Major Capital Investment Projects
Notice Of Proposed Rulemaking.
This notice of proposed rulemaking (NPRM) proposes a new regulatory framework for FTA's evaluation and rating of major new transit investments seeking funding under the discretionary “New Starts” and “Small Starts” programs. This notice of proposed rulemaking is being published concurrently with a Notice of Availability of proposed guidance that proposes new measures and methods for calculating the project justification and local financial commitment criteria specified in statute and this proposed rule. FTA seeks public comment on both this proposed rule and the proposed guidance.
3 actions from June 3rd, 2010 to January 2012
June 3rd, 2010
August 2nd, 2010
- ANPRM Comment Period End
Table of Contents Back to Top
- FOR FURTHER INFORMATION CONTACT:
- SUPPLEMENTARY INFORMATION:
- I. Introduction
- II. What This NPRM Contains
- III. Executive Summary
- 1. The Advance Notice of Proposed Rulemaking (ANPRM)
- 2. Key Issues and Proposed Resolution
- 3. Streamlining
- IV. Response to Comments
- A. General Comments
- 1. Funding Based on Regional or Project Characteristics
- 2. Additional and Updated Guidance
- 3. Livability and Sustainability
- 4. Methodology
- 5. Other General Comments
- B. Cost Effectiveness
- Measuring Cost Effectiveness
- Cost Effectiveness Question 1: “How might FTA better evaluate cost effectiveness?”
- 1. Conceptual Basis for Comparing Benefits and Costs
- 2. Calculating Costs
- 3. Determining What Costs Should Be Included in Cost Effectiveness
- 4. Forecasting Methods
- Inclusion of Benefits in Cost Effectiveness
- Cost Effectiveness Question 2: “What, if any, additional benefits such as environmental benefits, equity considerations (e.g., the social benefits of low-income ridership), and benefits of economic development attributed to a specific project could FTA include in the measure of cost effectiveness? What specific benefits should be included in the calculation of cost effectiveness?”
- Cost Effectiveness Question 3: “If you believe that FTA should include other benefits in the measure of cost effectiveness, how can FTA best quantify those benefits? Please include specifics on how FTA would quantify and measure these benefits.”
- Cost Effectiveness Question 5 (part B): “Should FTA consider additional benefit categories such as convenience for riders, reduced congestion, reduced travel time as a result of reduced congestion, reduction in the number of accidents due to reduced congestion, fuel costs (or other variable cost) savings for individuals who would be using the projects and/or the benefit to national security of additional transportation options? If so, how should these be measured?”
- Environmental Benefits Question 8: “Should environmental benefits be included in the cost effectiveness measure? How can environmental benefits be compared across projects, and incorporated into FTA funding decisions?”
- Economic Development Question 10: “Should economic development be a part of the cost effectiveness measure?”
- 1. Inclusion of Non-Transportation Benefits in Cost Effectiveness
- a. Public Health and Environmental Benefits
- b. Economic Development
- c. Land Use
- d. Local Support
- 2. Inclusion of Additional Transportation Benefits in Cost Effectiveness
- a. Transit Systems
- b. Transit Users
- c. Project Planning
- d. Access
- e. Mobility Improvements
- f. Equity Benefits
- g. Reduced Vehicle Use
- h. Congestion and Non-Transit Travel Time Reductions
- i. Transportation Costs
- j. Safety Benefits
- k. Non-Motorized Travel
- l. National Security
- Simplified Measures
- Cost Effectiveness Question 4: “Are there simpler measures of cost effectiveness that FTA could use? If so, what are they? Please be specific.”
- 1. Cost Per Rider or Passenger Trips
- 2. Other Proposals for Simplification
- 3. Support for Existing Measure
- C. Environmental Benefits
- Measuring Environmental Benefits
- Environmental Benefits Question 1: “How might FTA better measure environmental benefits?”
- 1. Comments on the Existing Measure
- 2. Data Reliable and Easily Obtained
- 3. Incorporation of Environmental Benefits Into Other Metrics
- 4. Consideration of Transit Agency Size, Project Setting, and Project Size
- 5. Consideration of Local versus Regional Context
- 6. Project Specific Impacts
- 7. Consideration of NEPA and the Environmental Benefits Measure
- 8. Priority and Weighting for Environmental Benefits Measures
- 9. Qualitative Versus Quantitative Environmental Benefits Measures
- 10. Other General Environmental Benefits Suggestions
- 11. Proposed Approaches to Measuring Environmental Benefits
- a. Checklist or Point Systems
- b. Warrants
- c. Economic Models—Natural Resource Valuation
- d. “Warrants-Plus-Merits”
- Environmental Benefits Question 2A: “In measuring environmental benefits, should FTA consider a broad definition of environment, as does the National Environmental Policy Act (NEPA), which includes consideration of both the human and natural environment?”
- Environmental Benefits Question 2B: “Should FTA focus on the environmental performance of specific areas such as air quality emissions, energy use, greenhouse gas emissions, or water quality?”
- 1. Air quality
- 2. Greenhouse Gas Emissions
- 3. Energy Use
- 4. Water Quality
- 5. Public Health
- 6. Consistency With State or Regional Sustainability Plans or Policies
- 7. Environmental Management Systems
- 8. Parking
- 9. Other Metrics
- Environmental Benefits Question 3: “Should the environmental benefits evaluation consider the steps a project sponsor takes to mitigate the construction impacts of New Starts projects in addition to the environmental effects of their operation? Should the origin and methods to obtain construction or vehicle materials; energy type and use; and water consumption be considered in the overall evaluation of environmental benefits?”
- 1. Construction Mitigation
- 2. Including Lifecycle Environmental Costs in the Measure of Environmental Benefits
- Environmental Benefits Question 4: “Should FTA consider the reduction in single occupant vehicle usage as part of its evaluation of environmental benefits? What method should be used to measure the changes in vehicle miles travelled resulting from implementation of a project? Please be specific about how FTA should measure this.”
- 1. Reduction in Single Occupant Vehicle Usage
- 2. Method for Calculating the Change in Vehicle Miles Traveled
- Environmental Benefits Question 5: “Should FTA consider certification of the planned facility through the Leadership in Energy and Environmental Design (LEED) Green Building Rating System; low impact development of transit facilities; or energy production with windmills or solar panels?”
- 1. Leadership in Energy and Environmental Design (LEED)
- 2. Low impact development (LID)
- 3. Alternative Energy
- Environmental Benefits Question 6: “In measuring the environmental benefits of a project, how might FTA take into account the goals and objectives of Executive Order 13514 [Federal Leadership in Environmental, Energy, and Economic Performance]? Should a project be evaluated and rated on how well it maximizes the land use efficiencies created through locating the project in areas that facilitate sustainable development?”
- 1. Executive Order 13514
- 2. Land Use Efficiency
- Environmental Benefits Question 7: “To what extent, if any, can technology improvements—lower carbon transport technologies, the use of emerging light weight materials, improved engine designs, or bio-fuel applications, for example—be said to reflect environmental benefits of transit proposals? How would such improvements be measured and compared?”
- Environmental Benefits Question 8: “Should environmental benefits be included in the cost effectiveness measure? How can environmental benefits be compared across projects, and incorporated into FTA funding decisions?”
- D. Economic Development
- Measuring Economic Development
- Economic Development Question 1: “How might FTA better measure the impact of transit on local land use patterns and/or economic development (ED)?”
- Economic Development Question 2: “Should FTA continue to use its current approach for evaluating the economic development effects of major transit investments?”
- Economic Development Question 3: “Should FTA define economic development differently? If so, how?”
- Economic Development Question 4: “Should FTA use either a qualitative or a quantitative approach (or both) for evaluating the economic development effects of New Starts and Small Starts projects? Should FTA consider a qualitative approach for evaluating land use policies or a quantitative approach for predicting changes in land use values and patterns (or both) as a proxy for evaluating economic development benefits?”
- Land Use and Economic Development
- Economic Development Question 5: “What scale should be used to measure economic development? At a corridor level or at the metropolitan area level?”
- Economic Development Question 6: “How should FTA distinguish between the land use effects and the economic development effects of a proposed project? How should they be measured?”
- Economic Development Question 7: “Can a New Starts or Small Starts project generate new economic development that would otherwise not have occurred in the surrounding area? If so, how might that economic development be measured? Should FTA consider the overall economic health of a metropolitan area when estimating the potential for a New Starts or Small Starts project to foster economic development?”
- Scope of Measurement and Factors Considered
- Economic Development Question 8: “How should FTA assess whether the plans, policies, and incentives intended to promote economic development would lead to transit oriented development that provides jobs and services within the corridor? Should FTA consider the economic development effects of the project on adjacent corridors? Should FTA consider commitments by developers or funding offered by developers as evidence of future economic development benefits? What time horizon should be used for considering economic development effects?”
- Economic Development Question 9: “Should FTA consider changes in land values as evidence of potential economic growth in a station area or project corridor? How would FTA quantify recent and future changes in land values? How can FTA avoid double counting benefits given that changes in land values may be caused in part by the improved accessibility from the project that FTA already measures as part of cost effectiveness? Should FTA consider the extent to which existing affordable housing and commercial space can be maintained in the corridor after implementation of a transit project there?”
- Economic Development Question 10: “Should economic development be a part of the cost effectiveness measure?”
- V. Section-by-Section Analysis
- Subpart A—General Provisions
- Section 611.101Purpose and Contents
- Section 611.103Applicability
- Section 611.105Definitions
- Section 611.107Relation to the Planning Process
- Subpart B—New Starts
- Section 611.201Eligibility
- Section 611.203Project Justification Criteria
- A. Proposed Regulation
- B. Appendix A and Proposed Guidance
- Section 611.205Local Financial Commitment Criteria
- A. Proposed Regulation
- B. Appendix A and Proposed Guidance
- Section 611.207Overall New Starts Project Ratings
- Section 611.209Project Development Process
- Section 611.211Before and After Study
- Subpart C—Small Starts
- Section 611.301Eligibility
- Section 611.303Project Justification Criteria
- Section 611.305Local Financial Commitment Criteria
- Section 611.307Overall Small Starts Project Ratings
- Section 611.309Project Development Process
- VI. Regulatory Analysis and Notices
- A. Executive Orders 13563 and 12866
- B. Need for Regulation
- B. Regulatory Evaluation
- 1. Overview
- 2. Covered Entities
- 3. Cost Effectiveness
- 4. Economic Development
- 5. Environmental Benefits
- 6. Mobility Improvements
- 7. Operating Efficiencies
- 8. Regulatory Evaluation
- C. Departmental Significance
- D. Regulatory Flexibility Act
- E. Paperwork Reduction Act
- F. Executive Order 13132
- G. National Environmental Policy Act
- H. Energy Act Implications
- I. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments
- J. Unfunded Mandates Reform Act
- K. Statutory/Legal Authority for This Rulemaking
- L. Regulation Identifier Number (RIN)
- VII. Proposed Regulatory Text
- List of subjects in 49 CFR part 611
- PART 611—MAJOR CAPITAL INVESTMENT PROJECTS
- Subpart A—General Provisions
- Subpart B—New Starts
- Subpart C—Small Starts
- Subpart A—General Provisions
- Subpart B—New Starts
- Subpart C—Small Starts
- Appendix A to Part 611—Description of Measures Used for Project Evaluation
- A. New Starts
- I. Project Justification
- II. Local Financial Commitment
- B. Small Starts
- I. Project Justification
- II. Local Financial Commitment
Tables Back to Top
DATES: Back to Top
Comments must be received by March 26, 2012.
ADDRESSES: Back to Top
You may submit comments identified by the docket number FTA-2010-0009 by any of the following methods:
1. Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments on the U.S. Government electronic docket site.
