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entitled 'Public Transportation: Opportunities Exist to Improve the 
Communication and Transparency of Changes Made to the New Starts 
Program' which was released on June 28, 2005. 

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Report to Congressional Committees: 

June 2005: 

Public Transportation: 

Opportunities Exist to Improve the Communication and Transparency of 
Changes Made to the New Starts Program: 

GAO-05-674: 

GAO Highlights: 

Highlights of GAO-05-674, a report to congressional committees: 

Why GAO Did This Study: 

The Transportation Equity Act for the 21st Century (TEA-21) and 
subsequent legislation authorized about $13.5 billion in guaranteed 
funding for the Federal Transit Administration’s (FTA) New Starts 
program, which is used to select fixed guideway transit projects, such 
as rail and trolley projects, and to award full funding grant 
agreements (FFGA). GAO assessed the New Starts process for the fiscal 
year 2006 cycle. GAO identified (1) the number of projects that were 
evaluated, rated, and proposed for new FFGAs and the proposed funding 
commitments in the administration’s budget request; (2) changes FTA has 
made to the New Starts application, evaluation, rating, and oversight 
processes since the fiscal year 2001 evaluation cycle and how these 
changes have been communicated to project sponsors; and (3) how FTA 
developed the measures used to evaluate and rate projects from the 
criteria outlined in TEA-21 and how those measures are used in the 
rating process. 

What GAO Found: 

For the fiscal year 2006 evaluation cycle, FTA evaluated and rated 27 
projects and identified 4 projects that were expected to be ready for 
new FFGAs before the end of fiscal year 2006 and an additional 6 
projects that may be eligible for other funding outside of FFGAs. The 
administration’s fiscal year 2006 budget proposal requests $1.5 billion 
for the New Starts program, a request similar to that of the past 2 
years. 

FTA has made 16 changes to the New Starts application, evaluation, 
rating, and oversight processes since the fiscal year 2001 cycle that 
were primarily intended to make the process more rigorous and 
systematic. Seven of the 16 changes underwent rulemaking, including 
providing formal notice to the transit industry and soliciting comment, 
while 9 changes did not. FTA officials said that these nine changes are 
consistent with the existing regulations governing the New Starts 
process or relate to the project development oversight process rather 
than the evaluation and rating process and, therefore, in their 
opinion, do not need to undergo formal rulemaking. By not consistently 
soliciting public opinion, however, FTA is missing an opportunity to 
obtain stakeholder buy-in, increase the transparency of the New Starts 
process, and lessen potential difficulties project sponsors face in 
implementing the changes. 

Many of the measures FTA uses to evaluate and rate New Starts projects 
have evolved over time, with industry input, through formal rulemaking 
and informal efforts, such as workshops and reports. Although both TEA-
21 and FTA’s New Starts program regulations emphasize the importance of 
using a multiple-measure approach for evaluating projects, FTA assigns 
weight to all three financial criteria but only two of the five project 
justification criteria in developing a project’s rating. FTA officials 
said that they do not use the other three project justification 
criteria—which are specified in TEA-21—because the measures fail to 
distinguish among projects. Project sponsors we interviewed offered 
suggestions for improving all of the project justification measures, 
and FTA has efforts underway to improve some of the measures. 

Example of a New Starts Project with an Existing FFGA- Bay Area Rapid 
Transit Extension to San Francisco International Airport: 

[See PDF for image]

[End of figure]

What GAO Recommends: 

This report makes a number of recommendations intended to ensure that 
the New Starts regulations reflect FTA’s current evaluation and rating 
process and ensure that FTA’s New Starts evaluation process and 
policies are objective, transparent, and follow the spirit of federal 
statutes and regulations. FTA officials agreed with the findings and 
recommendations in this report. 

www.gao.gov/cgi-bin/getrpt?GAO-05-674. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Katherine Siggerud at 
(202) 512-2834 or siggerudk@gao.gov. 

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

FTA Identified Four New Projects for FFGAs and Requested $1.5 Billion 
for Fiscal Year 2006: 

FTA Has Implemented a Number of Changes to the New Starts Program, Some 
Without Project Sponsors' Input: 

New Starts Measures Have Evolved Over Time, but Not All Measures Count 
Toward a Project's Rating: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Projects with Existing FFGAs and Projects in Preliminary 
Engineering and Final Design in the Fiscal Year 2006 Cycle: 

Appendix III: Status of Previous GAO Recommendations for Improving the 
New Starts Evaluation Process: 

Appendix IV: Key New Starts Provisions Contained in House and Senate 
Reauthorization Bills: 

Appendix V: FTA's Project Justification Measures for Evaluating and 
Rating New Starts Projects: 

Appendix VI: GAO Contacts and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: FTA's Criteria for Assigning Overall Project Ratings: 

Table 2: Changes to the New Starts Application, Evaluation, Rating, and 
Project Development Oversight Processes since the Fiscal Year 2001 
Evaluation Cycle: 

Table 3: Strengths, Weaknesses, and Other Concerns about New Starts 
Measures, as Identified by Project Sponsors: 

Table 4: Suggestions for Improving New Starts Measures, as Identified 
by Project Sponsors: 

Table 5: Projects Contacted for Our Review: 

Figures: 

Figure 1: New Starts Planning and Development Process: 

Figure 2: New Starts Project Evaluation Criteria: 

Figure 3: Distribution of New Starts Projects in Preliminary 
Engineering and Final Design for Fiscal Year 2000 to 2006 Evaluation 
Cycles: 

Figure 4: Total New Starts Funding for Fiscal Year 2006 Equals $1.5 
Billion: 

Figure 5: Criteria and Measures for Evaluating Projects, as Outlined in 
TEA-21 and FTA's New Starts Program Regulations: 

Figure 6: Weights Used to Determine Project Justification and Financial 
Summary Ratings for New Starts Projects: 

Abbreviations: 

APTA: American Public Transportation Association: 

BRT: bus rapid transit: 

FFGA: full funding grant agreement: 

FTA: Federal Transit Administration: 

ISTEA: Intermodal Surface Transportation Efficiency Act of 1991: 

LRT: light rail transit: 

MOS: minimum operable segment: 

TEA-21: Transportation Equity Act for the 21ST Century: 

TSUB: Transportation System User Benefits: 

Letter June 28, 2005: 

The Honorable Richard C. Shelby: 
Chairman: 
The Honorable Paul S. Sarbanes: 
Ranking Minority Member: 
Committee on Banking, Housing, and Urban Affairs: 
United States Senate: 

The Honorable Don Young: 
Chairman: 
The Honorable James L. Oberstar: 
Ranking Democratic Member: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

Much of the federal government's share of new capital investment in 
mass transportation since the early 1970s has come through the Federal 
Transit Administration's (FTA) New Starts program, which awards full 
funding grant agreements (FFGA) for fixed guideway rail, bus rapid 
transit, and ferry projects across the country.[Footnote 1] An FFGA 
establishes the terms and conditions for federal participation in a 
project, including the maximum amount of federal funds available for 
the project, which by statute cannot exceed 80 percent of its net cost. 
Since fiscal year 1998, the New Starts program has provided state and 
local agencies with more than $8.8 billion[Footnote 2] to help design 
and construct transit projects throughout the country. 

Under the Transportation Equity Act for the 21ST Century (TEA- 
21)[Footnote 3] and subsequent amendments and other legislation, 
Congress authorized approximately $13.5 billion in New Starts 
commitment authority through 2005.[Footnote 4] Even though the level of 
program funding is higher than it has ever been, demand for these funds 
has also been extremely high. For that reason, TEA-21 directed FTA to 
prioritize projects for funding by evaluating, rating, and recommending 
potential projects on the basis of specific financial and project 
justification criteria--including mobility improvements, cost- 
effectiveness, environmental benefits, and operating efficiencies. In 
applying these criteria, TEA-21 directed FTA to consider a number of 
additional factors, including land use and congestion relief. 
Furthermore, TEA-21 required FTA to issue regulations for the 
evaluation and rating process, which FTA did in December 2000. 

TEA-21 also requires us to report each year on FTA's processes and 
procedures for evaluating, rating, and recommending New Starts projects 
for federal funding and on the implementation of these processes and 
procedures.[Footnote 5] This report discusses (1) the number of 
projects that were evaluated, rated, and proposed for new FFGAs for the 
fiscal year 2006 evaluation cycle[Footnote 6] and the proposed funding 
commitments for New Starts in the administration's fiscal year 2006 
budget request; (2) changes that FTA has made to the New Starts 
application, evaluation, rating, and oversight processes since TEA-21 
and how those changes have been communicated to project sponsors; and 
(3) how FTA developed the measures it uses to evaluate and rate 
projects from the criteria identified in TEA-21 and how the agency uses 
these measures in the evaluation process. To address these objectives, 
we reviewed the administration's fiscal year 2006 budget request; the 
legislation and regulations governing the New Starts process; and FTA's 
annual New Starts reports, reporting instructions, and other program 
guidance and documentation. We also interviewed FTA officials and 
representatives from the American Public Transportation Association, 
the New Starts Working Group,[Footnote 7] and the projects that were 
rated in the fiscal year 2006 evaluation cycle.[Footnote 8] In 
addition, we attended FTA's meetings with project sponsors--the New 
Starts Roundtables--in April and May 2005. We conducted our work from 
November 2004 through May 2005 in accordance with generally accepted 
government auditing standards. (See app. I for more information about 
our scope and methodology.)

Results in Brief: 

For the fiscal year 2006 evaluation cycle, FTA evaluated and rated 27 
projects and identified 4 that were expected to be ready for new FFGAs 
before the end of fiscal year 2006. In addition, FTA identified 6 other 
projects as potentially being eligible for funding outside of FFGAs. 
The administration is requesting a total of $1.5 billion for the New 
Starts program (an amount similar to that requested for the last 2 
years). This amount includes $634.6 million for projects with existing 
FFGAs and $590 million for projects proposed for new FFGAs. The total 
number of projects evaluated and rated has declined slightly every year 
since TEA-21, from 42 projects in the fiscal year 2000 evaluation cycle 
to 27 projects in the most recent cycle, while the number of 
recommended and highly recommended projects has varied from year to 
year. 

