[Federal Register Volume 73, Number 154 (Friday, August 8, 2008)]
[Notices]
[Pages 46352-46358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-18315]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[Docket Number: FTA-2008-0020]
Final Guidance on New Starts/Small Starts Policies and Procedures
AGENCY: Federal Transit Administration (FTA), DOT.
ACTION: Notice of Availability of Final Guidance on New Starts/Small
Starts Policies and Procedures.
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SUMMARY: This notice conveys the Federal Transit Administration's (FTA)
Final Guidance on New Starts/Small Starts Policies and Procedures.
DATES: Effective Date: These policies and procedures will take effect
on August 8, 2008.
FOR FURTHER INFORMATION CONTACT: Ron Fisher, Office of Planning and
Environment, telephone (202) 366-4033, Federal Transit Administration,
U.S. Department of Transportation, 1200 New Jersey Avenue, SE., East
Building, Washington, DC 20590 or [email protected].
Availability of Comments Considered in the Development of This Guidance
A copy of the notice of availability of the proposed Guidance,
issued on April 18, 2008, and comments and material received from the
public as a part of its review of the proposed Guidance, are part of
docket FTA-2008-0020 and are available for inspection or copying at the
Docket Management Facility, U.S. Department of Transportation, West
Building, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC
20590 between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. You may retrieve the comments online at: http://www.regulations.gov. Enter docket number FTA-2008-0020 in the search
field. In the ``Narrow Results'' section on the left side of the
screen, click on ``Rules.'' The Web site is available 24 hours each
day, 365 days each year. Electronic submission and retrieval help and
guidelines are available under the help section of the Web site. An
electronic copy of this document may also be downloaded by using a
computer, modem and suitable communications software from the
Government Printing Office's Electronic Bulletin Board Service at (202)
512-1661. Internet users may also reach the Office of the Federal
Register's home page at: http://www.nara.gov/fedreg and the Government
Printing Office's Web page at: http://www.gpoaccess.gov/fr/index.html.
Response to Comments and New and Small Starts Program Changes
The purpose of this notice is to convey the Final Guidance on New
Starts/Small Starts Policies and Procedures, reflecting the changes
implemented as a result of comments received on the April 18, 2008
Notice of Availability (73 FR 21170). FTA finds that there is good
cause to make this guidance effective upon publication of this notice
in order to assist grantees to enter or complete development of
proposed projects.
1. Initiation Package
FTA adopts as final its proposal to require that project sponsors
beginning an alternatives analysis prepare and provide to FTA a package
of information on: (1) The problems that motivate consideration of
major transit alternatives in a corridor; (2) the alternatives that
have been identified for consideration; and (3) the information that
will be prepared to support decisions on the alternatives along with
the identification of the general approach to development of that
information.
Preparing the package at the beginning of an alternative analysis
allows FTA and other stakeholders to better understand the key
considerations for an alternatives analysis. We anticipate that this
will result in a more streamlined process.
Comments: A significant number of respondents supported this
measure as a way to discuss potential road blocks that may occur in the
project development process. Several commenters opposed this proposal
indicating the scope of the proposal is best suited for a rulemaking
process and is beyond the level of change appropriate for annual policy
guidance.
Response: The proposal is a small change in FTA requirements that
is properly implemented through policy guidance.
[[Page 46353]]
Comments: A few commenters suggested that the proposal should not
require approval or delay an alternatives analysis study and that FTA
should provide guidance on the initiation package to aid the project
sponsor in the planning process.
Response: FTA does not intend to formally approve these documents,
but will instead comment on them. If FTA expresses significant concerns
with the description of problems in the study corridor, the nature of
the alternatives, or the methodology, this could delay study progress.
Because FTA must eventually agree to both the alternatives studied and
the methodological approach as it affects development of information
used for FTA evaluation, addressing these issues early in a study with
possible delays means that technical work will not have to be redone
later, which would likely result in more significant study delays. FTA
has encouraged study sponsors to produce this kind of document for
several years and provides guidance for what the document should
contain on its Web site (http://www.fta.dot.gov/planning/newstarts/planning_environment_2589.html).