2. Fax: (202) 493-2251.
3. Mail: U.S. Department of Transportation, 1200 New Jersey Ave. SE., Docket Operations, M-30, West Building Ground Floor, Room W12-140, Washington, DC 20590-0001.
4. Hand Delivery: U.S. Department of Transportation, 1200 New Jersey Ave. SE., Docket Operations, M-30, West Building Ground Floor, Room W12-140, Washington, DC 20590 between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
Instructions: You must include the agency name (Federal Transit Administration) and Docket number (FTA-2010-0009) for this NPRM at the beginning of your comments. You should submit two copies of your comments if you submit them by mail. If you wish to receive confirmation that FTA received your comments, you must include a self-addressed stamped postcard. Note that all comments received will be posted without change to www.regulations.gov including any personal information provided and will be available to internet users. You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477). Docket: For access to the docket to read background documents and comments received, go to http://www.regulations.gov at any time or to the U.S. Department of Transportation, 1200 New Jersey Ave. SE., Docket Operations, M-30, West Building Ground Floor, Room W12-140, Washington, DC 20590 between 9 a.m. and 5 p.m., EST, Monday through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Back to Top
Elizabeth Day, Office of Planning and Environment, (202) 366-5159; for questions of a legal nature, Christopher Van Wyk, Office of Chief Counsel, (202) 366-1733. FTA is located at 1200 New Jersey Avenue SE., Washington, DC 20590. Office hours are from 9 a.m. to 5:30 p.m., EST, Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION: Back to Top
I. Introduction Back to Top
This NPRM is being issued to amend the regulation (Part 611 of Title 49 of the Code of Federal Regulations) under which the Federal Transit Administration (FTA) evaluates major new transit investments seeking funding under the discretionary “New Starts” and “Small Starts” programs authorized by Section 5309 of Title 49, U.S. Code. The New Starts and Small Starts programs are FTA's primary capital funding programs for new or extended fixed guideway and bus rapid transit systems across the country, including rapid rail, light rail, commuter rail, bus rapid transit, and ferries. This proposed rule was the subject of an Advance Notice of Proposed Rulemaking (ANPRM) issued on June 3, 2010, which posed a series of questions about the current regulation, and in particular about three of the criteria used to assess project justification.
In developing this NPRM, FTA has been guided by two broad goals. First, FTA intends, as suggested by the ANRPM and by the Secretary's announcement of January 13, 2010, to measure a wider range of benefits transit projects provide. Second, FTA desires to do so while establishing measures that support streamlining of the New Starts and Small Starts project development process. In balancing these goals, FTA is seeking to continue a system in which well-justified projects are funded. At the same time, FTA seeks to ensure that it does not perpetuate a system in which the measures used to determine the project justification or local financial commitment are so complex that they unnecessarily burden projects sponsors and FTA, or that make it increasingly difficult to understand, which hinders effective involvement of the public.
To streamline the process, FTA is first proposing a simplified measure of mobility benefits. Second, FTA is proposing to expand the ability of projects to pre-qualify based on the characteristics of the project or the corridor in which it is located. As with the current “Very Small Starts” category, FTA proposes to determine what characteristics would be sufficient, without further analysis, to warrant a satisfactory rating of “medium” on one or more of the evaluation criteria. Third, FTA is proposing ways the data submitted by project sponsors and the evaluation methods employed by FTA could be simplified. Fourth, FTA is proposing to greatly simplify the process for developing a point of comparison for incremental measures (i.e., measures that are based on a comparison between two different scenarios, such as a comparison of Vehicle Miles of Travel (VMT) in the corridor without the project and VMT in the corridor with the project). Fifth, FTA is proposing to clarify the local financial commitment criteria to address more clearly the strong interaction between capital and operating funding plans. Finally, FTA is proposing that if a project stays within a certain “envelope” of cost and scope during the project development process, no further re-evaluation of project merit will be required.
To address more explicitly the broad range of benefits that transit projects provide, FTA is proposing several ways such benefits will be incorporated into the evaluation process. In particular, this includes livability principles and goals that relate strongly to the purposes of many transit investments. More specifically, FTA is proposing to include more meaningful measures of the environmental benefits and economic development effects of projects and to give these measures equal weight in the evaluation of project justification.
II. What This NPRM Contains Back to Top
This NPRM is one way FTA seeks to accomplish the two goals outlined above; FTA is also publishing a notice in the Federal Register today that proposes guidance related to the proposals in this NPRM that is available for public review and comment. The regulations act as a framework for the project evaluation process, and the policy guidance provides non-binding interpretations for implementing the regulations. Under current law, FTA is required to issue such policy guidance for public comment at least every two years and whenever major changes in policy are proposed. FTA believes that this approach allows FTA to make improvements in the criteria as new techniques become available. FTA encourages comment on both the NPRM and the proposed policy guidance.
The Executive Summary that follows describes the New Starts and Small Starts programs, describes the ANPRM published on June 3, 2010, describes the general approach taken in the NPRM, and discusses several key issues and how they are resolved.
The following section includes a detailed summary of the comments received on the ANPRM and FTA's response to those comments. FTA received over 2,000 individual comments from over 160 respondents to the ANRPM. FTA made a special effort to categorize the comments by topical area, group them, and summarize them so as to assure all relevant comments received consideration in the development of this NRPM and accompanying proposed policy guidance. The responses to comments will provide a sense of the proposals that FTA is carrying forward through this NPRM and accompanying proposed policy guidance, but those proposals are more specifically detailed in the “Section-by-Section” analysis that directly follows the comment summaries and responses.
The Section-by-Section analysis is intended to do two things: (1) Explain the proposed changes to the regulatory text found at the end of this NPRM; and (2) provide some sense of what is in the related proposed policy guidance also being published for comment today. FTA is bound by the current law when it comes to the process used to evaluate, rate, and approve funding for New Starts and Small Starts projects, including the criteria used to evaluate them. But FTA has made an effort in this proposal to introduce a number of streamlining features compatible with current law. In addition, and separately from this effort, FTA will be pursuing additional legislative changes to further streamline the process as part of its efforts toward reauthorization of its programs.
Following the Section-by-Section analysis is the “Regulatory Evaluation” section of this NPRM, which includes descriptions of the requirements that apply to the rulemaking process and information on how this rulemaking effort fits within those requirements. FTA encourages you to read these and submit comments on them.
The NPRM concludes with the actual regulatory text FTA is proposing for its New Starts and Small Starts programs. This is the language that, if finalized, would govern the way New Starts and Small Starts projects are evaluated, rated, and funded. The language would be binding, which means FTA's future policy guidance documents would need to be consistent with the language. FTA seeks your comments on this proposed regulatory text.
III. Executive Summary Back to Top
The New Starts and Small Starts programs, established in Section 5309(d) and (e) of Title 49, U.S. Code, are FTA's primary capital funding programs for new or extended transit systems across the country, including rapid rail, light rail, commuter rail, bus rapid transit, and ferries. Under this discretionary program, proposed projects are evaluated and rated as they seek FTA approval for a Federal New Starts or Small Starts funding commitment to finance project construction. Currently, overall ratings for proposed New Starts and Small Starts projects are based on summary ratings for two categories of criteria: project justification and local financial commitment. Within these two categories, projects are evaluated and rated against several criteria specified in law. Details on how projects are currently evaluated and rated are set forth in the FTA regulations at 49 CFR Part 611, which can be found at the following web address: http://www.gpo.gov/fdsys/pkg/CFR-2009-title49-vol7/pdf/CFR-2009-title49-vol7-part611.pdf.
Several statutory changes since 49 CFR Part 611 was first written have modified the evaluation process, including the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) signed on August 10, 2005, and the SAFETEA-LU Technical Corrections Act of 2008, signed on June 6, 2008. FTA announced the most recent policy guidance on the evaluation process (issued to address the SAFETEA-LU Technical Corrections Act) on July 29, 2009. This policy guidance is available in the Federal Register at 74 FR 37763. A summary of the evaluation and rating process can be found at http://fta.dot.gov/documents/FY12_Evaluation_Process(1).pdf.
1. The Advance Notice of Proposed Rulemaking (ANPRM)
The ANPRM sought comment on three of the evaluation criteria under the project justification category: Cost effectiveness, environmental benefits, and economic development benefits.
a. Cost Effectiveness. All of the project justification criteria characterize the effectiveness of projects in addressing the objectives identified by the statute; cost effectiveness is currently the only project justification criterion that examines whether certain benefits are in scale with project costs. Cost effectiveness is not, however, an attempt to perform a full cost-benefit analysis. In its current cost effectiveness measure, FTA includes the direct mobility benefits of the project and compares them to the annualized capital and operating costs of the proposed project as compared to a baseline alternative. FTA defines mobility benefits as any measurable change from the proposed project in travel time, including walking, waiting, transfers, and other attributes of travel on the transportation system as compared to the baseline alternative.
Although FTA's definition of mobility benefits includes time savings to highway users caused by congestion relief, FTA has not been using projections of highway time savings because of their unreliability and inconsistency. Instead, in determining cost effectiveness ratings, FTA credits all projects with an allowance for highway time savings that is equal to 20 percent of the project-specific transit travel time savings. FTA has sponsored research on better methods to predict highway time savings so that project-specific highway time savings might someday be included in the mobility benefits that are compared to project costs in the cost effectiveness calculation.
FTA has also not included other benefits among the project-specific benefits used to compute the current cost effectiveness measure because of the difficulties of combining the broad range of other benefits into a common unit of measurement. Instead, in determining cost effectiveness ratings, FTA currently credits all projects with an allowance for other benefits that is equal to 100 percent of the project-specific time savings. FTA sought comment in the ANPRM on ways to quantify and value other benefits so that they can be included as project-specific benefits, rather than as a general allowance, in the comparison against project costs that is done in measuring cost effectiveness.
Beginning in April 2005, FTA had in place a budget decision approach that required at least a “medium” rating on cost effectiveness for a project to be considered for funding in the President's annual budget. Members of the transit community criticized that policy and questioned the way in which FTA measured cost effectiveness. Specifically, the transit community expressed concern that receiving a “low” or “medium-low” cost effectiveness rating “trumped” the other project justification criteria established by law. Critics also noted that projects were sometimes designed to achieve a “medium” cost effectiveness rating to remain eligible for funding while sacrificing other potentially important considerations (such as station locations and/or design features to accommodate ridership growth). On January 13, 2010, Secretary Ray LaHood announced the end of that budget decision approach. This new direction presented FTA with an opportunity to rethink how it evaluates cost effectiveness for projects seeking New Starts and Small Starts funding, which led to this rulemaking effort.
Quantitative measures often require evaluating the incremental (or added) benefits of implementing a proposed project against some other alternative. FTA sought comment in the ANPRM on what the point of comparison should be. As stated above, projects are currently evaluated against a “baseline alternative,” which is defined as the “best that can be done” to address identified transportation needs in the corridor without a major capital investment in new infrastructure. The baseline alternative generally includes lower cost actions such as traffic engineering, enhanced bus service and other transit operational changes, and modest capital improvements such as reserved lanes, park-and-ride lots, and transit terminals. Although less expensive than the proposed project, the baseline alternative may still result in substantial costs, particularly in complex study areas with significant transportation problems.
For more information how FTA currently calculates cost effectiveness, see the summary of the evaluation and rating process available at http://fta.dot.gov/documents/FY12_Evaluation_Process(1).pdf
b. Environmental Benefits. Since environmental benefits was first added as a project justification criterion in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), FTA has attempted through various methods, with limited success, to meaningfully measure and compare the environmental benefits of transit projects in the project development pipeline, even though each project may be located in a unique environmental setting.