FTA has implemented 16 changes to the New Starts application, 
evaluation, rating, and project development oversight processes since 
the fiscal year 2001 evaluation cycle, using a variety of communication 
methods, but has not consistently sought industry input before 
implementing the changes. By not soliciting public opinion, FTA is 
missing an opportunity to obtain stakeholder buy-in, increase the 
transparency of the New Starts process, and lessen potential 
difficulties project sponsors face in implementing the changes. 
Although the impetus for each change varied, FTA officials stated that, 
in general, all of the changes were intended to make the process more 
rigorous, systematic, and transparent. For example, the requirement for 
project sponsors to develop a plan for evaluating the impacts of the 
project and the accuracy of ridership projections will identify lessons 
learned and hold transit agencies accountable for results. Some project 
sponsors told us a few of the changes have helped to improve the 
program, while others expressed a variety of concerns about the effect 
of some changes. For example, seven project sponsors stated that the 
"make the case" document helped them focus on the key benefits of the 
projects and three said it helped them "sell" the project to local 
decisionmakers or the public. Ten project sponsors noted, however, that 
FTA did not provide clear guidance on how to develop the "make the 
case" document and eight said that they had to produce multiple 
iterations of the document. FTA communicates information about changes 
to project sponsors through a variety of different methods, including 
regulations, reporting instructions, and the agency's Web site. Project 
sponsors we interviewed had varying opinions on the effectiveness of 
these communication methods but overall found that the Web site was 
ineffective because it was difficult to navigate and information was 
not consolidated in one location. Seven of the changes that FTA has 
made to the New Starts process since the fiscal year 2001 evaluation 
cycle underwent rulemaking, including providing formal notice to the 
transit industry and soliciting public comment, while nine changes did 
not. The Freedom of Information Act requires federal agencies to 
publish in the Federal Register notice of changes to programs, and the 
Administrative Procedure Act sets out the rulemaking process required 
to make changes to agencies' rules and procedures. FTA officials said 
that the changes they have made are consistent with the existing 
regulations governing the New Starts process and that some of the 
changes relate to the project development oversight process rather than 
the evaluation and rating process; therefore, in their opinion, the 
regulations do not need to be amended. Of the nine changes that did not 
undergo rulemaking, six changes--including the administration's new 
cost-effectiveness funding recommendation practice that would generally 
target funding recommendations to projects that achieve at least a 
medium cost-effectiveness rating--were made without FTA providing any 
avenues for public review and comment prior to their implementation. 
When formal rulemaking is not necessary, there are less formal options 
available for soliciting public comment. For example, in March 2005, 
FTA solicited public comment on three recent technical changes to the 
rating process. 

Many of the measures that FTA uses to evaluate projects predate TEA-21 
and have evolved over time through an iterative process--involving FTA, 
industry, and Congress--through rulemaking, outreach sessions, and 
reports. The measures reflect congressional direction to evaluate 
projects against a variety of criteria, including mobility 
improvements, environmental benefits, operating efficiencies, and cost-
effectiveness, and to consider other issues, such as land use, in the 
evaluation of projects. FTA's regulations governing the New Starts 
program likewise emphasize a multiple-measure approach. Using a series 
of these measures, FTA evaluates projects against statutorily 
identified criteria, including three local financial commitment 
criteria and five project justification criteria. Each local financial 
commitment criterion is counted toward a project's overall rating. 
However, only two of the project justification criteria typically count 
toward a project's overall rating, despite statements in the New Starts 
program regulations that all of the criteria will be used. 
Specifically, FTA currently assigns a weight of 50 percent each to the 
cost-effectiveness and land use criteria; the other three project 
justification criteria are not assigned weights. FTA sought industry 
input on whether there should be a weighting system in the last 
rulemaking process; however, according to FTA officials, the agency did 
not receive input that was useful to inform its policy. Consequently, 
the regulations are silent on the weights that should be assigned to 
each criterion and do not prohibit FTA from treating various criteria 
as more important than others. FTA officials said that the measures for 
the other three project justification criteria--mobility improvements, 
environmental benefits, and operating efficiencies--do not meaningfully 
distinguish among projects, and aspects of the mobility improvements 
criterion are already captured in the measure for cost- effectiveness. 
Although FTA has made improvements to the measures for land use and 
cost-effectiveness, it has not yet been able to identify measures for 
the other three project justification criteria that make meaningful 
distinctions among projects for the purpose of rating and funding 
decisions. FTA officials told us that they will initiate a formal 
rulemaking process after the program is reauthorized, at which point 
all New Starts policies and procedures will be reevaluated. 

This report makes recommendations to the Secretary of Transportation to 
ensure that FTA's New Starts regulations reflect its weighting policy, 
to improve the measures used to evaluate projects so that all criteria 
named in statute can be used to develop a project's rating, to publish 
future changes to the New Starts program in the Federal Register, and 
to solicit industry comment on changes, through rulemaking or some 
other process, as appropriate. To ensure that transit agencies have 
clear information on the New Starts program, we are also recommending 
that FTA consolidate guidance, reporting instructions, and other New 
Starts program information in one location on its Web site. The 
Department of Transportation, including FTA, reviewed a draft of this 
report. FTA officials generally agreed with the report's findings, 
conclusions, and recommendations. 

Background: 

TEA-21 authorized a total of $36 billion in "guaranteed" funding for a 
variety of transit programs, including financial assistance to states 
and localities to develop, operate, and maintain transit 
systems.[Footnote 9] Under one of these programs, New Starts, FTA 
identifies and selects fixed-guideway transit projects for funding-- 
including heavy, light, and commuter rail; ferry; and certain bus 
projects (such as bus rapid transit). FTA generally funds New Starts 
projects through FFGAs, which establish the terms and conditions for 
federal participation in a New Starts project and also define a 
project's scope, including the length of the system and the number of 
stations; its schedule, including the date when the system is expected 
to open for service; and its cost. 

To obtain an FFGA, a project must progress through a local or regional 
review of alternatives and meet a number of federal requirements, 
including providing information for the New Starts evaluation and 
rating process (see fig. 1). As required by TEA-21, New Starts projects 
must emerge from a regional, multimodal transportation planning 
process. The first two phases of the New Starts process--systems 
planning and alternatives analysis--address this requirement. The 
systems planning phase identifies the transportation needs of a region, 
while the alternatives analysis phase provides information on the 
benefits, costs, and impacts of different corridor-level options, such 
as rail lines or bus routes. The alternatives analysis phase results in 
the selection of a locally preferred alternative--which is intended to 
be the New Starts project that FTA evaluates for funding, as required 
by statute. After a locally preferred alternative is selected, project 
sponsors submit a request to FTA for entry into the preliminary 
engineering phase.[Footnote 10] Following completion of preliminary 
engineering and federal environmental requirements, the project may be 
approved by FTA to advance into final design,[Footnote 11] after which 
the project may be approved by FTA for an FFGA and proceed to 
construction, as provided for in statute. FTA oversees grantee 
management of projects from the preliminary engineering phase through 
construction and evaluates the projects for advancement into each phase 
of the process, as well as annually for the New Starts report to 
Congress. We have recognized the New Starts program as a good model 
that the federal government could use for approving other 
transportation projects. 

Figure 1: New Starts Planning and Development Process: 

[See PDF for image] 

[End of figure] 

To help inform administration and congressional decisions about which 
projects should receive federal funds, FTA assigns ratings based on a 
variety of financial and project justification criteria, as defined by 
its program regulations, and then assigns an overall rating. These 
criteria are identified in TEA-21 and reflect a broad range of benefits 
and effects of the proposed project, such as cost-effectiveness, as 
well as the ability of the project sponsor to fund the project and 
finance the continued operation of its transit system (see fig. 2). 
Projects are rated at several points during the New Starts process--as 
part of the evaluation for entry into preliminary engineering and final 
design, and yearly for inclusion in the New Starts annual report. 

Figure 2: New Starts Project Evaluation Criteria: 

[See PDF for image] 

[A] Other factors can include environmental justice and equity issues, 
economic development initiatives, innovative financing, etc. 

[End of figure] 

FTA assigns the proposed project a rating of high, medium-high, medium, 
low-medium, or low for each criterion, then assigns a summary rating 
for local financial commitment and project justification. Finally, FTA 
develops an overall project rating of "highly recommended," 
"recommended," "not recommended," or "not rated." (See table 1 for the 
criteria FTA uses to evaluate projects.) The exceptions to this process 
are statutorily "exempt" projects, which are those that request less 
than $25 million in New Starts funding. These projects are not required 
to submit project justification information--although FTA encourages 
them to do so--and do not receive ratings from FTA; thus, the number of 
projects in preliminary engineering or final design may be greater than 
the number of projects evaluated and rated by FTA. 

Table 1: FTA's Criteria for Assigning Overall Project Ratings: 

Overall rating category: Highly recommended; 
Criteria: Requires at least a medium-high for both the financial and 
project justification summary ratings. 

Overall rating category: Recommended; 
Criteria: Requires at least a medium for both the financial and project 
justification summary ratings. 

Overall rating category: Not recommended; 
Criteria: Assigned to projects not rated at least medium for both the 
financial and project justification summary ratings. 

Overall rating category: Not rated; 
Criteria: Indicates that insufficient information was submitted or that 
FTA has serious concerns about the information submitted because the 
underlying travel forecasting assumptions used by the project sponsor 
may have inaccurately represented the benefits of the project. 

Source: FTA. 

[End of table]

As required by statute, the administration uses the FTA evaluation and 
rating process, along with the stage of development of New Starts 
projects, to decide which projects to recommend to Congress for 
funding.[Footnote 12] Although many projects receive an overall rating 
of "recommended" or "highly recommended," only a few are proposed for 
FFGAs in a given fiscal year. FTA proposes "recommended" or "highly 
recommended" projects for FFGAs when it believes that the projects will 
be able to meet certain conditions during the fiscal year that the 
proposals are made. These conditions include the following: 

* All non-New Starts funding must be committed and available for the 
project. 