Comments: A few other respondents requested that care be taken so
that the Federal perspective will not hamper the local project
development process.
Response: We agree. FTA's responsibility is to ensure that a
reasonable range of alternatives is considered to fulfill its
responsibilities under the National Environmental Policy Act (NEPA) and
the alternatives analysis requirement in 49 U.S.C. 5309. It is also
FTA's responsibility to ensure that the information developed for its
evaluations is consistent with good planning practice and FTA guidance.
FTA does not dictate what kind of information should be developed to
serve local decision-making needs.
Comment: One commenter stated that FTA should be aware that even
with the most thorough planning efforts, new alternatives may arise
after the initiation package is complete due to circumstances beyond
the project sponsor's control.
Response: It is FTA's aspiration to minimize changes to
alternatives being studied by vetting them early with all interested
parties. FTA understands that new alternatives could arise later in the
study as a result of study findings.
2. Small Starts Eligibility
a. FTA adopts as final the modification of the Small Starts
eligibility requirements for proposed projects that do not include an
actual fixed guideway but meet the definition of being a corridor-based
bus project. FTA eliminates the requirement that all four project
elements (low-floor buses, traffic signal priority/pre-emption,
significant stations, and branding) must be part of the project, and
instead allows a project to be eligible if it includes at least three
of the four elements.
Heretofore, non-fixed guideway projects were not eligible for Small
Starts funding if any of the four elements listed above already existed
in the corridor. Our experience has shown that minor improvements
already made in a corridor, such as the existence of one of the
elements, prevents worthy projects from being eligible for Small Starts
funding. Our intent for the Small Starts program has been to
differentiate the Small Starts program from the Section 5309 Bus
Program by funding significant corridor improvements. By revising the
policy to allow projects in corridors with one of the existing elements
to apply for Small Starts funding, FTA has attempted to strike a
balance between being too restrictive so that many worthy projects are
excluded from eligibility, and being too flexible thus allowing
eligibility for projects that are not significant corridor improvements
but rather incremental improvements better funded under another
program.
Comments: A few commenters opposed the measure, stating that no
project should be eligible for funding under 49 U.S.C. 5309 unless it
is an actual fixed guideway that includes rails or the exclusive use of
right-of-way.
Response: The Safe, Accountable, Flexible, Efficient Transportation
Equity Act--A Legacy for Users (SAFETEA-LU) amended 49 U.S.C. 5309 to
make non-fixed guideway projects eligible for Small Starts funding.
Comments: A significant number of respondents supported the
elimination of the low-floor bus requirement for Small Starts projects.
A few commenters supported and expanded on the measure by stating
that if one or more Small Starts elements are already present in a
corridor that they should not preclude a project from Small Starts
funds.
One respondent encouraged FTA to allow some level of existing BRT
components, but suggested that FTA clarify that it will not fund
installation or replacement of existing components. One commenter
suggested that FTA allow a project to qualify if it contains four of
the following six elements : (1) Low floor buses/level boarding; (2)
significant stations; (3) high frequency service; (4) branding; (5)
traffic signal priority/pre-emption; and (6) real-time customer
information. One respondent supported the use of a minimum threshold
for Small Starts projects.
Response: While the proposal was to eliminate only the low-floor
requirement, we have modified that in response to comments asking for
more flexibility. FTA has tried to be more flexible in its eligibility
requirements while still ensuring that the improvements are substantial
enough to differentiate the Small Starts program from the Section 5309
Bus Program. In order to keep the program as simple as possible, we
have not required a large number of elements, instead settling on a few
that we think are necessary for premium transit services that will
result in significant improvements in service. Should a proposed
corridor already include one of the four required elements and request
that, as part of the proposed project, this element be replaced or
upgraded, FTA considers these an eligible capital expense in the Small
Starts Program. In addition, FTA considers installation an eligible
capital expense. Should, however, a project involve repair to an
existing element, this item would need to be considered on a case-by-
case basis. As for a minimum threshold, FTA assumes that this is a
reference to a minimum project cost or Federal funding threshold. FTA
declines to adopt a minimum threshold, however, as any such threshold
could discourage low-cost transit solutions.
b. FTA adopts as final the removal of the current prohibition of
dividing a Small Starts project envisioned for a corridor into multiple
Very Small Starts projects.