For a number of years, FTA measured air quality effects using a regional forecast of the change in vehicle miles of travel (VMT) expected to result from implementation of the proposed project compared to the baseline alternative in the forecast year. The results of that approach proved unsatisfactory because any one project had only a minor effect on total regional air quality. The results also did not take into account the severity of the metropolitan area's air quality problems or the size of the population exposed to polluted air. Because of those concerns, FTA switched to using the Environmental Protection Agency's (EPA) air quality conformity designation of the metropolitan area in which the proposed project is located as the sole basis for assigning a rating on environmental benefits.
Although FTA has focused solely on air quality for the environmental benefits criterion in the past, the statute is written broadly enough to allow FTA to take into account other factors such as noise pollution, energy consumption, reductions in local infrastructure costs achieved through compact land use development, and the cost of suburban sprawl. In the ANPRM, FTA sought input on how better to assess all of the environmental benefits connected with a proposed project.
c. Economic Development. Under its current approach, FTA has defined economic development as the extent to which a proposed project is likely to enhance additional, transit-supportive development. Currently, FTA rates the economic development effects of major transit investments on the basis of the transit-supportive plans and policies in place and the demonstrated performance and impact of those policies. These “on the ground” indicators characterize the environment in which a project would be built and are not intended to predict future development outcomes. In the ANPRM, FTA requested input on how better to define economic development and on how to establish an improved approach for assessing these benefits.
d. Outreach. In support of this ANPRM, FTA held a series of public outreach meetings at which FTA staff made oral presentations on the ANPRM and provided meeting attendees with an opportunity to pose questions. Additionally, the sessions were intended to encourage interested parties and stakeholders to submit their comments directly to the official docket per the instructions. These sessions, announced in the Federal Register, were held in: Raleigh, NC; Vancouver, Canada (in connection with the American Public Transportation Association's annual Rail Conference); Chicago, IL; San Francisco, CA; Dallas, TX; and Washington, DC In addition, two webinars were held to provide the same opportunity for those unable to attend the other outreach sessions in person.
2. Key Issues and Proposed Resolution
The ANPRM laid out a series of questions on cost effectiveness, environmental benefits, and economic development effects. This section describes the current approach and lays out the changes being proposed in this NPRM. These proposed changes are the result of a review of the comments received and an application of the lessons learned from implementation of the current methods.
a. Cost Effectiveness. Currently, cost effectiveness is evaluated based on the incremental annualized capital and operating cost of the project per hour of travel time savings (i.e., the cost of the project divided by how much time it would save travelers). Changes in cost and travel time are calculated by comparing the proposed project with a baseline alternative. FTA's thresholds for assigning ratings from “low” to “high” are based on U.S. DOT guidance on the value of time. To establish these thresholds, benefits other than travel time savings are not calculated directly, but are assumed to be equal to the value of the travel time savings (as described above).
FTA is proposing a significantly different and simpler approach. The measure of cost effectiveness is proposed to be cost (annualized capital cost and operating cost) per trip taken on the project, with extra weight given to project trips made by transit dependents, with some allowances for “betterments” to be excluded from the cost side of the equation.
This proposed measure is intended to be much simpler that the current measure. It also allows project sponsors to use simplified forecasting methods for estimating project trips rather than traditional local travel forecasting methods. Given that the measure of effectiveness is not an incremental measure, there is no need for a point of comparison, or “baseline alternative,” to calculate it. To calculate the annualized capital and operating costs of the proposed project, the point of comparison would be the existing system.
FTA proposes the cost of “betterments,” would be excluded from the cost side of the cost effectiveness calculation. Betterments are those items above and beyond the items needed to deliver the mobility benefits of the project and that would not contribute to other benefits such as operating efficiencies. Betterments may include, for example, features needed to obtain LEED certification for the transit facilities or additional features to provide extra pedestrian access to surrounding development or aesthetically-oriented design features. This would remove a disincentive to include such features in the design of projects. FTA is interested on receiving comments on the kinds of betterments that should be excluded from the calculation.
FTA is proposing, in addition, to develop pre-qualification approaches that would allow for a project to automatically receive a satisfactory rating on cost effectiveness based on its characteristics or the characteristics of the project corridor. These approaches would be developed by analyzing how certain project or corridor characteristics would contribute to producing a satisfactory rating on cost effectiveness. In this way, a project whose characteristics met or exceeded a certain threshold value could be automatically rated without further project-specific analysis. Proposed pre-qualification values (“warrants”) would be proposed in policy guidance for comment by the public.
b. Environmental Benefits. Currently, FTA uses the EPA air quality designation for the metropolitan area in which a project is proposed to be located. Thus, FTA assigns projects located in non-attainment areas (areas that EPA has designated as having poor air quality) with a “high” rating; all other projects receive a “medium” rating.
FTA is proposing to expand the measure for environmental benefits to include direct and indirect benefits to the natural and human environment. Based on estimated changes in vehicle miles of travel (VMT), FTA would evaluate air quality based on changes in total emissions of EPA criteria pollutants, changes in energy use, changes in total greenhouse gas emissions, and safety changes including the amount of accidents, fatalities, and property damage. Changes in public health, such as benefits associated with long-term activity levels that would result from changes in development patterns, would be included once better methods for calculating this information are developed.
Estimated changes in VMT would be calculated in one of two ways. If the project sponsor uses the simplified forecasting method developed by FTA, changes in VMT would be imputed using standard factors developed by FTA that are applied to the estimated project-trips and passenger-miles. If a project sponsor chooses at its option to use standard local travel forecasting methods, the changes in VMT would be an output of the local travel forecasting process. The estimated environmental benefits would be monetized and compared to the annualized capital and operating cost of the proposed project.
c. Economic Development. Currently, FTA rates the economic development effects of major transit investments on the basis of the transit-supportive plans and policies in place and the demonstrated performance and impact of those policies. FTA proposes to continue to use this measure and to add a consideration of the social equity impacts of the proposed investment by assessing the degree to which policies maintaining or increasing affordable housing are in place. The number of domestic jobs related to design, construction and operation of the project would also be reported.
FTA is also proposing to allow project sponsors, at their option, to estimate indirect changes in VMT resulting from changes in development patterns that are anticipated to occur with implementation of the proposed project. The resulting environmental benefits would be calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion. In is anticipated that the project sponsor would undertake an analysis of the economic conditions in the project corridor, the mechanisms by which the project would improve those conditions, the availability of land in station areas for development and redevelopment, and a pro forma assessment of the feasibility of specific development scenarios.
Aside from changes that will improve FTA's measures for evaluating projects, FTA is proposing some changes that are intended to streamline the process.
First, FTA is proposing to allow project sponsors to forgo a detailed analysis of benefits that are unnecessary to justify a project. For example, if a project rates “medium” overall based on benefit calculations developed using existing conditions in the project corridor today, the project sponsor would not be required to do the analysis necessary to forecast benefits out to some future year (i.e., a “horizon” year). Similarly, FTA is proposing to develop methods that can be used to estimate benefits using simple approaches. Only when a project sponsor feels it is necessary to further identify benefits beyond a simplified method would more elaborate analysis be undertaken, and only at the project sponsor's option.
IV. Response to Comments Back to Top
The following is a summary of the comments received in response to the questions in the ANPRM, FTA's response to the comments received, and our proposal for addressing the issue raised by the questions in this NPRM. FTA received approximately 165 comment submissions from a wide-range of organizations and individuals. Comments included operators of public transportation; a private bus operator; State departments of transportation; a Federal agency; a member of Congress, metropolitan planning organizations (MPO) and regional councils of governments; local governments or entities; trade organizations; national non-profit organizations; lobbyists; research institutions; local or regional community organizations; private citizens; and businesses.
Please note that FTA attempted to respond to all relevant comments received on the ANPRM. FTA provided a more detailed response, however, only to comments that specifically addressed the issues presented in the ANPRM. General comments that did not pertain specifically to those topics were summarized at the beginning of this section.
A. General Comments
1. Funding Based on Regional or Project Characteristics
Comment: A number of comments suggested separate funding streams depending on the characteristics of the project or the region in which it is located. One comment suggested that FTA separate funding streams based on regional population to afford projects in medium-to-small regions a better chance to compete for funding. Another suggested creating separate funding opportunities for new transit initiatives and one for additions to existing systems. One comment suggested distinguishing between new corridors, extensions, and circulator projects.
Response: FTA is bound by the current law, in which funding eligibility is distinguished only by the size of the project and the amount of New Starts/Small Starts funds being sought. FTA believes the simplified project development and evaluation processes for smaller projects provide an opportunity for smaller and medium sized regions to compete. So long as there is a single source of funding in law for both extensions and completely new systems, FTA must evaluate them using the same criteria.
2. Additional and Updated Guidance
Comment: Numerous comments suggested FTA publish additional guidance on the New Starts/Small Starts project development and evaluation processes. For example, several comments suggested publishing additional guidance for how to achieve higher project justification ratings, although one comment suggested FTA retain its current level of guidance emphasizing the importance of regional and local land use planning, zoning, and economic development. Individual comments were received suggesting FTA should:
- Annually publish a capital cost analysis looking at regional variations and cost trends, as well as the actual as-built project costs and New Start application costs.
- Issue guidance on policies that support land use goals and transit-oriented development (TOD) planning.
- Update FTA's 2004 contractor guidelines on land use and economic development and issue it as official guidance to all applicants.
- Provide project sponsors with complete details on cost estimating and an actual FTA high-reliability ridership model.
- Facilitate the application process with best practices, guidelines, or other explanatory materials.
- Maximize public investment by using FTA resources to provide guidance, best practices, and research to facilitate efficient and cost-effective project completion.
- Clarify FTA's goals, objectives, and desired outcomes from the New Starts process.
- Assure the application process is clear, comprehensible, and efficient, so that project sponsors have sufficient time to make necessary project decisions according to whether they have qualified for funding.
- Create a comprehensive, up-to-date source of guidance for applicants.
- Enhance its current Lessons Learned and Best Practices procedures.
- Update the New and Small Starts guidance to reflect changes in policies and administrative requirements and make it consistent with the FTA Web site.
Response: FTA agrees with the importance of providing clear and up-to-date guidance about the project development and evaluation processes. By law, FTA is required to publish guidance about its policies for New and Small Starts at least every two years for comment, and whenever it intends to make a substantive change in its procedures or evaluation criteria. FTA intends to use this process to provide periodic updates to its policies and procedures in this arena. FTA also intends to continue to provide technical assistance in the form of research, training, and technical assistance materials on all aspects of the process. FTA appreciates the suggestions for specific areas of attention, and will use these, as well as comments on this rulemaking process, to guide the development of policy and procedural guidance and technical assistance activities in the future. In particular, FTA intends to use its Web site to provide a source for updated technical assistance and guidance materials.
3. Livability and Sustainability
Comment: A number of comments addressed the topic of how FTA should address the Administration's livability and sustainability initiatives. A few comments expressed general support for the new livability initiative and policy shift to support transit projects with positive community, environmental, and economic impacts. One comment expressed support for the Administration's livability and sustainability initiatives recognizing the connection among DOT, HUD, and EPA in future regional and local planning efforts. Another comment, however, suggested ignoring sustainability and livability claims.
Response: FTA believes its New and Small Starts project development and evaluation processes should address the Administration's livability and sustainability goals. Current law provides that projects be evaluated by factors including environmental benefits and economic development effects, which relate very strongly to these goals. In addition, the degree to which these projects are supported by local transit supportive plans and policies is also a criterion specified in law that FTA proposes to continue measuring.