* The project must be in the final design phase and have progressed to 
the point where uncertainties about costs, benefits, and impacts (e.g., 
environmental or financial) are minimized. 

* The project must meet FTA's tests for readiness and technical 
capacity, which confirm there are no cost, project scope, or local 
financial commitment issues remaining. 

FTA Identified Four New Projects for FFGAs and Requested $1.5 Billion 
for Fiscal Year 2006: 

Of the 34 projects in preliminary engineering or final design for the 
fiscal year 2006 cycle, 27 were evaluated and rated and 7 were 
statutorily exempt from the rating process. Four projects were 
recommended for funding with the expectation that they would be ready 
for new FFGAs before the end of fiscal year 2006, and an additional 6 
projects were identified as potentially receiving a recommendation for 
New Starts funding outside of FFGAs. The administration's fiscal year 
2006 budget proposal requests a total of $1.5 billion for the New 
Starts program, an amount similar to requests for the past 2 fiscal 
years. (See app. II for the administration's 2006 budget proposal and 
FTA's project ratings.)

FTA Evaluated and Rated 27 Projects and Proposed 4 for FFGAs in Fiscal 
Year 2006: 

FTA's Annual Report on New Starts: Proposed Allocations of Funds for 
Fiscal Year 2006 ("annual report") listed a total of 34 projects in 
preliminary engineering and final design, and FTA evaluated and rated 
27 of them.[Footnote 13] Seven were statutorily exempt from being rated 
because they requested less than $25 million in New Starts funding. Of 
the 27 projects that were rated, 2 were highly recommended, 12 were 
recommended, 8 were not recommended, and 5 were designated "not rated." 
In its annual report, FTA said that projects were designated as "not 
rated" because they did not submit the required information or because 
of FTA's continuing concerns about the reliability of the 
transportation benefits forecast for these projects. According to FTA, 
a principal source of these concerns was inconsistent assumptions used 
in defining the baseline alternative and the proposed New Starts 
project, making it difficult to isolate the impacts of the proposed 
project. In some cases, the local travel demand models were 
inconsistent with FTA guidance and good planning practice. FTA is 
currently working with the sponsors of these projects to improve the 
forecasts. 

As shown in figure 3, the combined number of recommended and highly 
recommended projects declined sharply from 27 in the fiscal year 2003 
evaluation cycle to 14 in the fiscal year 2004 evaluation cycle, while 
the combined number of not recommended and not rated projects rose from 
6 to 18. As we previously reported, this was primarily due to 
difficulties project sponsors encountered when implementing the new 
cost-effectiveness measure--the Transportation System User Benefits 
(TSUB) measure[Footnote 14]--and adjusting to FTA's preference policy 
that favors projects that seek a federal New Starts share of no more 
than 60 percent of the total project costs.[Footnote 15] According to 
FTA, the information that was provided by project sponsors in their 
reports on TSUB highlighted previously unknown problems with many local 
models that forecast travel demand. FTA first incorporated both of 
these changes beginning with the fiscal year 2004 evaluation cycle. 
Project ratings generally improved (i.e., there were more projects with 
recommended ratings and fewer with not recommended ratings) in the 
fiscal year 2005 evaluation cycle as project sponsors improved their 
financial plans, grew more comfortable with the new cost-effectiveness 
measure, and made corrections and improvements to their models that 
forecast travel demand, according to FTA.[Footnote 16] While the 
combined number of not rated and not recommended projects was 
approximately the same in the fiscal year 2005 and 2006 evaluation 
cycles, the number of projects receiving ratings of at least 
recommended has decreased slightly again. Unlike in previous years, 
however, there was no obviously identifiable reason for this change, 
except for the fact that some projects moved out of the ratings pool 
and into construction, according to FTA. 

Figure 3: Distribution of New Starts Projects in Preliminary 
Engineering and Final Design for Fiscal Year 2000 to 2006 Evaluation 
Cycles: 

[See PDF for image] 

Note: The pool of projects evaluated and rated each year changes, as 
some projects from the previous year receive FFGAs and begin 
construction, while new projects enter preliminary engineering and are 
evaluated and rated for the first time. 

[End of figure] 

The fiscal year 2006 rating cycle saw the smallest total number of 
projects in preliminary engineering and final design during the TEA-21 
period. The number of projects evaluated and rated has decreased 
slightly every year, from 42 projects in the fiscal year 2000 rating 
cycle to 27 projects in the most recent cycle.[Footnote 17] During this 
same time frame, the number of exempt projects grew steadily through 
the fiscal year 2004 cycle but has been declining ever since. FTA 
officials suggested that these trends could be the result of a 
combination of factors. First, many of the projects that TEA-21 
authorized have worked their way through the New Starts process and 
obtained FFGAs, and thus are not subject to the annual evaluation and 
rating process. At the same time, new projects entered preliminary 
engineering each year and were rated for the first time. FTA officials 
speculated that additional projects would be included in 
reauthorization legislation and would enter the New Starts pipeline 
over the course of the reauthorization period. Second, FTA has 
increased the level of scrutiny it applies to projects attempting to 
advance from alternatives analysis to preliminary engineering to help 
ensure that only the strongest projects enter the New Starts pipeline. 
Third, FTA has worked with project sponsors to reduce the number of 
inactive projects in the New Starts pipeline. Fourth, since the time 
TEA-21 was enacted, some state and local transportation agencies have 
been feeling the impact of local budget constraints, making it more 
difficult to secure local funding for proposed New Starts projects. 
This could be exacerbated by FTA's policy of favoring projects that 
seek a federal New Starts share of no more than 60 percent of the total 
project costs. As we reported in 2004, several project sponsors told us 
that FTA's push for a lower federal New Starts share would likely 
affect their decision to advance future transit projects.[Footnote 18] 
Therefore, we recommended that FTA examine the impact of the preference 
policy on projects in the evaluation process. FTA is considering how to 
conduct such an examination. 

FTA's evaluation process informed the administration's recommendation 
to fund four projects that are expected to be ready for new FFGAs 
before the end of fiscal year 2006, including Charlotte, South Corridor 
Light Rail Transit; New York, Long Island Rail Road East Side Access; 
Phoenix, Central Phoenix/East Valley Light Rail Transit Corridor; and 
Pittsburgh, North Shore Light Rail Transit Connector. The total capital 
cost of these four projects is estimated to be $9.9 billion, of which 
the total federal New Starts share is expected to be $3.6 billion. FTA 
executed an FFGA for the Phoenix project in January 2005 and for the 
Charlotte project in May 2005. The other two projects are expected to 
be ready for FFGAs before the end of fiscal year 2006. According to 
FTA, the remaining projects that received overall ratings of 
recommended or highly recommended do not yet pass FTA's readiness tests 
for FFGAs. 

The administration also proposed reserving $158.6 million in New Starts 
funding for final design and early construction activities for as many 
as six "other projects," including San Diego, Mid-Coast Light Rail 
Transit Extension; Denver, West Corridor Light Rail Transit; New York, 
Second Avenue Subway; Washington County (Oregon), Wilsonville to 
Beaverton Commuter Rail; Dallas, Northwest-Southeast Light Rail; and 
Salt Lake City, Weber County to Salt Lake City Commuter Rail. These six 
projects were in or nearing final design, received overall highly 
recommended or recommended ratings, and had cost-effectiveness ratings 
above "low." According to FTA officials, no other projects met these 
criteria. The annual report did not specify amounts for particular 
projects to ensure that the project is moving forward as anticipated 
prior to making specific funding recommendations to Congress, according 
to FTA officials, because projects may encounter unexpected financial 
or other obstacles that slow their progress. For example, FTA told us 
that the sponsor for one of the projects is considering a significant 
expansion of the project scope, which would put it back in preliminary 
engineering and render it ineligible for the funds FTA proposed 
reserving for the "other projects" for fiscal year 2006. Reserving 
funds for these projects without specifying a particular amount for any 
given project will allow the administration to make "real time" funding 
recommendations when Congress is making appropriations decisions. FTA 
does not anticipate that all of the six projects will be recommended 
for funding in fiscal year 2006. 

Administration's Proposed Fiscal Year 2006 Budget Requests Similar 
Amount of Funding to Previous Years: 

The administration's fiscal year 2006 budget proposal requests that 
$1.5 billion be made available for the New Starts program, an amount 
similar to that requested in the last two fiscal years. Figure 4 
illustrates the specific budget allocations the administration has 
proposed for fiscal year 2006, including the following: 

* $634.6 million would be allocated among the 16 projects with existing 
grant agreements,

* $590 million would be allocated to four projects expected to be 
proposed for new FFGAs,

* $158.6 million would be allocated to as many as six "other" projects 
to continue project development, and: 

* $122.5 million is reserved to be allocated among projects in 
preliminary engineering, at the discretion of Congress and as provided 
in law.[Footnote 19]

Figure 4: Total New Starts Funding for Fiscal Year 2006 Equals $1.5 
Billion: 

[See PDF for image] 

Note: FTA is authorized to use up to 1 percent of amounts made 
available for the New Starts program for project management oversight 
activities. TEA-21 requires that specified amounts of New Starts funds 
be set aside annually for projects in Alaska and Hawaii, for new fixed 
guideway systems and extensions to existing systems that are ferry 
boats or ferry terminal facilities or that are approaches to ferry 
terminal facilities. 

[End of figure] 

FTA had approximately $2.2 billion in commitment authority--that is, 
the amount of funding authorized for New Starts projects--remaining as 
of May 2005. TEA-21 and subsequent amendments and legislation provided 
FTA the authority to make about $13.5 billion in funding commitments 
for New Starts projects. Surface transportation programs, including the 
New Starts program, were scheduled to expire in September 2003, but 
have subsequently been extended through June 2005.[Footnote 20] 
According to FTA officials, the commitment authority for fiscal year 
2006 and beyond will be addressed in the next surface transportation 
authorization legislation. However, FTA officials told us that there 
will not be sufficient commitment authority remaining to execute all 
four proposed FFGAs until additional commitment authority is provided 
through congressional authorization. 