The intent is to allow smaller projects to qualify as Very Small
Starts, since the eligibility provisions for Very Small Starts
guarantee that the projects will have acceptable ratings for project
justification regardless of whether they will eventually be part of a
larger project or not.
Comments: In the same comment, several respondents both supported
the proposal to divide Small Starts into Very Small Starts projects and
also noted that the Very Small Starts program is not authorized in
SAFETEA-LU. In addition, these respondents stated that the project
requirements for Very Small Starts are inherently mode-biased.
Response: The Federal Transit Administrator may impose any terms
and conditions on a grant award under 49 U.S.C. 5309 as he ``determines
to be necessary or appropriate'' to carry out the purposes of the
Section 5309 capital programs FTA is mindful, of course, that in
enacting SAFETEA-LU, the Congress expected the agency to develop
criteria and procedures for
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certain types of projects that would be simpler, and quicker, than
those applicable to New Starts, to meet travel demands in discrete
corridors that are growing, but do not yet necessitate the cost or
careful development of a traditional New Starts fixed guideway. The
Very Small Starts program is an exercise of the Administrator's
inherent, discretionary authorities to make grants under Section 5309
and to meet the growing demand across the Nation for projects that do
not require the time or expense of larger Small Starts projects--which,
in many instances, resemble those of traditional New Starts projects.
Any project seeking funding, regardless of mode, must have an
acceptable project justification rating. The eligibility requirements
for Very Small Starts were set to guarantee that a project has an
acceptable project justification rating. To meet an acceptable cost
effectiveness rating, the costs for eligibility were constrained so
that the user benefits resulting from the travel time and non-travel
time benefits assure an acceptable cost effectiveness rating.
Due to the generally higher cost and other variables of a fixed
guideway, it is not possible to automatically assure that such a
project can be cost-effective unless it meets the requirements put in
place for Very Small Start projects.
Comments: A few commenters opposed the proposal to allow for the
subdivision of Small Starts projects into Very Small Starts projects
because the project sponsor may potentially circumvent cost
effectiveness, the National Environmental Policy Act (NEPA) process,
and public input.
Response: The eligibility requirements for Very Small Starts ensure
that a project will have an acceptable cost effectiveness rating. There
is nothing in the Very Small Starts program that allows a project to
either circumvent NEPA or avoid public input.
Comments: A few respondents opposed the measure, arguing that Very
Small Starts projects do not guarantee a high quality transit project
that is permanent enough to help a region move to a sustainable
transportation system.
Response: The Very Small Starts eligibility requirements were
developed to ensure that premium transit service is provided. FTA
requires in its grant agreements that the federally funded assets stay
in public transportation service for their entire useful lives,
otherwise FTA must be reimbursed its share of the fair market value of
the assets. This provision gives some permanence to Very Small Start
projects.
Comments: Several respondents also encouraged FTA to allow New
Starts projects to be subdivided into Small Starts projects.
Response: FTA does not allow New Starts projects to be subdivided
into multiple Small Starts projects because we believe it violates the
intent of the Small Starts program, eliminates the need for the more
intense scrutiny required for larger projects, and stretches FTA
oversight resources too far. The Small Starts program is authorized at
only $200 million per year, which would be used up very quickly were
FTA to allow New Starts projects to be divided into multiple Small
Starts projects.
Comments: A few commenters responded to the category of Small
Starts eligibility by suggesting that if FTA notices an increase in the
number of Small Starts project development applications, FTA should
request a greater amount of funding for this program.
Response: The President's annual budget request of Congress is
based on an evaluation of the many competing priorities for public
transportation across the Nation, not simply the demand for funding for
Small Starts projects.