Comment: A series of comments suggested ways FTA could support this initiative by altering its evaluation criteria. One comment expressed concern that the current criteria are not compatible with streetcar projects, and along with another comment, recommended FTA adopt performance measures supporting the livability and sustainability criteria. One comment made a general suggestion that FTA review the entire livability program and alter its rating system to address features of the program. Another comment, however, recommended FTA develop new rating factors that only award more points to applicants agreeing to increase affordable housing investment within one-half mile of planned transit stops. A couple of comments suggested the six Federal livability and sustainability criteria should be the primary criteria in law for New Starts. A couple of other comments expressed support for FTA's furtherance of the goals of the Partnership for Sustainable Communities through its New Starts and Small Starts program analyses. Others recommended New Starts and Small Starts projects support building healthy and sustainable communities of opportunity, recommending livability indicators as a means for attaining that outcome. One comment recommended the criteria for New Starts and Small Starts funds should focus on the improvements made towards safer walking and biking environments. Another comment recommended modifying the New Starts and Small Starts regulation to incentivizethe preservation and expansion of affordable housing near planned transit stops.
Response: FTA believes it can address livability and sustainability in measures it establishes for the environmental benefits, economic development effects, and land use criteria. FTA believes reductions in energy use and greenhouse gas and air pollutant emissions are the primary environmental benefits of transit projects that promote sustainability. FTA is proposing to evaluate the magnitude of these benefits in its environmental benefits criterion. FTA also believes it can address livability benefits of proposed investments by assessing transit supportive economic development plans and policies, existing and proposed, that would promote development in concert with assessing the degree to which those policies protect affordable housing.
In addition, FTA is proposing to allow project sponsors to evaluate the magnitude of the projected benefits that come from denser development around the transit investment as part of the measure for economic development. At the option of the project sponsor, indirect changes in VMT resulting from changes in development patterns may be estimated, and the resulting environmental benefits calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion.
Comment: Other comments addressed how funding priorities might be established to support the livability and sustainability initiatives. One comment recommended funding transportation projects that ensure that communities have streets, sidewalks, and transportation networks that are safe and inviting. Another comment suggested addressing national environmental and climate challenges by promoting low-carbon types of transportation modes via integration of transportation, housing, environment, and community revitalization strategies. One other comment encouraged FTA to consider the unequal treatment of highway and transit investments as the primary obstacle to improving livability.
Response: FTA does not believe it is necessary to explicitly establish funding priorities for certain kinds of projects. Rather, it believes having evaluation criteria in place that reward projects that achieve more environmental benefits and economic development effects can provide sufficient incentives to project sponsors to meet these goals. FTA notes the way highway and transit projects are treated is a feature of surface transportation law and cannot be changed through rulemaking.
Comment: A few comments addressed the weights assigned to the various evaluation criteria. The first comment suggested FTA's rating system give up to 40 percent of the points awarded for local matching funds. Another comment suggested only weighting environmental benefits higher than ten percent. A third comment suggested FTA give points to sponsors leveraging symbiotic projects that have private funds from rail companies or industry.
Response: According to existing law, FTA must evaluate the six specified project justification criteria and give “comparable, but not necessarily equal” weight to each. Separately, FTA must evaluate local financial commitment and produce a rating for it based on the various factors specified in the law. The separate ratings for project justification and local financial commitment must then be combined into an overall rating. The weightings for the project justification criteria will not be included in this proposed rule. Rather, FTA is proposing specific weights in the accompanying policy guidance. FTA does not believe it is appropriate to provide additional weight to projects with private funding. The source of local funding is not as important as whether the project has adequate overall financial support from non-Federal sources for both capital and operating costs.
Comment: A couple of comments questioned how FTA planned to incorporate incomplete studies commissioned by FTA, including Transit Cooperative Research Program studies H-39, H-41, and H-42, to develop data for future project evaluation.
Response: FTA will consider the results of these studies when they become available through policy guidance issued for notice and comment at least every two years. This will allow FTA to take into account any improved methodologies that may result from these and other studies conducted in the future.
Comment: Several comments included general suggestions for additional evaluation factors. One comment suggested adding a transit agency's management-labor relations history as a factor. Another comment expressed support for comparing project cost to shortened commute times. One other comment recommended that the project justification criteria should better address equity benefits associated with transit projects.
Response: FTA does not believe labor-management relations affect the relative performance or merits of a proposed transit investment. Shortened commute times are one important factor in assessing project merit, but FTA believes a simple measure of project effectiveness, such as system usage, is a reasonable proxy for a wide variety of project benefits. FTA also believes shortened commute times can be an important part of evaluating the likelihood a project will produce economic development benefits since improvements in accessibility are often a major reason why development occurs around transit investments. FTA agrees equity issues are an important part of project evaluation and is proposing to incorporate assessments of equity into its evaluations of project justification.
Comment: Some comments made general methodological suggestions. Of these, one comment questioned the use of a cost effectiveness decision rule. The other comment recommended FTA combine a quantitative and qualitative framework for New and Small Starts project evaluation.
Response: FTA agrees that cost effectiveness should not be the primary test of project merit. It is for that reason the Secretary of Transportation announced in January 2010 that FTA would no longer require a “medium” rating on cost effectiveness, but would return to the approach prescribed by law in which six project justification criteria (including cost effectiveness) would be evaluated and given “comparable, but not necessarily equal” weight. This NPRM proposes to continue that approach. FTA will propose both quantitative and qualitative measures.
5. Other General Comments
Comment: One comment suggested program goals should include public communication specifically targeting transit advocates. Another comment encouraged FTA to support development of mixed-use activity centers with varied transportation access because they will provide the highest return on Federal New Starts investments. One comment questioned why FTA held a public outreach session in Vancouver, Canada.
Response: FTA believes communication is a particularly important part of its New and Small Starts process and thus will continue to work to make sure all parties in the process have a clear understanding of the project development and evaluation processes. FTA will continue to use its Web site, training, publication of technical assistance and guidance documents, and outreach sessions to make the process as transparent as possible. FTA also believes a simpler, more understandable process for determining project merit can add considerably to more effective participation by the public and agrees that good transportation access and mixed-use development are important to assuring transit investments are successful. FTA is incorporating an assessment of these features in its economic development and land use criteria. FTA held an outreach session in Vancouver in connection with the American Public Transportation Association's annual Rail Conference. This site was selected because it was an event at which a substantial number of U.S. public transportation agencies and other interested parties would be in attendance during the public comment period. FTA also held outreach sessions at a number of other sites in the United States where such interested parties were likely to be able to attend, as well as two Webinars for those who were unable to be at one of the sessions in person.
B. Cost Effectiveness
Measuring Cost Effectiveness
Cost Effectiveness Question 1: “How might FTA better evaluate cost effectiveness?”
1. Conceptual Basis for Comparing Benefits and Costs
Comment: A large number of comments suggested various ways of comparing costs and benefits. Comments also provided thoughts on the difference between a cost effectiveness evaluation and a cost-benefit analysis.
One comment stated cost effectiveness is often wrongly confused with cost-benefit analysis. The comment stated cost-benefit analysis is appropriate when it is possible to calculate all benefits and costs in dollars (or some other common denomination), but a cost effectiveness evaluation is appropriate when it is not possible to express all of the potential benefits of investments in dollar terms. The comment stated that for a cost effectiveness evaluation, benefits that cannot be expressed in dollars must still be quantified using some other measure or measures such as hours of time saved, tons of abated air emissions, or accident fatalities avoided, with the costs in dollars divided by the benefits to calculate the cost per hour, ton, fatality, or whatever is the benefit. The comment favored quantification of the annual outputs (or savings) of each of the key non-monetary benefits under each of the local alternatives.
According to another comment, cost effectiveness is best understood and evaluated by comparing costs to ridership and then understanding other benefits individually. This comment stated that development of a single cost effectiveness measure that captures what decisionmakers would expect is too complex to ever explain and, therefore, not useful in this context. Another comment also argued the law does not require a single cost effectiveness measure.
Response: FTA agrees a cost effectiveness evaluation should not be confused with a cost-benefit analysis. FTA believes a cost effectiveness evaluation is more appropriate for New and Small Starts project evaluation than is a cost-benefit analysis because it is very difficult to express many of the benefits of these transit projects in dollar terms. Further, the statute explicitly calls for cost effectiveness as one of a series of measures of project justification. FTA agrees a wide range of benefits should be quantified and is proposing to do so in this NPRM and in the accompanying policy guidance made available for public comment today.
FTA agrees it makes sense to compare costs to measures of ridership and to account explicitly for other benefits in the other measures of project justification. Although the law may not require a single measure of cost effectiveness, FTA believes having multiple cost effectiveness measures would cause too much complexity and confusion. However, FTA believes it is appropriate to use cost as a way to scale environmental benefits (including the indirect environmental benefits that may be estimated at the project sponsor's option under the economic development criterion), but that it is better to calculate a summed monetary value for these benefits, rather than having a series of measures, one for each kind of environmental benefit.
2. Calculating Costs
Comment: One comment stated the current cost effectiveness measure is adequate for large New Starts projects, and that the most effective way to improve it is to change FTA's treatment of New Starts project costs. Some comments stated concern that traditional cost effectiveness measures along with FTA's current guidance can be a challenge for projects located in more mature urban transit network environments due to higher real estate costs in those areas. Other comments agreed with this sentiment, further stating FTA should index or otherwise normalize the cost effectiveness thresholds to differentiate between “low,” “medium-low,” “medium,” “medium-high,” and “high” ratings to reflect local cost levels, which are often higher in denser areas having the greatest transit needs. One other comment suggested FTA develop peer-specific cost effectiveness standards. Another comment said FTA should develop a method for “equalizing” the comparative disadvantages of projects that have higher capital costs because they are situated in environments that necessitate complex construction methods. Along similar lines, another comment stated FTA should account for cost differences among regional economies on the cost side of the cost effectiveness calculation.
Also with respect to calculating cost, one comment argued the seven percent discount rate used by FTA to annualize costs in the existing cost effectiveness calculation is high, such that it discriminates against large, very long-term benefits associated with heavy rail projects.
Finally, one comment argued a fully-allocated cost model better applies to new systems, and an incremental cost model better applies to expansions of existing systems. This comment also stated current FTA policy appears to prefer a fully allocated cost model.
Response: FTA believes in general that its current approach to evaluating capital costs in the cost effectiveness measure is appropriate. FTA also believes, however, the cost of certain “betterments” should be excluded from the cost effectiveness calculation. These include the incremental costs of features that may be required to obtain LEED certification of public transportation facilities. Such project features can achieve environmental benefits not well captured in the assessment of changes in travel behavior that accompany public transportation investments, such as improved water quality or reduced runoff, even though some of these project elements might also produce operating cost savings that would be assessed under the operating efficiencies criterion. To include these costs in the calculation of cost effectiveness would penalize project sponsors making such investments, and would provide a disincentive to making them. FTA does not believe it is appropriate to adjust the costs used in the cost effectiveness measure for local real estate costs, construction complexity, or above-average construction costs. Project sponsors are competing for scarce funds at the national level, so it is necessary to determine which projects are the most cost effective investments of Federal funds. For this purpose, it is necessary to determine how much each dollar of Federal funding is purchasing.
FTA agrees the current seven percent discount rate used to annualize costs in the current cost effectiveness measure is a stiff test for very long-term investments and is proposing to change it to two percent.
FTA believes its approach for calculating costs is appropriate. Although an incremental cost model may make sense when it comes to developing estimates for use in financial planning, for the purposes of understanding the complete cost of a particular investment, a fully allocated approach makes sense.
