefits, and operating efficiencies to the list of criteria FTA should use to evaluate projects and also added land use policies as an additional factor for consideration.

FTA circulated a policy paper in 1994, asking for public comment on its proposed measures and procedures for assessing projects to address the requirements laid out in ISTEA. The agency received 31 responses from transit operators, metropolitan planning organizations, state departments of transportation, and other interested parties. FTA used these responses in finalizing its criteria and measures in a notice published in 1996 in the Federal Register. In the 1994 policy paper, FTA also solicited comments on the appropriateness of using a multiple-measure method for evaluating projects. Respondents generally agreed that this was appropriate, although they were split on how (or whether) the various criteria should be weighted. FTA formally adopted the multiple-measure approach in 1996.

TEA-21 required FTA to issue regulations for the evaluation and rating process, and FTA used that rulemaking opportunity to revise several of the project justification measures. Before and during the rulemaking process, FTA conducted outreach sessions around the country, soliciting comments on its processes and procedures for managing the New Starts program. FTA issued a Notice of Proposed Rulemaking in 1999 and received comments from 41 individuals and organizations. In response to the comments, FTA made several changes to the project justification measures. For example, many of these commenters objected to the “cost per new rider” measure for cost-effectiveness, saying that the focus on new riders ignores benefits provided to other riders, which may bias the measure against cities with “mature” transit systems. In response, FTA replaced it with the incremental cost per hour of TSUB measure (to capture benefits to both new and existing riders). The agency also added a mobility improvements measure for employment near stations to complement the existing low-income households near stations measure in response to industry comments that a system that is located near low-income households is of little use to residents unless it can also provide access to employment and other activity centers.

Since issuing the regulations, FTA has continued efforts to fine-tune and improve some of the project justification measures. For example, FTA convened a panel of experts from the Urban Land Institute to discuss the land use measures and is seeking industry input on possible changes. FTA’s Strategic Business Plan for Fiscal Year 2005 includes deliverables to (1) develop a land use measure that is more quantifiable, offers a better basis for distinguishing among projects, and provides grantees information with which to improve their projects and (2) develop a methodology for measuring the congestion relief benefits of New Start projects. Both are scheduled to be completed by summer 2005. FTA officials told us that the fiscal year 2005 program plan included research funds for these efforts. In addition, as discussed previously, FTA recently instituted technical modifications to the cost-effectiveness measure.

FTA Does Not Use All Project Justification Criteria in Determining Ratings Because of Perceived Weaknesses in the Measures

Despite the requirement to use multiple measures, FTA does not use three of the five project justification criteria in calculating a project’s rating. Specifically, FTA currently assigns a weight of 50 percent each to the cost- effectiveness and land use criteria; the other three project justification criteria are not assigned weights (see fig. 6). In its annual report for fiscal year 2006, FTA stated that it assigns individual ratings for the other three project justification criteria and reports them in the annual report, but these ratings “are not considered in the determination of an overall project justification rating.” FTA does, however, use all three financial commitment criteria in developing a project’s rating.

FTA officials told us that they do not use the mobility improvements, environmental benefits, and operating efficiencies criteria in determining the project justification summary rating because the measures do not, as currently structured, provide meaningful distinctions among competing New Starts projects. Many project sponsors we interviewed had similar views, noting that individual projects are too small to have much impact on the whole region or the whole transit system. For example, one of the environmental benefits measures requires project sponsors to measure the project’s impact on the annual number of tons of emissions forecast for the region for various pollutants. FTA officials also said that they do not assign weight to the mobility improvements measures in determining the project justification rating because they believe that the employment and low- income household measures do not meaningfully distinguish among projects, and the user benefits are already captured in the cost- effectiveness measure. Therefore, to count the user benefits as part of the mobility improvements would result in a double-counting of the benefits. In contrast, FTA officials told us that the cost-effectiveness and land use measures help to make meaningful distinctions among projects. For example, according to FTA, existing transit supportive plans and policies demonstrate an area’s commitment to transit projects and are a strong indicator of a project’s future success.

Because FTA officials believe that these project justification measures do not provide meaningful distinctions among projects and are not factored into a project’s rating, FTA does not stringently evaluate the projects on the associated criteria. For instance, according to FTA’s New Starts reporting instructions, every project must submit data on operating efficiencies and automatically receives a score of medium on that criterion. Similarly, a project that is in a nonattainment area for a pollutant and that demonstrates a projected decrease in that pollutant gets a high environmental benefits rating, while a project in an attainment area that demonstrates a decrease gets a medium environmental benefits rating.