3. Documentation of Uncertainties in Predictions of Capital Cost and
Ridership
FTA adopts as final its proposal to require that predictions of
capital costs and project ridership for the locally preferred
alternative (LPA) be expressed as ranges with accompanying explanations
of the contributing sources of uncertainty that bracket the range. This
requirement would apply to predictions submitted to FTA in support of
requests to advance the LPA into preliminary engineering or, for Small
Starts projects, project development, to all subsequent environmental
documents, and to requests for entry into final design. The requirement
does not apply to Very Small Starts. The requirement will go into
effect six months after FTA issues separate guidance concerning this
provision, expected before the end of calendar year 2008. Three months
after guidance is issued, project sponsors are required to consult with
FTA on the approach for the analysis to ensure that it meets FTA
expectations.
The intent of this requirement is to comply with a number of
SAFETEA-LU provisions that relate to project uncertainties. An analysis
of project uncertainties provides the underpinnings for the
reasonability of key information that FTA must confirm to assure that
its evaluations and ratings are sufficient for Federal funding
decisions. As a result, the time required for FTA technical reviews
will be shortened because uncertainties will be disclosed, reducing FTA
questions and requests for follow-up analysis and the attendant impacts
on review times.
The requirement will support more effective FTA compliance with
SAFETEA-LU provisions relating to reliability of forecasting methods,
the Before and After Study, the Contractor Performance Incentive
Report, incentive awards when forecasts of costs and ridership are
close to those achieved, and grantee consideration of the Contractor
Performance Assessment Report (all found on http://www.fta.dot.gov).
This is because FTA will be able to better understand the context of
forecasts when comparing outcomes to forecasts, in contrast to having
single estimate forecasts with no explanation of variances as a result
of other causal factors.
Comments: A significant number of respondents stated that the
measure would add to the burden of the New and Small Starts project
development process by delaying planning and increasing costs for very
little additional information. Several respondents opposed the measure
noting that expressing forecasts in terms of a range is unreasonable
and does not add to the utility of the project's forecast.
Response: FTA believes that any additional overall level of effort
and time impacts for documentation of cost and ridership uncertainties
will be modest if good planning practices are followed. For costs, the
documentation of scope-related uncertainties relies on information that
is surfaced in the routine course of the development of alternatives.
The representation of these uncertainties can be captured in the
existing spreadsheet framework of FTA's standard cost categories
(SCCs). For ridership, the basis of the analysis is easily generated by
rerunning models with minor changes in the inputs, thus significantly
reducing the level of analysis necessary to understand the
reasonableness of forecasts.
FTA believes that expressing forecasts in terms of ranges
acknowledges the uncertainties that are endemic to any profession that
makes forecasts of the future. That the actual capital costs and
ridership of major transit projects have varied significantly from
previous forecasts is evidence of the uncertainties that exist in
forecasts for transit projects.
Comments: Several commenters stated that this measure is more
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appropriately considered in a rulemaking process, not an annual policy
guidance document. A few commenters suggested that if FTA were to
accept this proposal as final that FTA should conduct research to
establish the efficacy of the methodology and subject the research to a
formal rulemaking process.
Response: FTA finds that this policy addresses good practice for
planning and project development at a level of detail not usually
addressed in rulemaking, which is intended for establishing the
framework for project eligibility and evaluation. FTA intends to use
the results of the uncertainty analysis in its research related to
``before and after'' studies.
Comments: A few commenters expressed concern that FTA is seeking to
impose this requirement three months after publishing guidance without
consideration for project status and without providing training to
project sponsors.
Response: FTA has extended the time for the requirement to go into
effect from three months in the proposal to six months after FTA
publishes guidance on the uncertainty analysis, which should provide
ample time for project sponsors to develop the analysis. Projects
already approved into final design prior to the eventual effective date
of this requirement will not be subject to this requirement.
Comments: A few respondents stated that the project development
process is intended to reduce uncertainty and develop a more accurate
cost as the project progresses toward final design; not to provide a
detailed assessment.
Response: We agree that current practice reduces the uncertainty in
the capital cost estimate as project development progresses, but an
analysis of those uncertainties is not usually described in public
documents. Travel forecasts are rarely refined in project development,
so that analysis of uncertainties would not be expected to change
significantly.
Comments: A few respondents stated that FTA has not given existing
improvements to its process that are already in place enough time to
work and that this requirement would add extra work to an already
cumbersome process.