FTA Has Implemented a Number of Changes to the New Starts Program, Some 
Without Project Sponsors' Input: 

FTA has made 16 changes to the New Starts application, evaluation, 
rating, and project development oversight processes since the fiscal 
year 2001 evaluation cycle--the first full evaluation and rating cycle 
after the enactment of TEA-21. FTA has used a variety of written and 
electronic methods to communicate information about these changes, 
although it primarily relies on reporting instructions, roundtables, 
and workshops. For nine of these changes, FTA did not publish 
information about the change in the Federal Register or institute a 
rulemaking process and for six of these nine changes did not provide 
any avenues for public review and comment prior to implementing the 
changes. FTA has said that all of the changes it has made are 
consistent with the evaluation framework outlined in the existing 
regulations governing the New Starts process. Some project sponsors we 
interviewed thought certain changes helped to improve the process; 
however, a considerable number of project sponsors expressed concern 
that they did not have an opportunity to comment on many of the changes 
before they were implemented and have experienced considerable 
challenges while attempting to incorporate some of the changes. For 
example, some changes have required project sponsors to devote 
additional agency resources, as well as time. 

FTA Has Made 16 Changes Intended to Improve the Application, 
Evaluation, Rating, and Project Development Oversight Processes since 
the Fiscal Year 2001 Evaluation Cycle: 

We identified 16 changes that FTA made to the New Starts application, 
evaluation, rating, and project development oversight processes since 
the fiscal year 2001 evaluation cycle.[Footnote 21] These changes range 
from requiring that projects undergo a risk assessment to instituting 
new practices for funding recommendations. (See table 2 for complete 
list of changes.) For example, FTA made two significant changes to the 
evaluation and rating process for the fiscal year 2004 evaluation 
cycle. First, FTA implemented the TSUB measure as a variable in the 
calculation of cost-effectiveness and mobility improvements.[Footnote 
22] The new measure is intended to calculate the change in the amount 
of travel time and costs that people incur for taking a trip. This is a 
more comprehensive measure than the old "cost per new rider" measure 
because it takes into account a broader set of benefits to transit 
riders, including new and existing transit riders. Second, in response 
to language contained in appropriations committee reports, FTA 
instituted a preference policy favoring projects that seek a federal 
New Starts share of no more than 60 percent of the total project cost. 
As shown in table 2, FTA implemented changes for a variety of reasons, 
including simplifying the New Starts process and focusing more on 
results and performance. Although the impetus for each change varied, 
FTA officials stated that, in general, all the changes were intended to 
make the process more rigorous, systematic, and transparent. For 
example, the requirement for project sponsors to develop a plan for 
evaluating the impacts of the project and the accuracy of travel 
forecasts--that is, a Before and After study--will identify lessons 
learned and hold transit agencies accountable for results. In our 
previous work we have commented on a number of these changes and made 
some recommendations for improving the New Starts process. (See app. 
III for a list of recommendations from previous reports.)

Table 2: Changes to the New Starts Application, Evaluation, Rating, and 
Project Development Oversight Processes since the Fiscal Year 2001 
Evaluation Cycle: 

Change: Additional subfactors added to the land use criterion; 
Brief description of change: Several additional "statutory 
considerations" were added to the land use criterion, including the 
cost of sprawl, infrastructure cost savings due to compact land use, 
and population density and current transit ridership in a corridor; 
Method and date introduced: Transportation Equity Act for the 21st 
Century (TEA-21)/New Starts regulations, June 1998/Dec. 2000; 
Evaluation cycle effective: Fiscal year (FY) 2003; 
Reason for change: Required by TEA- 21; 
Published in Federal Register? Yes; 
Formal opportunity for comment? Yes. 

Change: Baseline alternative introduced; 
Brief description of change: FTA eliminated the requirement for the 
separate no-build and transportation system management alternatives,[A] 
and instead requires that the proposed New Start be evaluated against a 
single "baseline alternative" (i.e., the best that can be done without 
the New Starts investment); 
Method and date introduced: New Starts regulations, Dec. 2000; 
Evaluation cycle effective: FY 2003; 
Reason for change: Simplify New Starts process and address project 
sponsor concerns about undue reporting burden; 
Published in Federal Register? Yes; 
Formal opportunity for comment? Yes. 

Change: Pedestrian mobility formally incorporated into land use 
criterion; 
Brief description of change: Pedestrian mobility had been a component 
of FTA's land use evaluation, as described in FTA guidance issued each 
year. However, the regulations formally incorporated an element for 
pedestrian mobility into the land use criterion; 
Method and date introduced: New Starts regulations, Dec. 2000; 
Evaluation cycle effective: FY 2003; 
Reason for change: Formalize agency practice; 
Published in Federal Register? Yes; 
Formal opportunity for comment? Yes. 

Change: "Employment near stations" measure added to mobility 
improvements criterion; 
Brief description of change: FTA added a new factor to calculate 
destinations for jobs within a half-mile radius of boarding points on 
the new system, complementing the existing factor that measures low-
income households within a half-mile radius of boarding points; 
Method and date introduced: New Starts regulations, Dec. 2000; 
Evaluation cycle effective: FY 2003; 
Reason for change: Address industry concerns that FTA was undervaluing 
destination trips; 
Published in Federal Register? Yes; 
Formal opportunity for comment? Yes. 

Change: Decision rule for financial summary rating; 
Brief description of change: FTA instituted a decision rule that 
required projects to receive at least a "medium" rating for both 
capital and operating plans to get an overall "recommended" rating; 
Method and date introduced: New Starts regulations, Dec. 2000; 
Evaluation cycle effective: FY 2003; 
Reason for change: Emphasize both capital and operating plans; 
Published in Federal Register? Yes; 
Formal opportunity for comment? Yes. 

Change: Before and After study required[B]; 
Brief description of change: Project sponsors seeking a full funding 
grant agreement (FFGA) for their New Starts project must submit to FTA 
a plan for the collection and analysis of information leading to the 
identification of the impacts of the project and the accuracy of the 
forecasts that were prepared during project planning and development; 
Method and date introduced: New Starts regulations, Dec. 2000; 
Evaluation cycle effective: FY 2003; 
Reason for change: Overall government focus on performance and results; 
Published in Federal Register? Yes; 
Formal opportunity for comment? Yes. 

Change: Transportation System User Benefits (TSUB) measure introduced; 
Brief description of change: FTA revised its cost-effectiveness and 
mobility improvements criteria by adopting the TSUB measure that 
includes benefits for both new and existing transit system riders; 
Method and date introduced: New Starts regulations, Dec. 2000; 
Evaluation cycle effective: FY 2004; 
Reason for change: Address industry's concerns about cost per new rider 
index; 
Published in Federal Register? Yes; 
Formal opportunity for comment? Yes. 

Change: Project justification criteria weights changed; 
Brief description of change: The cost-effectiveness and land use 
criteria were each weighted 50%. In the previous rating cycle, FTA 
attempted to use all five project justification criteria in the rating 
process; 
Method and date introduced: Reporting instructions,[C] June 2003; 
Evaluation cycle effective: FY 2004; 
Reason for change: Other criteria's measures do not meaningfully 
distinguish among projects; 
Published in Federal Register? No; 
Formal opportunity for comment? No. 

Change: 60% preference policy instituted; 
Brief description of change: FTA instituted a preference policy in its 
ratings process favoring current and future projects that do not 
request more than a 60% federal share. To achieve this, FTA changed its 
criterion related to capital finance plans to give projects seeking a 
federal share greater than 60% a "low" financial rating; 
Method and date introduced: Annual report for FY 2004 evaluation cycle; 
Evaluation cycle effective: FY 2004; 
Reason for change: FY 2004 Appropriations Conference Report; 
Published in Federal Register? No; 
Formal opportunity for comment? No. 

Change: Risk assessments introduced[B]; 
Brief description of change: The Risk Assessment is an FTA management 
and oversight tool intended to identify the issues that could affect 
schedule or cost, as well as the probability that a cost estimate will 
be met; 
Method and date introduced: New Starts and FTA construction 
roundtables,[D] April/May 2003; 
Evaluation cycle effective: FY 2005; 
Reason for change: Implemented for project management oversight; 
Published in Federal Register? No; 
Formal opportunity for comment? No. 

Change: "Make the case" document required[B]; 
Brief description of change: FTA requires all project sponsors to 
submit a three-page narrative that justifies why the New Starts project 
is the best possible alternative and why it is needed; 
Method and date introduced: Reporting instructions,[C] June 2003; 
Evaluation cycle effective: FY 2005; 
Reason for change: To have a short document that describes the 
individual merits of a project from the community's perspective; 
Published in Federal Register? No; 
Formal opportunity for comment? No. 

Change: Travel forecasts requested in advance of application deadline; 
Brief description of change: FTA encouraged (but did not require) 
grantees to submit their travel forecasts by June 30, 2004, in advance 
of the Aug. 20 deadline for the rest of the information; 
Method and date introduced: Reporting instructions,[C] April 2004; 
Evaluation cycle effective: FY 2006; 
Reason for change: To allow technical assistance to be provided in time 
for the project to be rated in the upcoming annual report; 
Published in Federal Register? No; 
Formal opportunity for comment? No. 

Change: Cost-effectiveness practice[B]; 
Brief description of change: Generally, the administration will target 
its funding recommendations to projects that achieve a cost-
effectiveness rating of medium or higher to be recommended for funding. 
Previously, the administration would recommend projects for funding 
that had a low-medium cost- effectiveness rating, if they met all other 
criteria; 
Method and date introduced: New Starts Workshop[E] and FTA "Dear 
Colleague" letter,[F] March 2005; 
Evaluation cycle effective: FY 2007; 
Reason for change: Address concerns raised by the DOT Inspector 
General, Congress, and Office of Management and Budget; 
Published in Federal Register? No; 
Formal opportunity for comment? No. 

