Federal Transit Administration (FTA), DOT.
Notice of agency response to comments.
Section 3011(c) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (“SAFETEA–LU”) authorizes the U.S. Secretary of Transportation (the “Secretary”) to establish and implement a pilot program to demonstrate the advantages and disadvantages of public-private partnerships (“PPPs”) for certain new fixed guideway capital projects (the “Pilot Program”). This notice summarizes and responds to comments solicited by FTA by notice published in the
Shauna J. Coleman, Esq., Federal Transit Administration, Office of the Chief Counsel, U.S. Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590–0001, (202) 366–4011,
Section 3011(c) of the SAFETEA–LU authorizes the Secretary to establish and implement the Pilot Program to demonstrate the advantages and disadvantages of public-private partnerships for certain new fixed guideway capital projects. On March 22, 2006, FTA issued a notice and solicitation for comments with respect to the Secretary's establishment and implementation of the Pilot Program (71 FR 14568). FTA received comments from 19 parties in response to the notice. FTA responds to these comments by topic and in the following order: (A) Statutory background; (B) objective of the Pilot Program; (C) operation of the Pilot Program; (D) common grant rule; (E) seniority of the Federal Interest; and (F) tax-exempt financing.
FTA requested comments on the following questions: (i) What, if any, operative criteria beyond those set forth in the statute should the Secretary adopt to implement the Pilot Program; (ii) what, if any, benefits should the Secretary confer on selected projects; (iii) whether it is significant that section 3011(c) provides no special funding for the Pilot Program; and (iv) what, if any, changes in law or new financial incentives are appropriate or necessary to promote the participation of private enterprise in the delivery and operation of transit systems?
Six commenters responded to this question. Some of these commenters thought that additional operating criteria should not limit the opportunities for creativity and that FTA should allow private, state, and local parties maximum latitude to determine the parameters and merits of potential projects. In addition, several of these commenters recommended that selected projects should incorporate innovative contracting mechanisms.
Five commenters responded to this question. Two commenters submitted general comments on the benefits the Secretary should confer on selected projects. For instance, one commenter generally recommended that FTA tailor the benefits it confers to the particular requirements of a project. Another commenter generally recommended that FTA award PPPs the highest priority available from programs for which such projects apply and qualify. Two commenters recommended that FTA waive strict compliance with one or more New Starts and/or NEPA evaluation requirements. One commenter recommended that FTA support Congressional earmarks for selected projects.
FTA received the following three comments on this question: one commenter thought that it was unremarkable that Congress authorized no special funding for this program; one commenter noted that by not designating any specific source of funding, Congress provided FTA with the flexibility to identify funds and develop program requirements; and one commenter thought Congress intended to limit the use of private investment in PPPs for selected fixed guideway projects.
Three commenters responded to this question. One commenter suggested that FTA reclassify the retirement of a capital debt from an operating expense to a capital expense. Two commenters suggested that providing Federal grant or loan money for developmental or pre-construction work could induce private investment.
FTA requested comments on whether, and on what terms, the Pilot Program should streamline the New Starts application process, specifically with regard to its due diligence and NEPA components, to promote PPPs that would realize significant savings in the procurement of eligible projects.
FTA requested comments regarding how its New Starts application process may be altered to accelerate project delivery without impairing FTA's duties as a steward of Federal funds. Six commenters responded to this question. Two commenters supported the use of contract terms to allocate risk and ensure due diligence. Three commenters recommended that FTA utilize concurrent rather than linear procedures in its New Starts process, and provided specific recommendations on how FTA could alter its New Starts application process. One commenter requested that FTA clarify how the requirement for public accountability and due diligence can be met under the PPP approach.
FTA requested comments on whether, and on what terms, the Pilot Program should streamline its NEPA components to accelerate project delivery without impairing FTA's duties as a steward of the environment.
Several commenters responded to this question. All but one of these commenters supported the acquisition of engineering and design services prior to the issuance of a ROD.
Three commenters responded to this question and all of these commenters supported FTA's adoption of procedures similar to those in section 1503 of SAFETEA–LU, concerning design-build contracts.
One commenter responded to this question. This commenter urged FTA to consider increasing real estate prices as one factor used to establish the imminence of increasing development pressures so that increasing prices in highly developed or rapidly developing areas would permit an agency to rely upon the CE.
Five commenters responded to this question and all of these commenters recommended that FTA should not reopen the NEPA process and/or existing ROD for review of a new impact that is not determined to be substantial.
FTA requested comments on whether, and on what terms, the Pilot Program should provide grants for eligible projects contemplated by long-term operation or concession agreements with private enterprise. Six commenters supported FTA providing grants for eligible projects contemplated by long-term operation or concession agreements with private enterprise. Three commenters offered suggestions as to how the Pilot Program might encourage transit systems to enter into PPPs. One commenter suggested that FTA allow the Pilot Program to privatize all or part of the capital asset. Another commenter suggested FTA provide financial capacity for pre-construction work. One commenter recommended that FTA tie the Pilot Program directly to New Starts funding.
FTA requested comments on whether, and to what extent, the Pilot Program should authorize the use of program income to support a PPP that sponsors an eligible project. Five commenters supported the flexible use of program income.
FTA requested comments on whether, and to what degree, FTA's subordination of priority of repayment of Federal loans would be useful in structuring a PPP. FTA also requested comments on the extent to which loans, loan guarantees, and other credit enhancing devices available under the Transportation Infrastructure Financing and Innovation Act (“TIFIA”) might be used to facilitate the financing of an eligible project. Four commenters supported subordination of the Federal Interest. Three commenters generally supported the use of the loan guarantees available under TIFIA for financing PPPs.
FTA requested comments on the extent to which private activity bonds (“PABs”) or PABs not subject to State population-based bond issuance limits (“new PABs”) might assist in financing an eligible project. Seven commenters generally supported the use of PABs to assist in financing eligible projects.