3. Determining What Costs Should Be Included in Cost Effectiveness
Comment: FTA received a number of comments concerning what costs should be included in the calculation of cost effectiveness. Sixteen comments supported basing the calculation of cost effectiveness on either the New Starts/Small Starts share or Federal share of the project cost instead of the current practice of basing cost effectiveness on the total project cost, with thirteen comments stating a preference for the New Starts or Small Starts share and three comments expressing support for the Federal share. Comments said FTA's current approach is burdensome to communities with stringent local requirements because those communities must include locally funded project elements in their projects that are not necessary for the basic functioning of the project. Comments said the costs for these locally required and locally funded elements are factored into the cost effectiveness calculation, which makes their cost effectiveness rating “worse” than the ratings for projects in communities that do not have stringent local requirements. Comments also said this approach would enable communities to build projects that best serve their local needs because project elements funded with local sources would be excluded from the calculation of cost effectiveness. Some comments also said this approach would provide an incentive for project sponsors to provide a higher local funding share, allowing Federal dollars to be distributed to a larger number of projects than would be the case under FTA's current approach. They stated this approach would reduce the likelihood that project sponsors would need to conduct “value engineering” in ways that may reduce the full benefit of the project in order to achieve an “acceptable” cost effectiveness rating. Some comments said this approach would enable project sponsors to easily calculate the cost effectiveness for the project based on the level of local funding that they provide to the project.
Some comments stated FTA should change the current policy of basing cost effectiveness on total project cost and instead exclude certain costs from the calculation of cost effectiveness for various reasons. One comment stated the cost effectiveness calculation should only include the costs necessary for the functioning of the project, while another argued FTA should deduct from the cost effectiveness calculation the total or incremental costs of project “upgrades” that support important Federal objectives but do not produce additional ridership or user benefits or benefits associated with the other project justification criteria. Two comments said the cost included in the cost effectiveness calculation should be reduced by the amount of private sector contributions to the project, with one suggesting FTA only deduct costs provided by real estate developers and businesses that contribute funds because they realize the economic value created at the project's station areas. The comment said FTA should not deduct costs that apply to public-private partnerships in cases where the private sector partner provides construction funding in exchange for future availability payments from the public agency. Another comment said FTA could create a meaningful incentive by specifying that the private capital or public-private partnership must have a positive impact on the project's evaluation and rating in order to be worth counting in the evaluation process. One comment said FTA should limit the costs included in the calculation of cost effectiveness to operating costs, including environmental costs and benefits, stating the current capital and operating costs included in the calculation of cost effectiveness are focused on short-term costs at the expense of long-term environmental and economic benefits. Along similar lines, another comment said FTA should deduct costs associated with the use of new energy saving technologies from the calculation of cost effectiveness.
Two comments supported FTA's current approach of basing cost effectiveness on the total project cost, stating that a focus on only Federal costs would cause a “race to the bottom” as projects try to improve the rating by reducing scope to lower the Federal share. The comments also stated many New Starts projects are major capital investments and require robust levels of Federal funding in order to be built. Another comment argued that reaching agreement with FTA on the cost of “betterments” would be complex and time-consuming, especially when agencies are seeking to incorporate “green” technologies into their routine practices. The same comment stated that comparing user benefits to the Federally-funded portion of a project could create other complications because agencies may attempt to apply Federal funds to the standardized cost categories with the longest useful life.
Response: FTA does not agree the cost effectiveness measure should be calculated based on either the New Starts or Small Starts share or the total Federal share. Instead, FTA believes the total project cost should be the basis for the calculation, with allowances for “betterments” to be excluded (as noted above). To allow a project to potentially obtain a satisfactory project justification rating simply by reducing the Federal share mixes an evaluation of project merit with an evaluation of the local financial commitment to the project. Further, it could permit an otherwise poorly performing project to receive an adequate rating. FTA believes it is possible, however, to exclude certain locally-required or preferred project elements from the cost calculation. FTA believes allowing “betterments” (those elements that go beyond what is needed for the basic functioning of the project) to be excluded from the cost side of the cost effectiveness calculation is reasonable. FTA understands it may be challenging to identify exactly what constitutes a “betterment,” but believes that guidelines or parameters can be established to help with this. FTA believes incentives for providing higher local funding shares should be considered in the local financial commitment criteria evaluation, not the project justification criteria evaluation. FTA agrees it is important that a project sponsor not delete necessary project elements in order to achieve an acceptable cost effectiveness rating, but believes this can be avoided through guidance defining necessary elements (along with what might be considered a betterment) and by thoroughly reviewing cost estimates as part of FTA's project management oversight.
FTA agrees the costs used in calculating cost effectiveness can be limited to those necessary to produce the project's primary functions. This can be done to avoid counting the costs of various locally-derived “betterments” and the costs of achieving certain Federal policy objectives, so long as these costs are not being borne by New Starts/Small Starts or other Federal funds. These costs could include things like additional features to provide extra pedestrian access to surrounding development, aesthetically-oriented design features, or features to allow for LEED certification of project facilities. FTA agrees such features often do not produce the primary transportation benefits being evaluated in assessing cost effectiveness, but nonetheless produce desirable outcomes. To count such costs in the cost effectiveness measure would provide a disincentive to include such project features. FTA is interested in receiving comment on the kinds of betterments that should be excluded from the cost side of the cost effectiveness calculation.
FTA does not believe it is appropriate to deduct private contributions to the project from the cost effectiveness measure for the same reasons stated above regarding calculating cost effectiveness based on the New Starts or Federal share alone. If a private developer contributes funds to a specific feature, such as an enhanced pedestrian linkage to a developer's project site, then it would make sense to delete those costs to the extent that the feature is not necessary for the achievement of the project's ridership or other benefits included in the justification measures. FTA agrees private equity contributions that will later be repaid through availability payments or other reimbursement by the project sponsor should be included in the costs used to calculate cost effectiveness. FTA does not agree that only operating costs should be part of the costs included in the cost effectiveness calculation. Both capital and operating costs are part of the overall investment being evaluated. FTA believes it may be appropriate to deduct the costs of various energy saving features to the extent they are not necessary for the basic functionality of the project.
FTA agrees using total project costs, net of betterments (i.e., subtracting certain elements from the cost), rather than only Federal funding, is appropriate since otherwise a major portion of project costs would be excluded. FTA agrees there will be some complexity involved in identifying “betterments,” but on balance it is worth the effort to assure that disincentives to such features are not an inadvertent part of the evaluation process. Further, FTA believes it is more appropriate to reward projects that contribute a higher non-New Starts share of funding in the evaluation of local financial commitment. That way, the evaluation of project justification will be appropriately focused on the merits of the project itself, regardless of funding source. The overall evaluation of the project's worthiness is the combination of the project justification and local financial commitment rating that will include an accounting of the degree to which additional local resources are being brought to bear on the project.
4. Forecasting Methods
Comment: FTA received a number of comments on the methods used to forecast ridership to calculate travel time savings, which is the current measure FTA uses in the calculation of cost effectiveness and mobility. Comments expressed concern that projects are designed to meet the projected ridership forecasts, but that actual ridership can sometimes surpass projections leaving the project under-developed. The comment noted projects facing this situation are then required to undergo costly retrofits to accommodate actual ridership. One comment suggested that if travel time savings is retained as the measure, the forecasting methods behind the measure should be improved. Similarly, another comment suggested the creation of a national standard or approach to transit ridership forecasting
Response: FTA agrees these projects are long-term investments and should be built to accommodate long-term demand, which is difficult to predict. However, calculating cost effectiveness is a necessary part of the evaluation process, as required by statute.
FTA agrees with the need for improved and simplified forecasting methods. FTA is proposing a simplified measure of effectiveness and the use of approaches that are easier to apply, including an FTA-developed standard national model to predict the number of trips on a proposed project.
Comment: Other comments suggested various ways of improving travel forecasts and noted concerns about consultants having a conflict of interest that leads them to inflate ridership forecasts. Comments suggested FTA require better documentation of ridership projections, such as origin-destination surveys of current users of existing transit systems in the region and origin-destination surveys of current automobile drivers to determine the congestion impacts when existing roadways are altered to allow dedicated lanes for buses in a bus rapid transit (BRT) system. Another comment suggested FTA create a new FTA-specific debarment process that would prohibit a firm that submitted false or misleading ridership forecasts to FTA from submitting additional information for the next three years. Another comment stated that in markets without choice riders (riders that choose transit over driving even though they have a car or other travel options available to them) historically, initial choice ridership may come from special events such as college and professional sports games, holiday parades, etc. The comment went on to say FTA should develop tools to allow projects to better model trips generated by those special events.
Response: FTA does not agree consultants alone are the cause of inflated ridership forecasts. An over-reliance on a single metric, whatever it may be, can provide an incentive for all parties involved, including consultants and project sponsors, to overinflate the numbers. Ultimately ridership forecasts and all data submitted to FTA about the proposed project are the responsibility of project sponsors.
FTA agrees the data on which forecasting models are based can be improved and already requires that models be calibrated based on recent rider surveys. FTA will continue to evaluate the quality of the ridership forecasts submitted by project sponsors before accepting them as part of any evaluation process. FTA is proposing simplified forecasting methods, including an FTA-developed national model to predict ridership on the proposed project. FTA notes that it already has tools available to deal with special events and other trip generators, which project sponsors now currently employ.
With respect to a debarment process, the existing government-wide debarment process at 2 CFR part 180, supplemented with the DOT rule at 2 CFR part 1200 would allow FTA to suspend or debar any entity for numerous reasons. Conviction for making false statements is listed as one of the bases for debarment (see 2 CFR 180.800(a)(3)).
Comment: One theme among comments on travel forecasting was the extent to which ridership forecasts take into account land use changes expected in the project area. One comment stated some applications of direct transit ridership models have been demonstrated in the field, and may offer a more accurate alternative to forecasting ridership than regional travel demand models built primarily around forecasting auto trips. The comment argued that such models offer the ability to consider the effect of fine grained land use characteristics around stations that may increase ridership—higher quality pedestrian environments, a mix of land use types, key destinations, and residential density. Other comments stated FTA should work with project sponsors, MPOs, and others to improve modeling technology to more accurately recognize land use-related variables and different land use distribution patterns, with an aim toward incorporating induced land development into forecasts. Other comments specifically suggested a standard methodology for projected land use changes in furtherance of better ridership forecasting.
Response: FTA agrees it is important to fully account for the land use changes that occur in project areas to the extent possible, and FTA encourages use of the most accurate tools available. To avoid increasing the burden on project sponsors, FTA prefers that existing tools available in the project area be the primary basis for analysis. Use of new tools may require expensive development and calibration that may not be worth the time and money for the enhanced precision that might result. Although finer grained analysis may be helpful in producing more accurate forecasts, in general FTA needs only to be assured that the project is justified according to broad criteria for which existing tools have proved sufficient. Project sponsors who feel the need for more precise forecasts to justify projects at the local level are always free to pursue enhanced models on their own.
Comment: Some comments suggested alternative methods for developing travel forecasts, with one comment expressing appreciation that FTA already allows project sponsors to use alternative methods in special cases. One such comment stated transit agencies should be required to use the current travel forecasting model of the MPO for all estimates of ridership, revenue and ridership-related costs, and that a transit agency should under no circumstances develop its own model for estimating patronage for any proposed new transit project. That comment suggested any modifications of the MPO model should be clearly documented and certified by the MPO. Another comment stated FTA should require MPOs, especially those in regions with significant transit investments in place, to maintain an updated transit model capable of meeting the rigors of a New Starts evaluation.
Response: FTA believes it should provide project sponsors with flexibility in determining what methods to use to develop travel forecasts. FTA will continue to allow use of alternative forecasting approaches in certain cases, and is proposing a simplified, FTA-developed national model. FTA does not believe it is appropriate or necessary to mandate use of such specific models, or to require MPOs to have in place models appropriate for modeling New Starts project impacts. In some cases the models may not be sensitive to the kind of changes in travel that arise from a major transit investment because they are usually designed to produce travel forecasts in support of an area's metropolitan transportation plan and often focus on mainly regional ridership totals rather than corridor or station area levels. In addition, most MPOs will be called on to forecast New Starts project ridership only on rare occasions. In any case, FTA will continue to work with project sponsors to assure that the models used are appropriate and the results as accurate as possible.