The New Starts regulations do not specify the weights that should be assigned to each project justification criterion. FTA sought industry input on whether there should be a weighting system in the last rulemaking process; however, according to FTA officials, the agency did not receive input that was useful to inform its policy. Consequently, the regulations are silent on the weights that should be assigned to each criterion and do not prohibit FTA from treating various criteria as more important than other criteria. FTA instituted its current weighting system with the fiscal year 2004 evaluation cycle after determining that the operating efficiencies, environmental benefits, and mobility improvements measures do not effectively distinguish among projects and that there is overlap among the mobility and cost-effectiveness measures. Because the regulations do not set forth the weights that should be assigned to each criterion, FTA did not amend the regulations when it instituted the current weighting system.

Although FTA does not use all of the project justification criteria identified in TEA-21 to calculate project ratings, project sponsors must submit information for all five project justification criteria and FTA publishes this information for each project in the New Starts annual report. FTA officials offered several reasons for requiring project sponsors to continue to provide this information. First, TEA-21 requires FTA to consider these criteria when evaluating projects. Even though not all of the project justification criteria count toward the rating, FTA officials told us that they review and consider all five criteria and, therefore, are operating within the evaluation framework established in TEA-21 and the New Starts regulations. Second, FTA officials said that they believe that mobility improvements, environmental benefits, and operating efficiencies are important and should be a part of the evaluation process, even though FTA does not yet have measures for these criteria that help make distinctions among projects for the purpose of rating and funding decisions. No measures are specified in TEA-21, which only describes the criteria FTA should use to evaluate and rate projects, so FTA has the flexibility to revise the measures as needed. FTA officials stated that they continue to examine and pursue options to improve the measures and that FTA has committed approximately $500,000 of its fiscal year 2005 research funds to continue its work to improve the New Starts measures. The officials also said that they would wait to change these measures until legislation governing the New Starts program is reauthorized. They said that they will have to institute a formal rulemaking process at that time and would use that opportunity to solicit public comment on the New Starts evaluation and rating process. Third, FTA officials told us that information on these three criteria is presented in the annual report and may be useful to Congress and local decisionmakers. A number of project sponsors we spoke to expressed frustration that they must prepare and submit information for all the measures for the five project justification criteria even though some of this information does not contribute to the projects’ ratings.

Project Sponsors and Others Identified Strengths and Weaknesses of the Measures and Suggested Improvements

Project sponsors we interviewed, as well as FTA, the Department of Transportation’s Inspector General, and other industry experts have identified various strengths and weaknesses of the project justification measures used to evaluate the New Starts projects. For example, all of these sources acknowledge that FTA’s measure of cost-effectiveness does not capture benefits that accrue to highway users as more people switch to the improved transit system and highway congestion decreases. According to the department’s Inspector General, the omission of highway travel time savings means that the benefits from proposed projects that convey significant travel time savings for motorists are not recognized in the selection process. FTA noted that current local models used to estimate future travel demand for New Starts are incapable of estimating reliable highway travel time savings as a result of the New Starts project. According to the department’s Inspector General, this limitation is due to unreliable local data on highway speeds. FTA is working with the Federal Highway Administration to study ways to remedy this problem. Table 3 shows the strengths, weaknesses, and other concerns most commonly mentioned by the New Starts project sponsors we interviewed.

In addition, in a recent report on the benefits and costs of transportation improvements, we identified challenges in measuring the benefits and costs of transit investments—some of which are relevant to the measures used by FTA to evaluate New Starts projects. For example, desirable changes in land use are indirect benefits of a transportation investment, which are difficult to forecast and quantify. We also reported that social benefits such as reductions in environmental costs—including reduced emissions—were difficult to quantify and value. Additionally, we reported that there is great variation in the models local transportation planning agencies use to develop travel forecasts (which underlie many of the New Starts measures), producing significant variation in forecast quality and limiting the ability to assess quality against the general state of practice. Some experts have also found that travel demand models tend to predict unreasonably bad conditions in the absence of a proposed highway or transit investment. In particular, travel forecasting does not contend well with land-use changes or effects on nearby roads or other transportation alternatives that result from transportation improvements or growing congestion. Before conditions get as bad as they are forecasted, people make other changes, such as residence or employment changes, to avoid the excessive travel costs.