Change: Standard cost categories required; 
Brief description of change: FTA updated the useful life assumptions 
for various categories of assets and is requiring project sponsors to 
report costs in standard categories; 
Method and date introduced: New Starts Workshop[E] and FTA "Dear 
Colleague" letter,[F] March 2005; 
Evaluation cycle effective: FY 2007; 
Reason for change: To be consistent with useful life estimates; 
Published in Federal Register? No; 
Formal opportunity for comment? Yes. 

Change: Cost-effectiveness rating breakpoints adjusted for inflation; 
Brief description of change: FTA adjusted cost-effectiveness rating 
breakpoints for inflation using the Gross Domestic Price Index; 
Method and date introduced: New Starts Workshop[E] and FTA "Dear 
Colleague" letter,[F] March 2005; 
Evaluation cycle effective: FY 2007; 
Reason for change: Cost-effectiveness breakpoints were first 
established in 2002; 
Published in Federal Register? No; 
Formal opportunity for comment? Yes. 

Change: 2030 planning horizon permitted; 
Brief description of change: Project sponsors will be permitted to use 
either a 2025 or 2030 planning horizon for estimating the project's 
costs and benefits to maintain consistency with the horizon year used 
by the local metropolitan planning organization; 
Method and date introduced: New Starts Workshop[E] and FTA "Dear 
Colleague" letter,[F] March 2005; 
Evaluation cycle effective: FY 2007; 
Reason for change: To maintain consistency with what local metropolitan 
planning organizations are using; 
Published in Federal Register? No; 
Formal opportunity for comment? Yes. 

Sources: GAO and FTA. 

[A] The transportation system management alternative is equivalent to 
the New Starts baseline alternative for most New Starts projects. 

[B] FTA officials identified these changes as involving project 
development oversight that do not affect project ratings. 

[C] FTA uses reporting instructions to provide project sponsors with 
technical and procedural assistance on the application and reporting of 
New Starts criteria. 

[D] FTA uses New Starts roundtables to share information and 
experiences with project sponsors, identify and discuss common issues, 
and generate suggestions for improving the planning and development 
process. 

[E] The American Public Transportation Association typically hosts an 
annual legislative conference at which FTA conducts an information 
session on the New Starts program. 

[F] The Dear Colleague letter is periodically sent from the FTA 
Administrator to project sponsors regarding issues associated with the 
New Starts program. 

[End of table]

Some project sponsors we interviewed thought that certain changes 
helped to improve the process. For instance, seven project sponsors 
stated that the "make the case" document helped them focus on the key 
benefits of the projects and three said it helped them "sell" the 
project to local decisionmakers or the public. In addition, many 
project sponsors acknowledged that the TSUB measure is more 
comprehensive than the old "cost per new rider" measure. However, 
project sponsors expressed a variety of concerns about the effects the 
changes had on the steps required to complete the application process 
and about FTA's implementation of the changes. For instance, for the 
"make the case" document, 15 project sponsors stated that FTA did not 
create clear expectations, 10 noted that FTA prepared no written 
guidance, and 5 indicated that FTA did not provide specific examples or 
templates.[Footnote 23] A few of these project sponsors also stated 
that they did not feel like they understood what FTA wanted for the 
"make the case" document, and eight said that they had to produce 
multiple iterations of the document. Twelve project sponsors also 
mentioned they were not clear about how FTA was using the document. In 
addition, when asked what effect the implementation of the TSUB measure 
had on their project, 13 of 26 project sponsors said it made the 
application process more expensive, and 20 of 26 said that this measure 
required them to spend significantly more time to complete the 
application. Similar comments were made by project sponsors about other 
changes, including the risk assessment and Before and After study 
requirements.[Footnote 24] For example, when asked what effect the risk 
assessment requirement has had on their project, 4 of the 26 project 
sponsors said it resulted in a more rigorous or systematic evaluation 
and rating process, 7 said it made the process more expensive, and 5 
said it delayed their project. Three project sponsors noted that each 
of the individual requirements add to the overall workload and 
eventually result in the application process becoming a full-time 
project. However, some project sponsors observed that as they become 
more familiar with each change and as FTA issues more guidance, such as 
for using FTA's software to calculate the TSUB value, the change has 
become less burdensome. 

In Spring 2005 FTA Introduced New Cost-Effectiveness Practice and 
Technical Changes to the Cost-Effectiveness Calculation: 

In March 2005, FTA announced a new practice for the New Starts program 
whereby the administration will generally target funding 
recommendations to projects able to achieve at least a medium or higher 
cost-effectiveness rating. FTA announced this change through a "Dear 
Colleague" letter sent to FTA grantees, including current New Starts 
project sponsors. The letter was also posted on the home page of FTA's 
Web site. The administration's previous policy had been to recommend 
projects for funding that received at least a medium-low cost- 
effectiveness rating, provided that they met all other criteria and 
project readiness requirements. In the letter to project sponsors, FTA 
explained that the impetus for change was the concerns that GAO, the 
Office of Management and Budget, the Department of Transportation's 
Inspector General, and Congress raised about recommending projects for 
funding that had medium-low cost-effectiveness ratings.[Footnote 25] In 
the letter, and in subsequent communication to project sponsors, FTA 
also stated that the practice applies to a recommendation for funding 
and not to the way the project's overall rating is determined. For 
example, a project can still receive an overall recommended project 
rating with a medium-low cost-effectiveness rating and can advance from 
preliminary engineering to final design with this rating; however, as a 
general rule, the project would not be recommended for funding by the 
administration. FTA has said that this new practice will help it to 
further prioritize and distinguish among projects for federal funding, 
which is important given current fiscal challenges and the resulting 
need to maximize the benefit of every federal dollar invested in 
transportation. 

According to FTA officials, the four New Starts projects with 
anticipated FFGAs for the fiscal year 2006 cycle (see app. II) will not 
be affected by the new practice. However, FTA has said that the six New 
Starts projects that are categorized as "other projects" in the fiscal 
year 2006 annual report--and therefore eligible for a portion of the 
$158.6 million in New Starts funds FTA reserved--will be subject to the 
new cost-effectiveness funding recommendation practice and will 
continue to be subject to this practice when they apply for an FFGA. 
According to FTA, two of the six "other projects" currently do not meet 
this standard, and FTA is working with them to improve their cost- 
effectiveness rating. Six project sponsors we interviewed expressed 
concern as to whether they would be able to make the necessary 
modifications to their projects in order to earn a higher cost- 
effectiveness rating by the next evaluation cycle--which begins in 
August 2005. Also, seven project sponsors commented that FTA puts too 
much emphasis on the cost-effectiveness measure, and four indicated 
that the new cost-effectiveness practice increases this emphasis. FTA 
officials stated that FTA and the administration consider more than 
just cost-effectiveness in making funding recommendations, noting that 
every project that received a not recommended rating in the last 2 
years did so because of its poor financial summary rating. 

In addition to the new cost-effectiveness practice in the March "Dear 
Colleague" letter, FTA also proposed five technical changes to the way 
cost-effectiveness is calculated and asked for industry comment on 
these proposed changes by April 1, 2005. All comments were posted on 
the Department of Transportation's online docket[Footnote 26] and were 
available for public review. The proposed changes included (1) 
adjusting the cost-effectiveness rating breakpoints (i.e., low, low- 
medium, medium, medium-high, high) for inflation, and possibly applying 
a regional index in an effort to address cost differences across the 
country; (2) permitting project sponsors to utilize either a 2025 or 
2030 planning horizon to be consistent with metropolitan planning 
organizations' regional planning processes; (3) permitting standardized 
costs and the proposed adjustments to useful life estimates, which 
clarify and lengthen these estimates for a number of assets; (4) 
permitting modal constants for new guideway modes as a means of 
enabling travel models to estimate the effect of improvements to 
transit service quality beyond the time and cost measures already 
accounted for in the travel models (such as comfort and reliability); 
and (5) excluding some soft costs (e.g., administrative expenses) from 
the calculation of annualized capital costs for the purpose of 
calculating cost-effectiveness. FTA officials told us that they wanted 
to obtain industry comment on the proposed changes and to use this 
feedback to help decide which proposed changes to adopt. Officials from 
FTA also said the deadline for industry comments was driven by the 
reporting deadlines for the New Starts annual evaluations and the need 
to promptly release reporting instructions for the News Starts program. 
On the basis of FTA's review of the proposed changes and project 
sponsor responses, FTA announced in an April 29TH "Dear Colleague" 
letter its decision to incorporate three of the five proposed changes 
for the fiscal year 2007 cycle--adjusting rating breakpoints for 
inflation, permitting the 2030 design year forecast, and permitting the 
use of the standardized cost categories' useful life assumptions to 
calculate annualized capital costs for the purpose of calculating cost- 
effectiveness. FTA stated that further research is needed on the other 
two proposed changes. FTA incorporated the three technical changes into 
its fiscal year 2007 reporting instructions, which were released to 
project sponsors on May 3, 2005. 

FTA Uses Multiple Methods to Communicate Information about Changes: 

FTA communicates information about changes to project sponsors through 
a variety of different methods, including annual reporting 
instructions, "Dear Colleague" letters to project sponsors, 
conversations with project sponsors, roundtables and workshops with FTA 
officials and project sponsors, and the FTA Web site. FTA officials 
indicated that they most heavily rely on regulations, reporting 
instructions, and roundtables and workshops to communicate information 
about changes to the New Starts application, evaluation, rating, and 
project development oversight processes. In particular, FTA officials 
told us that they use the workshops as a two-way communication vehicle, 
during which they can explain the New Starts application and evaluation 
process to project sponsors. The workshops are usually held two to four 
times a year in conjunction with a transit industry conference. For 
example, during the American Public Transportation Association (APTA) 
legislative conference in early March 2005, FTA officials held a 
workshop to discuss the New Starts process as well as the 
administration's new cost-effectiveness funding recommendation 
practice. The agency also holds two New Starts roundtables each year to 
explain the application and evaluation process and allow project 
sponsors the opportunity to have an open discussion with FTA officials 
as well as share information on best practices. FTA used this year's 
New Starts roundtables in New York and San Francisco to, among other 
things, respond to questions about the recently introduced changes. 
FTA's annual reporting instructions also describe changes to the 
application and evaluation process, in addition to providing guidance 
to project sponsors on preparing their New Starts submittal. For 
instance, in the reporting instructions for the New Starts report for 
the fiscal year 2005 evaluation cycle, FTA introduced the change to the 
weighting system used to calculate the project justification rating. 