Comment: Some comments stated there is too much time, cost, and effort spent on travel modeling and ridership estimating and the process often is contentious. These comments suggested other approaches might be used instead to remedy this problem. One comment suggested a Delphi-based approach that uses the model as one of a number of methods to generate information that is then reviewed by a panel of local travel experts for consensus. Another suggested a transit forecasting model similar to the Aggregate Rail Ridership Forecasting (ARRF), arguing that ARRF is proving to be a more accurate generator of ridership forecasts than any other model. Other comments suggested simple, spreadsheet-based modeling tools using existing data sources, such as data obtained from Automatic Vehicle Locators installed on existing transit vehicles in the corridor data, as the basis for quantifying improvements in service reliability that would occur with the proposed project. One other comment suggested the use of sketch planning methods used to predict park-and-ride lot utilization, transit route ridership, and other travel data along with the requirement that the forecaster focus on results and making them plausible rather than expending large amounts of time and resources to figure out why the model is “misbehaving.”
Response: FTA agrees the level of effort required for producing and verifying the acceptability of travel forecasts should be reduced. FTA does not believe a Delphi approach is reasonable, but rather believes a model-based approach is more appropriate, since it can take into account more aspects of known travel behavior in a quantitative manner. However, the use of sketch-planning techniques such as ARRF has merit. FTA believes its proposal to use project trips as the effectiveness measure for mobility in the calculation of cost effectiveness supports the use of simpler forecasting methods for project sponsors. FTA agrees using simplified methods based on existing data for a variety of measures makes sense and often can produce better results than relying on complex travel models that may be difficult to understand.
Comment: FTA also received a number of comments on forecasting various aspects of automobile travel, with some arguing for use of regression techniques for estimating vehicle miles travelled (VMT) and others suggesting FTA sponsor research on increases in automobile operating costs. Others simply suggested developing a minimum standard for highway models to improve comparisons in multimodal contexts. Some comments favored increased funding to improve estimates of benefits to highway users from transit projects.
Response: FTA believes simple measures for assessing the impacts of a proposed transit investment on automobile travel have merit. FTA will continue to explore how to produce such measurements most effectively. FTA does not believe minimum standards for highway models are needed, although it believes continued research in this area would be appropriate.
Comment: A number of comments were also submitted concerning details of the measurement of travel time savings, the current measure FTA uses in calculating mobility and cost effectiveness. Comments expressed concerns about the reliability of forecasts in general, and urged the use of ridership surveys to improve ridership forecasts. Other comments stated mode-specific constants (which assign a different weight to time spent on various modes) should be replaced with improved transportation demand model specifications, including quality of service variables, stating there is no evidence that traveler preference is necessarily linked to mode. Some comments expressed concern about the interface of non-motorized trips and transit in travel models, arguing most regional models do not fully consider the impact on ridership of quality bicycle and pedestrian networks, thereby penalizing transit agencies that include the costs of improved sidewalks or bikeways in the proposed transit investment. Another comment stated modeling parameters seem to give greater weight to “drive-to-transit” access rather than “walk to transit” or “bus to transit” access, and that this approach fails to capture the benefits accruing to communities with transit supportive land use policies.
Response: FTA continues to believe travel time savings are an important benefit of major transit investments, but it is clear it is difficult to produce reliable estimates of such time savings. Accordingly, FTA proposes to use project trips as its mobility measure, which should be easier to forecast while still producing a good indication of project merit. FTA notes improvements in accessibility, which are related to the travel time savings produced by a proposed project, are an important factor in changes in land use and economic development due to the project. Hence, even if a different measure of effectiveness is used in calculating cost effectiveness, some indication of the reduction in travel time will be reflected in some of the other project justification measures.
FTA agrees rider surveys are an important tool in developing good estimates of current travel behavior and will continue to support their use for model calibration. FTA agrees mode specific constants are an imperfect way to measure travel mode changes and agrees it is the attributes of the mode that cause riders to change. However, FTA believes that mode specific constants remain a good proxy for calibrated factors in travel demand models (i.e., mode specific constants allow FTA to account for travel amenities that may differ between different types of transit projects, such as the differences between traveling on a light rail vehicle or a bus). FTA agrees many regional models are not sensitive to fine-grained factors such as non-motorized access to transit. But FTA does take account of improvements to transit walk access in the way the benefits of the transit investments are considered and will continue to explore methods to better evaluate their magnitude.
Inclusion of Benefits in Cost Effectiveness
The following is a summary of comments related to three separate ANPRM questions on cost effectiveness and one question each on environmental benefits and economic development. The questions from the ANPRM are included at the beginning for reference.
Cost Effectiveness Question 2: “What, if any, additional benefits such as environmental benefits, equity considerations (e.g., the social benefits of low-income ridership), and benefits of economic development attributed to a specific project could FTA include in the measure of cost effectiveness? What specific benefits should be included in the calculation of cost effectiveness?”
Cost Effectiveness Question 3: “If you believe that FTA should include other benefits in the measure of cost effectiveness, how can FTA best quantify those benefits? Please include specifics on how FTA would quantify and measure these benefits.”
Cost Effectiveness Question 5 (part B): “Should FTA consider additional benefit categories such as convenience for riders, reduced congestion, reduced travel time as a result of reduced congestion, reduction in the number of accidents due to reduced congestion, fuel costs (or other variable cost) savings for individuals who would be using the projects and/or the benefit to national security of additional transportation options? If so, how should these be measured?”
Environmental Benefits Question 8: “Should environmental benefits be included in the cost effectiveness measure? How can environmental benefits be compared across projects, and incorporated into FTA funding decisions?”
Economic Development Question 10: “Should economic development be a part of the cost effectiveness measure?”
Comment: Numerous comments stated the cost effectiveness criterion should include a fuller range of benefits, with some comments stating a preference for certain benefits, as explained below. Some comments supported inclusion of non-transportation benefits (discussed below in response to ANPRM Questions 2 and 3 on cost effectiveness, ANPRM Question 8 on environmental benefits, and ANPRM Question 10 on economic development) and others supported inclusion of additional transportation-related benefits (discussed below in response to ANPRM Question 5 on cost effectiveness). One comment stated generally that including a fuller range of benefits would improve services for minority and low-income populations. Another comment stated cost effectiveness should account for all benefits of a transit project. Some comments that proposed cost-benefit analysis suggested specific measures for use in that assessment framework. One comment recommended consideration of system design and operational features that support state of good repair, land use, and equity goals since such features can support better service but are often value-engineered out of projects. One comment proposed that a cost effectiveness rating for a full line be applied to a minimum operable segment (MOS) if a financial plan is in place for the full line based on an argument that MOSs often have higher costs relative to benefits.
Other comments stated no additional benefits should be included in the criterion for cost effectiveness. A couple of comments indicated other benefits are already addressed and weighted appropriately under other project justification criteria; one of these comments noted the current measure already captures certain transportation benefits beyond user benefits, such as service reliability and relief of transit congestion. Three comments expressed concern that additional benefits would make cost effectiveness more burdensome to measure or complex, while two others recommended additional research to determine how to quantify any additional benefits before including them in the cost effectiveness criterion. A few comments noted that including additional factors in the cost effectiveness criterion could complicate comparison of projects' benefits. A couple of comments suggested additional benefits are difficult to measure, with one specifically stating that capturing, measuring, and quantifying transit benefits in a way that is simple and nationally applicable is currently beyond the capabilities of agencies and sponsors. Another stated there are few tools today to measure the triple bottom line (economics, environment, and social equity), but they are in the process of being developed. Another argued cost effectiveness should remain as it is until accurate information is available that clearly defines a quantifiable non-mobility and/or congestion relief criteria that can evaluate the specific benefit between projects.
Some comments provided criticism of the existing measure for cost effectiveness. One stated the current cost effectiveness measure is biased against certain modes (e.g., streetcars and urban circulators), and another comment suggested that incorporating livability principles into the other project justification criteria could remedy this. One comment argued the existing measure seems to give greater weight or preference for benefits resulting from drive access than to bus or walk access to the transit system. Another stated the current measure of cost effectiveness favors long trips in metropolitan areas that are not compact and where there is more opportunity to save travel time over longer distances.
Response: FTA agrees that while there might be merit to including a wider range of benefits in the measure of cost effectiveness, on balance it is more appropriate to address these other benefits in the other evaluation criteria rather than trying to incorporate them into cost effectiveness. FTA is not convinced an effort should be made to include all benefits in a single measure since cost effectiveness is only one of six project justification criteria specified in law. In particular, certain benefits are not easily combined into a cost effectiveness measure but can be better addressed in the other criteria. FTA believes state of good repair goals are better assessed in the review of local financial commitment since they relate to whether a project sponsor has adequate resources to recapitalize the existing system in addition to constructing the new project, rather than serving as a reflection of the performance of the project itself, which is more rightly the basis on which project justification should be judged. Land use and equity considerations can be accounted for in other criteria. FTA continues to believe it should judge each operable segment on its own independent utility, since it is appropriate for FTA to evaluate the immediate investment being considered for funding.
FTA agrees other benefits should be left out of the cost effectiveness measure. Cost effectiveness does not have to be the only measure that scales project benefits to costs. FTA is particularly sensitive to the concern that including additional benefits in the measure could increase the burden on project sponsors since it would add considerably to the complexity of the measure. Thus, FTA is proposing that a simpler measure of mobility (trips) be compared to costs. Simplifying the measure for mobility should address concerns about the burden on sponsors. A project sponsor is not required to calculate the value of additional benefits, but can do so at its option as a part of the other measures rather than in the cost-effectiveness measure. FTA agrees that additional research on how to quantify such benefits would be productive. There are Transit Cooperative Research Program projects underway that may provide useful information. FTA plans to conduct additional work as needed to assure sponsors have usable tools. FTA does not believe it is beyond the capabilities of current tools to assess these benefits, but believes more work is needed to improve these tools and make them more readily usable. Nonetheless, FTA is convinced the currently available tools are sufficiently accurate for their results to be used in the analysis.
FTA agrees the current measure of cost effectiveness can be improved and is proposing a revised measure. FTA believes that having improved measures for economic development effects and environmental benefits will make for a more complete assessment of project merit, particularly when the entire range of project justification criteria are evaluated and weighted comparably, as required by law. FTA does not agree the current measure favors modes with drive access rather than walk or bus access. Under the current measure, savings in travel time are based on weightings that reflect travelers' perceptions that out-of-vehicle travel time is more onerous than in-vehicle travel time. Thus, since walk time is actually weighted more than in-vehicle time, projects that improve walk access actually score better on the current measure. FTA agrees the current measure favors projects that save large amounts of travel time on long trips, simply because there are more opportunities for travel time savings.
1. Inclusion of Non-Transportation Benefits in Cost Effectiveness
The following is a summary of non-transportation benefits proposed for inclusion in the cost effectiveness criterion.
a. Public Health and Environmental Benefits
Comment: Several comments supported inclusion of public health benefits under the cost effectiveness criterion, with one noting health benefits constitute one in a series of community benefits associated with reduced automobile use but not currently captured under cost effectiveness. A few of these comments recommended FTA use public health or health care cost savings as a measure. Another noted “the limits of information available to public transit agencies themselves to create this analysis” would need to be considered if FTA elects to develop a public health measure.
Numerous comments suggested environmental benefits be included in cost effectiveness, either generally (i.e., as an affirmative response to Environmental Benefits Question Number 8) or with support for particular benefits.