Our previous work has stated that agencies successful in measuring performance had performance measures that, among other things, demonstrate results and cover multiple priorities. Specifically, successful measures (1) are aligned with agencywide goals and mission and are clearly communicated throughout the organization; (2) are clearly stated, with a name and definition that are consistent with the methodology used to calculate the measures; (3) have a measurable target; (4) are objective; (5) are reliable; (6) cover core program activities; (7) have limited overlap with other measures; (8) provide balance in ensuring that various priorities are covered; and (9) address governmentwide priorities, such as quality and cost of service. For example, measures that are not objective may result in performance assessments that are systematically over- or understated, and a lack of balance could create skewed incentives when measures overemphasize some goals. While these successful attributes were developed specifically for performance measures, they also could be useful in determining how to improve other types of measures, such as those FTA uses to evaluate and rate New Starts projects.

The sponsors of the 26 projects we interviewed had many suggestions for improving the project justification measures. These suggestions ranged from adding measures to the mobility improvements, environmental benefits, and land use criteria to changing the way in which operating efficiencies are calculated. The most commonly cited suggestions are listed in table 4, but we did not determine whether the suggestions were appropriate or feasible. FTA officials told us that they received limited suggestions for specific measures or methodologies for mobility improvements, environmental benefits, and operating efficiencies during the rulemaking process.

Conclusions

TEA-21 and FTA’s New Starts regulations clearly state that New Starts projects should be evaluated and rated using multiple criteria. Further, the statute and regulations identify the project justification criteria that should be used in the evaluation process, including mobility improvements, environmental benefits, operating efficiencies, cost-effectiveness, and land use, as well as the financial commitment criteria that should be used in the evaluation process. The regulations also identify the measures that will be used to operationalize the criteria. Although FTA uses all three financial criteria, in practice, FTA uses only two of the project justification criteria— cost-effectiveness and land use—to calculate a project’s overall rating. FTA’s reliance on two of the five project justification criteria, coupled with the recent cost-effectiveness practice for funding—which further emphasizes one criterion—is drifting away from the multiple-measure evaluation and rating process outlined in TEA-21 and the current New Starts regulations. According to FTA officials, FTA does not assign weights to environmental benefits, operating efficiencies, and mobility improvements because of weaknesses in the measures and the overlap of some measures that could result in double-counting of benefits. FTA has made notable progress in improving the measures for cost-effectiveness and land use, including seeking advice from experts and the transit industry and conducting pilot tests since the enactment of TEA-21.

However, given that FTA has been statutorily directed to also use environmental benefits, operating efficiencies, and mobility improvements in evaluating and rating projects, it is imperative that FTA either pay additional attention to improving these three criteria so that they can be more explicitly used in the evaluation process or explicitly demonstrate the linkages between these criteria and the measures used.

FTA has made a number of changes intended to enhance the rigor of the program over the past 6 years, and some of these changes, such as the Before and After study, risk assessment, and cost-effectiveness practice could help FTA hold project sponsors accountable for results and maximize the benefits of each dollar invested. However, FTA could improve the transparency of changes made to the New Starts program by giving project sponsors an opportunity to review and comment on any substantive changes before they are implemented. The Freedom of Information and Administrative Procedure Acts establish formal processes for notifying the public and making changes to federal programs, including soliciting comments about proposed changes. If FTA officials determine that a formal rulemaking process is unnecessary, FTA could still provide project sponsors an opportunity to review and comment on any substantive changes proposed for the New Starts program, potentially avoiding some of the implementation problems that have occurred in the past. In addition, the review and comment period could help FTA improve the proposed changes as well as gain industry buy-in and support for changes—elements that are critical for success.

FTA could also strengthen its communication efforts by improving its Web site so that project sponsors view it as a viable source for obtaining information about changes to the New Starts program. The Web site could provide a central forum for comprehensive, up-to-date information on the New Starts program and could also be useful for publicizing FTA’s activities to improve the application, evaluation, rating, and oversight processes. Much of this information is already available on FTA’s Web site. However, the information that remains is scattered in different locations and many project sponsors told us that it was difficult to locate needed information. Making the information easier to find could help reduce confusion about the New Starts process.

