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September 2013

New Rail Projects Continue in Climate of Fiscal Restraint

Courtesy DC Streetcar

Courtesy DC Streetcar
The strong demand for additional rail investments in cities throughout the country continues unabated, despite the fact that following the sunset of Moving Ahead for Progress in the 21st Century Act (MAP-21) next September, the Mass Transit Account of the Highway Trust Fund is projected by the Congressional Budget Office (CBO) to have very little if not a negative balance by FY 2015 (beginning Oct. 1, 2014), when any reauthorization of MAP-21 would begin.

Meanwhile, regulatory implementation of this law is ongoing, and the final rule governing the New Starts and Small Starts programs that partly fund the majority of U.S. public transportation infrastructure projects was only recently released. This article will cover those recent developments as well as new and upcoming projects in the federal “pipeline” of funding requests. We’ll also take a look at how the next federal law may be funded and what cities are doing to address this fiscal climate.

New Starts rule finalized
The Federal Transit Administration (FTA) released its new policy guidance in August, which replaces all previous policy guidance documents published by FTA relating to the New and Small Starts programs. It revises the evaluation measures and methods for calculating a project’s justification and how FTA will evaluate a project’s local financial commitment, as required by MAP-21 and implemented in the final rule published this past January.

The FTA also released reporting instructions that describe what project sponsors need to submit to the agency and the new forms that must be completed. These documents can be found on FTA’s website at http://www.fta.dot.gov/12304.html.

Of course, the guidance and January regulation cover only the New and Small Starts evaluation process; many other implementing rules of new MAP-21 programs will follow in the next 18 months, including the core capacity improvement program evaluation and rating process; the program of interrelated projects evaluation and rating process; the pilot program for expedited project delivery; the measures and breakpoints for ratings for the congestion relief criterion; and the process for an expedited technical capacity review for project sponsors that have recently, and successfully, completed at least one new fixed guideway or core capacity project.

In addition, more specific explanation of how these steps in the New and Small Starts process will be implemented by FTA are expected in future interim policy guidance. In short, a considerable amount of the current federal law governing public transportation programs has yet to be implemented — for a law that is scheduled to expire in the last quarter of next year.

Considerable controversy
The August New and Small Starts guidance says the FTA will rate the six-project justification criteria equally, including mobility improvements, environmental benefits, congestion relief, economic development effects, land use and cost effectiveness. This will form the project justification rating, which is half of the overall project rating law. The other half will comprise the rating of local financial commitment, which in turn will look at three sub-criteria: availability of reasonable contingency amounts; availability of “stable and dependable” capital and operating funding sources; and availability of local resources to maintain and operate the overall existing and proposed public transportation system without requiring a reduction in existing services. Each of these criteria will be rated on a five-point scale, from low to high.

Considerable controversy was generated in how some of the project justification ratings would be applied between New and Small Starts. While the FTA tried to apply the same evaluations to both categories of projects, some, such as the cost-effectiveness rating, do have different break points for the five-point scale.

The final policy guidance specifies that FTA will assign a 25% weight to the current financial condition of the project sponsor, 25% weight to the firmness of the local funding commitment and fully 50% of the financial rating to the “reasonableness” of the financial plan submitted by the project sponsor. The requested New or Small Starts share of the total project capital cost, and  the level of local match, will be also be strongly considered; this can potentially raise the local financial commitment sub-rating one level.


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