Project sponsors told us that they generally learn about changes 
through one or more of FTA's communication methods, although they have 
varying views on the effectiveness of the different methods. Most 
project sponsors we interviewed said that they typically view the 
roundtables and workshops and conversations with FTA officials as 
generally or very effective methods for learning about changes. 
However, some concerns were also raised about these communication 
methods. First, three project sponsors stated that they feel compelled 
to attend all of FTA's workshops and roundtables in order to keep up 
with the changes to the New Starts process because these meetings are 
the primary methods FTA uses to introduce changes. Others noted that 
they have received inconsistent information about changes depending on 
the source. As a result, 18 of 26 project sponsors stated they prefer 
to obtain information about the changes directly from FTA officials-- 
and 11 of these project sponsors stated that they prefer to receive the 
information in writing for documentation purposes. Eleven of the 26 
project sponsors we interviewed said that FTA's Web site was generally 
or very ineffective as a method for communicating information about 
changes. Project sponsors cited a variety of challenges in using the 
Web site as a source of information about changes to the New Starts 
program. For example, some project sponsors stated the Web site was 
difficult to navigate and had a poor search engine, while others stated 
they had difficulty finding information about the New Starts program 
and that in some cases the information they retrieved from the Web site 
was not up to date. Several project sponsors indicated that maintaining 
a central repository for all information related to the New Starts 
program on FTA's Web site would be helpful. 

FTA Has Not Consistently Used the Public Notice or Rulemaking Process 
to Introduce Changes or Solicit Industry Comment on Proposed Changes: 

Of the 16 changes that FTA has made to the New Starts application, 
evaluation, rating, and project development oversight processes since 
the fiscal year 2001 evaluation cycle, seven underwent rulemaking, 
including providing formal notice to the transit industry and 
soliciting public comment, while nine changes did not (see table 2). 
The Freedom of Information Act requires federal agencies to publish in 
the Federal Register notice of changes to programs and the 
Administrative Procedure Act sets out the rulemaking process--which 
would include notifying the public and soliciting and considering 
comments, among other things--required to make changes to agencies' 
rules and procedures. FTA last undertook rulemaking for the New Starts 
program in 1999 at the direction of TEA-21 and issued regulations in 
December 2000.[Footnote 27] Officials from FTA told us that they have 
not amended their regulations to incorporate the nine changes made to 
the New Starts process since that time because, in their opinion, the 
changes are within the framework of the current regulations. FTA 
officials also said that some of the changes--such as the risk 
assessment requirement--involve project development oversight and do 
not affect the evaluation and rating process; therefore, in their view, 
the changes do not need to be included in program regulations. However, 
by making changes outside of the regulatory process, FTA has missed an 
opportunity to obtain formal public input on the proposed changes, 
which would increase the transparency of the agency's decision-making 
process and ensure that the views of project sponsors and other 
interested parties are considered. There are a range of options 
available to FTA for obtaining industry input, from the more formal 
rulemaking process to less formal ways of soliciting comment. In those 
instances where FTA determines that a formal rulemaking process is 
unnecessary, it could provide project sponsors an informal opportunity 
to review and comment on any substantive changes proposed for the New 
Starts program, as FTA recently did when it solicited public comment on 
proposed technical changes to the rating process. 

Of the nine changes that were not published in the Federal Register and 
did not undergo rulemaking, six were made without providing other 
avenues for public review and comment prior to their implementation. 
For example, FTA did not seek industry input before implementing the 
risk assessment requirement, project justification criteria weights, 
and the "make the case" changes to the document. The limited 
opportunities to review and comment on proposed changes have resulted 
in implementation problems, according to some project sponsors. In 
addition, FTA did not provide project sponsors the opportunity to 
comment on the administration's recently announced cost-effectiveness 
funding recommendation practice. Many project sponsors expressed 
concern about the way FTA has developed and implemented changes to the 
New Starts process. For example, 14 of the 26 project sponsors with 
whom we spoke said that they have generally not been given an 
opportunity to offer input into prospective changes before they are 
implemented. Many project sponsors noted that the March "Dear 
Colleague" letter was a step in the right direction in that it was one 
of the first times since the last rulemaking that FTA had sought their 
input on proposed changes. However, five project sponsors commented 
that FTA did not give them sufficient time to review and comment on the 
proposed changes. In addition, FTA did not publish these changes in the 
Federal Register and provide at least 30 days' notice, the minimum time 
typically required when changes are subject to the Administrative 
Procedure Act. Congressional committees have also expressed concerns 
about the transparency by which FTA makes changes to the evaluation and 
rating process, as shown by the bills to reauthorize surface 
transportation programs--introduced in early 2005--that offer a more 
formalized approach for providing notice to and soliciting comment from 
project sponsors.[Footnote 28] In particular, the House reauthorization 
bill would require that FTA provide notice and an opportunity for 
comment at least 60 days before issuing any "nonregulatory substantive 
changes."[Footnote 29] The Senate proposal states that FTA should issue 
periodic descriptions of the rating criteria and allow for public 
comment.[Footnote 30] (See app. IV for information about other changes 
proposed by the House and Senate.)

Project sponsors offered a number of suggestions for improving FTA's 
communication about changes to the New Starts process. For example, 
nine project sponsors told us that FTA should provide them with an 
opportunity to offer input into a change before it is made. Thirteen 
project sponsors mentioned that FTA should provide them with more lead 
time when the agency requires them to implement a change. For example, 
a number of project sponsors expressed concern that the recent 
technical changes to the cost-effectiveness calculation announced in 
April 2005 were made too close to when New Starts information is due-- 
June for travel forecasts and "make the case" documents and August for 
the remaining application materials.[Footnote 31] In addition, eight 
project sponsors expressed that FTA should develop a standard schedule 
for when it announces and implements changes to the New Starts process. 
For example, one project sponsor suggested that FTA announce all 
changes at its New Starts roundtable a year before the changes are to 
be implemented. 

Our previous body of work on organizational transformation[Footnote 32] 
indicates that communication with stakeholders should be a top priority 
for any agency, is most effective when done early and often in any 
process, and is central to forming the partnerships that are needed to 
develop and implement an organization's strategies. An effective 
communication strategy should facilitate an honest two-way exchange 
with, and allow for feedback from, stakeholders. This communication is 
central to forming the effective internal and external partnerships 
that are vital to a program's success. For the past 2 years, FTA 
officials have announced at the roundtables that they are planning to 
develop and implement a strategy for improving communication among FTA 
offices and between FTA and project sponsors. FTA officials have told 
us that the strategy could include providing a single FTA point of 
contact for project sponsors and improving the distribution of policy, 
guidance, and procedures, perhaps using tools such as a listserve or 
webinar, as it did when it sought comments from project sponsors on the 
recent cost-effectiveness changes.[Footnote 33] FTA has implemented new 
communications tools, such as the webinar, but has not developed a 
comprehensive communications strategy. 

New Starts Measures Have Evolved Over Time, but Not All Measures Count 
Toward a Project's Rating: 

Many of the measures FTA uses to evaluate and rate New Starts projects 
predate TEA-21 and have evolved over time. In developing these 
measures, FTA has historically sought industry input by way of formal 
rulemaking as well as outreach sessions, workshops, and reports. 
Although both TEA-21 and FTA's current New Starts program regulations 
emphasize the importance of using a multiple-measure approach for 
evaluating projects, FTA assigns a 50 percent weight to both the cost- 
effectiveness and the land use criteria when developing the project 
justification summary rating. The other three project justification 
criteria are not weighted, although the mobility improvements criterion 
is used as a "tie-breaker" when the average of the cost-effectiveness 
and land use ratings falls equally between two ratings (e.g., between 
"medium" and "medium-high").[Footnote 34] According to FTA officials, 
FTA does not use these criteria because the underlying measures have 
weaknesses that diminish their use in distinguishing among projects. 
Project sponsors we interviewed offered suggestions for improving all 
of the project justification measures. 

Congress Directed FTA to Use Multiple Criteria in Evaluating and Rating 
Projects: 

Through the Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) and TEA-21, Congress has directed FTA to use multiple criteria 
in evaluating and rating New Starts projects. In particular, TEA-21 
identifies a series of financial and project justification criteria 
that reflect a broad range of benefits and effects of the proposed 
projects. The financial criteria include the share of non-New Starts 
funding and the capital and operating finance plans. The project 
justification criteria identified by TEA-21 include mobility 
improvements, cost-effectiveness, operating efficiencies, and 
environmental benefits. TEA-21 also identifies several additional 
statutory "considerations" to the evaluation process, including land 
use issues. TEA-21 directs FTA to "evaluate and rate the project as 
'highly recommended,' 'recommended,' or 'not recommended,' based on…the 
project justification criteria," among other things.[Footnote 35] FTA 
has recognized and acknowledged the congressional intent for New Starts 
projects to be evaluated using multiple measures. For instance, in a 
January 2005 report to Congress, FTA states that it is "clear that 
Congress intends FTA to evaluate projects based on more than cost- 
effectiveness criteria" and that the "statutory framework is consistent 
with the concept that a wide range of benefits should be considered in 
evaluating projects."[Footnote 36]

FTA also has endorsed the concept of using multiple criteria to 
evaluate and rate New Starts projects and FTA's New Starts regulations 
set forth a multiple measure evaluation process. The New Starts 
regulations state that "FTA will combine the ratings for each of the 
financial rating factors and project justification criteria into 
overall 'finance' and 'justification' ratings…. These ratings will then 
be combined into the single, overall project ratings."[Footnote 37] 
Further, in response to a comment on the cost-effectiveness measure in 
the proposed New Starts regulations, FTA stated the following: 

"It is important to note that the measure for cost-effectiveness is not 
intended to be a single, stand-alone indicator of the merits of a 
proposed new starts project. It is but one part of the multiple measure 
method that FTA uses to evaluate project justification under the 
statutory criteria. While cost-effectiveness is an important 
consideration, so are mobility improvements, environmental benefits, 
and the other factors described both in TEA-21 and elsewhere in this 
rule."[Footnote 38]

FTA has repeated the importance of using a multiple measure approach in 
many reports and other documents since then, including its annual 
reports to Congress. The New Starts regulations identify the measures 
FTA will use to evaluate projects from the project justification 
criteria outlined in TEA-21.[Footnote 39] Figure 5 shows the project 
justification criteria identified by TEA-21 and the associated measures 
identified by FTA in the New Starts regulations. (See app. V for more 
detail on these measures.)

