FTA generally funds New Starts projects through FFGAs, which are required by statute to establish the terms and conditions for federal participation in a New Starts project. FFGAs may 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 projects to obtain FFGAs, New Starts projects must emerge from a regional, multimodal transportation planning process. The first two phases of the New Starts process—systems planning and alternatives analysis—address this requirement. The systems planning phase identifies the transportation needs of a region, while the alternatives analysis phase provides information on the benefits, costs, and impacts of different options, such as rail lines or bus routes, in a specific corridor versus a region. The alternatives analysis phase results in the selection of a locally preferred alternative, which is the New Starts project that FTA evaluates for funding. After a locally preferred alternative is selected, the project sponsor submits an application to FTA for the project to enter the preliminary engineering phase. When this phase is completed and federal environmental requirements are satisfied, FTA may approve the project’s advancement into final design, after which FTA may approve the project for an FFGA and proceed to construction. FTA oversees grantees’ management of projects from the preliminary engineering phase through the construction phase. To help inform administration and congressional decisions about which projects should receive federal funds, FTA currently distinguishes between proposed projects by evaluating and assigning ratings to various statutory evaluation criteria—including both project justification and local financial commitment criteria—and then assigning an overall project rating. (See fig. 1.) These evaluation criteria reflect a broad range of benefits and effects of the proposed project, such as cost-effectiveness, as well as the ability of the project sponsor to fund the project and finance the continued operation of its transit system. FTA has developed specific measures for each of the criteria outlined in the statute. On the basis of these measures, FTA assigns the proposed project a rating for each criterion and then assigns a summary rating for local financial commitment and project justification. These two ratings are averaged together, and then FTA assigns projects a “high,” “medium-high,” “medium,” “medium-low,” or “low” overall rating, which is used to rank projects and determine what projects are recommended for funding. Projects are rated at several points during the New Starts process—as part of the evaluation for entry into the preliminary engineering and the final design phases, and yearly for inclusion in the New Starts Annual Report. As required by SAFETEA-LU, the administration uses the FTA evaluation and rating process, along with the phase of development of New Starts projects, to decide which projects to recommend to Congress for funding. Although many projects receive a summary rating that would make them eligible for an FFGA, only a few are proposed for an FFGA in a given fiscal year. FTA proposes FFGAs for those projects that are projected to meet the following conditions during the fiscal year for which funding is proposed: All nonfederal project funding must be committed and available for the project. The project must be in the final design phase and have progressed far enough for uncertainties about costs, benefits, and impacts (e.g., financial or environmental) to be minimized. The project must meet FTA’s tests for readiness and technical capacity, which confirm that there are no remaining cost, project scope, or local financial commitment issues. SAFETEA-LU introduced a number of changes to the New Starts program, including some that affect the evaluation and rating process. For example, given past concerns that the evaluation process did not account for a project’s impact on economic development and FTA’s lack of communication to sponsors about upcoming changes, the statute added economic development to the list of project justification criteria that FTA must use to evaluate and rate New Starts projects, and requires FTA to issue notice and guidance each time significant changes are made to the program. SAFETEA-LU also established the Small Starts program, a new capital investment grant program, simplifying the requirements imposed for those seeking funding for lower-cost projects such as bus rapid transit, streetcar, and commuter rail projects. This program is intended to advance smaller-scale projects through an expedited and streamlined evaluation and rating process. FTA also subsequently introduced a separate eligibility category within the Small Starts program for “Very Small Starts” projects. Small Starts projects that qualify as Very Small Starts are simple, low-cost projects that FTA has determined qualify for a simplified evaluation and rating process. In addition to implementing the Small Starts program, FTA has taken other steps to implement SAFETEA-LU changes to the New Starts evaluation process. For example, FTA incorporated economic development into the existing evaluation framework by considering the information provided by project sponsors as an “other factor.” FTA also sought public comments on different proposals for revising the evaluation process to better reflect the statute through