Response: We believe that the improvements already in place should
facilitate the analysis of uncertainties and reporting of ranges,
which, at this time, are rarely described for the LPA and in
environmental documents.
Comments: A few commenters stated that changing input variables
would not indicate the accuracy of the travel model, but would only
demonstrate sensitivity which is already documented in the methodology
and demonstrated to be accurate based on actual behavior and the model
calibration process.
Response: Changing input variables provides the sensitivity of
ridership to those variables. Having a sense of the reliability of
those variables, and interpreting how the forecasts are affected,
provides insights into the uncertainties of the travel forecasts,
rather than mechanically producing results as implied in the comment.
Comments: One respondent said that this measure would present a
conflict to other FTA processes, noting that FTA's Office of Program
Management requests the risk assessment process to begin when
Preliminary Engineering is 20-50% complete.
Response: The uncertainty analysis should draw upon the best
available information at the time the estimates of cost and ridership
are developed.
Comment: One respondent stated that project sponsors depending on a
Metropolitan Planning Organization (MPO) with a large number of member
agencies will have great difficulty coming to a consensus on a high and
low set of forecasts.
Response: It is not clear that they will have responsibility for
facilitating a consensus on a range of forecasts, but if they do, one
of the key missions of MPOs is to facilitate decisions on
transportation issues.
Comment: One respondent stated that it was unfair to impose this
requirement on New Starts and Small Starts projects when other
Federally funded transit projects are not subject to the same scrutiny.
Response: The New and Small Starts programs have a number of
special requirements spelled out in 49 U.S.C. 5309 that do not apply to
other federally funded transit projects, for reasons of policy
enunciated by the statute; we note, moreover, the New and Small Starts
programs are discretionary, whereas most other program funding under 49
U.S.C. Chapter 53 is distributed by formulae.
Comment: One respondent noted that while qualitative concerns such
as political or financial conditions may be described in text, the
respondent questioned the value of using staff or consultant time to
attempt to value such components.
Response: It is the responsibility of the project sponsor to decide
which factors are important in performing the uncertainty analysis and
how they should be interpreted.
Comments: A few commenters suggested that the best way to improve
models is to encourage existing activities such as peer reviews,
surveys, research, calibration, best practices, and before and after
studies.
Response: FTA agrees that these actions can reduce the uncertainty
inherent in forecasts.
Comments: A few commenters suggested FTA place greater emphasis on
reducing trips and trip lengths by rewarding density in project
corridors and at stations, rather than retaining a focus on travel
time.
Response: This proposal addressed reporting of uncertainties, not
evaluation of land use. FTA currently gives credit for transit-oriented
development and densities in its ratings for the land use criterion.
Comments: A few respondents suggested that FTA identify
uncertainties and allow project sponsors to respond with a short
explanatory document that acknowledges the uncertainties that may
affect the project's capital costs or ridership.
Response: Prior to this proposal, FTA has collaborated with project
sponsors to refine ridership forecasts and estimates for capital costs.
We expect that collaboration will be useful in the determination of the
uncertainty analysis. The results of any analysis of uncertainties must
be summarized in submittals to FTA in support of requests to advance
the LPA into preliminary engineering or, for larger Small Starts
projects, project development, in all subsequent environmental
documents, and in requests for entry into final design.
Comments: A few respondents stated that this proposal should only
be applied to those elements that are a direct component of a Section
5309 funded project, and not to ``concurrent non-project activities''
that are beyond the control of the project sponsor.
Response: It is FTA's intent to focus the uncertainty analysis on
those project elements that relate to the transit project.
Comment: One comment suggested FTA reduce this requirement to allow
project sponsors to report every other year or only at key milestones.
In addition, the commenter noted that this requirement should not apply
to Very Small Starts projects as it would make the simplified process
too cumbersome.
Response: The requirement applies to key milestones only and does
not apply to Very Small Starts.
Comments: Several respondents asked how cost effectiveness would be
determined if cost and ridership are reported using ranges.
Response: FTA will use the best estimate of costs and ridership to
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quantify the evaluation measures related to mobility impacts and cost
effectiveness. The project sponsor, in collaboration with FTA, will
determine what constitutes the best estimate.