Figure 5: Criteria and Measures for Evaluating Projects, as Outlined in 
TEA-21 and FTA's New Starts Program Regulations: 

[See PDF for image] 

[A] Other factors can include environmental justice and equity issues, 
economic development initiatives, innovative financing, etc. 

[B] TSUB = Transportation System User Benefits. 

[End of figure] 

FTA Used Industry Input to Develop Measures for All Criteria Identified 
in TEA-21: 

The measures FTA uses to evaluate and rate New Starts projects have 
evolved over time, beginning years before TEA-21, through an iterative 
process involving Congress and the transit industry. FTA (then known as 
UMTA) introduced the first system for rating New Starts projects in 
1984. At that time, projects were rated on cost-effectiveness (cost per 
new rider) and local financial commitment. Through ISTEA in 1991, 
Congress added mobility improvements, environmental benefits, and 
operating efficiencies to the list of criteria FTA should use to 
evaluate projects and also added land use policies as an additional 
factor for consideration. 

FTA circulated a policy paper in 1994, asking for public comment on its 
proposed measures and procedures for assessing projects to address the 
requirements laid out in ISTEA. The agency received 31 responses from 
transit operators, metropolitan planning organizations, state 
departments of transportation, and other interested parties. FTA used 
these responses in finalizing its criteria and measures in a notice 
published in 1996 in the Federal Register. In the 1994 policy paper, 
FTA also solicited comments on the appropriateness of using a multiple- 
measure method for evaluating projects. Respondents generally agreed 
that this was appropriate, although they were split on how (or whether) 
the various criteria should be weighted. FTA formally adopted the 
multiple-measure approach in 1996. 

TEA-21 required FTA to issue regulations for the evaluation and rating 
process, and FTA used that rulemaking opportunity to revise several of 
the project justification measures. Before and during the rulemaking 
process, FTA conducted outreach sessions around the country, soliciting 
comments on its processes and procedures for managing the New Starts 
program. FTA issued a Notice of Proposed Rulemaking in 1999 and 
received comments from 41 individuals and organizations. In response to 
the comments, FTA made several changes to the project justification 
measures. For example, many of these commenters objected to the "cost 
per new rider" measure for cost-effectiveness, saying that the focus on 
new riders ignores benefits provided to other riders, which may bias 
the measure against cities with "mature" transit systems. In response, 
FTA replaced it with the incremental cost per hour of TSUB measure (to 
capture benefits to both new and existing riders). The agency also 
added a mobility improvements measure for employment near stations to 
complement the existing low-income households near stations measure in 
response to industry comments that a system that is located near low- 
income households is of little use to residents unless it can also 
provide access to employment and other activity centers. 

Since issuing the regulations, FTA has continued efforts to fine-tune 
and improve some of the project justification measures. For example, 
FTA convened a panel of experts from the Urban Land Institute to 
discuss the land use measures and is seeking industry input on possible 
changes. FTA's Strategic Business Plan for Fiscal Year 2005 includes 
deliverables to (1) develop a land use measure that is more 
quantifiable, offers a better basis for distinguishing among projects, 
and provides grantees information with which to improve their projects 
and (2) develop a methodology for measuring the congestion relief 
benefits of New Start projects.[Footnote 40] Both are scheduled to be 
completed by summer 2005. FTA officials told us that the fiscal year 
2005 program plan included research funds for these efforts. In 
addition, as discussed previously, FTA recently instituted technical 
modifications to the cost-effectiveness measure. 

FTA Does Not Use All Project Justification Criteria in Determining 
Ratings Because of Perceived Weaknesses in the Measures: 

Despite the requirement to use multiple measures, FTA does not use 
three of the five project justification criteria in calculating a 
project's rating. Specifically, FTA currently assigns a weight of 50 
percent each to the cost-effectiveness and land use criteria; the other 
three project justification criteria are not assigned weights (see fig. 
6). In its annual report for fiscal year 2006, FTA stated that it 
assigns individual ratings for the other three project justification 
criteria and reports them in the annual report, but these ratings "are 
not considered in the determination of an overall project justification 
rating."[Footnote 41] FTA does, however, use all three financial 
commitment criteria in developing a project's rating. 

Figure 6: Weights Used to Determine Project Justification and Financial 
Summary Ratings for New Starts Projects: 

[See PDF for image] 

Note: Numbers do not add to 100 due to rounding. 

[End of figure] 

FTA officials told us that they do not use the mobility improvements, 
environmental benefits, and operating efficiencies criteria in 
determining the project justification summary rating because the 
measures do not, as currently structured, provide meaningful 
distinctions among competing New Starts projects. Many project sponsors 
we interviewed had similar views, noting that individual projects are 
too small to have much impact on the whole region or the whole transit 
system. For example, one of the environmental benefits measures 
requires project sponsors to measure the project's impact on the annual 
number of tons of emissions forecast for the region for various 
pollutants. FTA officials also said that they do not assign weight to 
the mobility improvements measures in determining the project 
justification rating because they believe that the employment and low- 
income household measures do not meaningfully distinguish among 
projects, and the user benefits are already captured in the cost- 
effectiveness measure. Therefore, to count the user benefits as part of 
the mobility improvements would result in a double-counting of the 
benefits.[Footnote 42] In contrast, FTA officials told us that the cost-
effectiveness and land use measures help to make meaningful 
distinctions among projects. For example, according to FTA, existing 
transit supportive plans and policies demonstrate an area's commitment 
to transit projects and are a strong indicator of a project's future 
success. 

Because FTA officials believe that these project justification measures 
do not provide meaningful distinctions among projects and are not 
factored into a project's rating, FTA does not stringently evaluate the 
projects on the associated criteria. For instance, according to FTA's 
New Starts reporting instructions, every project must submit data on 
operating efficiencies and automatically receives a score of medium on 
that criterion. Similarly, a project that is in a nonattainment area 
for a pollutant and that demonstrates a projected decrease in that 
pollutant gets a high environmental benefits rating, while a project in 
an attainment area that demonstrates a decrease gets a medium 
environmental benefits rating.[Footnote 43]

The New Starts regulations do not specify the weights that should be 
assigned to each project justification criterion. FTA sought industry 
input on whether there should be a weighting system in the last 
rulemaking process; however, according to FTA officials, the agency did 
not receive input that was useful to inform its policy. Consequently, 
the regulations are silent on the weights that should be assigned to 
each criterion and do not prohibit FTA from treating various criteria 
as more important than other criteria. FTA instituted its current 
weighting system with the fiscal year 2004 evaluation cycle after 
determining that the operating efficiencies, environmental benefits, 
and mobility improvements measures do not effectively distinguish among 
projects and that there is overlap among the mobility and cost- 
effectiveness measures. Because the regulations do not set forth the 
weights that should be assigned to each criterion, FTA did not amend 
the regulations when it instituted the current weighting system. 

Although FTA does not use all of the project justification criteria 
identified in TEA-21 to calculate project ratings, project sponsors 
must submit information for all five project justification criteria and 
FTA publishes this information for each project in the New Starts 
annual report. FTA officials offered several reasons for requiring 
project sponsors to continue to provide this information. First, TEA-21 
requires FTA to consider these criteria when evaluating projects. Even 
though not all of the project justification criteria count toward the 
rating, FTA officials told us that they review and consider all five 
criteria and, therefore, are operating within the evaluation framework 
established in TEA-21 and the New Starts regulations. Second, FTA 
officials said that they believe that mobility improvements, 
environmental benefits, and operating efficiencies are important and 
should be a part of the evaluation process, even though FTA does not 
yet have measures for these criteria that help make distinctions among 
projects for the purpose of rating and funding decisions. No measures 
are specified in TEA-21, which only describes the criteria FTA should 
use to evaluate and rate projects, so FTA has the flexibility to revise 
the measures as needed. FTA officials stated that they continue to 
examine and pursue options to improve the measures and that FTA has 
committed approximately $500,000 of its fiscal year 2005 research funds 
to continue its work to improve the New Starts measures. The officials 
also said that they would wait to change these measures until 
legislation governing the New Starts program is reauthorized. They said 
that they will have to institute a formal rulemaking process at that 
time and would use that opportunity to solicit public comment on the 
New Starts evaluation and rating process. Third, FTA officials told us 
that information on these three criteria is presented in the annual 
report and may be useful to Congress and local decisionmakers. A number 
of project sponsors we spoke to expressed frustration that they must 
prepare and submit information for all the measures for the five 
project justification criteria even though some of this information 
does not contribute to the projects' ratings. 

Project Sponsors and Others Identified Strengths and Weaknesses of the 
Measures and Suggested Improvements: 

Project sponsors we interviewed, as well as FTA, the Department of 
Transportation's Inspector General, and other industry experts have 
identified various strengths and weaknesses of the project 
justification measures used to evaluate the New Starts projects. For 
example, all of these sources acknowledge that FTA's measure of cost- 
effectiveness does not capture benefits that accrue to highway users as 
more people switch to the improved transit system and highway 
congestion decreases. According to the department's Inspector General, 
the omission of highway travel time savings means that the benefits 
from proposed projects that convey significant travel time savings for 
motorists are not recognized in the selection process. FTA noted that 
current local models used to estimate future travel demand for New 
Starts are incapable of estimating reliable highway travel time savings 
as a result of the New Starts project. According to the department's 
Inspector General, this limitation is due to unreliable local data on 
highway speeds.[Footnote 44] FTA is working with the Federal Highway 
Administration to study ways to remedy this problem. Table 3 shows the 
strengths, weaknesses, and other concerns most commonly mentioned by 
the New Starts project sponsors we interviewed. 