Recommendations for Executive Action

To ensure that the New Starts regulations reflect FTA’s current evaluation and rating process, and to ensure that FTA’s New Starts evaluation process and policies are objective, transparent, and follow the intent of federal statute, we recommend that the Secretary of Transportation direct the Administrator, FTA, to take the following four actions: ensure that the agency’s regulations governing the New Starts evaluation and rating process reflect FTA’s current weighting practices for the criteria when the regulations are revised; improve the measures for evaluating New Starts projects so that all five project justification criteria can be used in determining a project’s overall rating, or provide a crosswalk in the agency’s New Starts regulations showing clear linkages between the criteria outlined in statute and the criteria and measures used in the rating process; publish future changes to the New Starts program in the Federal Register and subject future changes to the New Starts program to the rulemaking process or, at a minimum, a 30-day informal review and comment period, as appropriate. As part of this process, the agency should develop criteria for determining which changes should be subject to the rulemaking process, as outlined in federal statute, or to an informal review and comment period. At a minimum, these criteria could include changes that impose new reporting requirements or new analysis on project sponsors, changes to the principles used to recommend projects for funding, and changes to the weights assigned to the criteria used to evaluate and rate projects. The criteria should be communicated to Congress and to project sponsors and others in the transit community; and consolidate information and guidance related to the New Starts program in one location on the agency’s Web site and regularly review this information to ensure it is up to date and easy to access.

Agency Comments and Our Evaluation

We provided a draft of this report to the Department of Transportation for review and comment. Officials from the Department and FTA indicated that they generally agreed with the report’s findings, conclusions, and recommendations. FTA officials also provided technical clarifications, which we incorporated as appropriate.

We are sending copies of this report to 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 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. GAO contacts and key contributors to this report are listed in appendix VI.

Scope and Methodology

To address our objectives, we reviewed the administration’s fiscal year 2006 budget request, the Federal Transit Administration’s (FTA) annual New Starts report, FTA’s New Starts regulations, FTA’s 2004 and 2005 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, New Starts Working Group, and the Association of Metropolitan Planning Organizations. In addition, we attended FTA’s New Starts roundtables with project sponsors in New York and San Francisco in April and May 2005, respectively.

We also conducted semistructured interviews with project sponsors from the 26 projects that were evaluated and rated in the fiscal year 2006 evaluation cycle (see table 5). These interviews were designed to gain project sponsors’ perspectives on a number of topics, including the manner in which FTA communicates changes to the New Starts application, evaluation, rating, and project development oversight processes; the impact of the changes that FTA has made to the application, evaluation, rating, and project development oversight processes since the fiscal year 2001 evaluation cycle—the first full evaluation and rating cycle after the enactment of the Transportation Equity Act for the 21st Century (TEA-21); and the measures FTA uses to evaluate projects. To verify the clarity, length of time of administration, and understandability of the interview questions, as well as to determine whether respondents had sufficient knowledge and information to answer the questions, we pretested the questions with three project sponsors. We made changes to the content and format of the final set of interview questions as a result of these pretests. After conducting the interviews with sponsors from all 26 projects, we used a content analysis to systematically determine project sponsors’ views on key interview questions and identify common themes in project sponsors’ responses. Two analysts reached consensus on the coding of the responses, and a third reviewer was consulted in case of disagreements, to ensure that the codes were reliable.

To ensure the reliability of 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 them whether their policies and procedures had changed significantly since we reviewed them for our 2004 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 November 2004 through May 2005 in accordance with generally accepted government auditing standards, including standards for data reliability.

Projects with Existing FFGAs and Projects in Preliminary Engineering and Final Design in the Fiscal Year 2006 Cycle

Projects with existing full funding grant agreements (FFGAs)

Kansas City—Southtown Bus Rapid Transit (BRT)

Status of Previous GAO Recommendations for Improving the New Starts Evaluation Process

The Federal Transit Administration (FTA) should prioritize the projects it rates as highly recommended or recommended and ready to receive New Starts funds.

FTA officials told us that their recently implemented cost-effectiveness practice was partly in response to this recommendation. FTA will generally not recommend funding for a project that does not achieve at least a “medium” cost-effectiveness rating.

FTA should make commitment authority allocated to projects for which the federal funding commitments have been withdrawn available for all projects competing for New Starts funding (i.e., “release” the funding).

In fiscal year 2003, FTA released $157 million in commitment authority reserved for a Los Angeles Mid-City subway project that had been suspended for more than 3 years.

FTA should amend its regulations governing the level of federal funding share for projects to reflect its policy of favoring projects that request less than 60 percent New Starts funding.