A large number of comments endorsed inclusion of environmental benefits in FTA's cost effectiveness criterion without specifying a type of benefit. A few of these proposed the cost effectiveness measure capture project benefits beyond travel time savings, and one stated the current cost effectiveness measure is subjective. One comment asserted environmental sustainability, along with economic factors and social equity, is more critical than mobility improvements, with another comment suggesting inclusion of environmental benefits would help FTA identify and prioritize projects with the best long-term outcomes.
Response: FTA agrees public health benefits should be considered in evaluating New Starts projects. FTA believes they belong primarily under the environmental benefits criterion. FTA will propose in policy guidance that they be measured once a methodology for doing so has been developed. FTA agrees that valuing such benefits can be complex.
FTA does not believe its current or proposed measure of cost effectiveness is in any way “subjective,” but rather an effort to quantify benefits and costs and compare the two. Although FTA believes that environmental sustainability is important, mobility and accessibility are the primary benefits of transportation investments. FTA does not agree that incorporating environmental benefits in the cost effectiveness measure is an appropriate way to ensure good investments producing a wide range of important long-term outcomes are supported, mainly because it would complicate the measure. Instead, FTA believes the environmental benefits criterion is the appropriate place to examine these benefits and is proposing they be compared to cost under that criterion. Recognizing the importance of a multiple measure approach to project evaluation, FTA is proposing that environmental benefits receive a comparable weight to cost effectiveness in the evaluation of project justification.
Comment: A number of comments proposed measures of environmental benefits. These are discussed in the section on environmental benefits. Of these comments, one suggested VMT reductions due to higher density development receive half of the weight assigned to cost effectiveness. Finally, one comment suggested the multiplier for non-travel time benefits be increased (from two to two and a half) if FTA does not adopt another method for incorporating environmental benefits.
A couple of comments proposed techniques to evaluate environmental benefits as part of cost effectiveness, but did not suggest measures. One recommended a cost-benefit analysis of proposed environmental technologies given that certain “green” technologies can be more expensive than “older established technologies.” Another proposed environmental features of a project be subject to cost-benefit analysis, either individually or in combination with all other project costs and benefits, as part of a broader definition of cost effectiveness and suggested replacement of the current cost effectiveness measure with cost-benefit analysis.
Response: FTA believes certain environmental effects resulting from implementation of the project (which can be estimated based on estimated VMT changes) should be accounted for in the measure of environmental benefits. In addition, FTA proposes that at the option of the project sponsor, indirect changes in VMT resulting from changes in development patterns may also be estimated, and the resulting environmental benefits calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion. FTA is proposing to replace its current approach in which the thresholds for the various ratings assigned to travel time savings are developed by simply doubling the value of calculated travel time savings so as to account directly for the environmental benefits under the environmental benefits criterion.
FTA believes the decision on whether or not to implement certain “green” technologies should be made by local decision-makers and does not intend to propose any specific requirements. However, FTA believes it is appropriate to exclude the costs of such “betterments” from the calculation of cost effectiveness to avoid creating a disincentive to the application of such technologies.
Comment: Several comments recommended FTA evaluate air pollution or greenhouse gas emissions reductions under the cost effectiveness criterion, with about half citing air pollution reductions as a broader community and efficiency benefit associated with decreased automobile use. A few comments proposed specific measures: one suggested FTA measure costs avoided due to reduced emissions; another suggested FTA examine project cost per ton of abated emissions, with emissions reductions offset by the effects of vehicular cold starts and electricity production for transit vehicle propulsion; a third suggested FTA assign a monetary value to each ton of abated emissions; and two others suggested the financial benefits of climate change impact reductions be accounted for in cost effectiveness.
Response: FTA believes air pollution and greenhouse gas reductions are better accounted for under the environmental benefits criterion rather than as part of the cost effectiveness criterion. FTA believes the best approach is to estimate these benefits using standardized valuations per change in VMT, monetize them and compare them to the annualized capital and operating cost of the proposed project in the environmental benefits criterion.
Comment: Several comments advocated inclusion of energy conservation in cost effectiveness. Of these, a couple emphasized incorporation of Leadership in Energy and Environmental Design (LEED) components and technologies. One comment cited energy conservation as a community benefit associated with less automobile use. Another noted encouragement of energy-saving LEED components would be consistent with the Administration's livability and sustainability goals.
One comment suggested measuring project cost per British Thermal Units (BTU) of energy saved, and another proposed offering “some level of credit” against the Federal share for inclusion of LEED components. A couple of comments proposed identical measures for cost effectiveness and environmental benefits, namely projected VMT reductions and mode split changes, but did not mention particular environmental benefits to be assessed through these measures. These comments asserted that reductions in energy use and emissions should be key goals of any transit project.
One comment suggested projects receive cost effectiveness credit for only “ancillary” environmental benefits associated with mandatory project components in order to maintain the New Starts program's focus on funding transit improvements.
One comment suggested FTA incorporate long-term efficiency benefits and reductions in life-cycle costs associated with environmental technologies into the cost effectiveness measure so as to avoid penalizing projects with higher-cost, environmentally beneficial elements.
Response: FTA believes energy conservation should be included in the environmental benefits criterion, rather than in cost effectiveness. To do so, FTA is proposing to calculate the monetary value of the energy savings that come from changes in VMT using standardized values. FTA notes a significant part of the benefits that come from reducing energy use are accounted for by the resulting reduction in pollutant and greenhouse gas emissions. To avoid double counting, the monetary value of energy conservation will be factored down by some percentage specified by FTA in future policy guidance. In addition, FTA believes it may be appropriate to exclude from the cost effectiveness calculation the additional costs of energy efficient features of the project. These features do not necessarily produce the changes in VMT that form the basis for the mobility benefits included in the measure. Thus, subtracting the costs of these energy efficient features from the cost calculation will avoid having the cost effectiveness measure produce a disincentive to the adoption of such features. FTA notes although energy efficiency and reductions in emissions are important goals for investments in transit, improving mobility and accessibility, and enhancing economic development are also important.
Comment: A few comments discussed but did not explicitly support incorporation of environmental benefits into cost effectiveness. Some of these noted cost effectiveness could “potentially” comprise all other New Starts and Small Starts project justification criteria, including environmental benefits. Another recommended the cost effectiveness measure be left as is for now, but noted the measure “could eventually be strengthened” through direct inclusion of environmental benefits.
A large number of comments specifically discouraged FTA from including environmental benefits in the cost effectiveness measure for a number of reasons. Some of these comments noted environmental benefits are adequately recognized as a separate criterion. A couple of these comments observed that separate consideration of environmental benefits permits easier comparisons of projects. Others expressed concern that inclusion of environmental benefits would make the cost effectiveness measure more complicated and challenging to explain. Still others observed that quantifying environmental benefits may be challenging, with one comment recommending cost effectiveness remain focused on transportation benefits.
Response: FTA believes it is not appropriate to include environmental benefits in the cost effectiveness measure. The cost effectiveness measure does not have to be the only measure that compares benefits and costs. Project-specific environmental benefits can estimated, monetized, and compared to the annualized capital and operating cost of the proposed project in the environmental benefits criterion. FTA agrees with a multiple measure approach to evaluating whether a project is justified. While mobility benefits are the primary reason for making a transit investment, they are not the only benefits. Providing for a more robust measure of environmental benefits will assure these other benefits are accounted for with an approach that will involve minor effort by the project sponsor beyond calculating the change in VMT per guidelines that FTA will establish in policy guidance.
b. Economic Development
Comment: Numerous comments supported consideration of at least one facet of economic development in the cost effectiveness measure, either through an affirmative response to Economic Development Question 10 or discussion of particular factors or benefits. A large number of comments endorsed inclusion of economic development effects in FTA's cost effectiveness criterion without specifying factors or benefits. A number of reasons were given for supporting inclusion of economic development effects, including: The need to capture project benefits beyond travel time savings; the fact that current modeling procedures for Small Starts projects do not address the economic impact of transit use or “site development for transit;” that economic development effects is a “key factor overall” that should be considered as part of cost effectiveness; and finally, that economic development is the primary reason for transportation investments and potentially more critical to measure than mobility benefits.
A couple of comments proposed techniques to account for economic development effects in the cost effectiveness calculation. One comment suggested that projects that spur economic development receive cost effectiveness credit. The other proposed a project's economic development effects be subject to cost-benefit analysis, either individually or in combination with all other project costs and benefits, as part of a broader definition of cost effectiveness and replacement of the measure with a full cost-benefit analysis. One other comment recommended FTA require project sponsors to generate matching funds through value capture.
A number of additional comments offered general support for including economic development in the cost effectiveness measure and noted particular economic development effects or measures FTA should recognize: Agglomeration benefits (i.e., the benefits from land uses locating near each other and a transit project's ability to generate additional retail options near neighborhoods that are experiencing disinvestment). Some of these comments recommended approaches to quantify economic development effects as part of the cost effectiveness measure. One proposed using a forthcoming index from the Brookings Institution, Harvard JFK School of Government, and the Urban Land Institute to measure the economic benefit of walkable environments. The other proposed a larger multiplier for non-travel time benefits (two and a half instead of two) in the cost effectiveness thresholds calculation if another method to incorporate economic development effects is not devised.
Response: FTA agrees economic development effects should be considered, but believes it is better to consider them under the economic development criterion rather than under cost-effectiveness. In particular, FTA agrees adding economic development effects to the cost effectiveness measure would directly and explicitly capture a wider range of benefits than just mobility, but FTA also recognizes that there are significant challenges to estimating these effects. Thus, FTA is proposing that at the option of the project sponsor, indirect changes in VMT resulting from changes in development patterns may be estimated, and the resulting environmental benefits calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion.
Because FTA's proposed approach is optional, it would not overly burden project sponsors with difficult and time consuming analytical requirements. FTA does not believe it is necessary to perform a separate analysis of economic development costs and benefits in order to make an informed funding decision. It may be appropriate at some future point to convert the entire New and Small Starts project evaluation framework to a full cost-benefit analysis, but for the present, FTA does not deem this technique to be sufficiently mature in terms of valuing costs and benefits to warrant such conversion at this time.
FTA agrees agglomeration effects are a key benefit and is using this as a key concept in how it is proposing to establish a measure of economic development. Retail opportunities are only one part of the kind of development that might occur around a transit investment. Ultimately, FTA believes the primary benefit of a public transportation investment that can be most readily quantified and monetized is the improvement in various environmental factors coming from denser development that can occur around a transit investment. But the amount of development can be very difficult to forecast. Thus, FTA is proposing to allow project sponsors to develop scenario-based estimates of these effects, at their option, for measurement in the economic development effects criterion. The indirect changes in VMT resulting from the estimated changes in development patterns may be estimated, and the resulting environmental benefits calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion. Once better measures for the agglomeration effects are developed, FTA will propose to allow project sponsors to also add the economic effects due to that agglomeration in calculating economic development benefits.
As noted above, FTA is changing its current approach for developing the thresholds for assigning cost effectiveness ratings. FTA is proposing to explicitly include economic development effects in that measure rather than simply doubling the calculated travel time savings to account for these and other benefits in cost effectiveness, as is now its practice.
Comments: A number of comments proposed that FTA consider a transit project's ability to foster transit-supportive land uses, higher densities, and mixed-use development as part of the cost effectiveness measure (some of these comments opposed integration of economic development into cost effectiveness in Economic Development question 10). One comment noted dense land uses and convenient pedestrian and bicycle access around transit facilities would ultimately yield greater health, environmental, and travel benefits than short-term mode shifts to transit. Another indicated such development constitutes a community benefit that is not currently captured.