Comment: One commenter stated that FTA has not clearly stated how
the production of this information will result in an improved project.
Response: The reporting of uncertainties will help FTA in
determining project merit. In addition, proper reporting of
uncertainties could reduce review times by FTA, which in turn should
result in shorter project development times and reduced costs.
Comment: One respondent requested clarification on what was meant
by ``* * * FTA will give credit, perhaps approaching full credit for
useful presentations of forecasts.''
Response: The quoted language means that during project development
FTA would take into consideration an insightful uncertainty analysis
when establishing the reliability rating discussed under item 4 of this
paper. FTA would also use the uncertainty analysis when preparing the
Before and After Study Report and the Contractor Performance Assessment
Report. FTA would take into consideration an insightful uncertainty
analysis if the predicted or actual costs and ridership varied from the
best estimate and the reasons for the variance were discussed in the
uncertainty analysis as possibilities. In contrast, if the predicted or
actual costs and ridership varied in the same way from the best
estimate and the uncertainty analysis provided no insights into the
reasons for the actual variance, FTA would view the outcomes more
negatively in its assessments.
Comment: One commenter sought clarification on the following
questions: (1) To what extent will FTA hold up a project's advancement
in relation to this requirement; (2) will FTA question the breadth of
this range; and (3) what happens if a project sponsor submits a best
estimate that is closer to the low end than the high end?
Response: FTA will treat this requirement consistent with how it
treats other evaluation and rating requirements. Under rare
circumstances, FTA may hold up a project's advancement if FTA believes
there are good reasons for doing so. As stated in the proposal, FTA
will work with project sponsors to establish the best estimate and
allow project sponsors to establish the high and low ends of range. The
choice of the range is made by the project sponsor. If the project
sponsor thinks the best estimate is closer to the low end of the range
for the ridership forecasts or cost estimate than the high end, the
sponsor's accompanying explanation would describe why there is a low
probability that actual ridership or cost would reach the higher end of
the range.
4. Reliability Rating
FTA adopts as final the proposal to develop ratings of the
reliability of capital cost estimates and ridership forecasts beginning
in January 2009, and to consider these ratings in the determination of
the project justification rating for proposed projects beginning in
August 2009. The rating will be included under ``Other Factors'' for
project justification. This requirement would apply to ratings made for
requests to advance the LPA into preliminary engineering or, for larger
Small Starts projects, project development, and to requests for entry
into final design and prior to an FFGA. This requirement does not apply
to Very Small Starts.
FTA is implementing this rating to better differentiate the
worthiness of projects for funding recommendations and to minimize the
likelihood for project scope reductions when projects have ratings near
acceptable breakpoints. Projects seeking New Starts and Small Starts
funding vary considerably in the risks inherent in their cost and
ridership forecasts as evidenced in the variance between actual results
compared to the estimates made during planning and project development.
Capturing reliability within FTA's evaluation allows funding to be
directed to projects that have the greatest likelihood of achieving
their forecasts, which are the source of much of the information used
for project ratings. Additionally, incorporating reliability into FTA's
ratings will minimize changes to ratings (or project scope to maintain
a rating) that can occur after a project advances into preliminary
engineering or into final design. This allows FTA to better comply with
the 49 U.S.C. 5309 mandate that a proposed New Starts or Small Starts
project shall not advance through the project development process
unless the Secretary determines that there is a reasonable likelihood
that the project will continue to meet the evaluation requirements.
Comments: A significant number of respondents opposed this
requirement stating that this should have been included in a rulemaking
process, not annual policy guidance. Several commenters questioned why
FTA singled out this factor versus others listed in SAFETEA-LU that are
not currently included in the project justification rating.
Response: FTA does not believe adding reliability as an ``other
factor'' rises to the level of rulemaking. In the past we have added
several considerations under ``other factors'' without rulemaking. A
number of the ``other factors'' listed in SAFETEA-LU are either
incorporated into existing measures or are so difficult to compute that
using them in our evaluations would be cumbersome and not add to the
information we have on the merits of the project.