FTA disagreed with this recommendation, arguing that its preference policy is not a legally binding requirement and therefore should not be reflected in the New Starts regulations. However, the agency did change the way it characterized the policy in its fiscal year 2006 New Starts annual report. This document states that FTA “generally” will not recommend funding for projects that request more than a 60 percent New Starts share of funding.

FTA should issue additional guidance to transit agencies describing FTA’s expectations regarding the local travel forecasting models and the specific type of data FTA requires to calculate the Transportation System User Benefits measure.

FTA completed several actions and has other ongoing efforts to address the recommendation. (1) FTA provided additional guidance in its reporting instructions, clarifying the practices that must be followed in preparing the Transportation System User Benefits measure. (2) FTA provided additional guidance in July 2003, on how it would evaluate the measures in the fiscal year 2005 rating process. (3) FTA held several special workshops for transit agencies on Transportation System User Benefits, travel forecasting, and development of transit alternatives. (4) FTA initiated a proactive outreach to project sponsors to help them prepare and evaluate the measure, identifying weaknesses in their proposed measure and suggesting improvements. (5) FTA has a number of ongoing planned improvements to its guidance, including developing a users guide to the Summit software, developing case studies and exemplary practices, and updating its guidance on travel forecasting for New Starts projects.

FTA should clearly explain the basis on which it decides which projects will be recommended for funding outside of full funding grant agreements, and what projects must do to qualify for such a recommendation. These explanations should be included in FTA’s annual New Starts report and other published New Starts guidance.

In its fiscal year 2006 New Starts report, FTA described its criteria for recommending projects for funding outside of full funding grant agreements. These criteria include projects that were in or nearing final design, received overall highly recommended or recommended ratings, and had cost-effectiveness ratings above a “low.”

FTA should examine the impact of its preference policy on projects currently in the evaluation process, as well as projects in the early planning stages, and examine whether its policy results in maximizing New Starts funds and local participation.

FTA has not implemented this recommendation.

Key New Starts Provisions Contained in House and Senate Reauthorization Bills

Establishes a “Small Starts” program for projects develop a streamlined evaluation process for projects requesting less than $75 million in New Starts funds.

Eliminates the “exempt” classification for projects requesting between $25 million and $75 million in New Starts funding, with a total project cost of less than $200 million. These projects would be evaluated through a streamlined rating process. requesting less than $25 million in New Starts funding and allows FTA to analyze and rate all projects through a streamlined process.

Maintains the “exempt” classification for projects requesting less than $25 million in New Starts funding.

Expands New Starts funding eligibility to include rapid transit operating in nonexclusive lanes) requesting less than $75 million to be eligible for New Starts funding. nonfixed-guideway projects with a majority of fixed- guideway components seeking between $25 million and $75 million as part of its “Small Starts” initiative.

Maintains the current rating system. recommended,” “recommended,” and “not recommended” ratings) to five levels of ratings: “high,” “medium-high,” “medium,” “medium-low,” and “low.”

Maintains the maximum New Starts share at 80 percent for individual projects (in contrast to the administration’s reauthorization proposal, which would lower the maximum New Starts share to 50 percent).

Maintains the maximum New Starts share at 80 percent for individual projects.

Specifically prohibits FTA from requiring a nonfederal share that is more than 20 percent of the project’s cost.

Requires FTA to provide notice and an opportunity for review and evaluation process and criteria and allow for public comment. comment at least 60 days before issuing any nonregulatory substantive changes.

FTA’s Project Justification Measures for Evaluating and Rating New Starts Projects

Transportation System User Benefits per project passenger mile (normalized travel time savings)

GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

In addition to the individuals named above, other key contributors to this report were Bert Japikse, Jessica Lucas-Judy, Sara Ann Moessbauer, and Gary Stofko.

Related GAO Products

Highway and Transit Investments: Options for Improving Information on Projects’ Benefits and Costs and Increasing Accountability for Results. GAO-05-172. Washington, D.C.: January 24, 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: Challenges in Evaluating, Overseeing, and Funding Major Transit Projects. GAO/T-RCED-00-104. Washington, D.C.: March 8, 2000.

Mass Transit: “Mobility Improvements” Is One of Many Factors Used to Evaluate Mass Transit Projects. GAO/RCED-00-6R. Washington, D.C.: October 15, 1999.

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.