the Advanced Notice of Proposed Rulemaking (ANPRM) and the final NPRM for the New Starts and Small Starts programs. However, following concerns voiced by Members of Congress and the transit industry about the weights placed on different project benefits, FTA was prohibited from using funds to proceed with the rulemaking process, with the exception of reviewing comments, under the fiscal year Consolidated Appropriations Act of 2008. Figure 2 shows a timeline of FTA’s efforts to date to implement SAFETEA-LU changes to the New Starts evaluation and ratings process. FTA primarily uses the cost-effectiveness and land use criteria to evaluate New Starts projects, but concerns have been raised about the extent to which the measures for these criteria capture total project benefits. Specifically, FTA’s TSUB measure considers how the mobility improvements from a proposed project will reduce users’ travel times. According to FTA officials, experts, and the literature we consulted, the TSUB measure accounts for most secondary project benefits, including economic development, because these benefits are typically derived from mobility improvements that reduce users’ travel times. However, project sponsors and experts raised concerns about how FTA currently measures and weights different project justification criteria, noting that these practices may underestimate some project benefits. For example, some experts and project sponsors we spoke to said that the TSUB measure does not account for benefits for nontransit users or capture any economic development benefits that are not directly correlated to mobility improvements. As a result, FTA may be underestimating projects’ total benefits, particularly in areas looking to use these projects as a way to relieve congestion or promote more high-density development. In these cases, it is unclear the extent to which FTA’s current approach to estimating benefits impacts how projects are ranked in FTA’s evaluation and ratings process. FTA officials acknowledged these limitations, but noted that improvements in local travel models are needed to resolve some of these issues. FTA currently relies on the cost-effectiveness and land use criteria to evaluate and rate New Starts projects. Specifically, FTA assigns a weight of 50 percent to both the cost-effectiveness and land use criteria when developing project justification ratings. Table 1 provides a summary of all project justification criteria that FTA is required to review, the measures it uses to evaluate these criteria, and how this information is used to rate projects. To evaluate the land use criterion, FTA has developed and uses three qualitative land use measures: land use in the project area, the extent to which the area has transit supportive plans and policies, and the performance and impacts of these policies. For example, to determine whether a project’s surrounding area has transit supportive plans and policies, FTA examines whether there are growth management strategies and transit supportive corridor policies in place, the extent to which zoning regulations near stations are transit supportive, and the tools available to implement land use policies. To evaluate cost-effectiveness, FTA relies on the TSUB measure and costs. The TSUB measure captures predicted improvements in mobility caused by the implementation of a project. In particular, TSUB captures transit users’ cost and travel time savings, as well as improvements in comfort, convenience, and reliability of travel. Project sponsors use local travel models to forecast ridership and simulate trips taken in 2030, the forecast year used to estimate savings over time for two alternatives. To evaluate the benefits for these two alternatives, FTA uses the outputs from these models to consider and weigh a range of attributes, such as time spent waiting at and walking to the transit station, and calculates the perceived level of time savings associated with a given project. The first alternative, known as the baseline alternative, assumes low-cost improvements to the project area’s current transportation network, while the second alternative-—the “build alternative”—assumes the proposed New Starts transit project is constructed. As outlined in figure 3, FTA uses the forecasts for these two alternatives to calculate the predicted TSUB value for the proposed project. To determine a project’s final cost-effectiveness rating, FTA divides the project’s annual capital and operating costs by its predicted TSUB value and compares the computed figure to established cost-effectiveness breakpoints. FTA officials that we interviewed noted that the TSUB measure used to assess the cost-effectiveness criterion in the New Starts evaluation framework emphasizes predicted mobility improvements because most project benefits are realized only when transit users perceive that their time and cost of travel has been reduced. For example, the introduction of new transit service may reduce users’ overall travel time to a given destination. These reductions in travel time usually occur because a project offers faster travel times as a result of travel on the project’s fixed guideway, which does not incur the degree of congestion faced by buses operating in mixed travel. According to FTA, such transit user benefits are the distinct and primary benefit of transit investments.