Comments: Several respondents stated that the sub-criteria for
reliability are subjective. A few commenters said that reliability is
already being addressed in FTA's risk assessment process. Other
commenters stated that FTA works closely with all grantees to approve
their transit demand models, so reliability of forecasting methods
should already be accounted for.
Response: Assessing reliability of forecasts is largely a
subjective process given there are few analytical tools that cover many
of the factors that contribute to risk. FTA's risk assessment process
deals with much of the assessment of required risk, but omits some of
the factors described in the proposed policy guidance. FTA's oversight
of travel forecasts results in a reasonable estimate of ridership and
user benefits. However, the reliability of model results depends on a
number of factors relating to the uncertainty of the input variables
and the ability of the models to forecast certain travel markets. These
and other factors are captured in FTA's rating of reliability.
Comments: A few commenters stated that FTA should identify specific
project uncertainties and project sponsors would then respond to FTA's
assessment.
Response: Prior to this proposal, FTA has collaborated with project
sponsors to refine ridership forecasts and estimates for capital costs.
We expect that collaboration will be useful in the determination of the
reliability rating.
Comments: A few respondents recommended FTA implement this
requirement with procedures that are consistent with Congressional
intent for the Small Starts program (i.e., commensurate with the level
of investment). A few respondents encouraged FTA to help project
sponsors who are having trouble with the modeling process rather than
penalizing them through the application of a subjective rating factor.
Response: FTA will continue to provide technical assistance to
project sponsors undertaking cost and ridership forecasts and encourage
the analysis to
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be commensurate with level of investment.
Comments: A few commenters suggested that the following be added to
the list of uncertainties: change of development patterns due to
demographic changes, housing preferences for units close to transit,
housing and transportation expense, and the growing concern over
greenhouse gases.
Response: FTA intends to use the factors listed in the proposal as
we believe we can discern reliability from them. Change in development
patterns is one of the proposed factors, but the others listed in the
comment are not. The other factors cannot easily be used to assess
reliability because travel models do not include them; our
understanding of the link between them and ridership is very weak; and
they are difficult to forecast.
Comment: One commenter stated that the experience of the project
sponsor or contractor is more appropriately used to determine the
extent of the oversight needed.
Response: FTA believes that experience of the project sponsor is a
key variable in determining the reliability of the estimates. FTA
already considers the project sponsor's experience and technical
capacity when making a decision to advance a project and when assigning
oversight resources.
Comment: A few respondents requested clarification on how the
reliability assessment will be made and a rating assigned.
Response: Given the multitude of factors that contribute to
reliability, FTA believes that each project will have a variety of
factors that will inform the rating, so a description of a rigid rating
framework is not effective. The factors include: completeness of the
documentation of uncertainties, the quality of efforts to collect
appropriate data and test travel forecasting procedures, actions taken
by the project sponsor to minimize uncertainties, FTA findings, the
track record of the project sponsor for forecasts of previous projects,
the national track record of forecasts for similar projects, and the
extent to which the ridership forecasts depend on conditions in the
corridor that are substantially different from today. The rating will
be considered along with other considerations under ``Other factors''
and a decision made as to whether the project justification rating
should be changed.
5. Local Financial Commitment for Recapitalization of the Existing
Transit System
In rating potential New and Small Starts projects for local
financial commitment, FTA adopts as final its proposal to give
additional scrutiny to the adequacy of the local financial commitment
for ongoing recapitalization of the existing transit system.
SAFETEA-LU included provisions that underscore the need for transit
systems to first ensure they have sufficient funding for their
recapitalization needs before spending additional resources for new
projects that could exacerbate funding problems for recapitalization.
This policy is intended to assure that transit agencies considering new
projects have adequate resources to recapitalize their systems.
Comments: Several respondents sought clarification on what was
meant by ``additional attention will be given to local financial
commitment for ongoing recapitalization.'' A few commenters were not
clear on the proposal or how it was different from current practice.
Response: FTA intends to review the estimates of recapitalization
costs and revenues with greater scrutiny than it has done in the past.
While FTA has always included an examination of these needs in its
evaluation, project ratings have seldom been impacted. This policy
merely describes the greater emphasis FTA will be placing on the
recapitalization estimates.