Several comments proposed measures of land development benefits. Most of these proposed changes in average population and employment densities within a transit corridor or region; some also proposed evaluating percentages of households residing in single- versus multi-family housing units. One comment proposed comparing automobile trip generation and travel distance estimates between high-density station areas and “average” portions of a region, and another comment recommended value capture from development potential as well as land reuse and conservation opportunities. Another comment recommended FTA only consider increased land values from transit investments as part of cost effectiveness, as higher land values enable use of value capture mechanisms to offset Federal funding shares. One comment recommended consideration of increased employment and housing opportunities, and another comment proposed assessment of employment levels in downtown areas, with credit offered where regions have been successful in maintaining downtown employment.
One comment proposed a more qualitative assessment of cost effectiveness overall to recognize a project's economic goals, such as economic development and revitalization.
A small number of comments supported evaluating possible negative effects from development expected to result from implementation of transit. One comment suggested FTA discourage investments that exacerbate sprawl by primarily serving rural commuters. Another proposed benefit offsets for the social costs of redevelopment to existing communities, stating that transit projects and their development effects may displace residents and small businesses, and Uniform Relocation Assistance is not sufficient to cover relocation costs.
Response: FTA agrees that considering how well a project supports transit-supportive land use and higher densities should be part of the evaluation of project justification, but believes they are better addressed elsewhere than in cost effectiveness. As noted, FTA is proposing at the option of the project sponsor, indirect changes in VMT resulting from changes in development patterns may also be estimated, and the resulting environmental benefits calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion. In this way the benefits noted, such as enhanced pedestrian and bicycle access, and resultant reduced motor vehicle travel, can be captured.
FTA appreciates the various measures of land use development benefits proposed. Although changes in population and employment density might represent a benefit, they are really changes resulting from economic development. Further, it is the resulting change in vehicular travel that primarily produces environmental benefits. An approach that compares trip generation and travel distance in station areas with those outside station areas and then multiplies these rates by the amount of land use development that might occur in station areas could be useful in assessing the amount of reduced travel and related environmental benefits. Although value capture can be an important technique for producing the revenues needed to make a transit investment, increases in land values are likely to be very difficult to forecast or estimate. FTA does not believe a qualitative approach to cost effectiveness is sufficient to clearly distinguish project merit, particularly when there are specific quantitative measures that can be used.
FTA believes projects that support denser development are likely to rate higher and do better in FTA's evaluation. FTA is aware transit projects can often affect the affordability of housing around transit stations. But FTA believes it is more appropriate to take account of this problem in the measure of economic development rather than in cost effectiveness. FTA is proposing to whether there are policies and plans in place to maintain and or increase affordable housing around a proposed investment under the economic development criterion.
Comment: Several comments conditionally or tentatively supported inclusion of economic development effects into the cost effectiveness calculation. Some of these comments discussed, but did not explicitly support, incorporation of economic development factors into cost effectiveness. Some of these noted all other New Starts and Small Starts project justification criteria could “potentially” be folded into cost effectiveness; another proposed the cost effectiveness measure remain as is for now, but noted the measure “could eventually be strengthened” through direct inclusion of economic development.
A couple of comments proposed conditional inclusion of economic development effects in the cost effectiveness measure. One stated if economic development effects are included, costs (such as subsidies) should be as well, with the project's benefits compared at the metropolitan level with those of all potential alternatives. The other recommended economic development only be considered if it provides financial benefit to the project sponsor.
Response: FTA believes economic development effects are best addressed in their own criterion. Therefore, FTA is proposing at the option of the project sponsor, indirect changes in VMT resulting from changes in development patterns may also be estimated, and the resulting environmental benefits calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion.
FTA does not believe it is appropriate to require comparing a project's benefits with those of all alternatives to it. FTA's role is in assessing the merits of the project and reaching a decision on whether to recommend the project for funding. Whether or not economic development is financially beneficial to the project sponsor does not address the overall merits of the project. It is more important the benefits be evaluated, no matter who is the beneficiary.
Comment: A large number of comments urged FTA not to include economic development in the cost effectiveness measure. Most of these noted potential challenges in forecasting or quantifying economic development effects. Several noted the complexity of the cost effectiveness measure, either in its current form or with economic development effects added; four of these noted Congress intended for economic development to be assessed separately from cost effectiveness. A couple noted economic development effects are adequately addressed as a separate criterion. One observed that separate consideration of economic development effects permits easier comparisons of projects. One asserted transit projects only shift economic development that would have occurred elsewhere, rather than generating completely new development. One comment suggested different levels of analysis for cost effectiveness and economic development (i.e., project versus corridor or broader, respectively) should preclude the two from being combined. Lastly, another comment suggested FTA exclude means to an end, such as urban form, VMT reductions or vehicle ownership changes, from its cost effectiveness measure and focus only on outputs.
Response: FTA believes there are challenges to incorporating economic development effects in the cost effectiveness measure. FTA believes it is simpler and better to follow the multiple measure approach to project evaluation outlined in law. Thus, FTA is proposing at the option of the project sponsor, indirect changes in VMT resulting from changes in development patterns may be estimated, and the resulting environmental benefits calculated, monetized, and compared to the annualized capital and operating cost of the project under the economic development criterion.
The cost effectiveness measure would focus on one dimension of project-specific effectiveness—mobility. FTA disagrees that the shifting of development from one area to another due to implementation of a transit project does not actually produce a net benefit. By increasing the density of development, even if it only shifted from elsewhere in a region, a transit project can produce reductions of vehicular traffic and environmental benefits that can be included in a broadened measure of economic development. The changes in VMT resulting from economic development effects (agglomeration of development) can be estimated as can the resulting changes in pollutant emissions, energy use, and accidents and fatalities, and a monetary value calculated using standard factors. The monetary value can then be compared to the annualized capital and operating cost of the proposed project and used as on optional additional measure of economic development. FTA agrees outcomes are the most important issue in assessing project merit. By themselves, urban form, changes in VMT, or vehicle ownership are not as important as the resulting changes in pollutant emissions, energy use, or accidents and fatalities.
c. Land Use
Comment: Several comments recommended FTA consider transit-supportive plans or policies within the cost effectiveness measure. A couple of these suggested FTA award credit for the presence of state or regional plans that promote denser, mixed-use infill development, and others recommended that transit-supportive plans and policies that emphasize economic development and employment strategies receive “significant weight” in cost effectiveness evaluations. A number of comments proposed credit for complete-street, pedestrian, and bicycle plans for station areas (one of these comments suggested that better access via non-motorized means will increase transit use and endorsed the San Francisco Bay Area Rapid Transit District's Access Hierarchy policies as a potential model for such plans). Several comments advocated that FTA consider parking policies, such as supply reductions and pricing at stations and in station areas as an element of cost effectiveness. As rationale, one comment cited the importance of parking policies on transit ridership as shown in various studies, while another noted that high parking supplies decrease development densities and increase walking distances. Another comment added that project sponsors should also be required to assess the opportunity costs of providing parking at stations.
A couple of comments recommended FTA reward project sponsors for holding charrette sessions during the planning process. These comments noted such sessions can help to build support for higher-density, mixed-use development and complete-street policies. One suggested charrette sessions would affirm support for automobile alternatives and provide direction on where the alternatives are needed. One comment recommended FTA award credit to projects with affordable housing incentives in place in station areas. The comment reasoned that better access to transit from affordable housing units would improve ridership and thus improve cost effectiveness.
Response: Although FTA believes transit supportive plans and policies are an important part of assuring the success of a project, FTA does not believe these policies should be part of the cost effectiveness measure. FTA believes review of these policies is better handled in the economic development effects criterion as is currently done, because these policies by themselves do not represent an outcome of the project. FTA believes it is more appropriate to focus the cost effectiveness criterion on the mobility performance of the project. Likewise, policies supporting non-motorized access and dealing with parking supply also represent contextual factors that may contribute to a project's success, rather than performance-based outcomes of the project. Thus, they are also better addressed as part of the economic development criterion, rather than in the cost effectiveness measure.
FTA believes charrette sessions may be a useful tool for project development, but that the process by which a project is developed should remain a local choice. FTA believes the evaluation and rating criteria should focus on the performance of the project and on the policies in place that support such performance. FTA believes affordable housing is an important issue, and is proposing that existing publically supported housing be considered under the land use criterion and the plans and policies to maintain or increase affordable housing be reviewed under the economic development effects criterion.
d. Local Support
Comment: Several comments encouraged FTA to recognize local support for a project in the cost effectiveness measure. As justification, some comments noted the significance of local financial commitment to a project, deeming such commitment equivalent to a “regional vote of cost effectiveness” and an indication of the project's importance to the local environment and economy. One comment proposed that mode be considered in determining whether a project can gain local support (this comment stated that rail projects can generate more local support than bus-based projects).
A couple of comments proposed measures for determining local support, such as documented support for the project from local officials and developers as well as local funding commitments such as revenue from tax-increment financing (TIF) districts.
Response: FTA believes it is more appropriate to assess the degree of local support for a project, from both public and private sources, in its evaluation of local financial commitment. FTA agrees local financial support is crucial to the success of a project, but believes it is more appropriate to focus the cost effectiveness measure on the performance of the project itself.
2. Inclusion of Additional Transportation Benefits in Cost Effectiveness
The following is a summary of additional transportation benefits and associated measures proposed for inclusion in the cost effectiveness criterion.
a. Transit Systems
Comment: A large number of comments recommended FTA consider other benefits to transit system users beyond the current “user benefits” measure (which is expressed as travel time saved). Approximately a third of these comments proposed that FTA consider transit capacity increases. Of these, a few focused on the improved reliability that results from core capacity increases on existing systems, with one citing load factors as a potential measure to identify where such capacity improvements are needed. One comment focused on rail vehicles' superior capacity to buses. Several comments recommended consideration of ridership at the corridor, regional, or system level. One advocated that ridership be the primary benefit measure in the calculation of cost effectiveness. As rationale, the comment stated FTA should encourage as many transit trips as possible regardless of length, and that the congestion relief benefits resulting from transit investments accrue at the regional level.
A few comments proposed FTA consider or analyze off-peak or all-day travel as part of the cost effectiveness measure, but did not specify what element(s) of travel should be incorporated. Another comment similarly proposed measuring travel time savings across a project or system's span of service.
Several comments proposed using other measures of transit use in the cost effectiveness calculation. One of these proposed using the project cost per passenger mile of mobility within a metropolitan area; one proposed measuring mode shifts to transit, and another proposed measuring estimated farebox recovery improvements.
A couple of comments suggested consideration of the transit investment's beneficial effects on other transit services. One of these proposed giving credit for connecting transit systems because of the “increased efficiency” that occurs with little investment. Another recommended consideration of “network benefits,” measured by the length of the system expansion as a percentage of the total transit network. A few comments proposed measuring connectivity with existing transit service through transfers.
One comment suggested FTA consider the efficacy of the fare-collection systems proposed for projects. The comment observed that fare evasion associated with proof-of-payment systems hampers cost effective operations.
One comment proposed FTA adopt a combination of quantitative and qualitative measures that “reflect the unique characteristics of individual projects that will make those projects successful uses of Federal investments.”
Several comments discussed the question of whether to calculate cost effectiveness on a corridor or a regional scale. One comment stated that the average [regional] values have little meaning and are used by opponents of transit investments. Another comment suggested the cost effectiveness of a transit project in one corridor in a region may be very high, while the cost effectiveness of a transit project in another corridor in the same region may be very low, but that the project with low cost effectiveness still has to be provided for mobility reasons. One comment stated requiring that benefits be calculated for the entire region will ensure the benefits in the corridor, such as ridership gains or economic development effects, are not offset by losses of benefits elsewhere in the urban area.
Response: FTA does not believe transit capacity increases should be included in the cost effectiveness measure. Capacity represents an output of a transit investment rather than an outcome. Increases in capacity can result in increased utilization, which is a better measure of effectiveness, but only if the capacity is provided in a way that is convenient for potential users. FTA believes that transit ridership is an excellent measure of effectiveness, and is