Comments: A few commenters supported the proposal, stating that
funding for maintenance and recapitalization are appropriate
considerations in financial planning and FTA's project ratings. Several
respondents stated that it is not clear why a financial plan that
includes section 5307 and 5309 fixed guideway modernization funds
should be rated less favorably, given that maintaining the existing
system is an eligible use of these funds.
Response: The proposal stated that FTA would apply extra scrutiny
to ensure the recapitalization needs of the existing system were
covered with sufficient funds if a project sponsor proposed diverting
Section 5307 and Section 5309 fixed guideway funds from
recapitalization needs to help fund the capital cost of the New or
Small Starts project. If FTA determines that insufficient funds are
identified for recapitalization needs or that recapitalization cost
estimates are significantly understated in the financial plan, then the
financial rating for the ``capital cost estimates, planning
assumptions, and financial capacity'' subfactor may be downgraded.
Comments: A few commenters stated that even if Congress had ``the
state of good repair'' as its intent, that this is not applicable to
Small Starts projects that only have to prove ``each proposed local
source of capital and operating financing is stable, reliable, and
available within the proposed project's timeline.''
Response: Section 5309(c)(1)(B) of Title 49, U.S. Code, requires
that the grantee have the ``legal, technical, and financial capacity to
carry out the project, including safety and security aspects of the
project.'' FTA must have evidence that a transit agency has adequate
resources to maintain and recapitalize the system before we can confirm
that the project sponsor has the financial capacity to carry out the
proposed project.
Comments: A few commenters stated that Congress did not intend to
impose a state of good repair with this provision, but rather to ensure
transit agencies not cut existing service in favor of the New Starts
project.
Response: The plain language of 49 U.S.C. 5309(d)(4)(A)(iii)
requires that ``local resources [be] available to recapitalize * * *
the overall public transit system. * * *'' This language is clearly
focused not only on reducing existing service, but rather on the
overall system.
Comments: A few commenters stated that the triennial and planning
certification reviews are more appropriate venues to assess maintenance
and recapitalization funding than the New Starts project development
process.
Response: While the triennial and planning certification reviews
may touch on financial capacity and financial planning, FTA feels that
the large number of topics addressed in those reviews does not allow
for the level of scrutiny necessary to assure that project sponsors
will be able to adequately recapitalize their systems.
Comment: One respondent stated that FTA should continue to review
capital plans for continued maintenance of the base system, but did not
support giving the proposed requirement more weight than other aspects
of a project's financial plan.
Response: The adopted policy does not give more weight to this
factor than others when evaluating and rating local financial
commitment. The weights for the subfactors for rating local financial
commitment are unchanged. Rather, the policy merely puts project
sponsors on notice that additional scrutiny will be
[[Page 46358]]
applied to their projections of recapitalization costs and revenues.
Comments: Several respondents suggested that adjustments to capital
costs should be considered for extraordinary cost increases or
inflation; cost effectiveness break points should also be adjusted due
to these cost escalations.
Response: FTA currently allows cost increases related to unforeseen
commodities escalation or inflation. Per FTA's April 2005 Dear
Colleague letter, the cost-effectiveness breakpoints are adjusted
annually using the increase in the Gross National Product deflator.
6. Contractor Review of Information for the Before and After Study
FTA adopts as final its proposal that contractors involved in a
project's capital cost estimation and travel forecasting be given an
opportunity to review and comment each time the project sponsor is
required to submit information for the ``before and after'' study. The
contractor's comments, if any, must be included in the information
submitted to FTA.
The intent of this provision is to facilitate communication between
project sponsors and contractors on the responsibilities of contractors
for variances between forecasts at the three milestones before a
project opens and actual results two years after the project opens for
revenue service. If this communication does not result in a common
understanding that can be documented in the submittal of information
from the ``before and after'' study to FTA, the contractor's comments
would have to be included in the submittal by the project sponsor.
Comments: There was significant support for and no opposition to
this requirement.
Issued in Washington, DC this 4th day of August, 2008.
James S. Simpson,
Administrator.
[FR Doc. E8-18315 Filed 8-7-08; 8:45 am]
BILLING CODE 4910-57-P