Table 3: Strengths, Weaknesses, and Other Concerns about New Starts 
Measures, as Identified by Project Sponsors: 

Criterion: Mobility improvements; 
Measure: Transportation System User Benefits (TSUB) per project 
passenger mile; 
Strengths: 
* Captures benefits to new and existing riders (3); Weaknesses: 
* Does not include highway benefits (4); 
* Favors longer projects (3); 
Other concerns[A]: 
* Unclear what it means or how it is used (6); 
* Difficult to explain (5); 
* Difficult/time-consuming to calculate (4). 

Criterion: Mobility improvements; 
Measure: Employment near stations; 
Strengths: 
* Measures the potential transit market (4); Weaknesses: 
* Does not include projected or planned employment (3); 
* Does not capture benefits to the whole system or corridor (3). 

Criterion: Mobility improvements; 
Measure: Low-income households near stations; 
Strengths: 
* Measures the potential transit market (7); 
* Measures urban revitalization, equity, or social justice (3); 
Weaknesses: 
* Does not measure "choice" riders (e.g., commuters); does not reflect 
purpose of all transit systems (8); 
* Does not really measure mobility (5). 

Criterion: Environmental benefits; 
Measure: Change in regional pollutant emissions; 
Strengths: 
* Directly addresses pollution reduction (4); Weaknesses: 
* Individual project has a small impact on the region (13). 

Criterion: Environmental benefits; 
Measure: Change in regional energy consumption; 
Strengths: No consensus on strengths; Weaknesses: 
* Individual project has a small impact on the region (10); 
* This is not within the transit agency's control (3). 

Criterion: Environmental benefits; 
Measure: Environmental Protection Agency's air quality designation; 
Strengths: 
* Helps determine where transit is most needed (3); Weaknesses: 
* Individual project has a small or no impact on the region's 
designation (6); 
* This is not within the transit agency's control (6); 
Other concerns[A]: 
* Designation should not matter--all areas should be trying to improve 
air quality (3). 

Criterion: Operating efficiencies; 
Measure: System operating cost per passenger mile; 
Strengths: 
* Understandable, simple, straightforward, reasonable (6); Weaknesses: 
* Individual project has small impact on systemwide efficiency (5); 
* Incomplete by itself; needs context (3). 

Criterion: Cost-effectiveness; 
Measure: Incremental cost per hour of TSUB; 
Strengths: 
* Captures/quantifies project benefits in one number for comparison 
(9); 
* Reasonable, understandable (3); 
* Improvement over old measure (3); Weaknesses: 
* Sensitive to variations in underlying assumptions (5); 
* Does not include highway benefits (5); 
* Does not account for other local goals or benefits (5); 
* Does not include project's impact on land use[B] (3); 
Other concerns[A]: 
* Complicated to calculate and explain (7); 
* Thresholds/caps seem arbitrary (4). 

Criterion: Land use; 
Measure: Existing land use; 
Strengths: 
* Reflects current or future ridership (5); 
* Demonstrates project's benefits/need (3); Weaknesses: 
* Focuses on present, but project is built for the future (5); 
* Subjective (3). 

Criterion: Land use; 
Measure: Transit supportive plans and policies; 
Strengths: 
* Emphasizes link between land use and transit (8); Weaknesses: 
* Qualitative, difficult to document/measure (5). 

Criterion: Land use; 
Measure: Performance and impact of policies[C]; 
Strengths: 
* Measures actual public local support for transit (3); 
* Shows opportunity for expansion/development (3); Weaknesses: 
* Qualitative, subjective, vague (8). 

Source: GAO. 

Note: Numbers in parentheses indicate response frequency. This table 
only includes responses that were mentioned by at least 3 of the 26 
project sponsors we interviewed. 

[A] Project sponsors raised these other concerns during our discussions 
on the measures' strengths and weaknesses. 

[B] For example, one project sponsor said that the measure does not 
account for local land use policies and the resulting development 
potential in the area, such as the impact of that city's 20-year zoning 
plans. 

[C] This measure includes performance of land use policies and 
potential impact of transit project on regional land use. 

[End of table]

In addition, in a recent report on the benefits and costs of 
transportation improvements, we identified challenges in measuring the 
benefits and costs of transit investments--some of which are relevant 
to the measures used by FTA to evaluate New Starts projects.[Footnote 
45] For example, desirable changes in land use are indirect benefits of 
a transportation investment, which are difficult to forecast and 
quantify. We also reported that social benefits such as reductions in 
environmental costs--including reduced emissions--were difficult to 
quantify and value. Additionally, we reported that there is great 
variation in the models local transportation planning agencies use to 
develop travel forecasts (which underlie many of the New Starts 
measures), producing significant variation in forecast quality and 
limiting the ability to assess quality against the general state of 
practice. Some experts have also found that travel demand models tend 
to predict unreasonably bad conditions in the absence of a proposed 
highway or transit investment. In particular, travel forecasting does 
not contend well with land-use changes or effects on nearby roads or 
other transportation alternatives that result from transportation 
improvements or growing congestion. Before conditions get as bad as 
they are forecasted, people make other changes, such as residence or 
employment changes, to avoid the excessive travel costs.[Footnote 46]

Our previous work has stated that agencies successful in measuring 
performance had performance measures that, among other things, 
demonstrate results and cover multiple priorities. Specifically, 
successful measures (1) are aligned with agencywide goals and mission 
and are clearly communicated throughout the organization; (2) are 
clearly stated, with a name and definition that are consistent with the 
methodology used to calculate the measures; (3) have a measurable 
target; (4) are objective; (5) are reliable; (6) cover core program 
activities; (7) have limited overlap with other measures; (8) provide 
balance in ensuring that various priorities are covered; and (9) 
address governmentwide priorities, such as quality and cost of service. 
For example, measures that are not objective may result in performance 
assessments that are systematically over-or understated, and a lack of 
balance could create skewed incentives when measures overemphasize some 
goals.[Footnote 47] While these successful attributes were developed 
specifically for performance measures, they also could be useful in 
determining how to improve other types of measures, such as those FTA 
uses to evaluate and rate New Starts projects. 

The sponsors of the 26 projects we interviewed had many suggestions for 
improving the project justification measures. These suggestions ranged 
from adding measures to the mobility improvements, environmental 
benefits, and land use criteria to changing the way in which operating 
efficiencies are calculated. The most commonly cited suggestions are 
listed in table 4, but we did not determine whether the suggestions 
were appropriate or feasible. FTA officials told us that they received 
limited suggestions for specific measures or methodologies for mobility 
improvements, environmental benefits, and operating efficiencies during 
the rulemaking process. 

Table 4: Suggestions for Improving New Starts Measures, as Identified 
by Project Sponsors: 

Area: Mobility improvements; 
Suggestions: 
* Add measures, such as population density, residential density, number 
of high-income households served, projected or planned employment near 
stations, retail and stadiums near stations, transit-oriented 
development, accessibility, or number of new riders (10). 

Area: Environmental benefits; 
Suggestions: 
* Add measures or replace existing measures with movement toward a 
sustainable transit system, effect of project on automobile congestion, 
number of cars taken off the road, noise quality, preservation of open 
space, or other measures identified in the Environmental Impact 
Statement (4). 

Area: Operating efficiencies; 
Suggestions: 
* Measure operating cost per passenger or per passenger hour instead of 
per passenger mile (3). 

Area: Cost-effectiveness; 
Suggestions: 
* Add measures, such as cost per new rider, in addition to the current 
measure of incremental cost per hour of Transportation System User 
Benefits (5); 
* Adjust thresholds for inflation[A] (3). 

Area: Land use; 
Suggestions: 
* No consensus on suggestions. 

Source: GAO. 

Notes: Numbers in parentheses indicate response frequency. This table 
only includes responses that were mentioned by at least 3 of the 26 
project sponsors we interviewed. 

[A] FTA announced it was adjusting the cost-effectiveness thresholds 
for inflation on April 29, 2005, after we had completed our interviews. 

[End of table]

Conclusions: 

TEA-21 and FTA's New Starts regulations clearly state that New Starts 
projects should be evaluated and rated using multiple criteria. 
Further, the statute and regulations identify the project justification 
criteria that should be used in the evaluation process, including 
mobility improvements, environmental benefits, operating efficiencies, 
cost-effectiveness, and land use, as well as the financial commitment 
criteria that should be used in the evaluation process. The regulations 
also identify the measures that will be used to operationalize the 
criteria. Although FTA uses all three financial criteria, in practice, 
FTA uses only two of the project justification criteria--cost- 
effectiveness and land use--to calculate a project's overall rating. 
FTA's reliance on two of the five project justification criteria, 
coupled with the recent cost-effectiveness practice for funding--which 
further emphasizes one criterion--is drifting away from the multiple- 
measure evaluation and rating process outlined in TEA-21 and the 
current New Starts regulations. According to FTA officials, FTA does 
not assign weights to environmental benefits, operating efficiencies, 
and mobility improvements because of weaknesses in the measures and the 
overlap of some measures that could result in double-counting of 
benefits. FTA has made notable progress in improving the measures for 
cost-effectiveness and land use, including seeking advice from experts 
and the transit industry and conducting pilot tests since the enactment 
of TEA-21. However, given that FTA has been statutorily directed to 
also use environmental benefits, operating efficiencies, and mobility 
improvements in evaluating and rating projects, it is imperative that 
FTA either pay additional attention to improving these three criteria 
so that they can be more explicitly used in the evaluation process or 
explicitly demonstrate the linkages between these criteria and the 
measures used. 

FTA has made a number of changes intended to enhance the rigor of the 
program over the past 6 years, and some of these changes, such as the 
Before and After study, risk assessment, and cost-effectiveness 
practice could help FTA hold project sponsors accountable for results 
and maximize the benefits of each dollar invested. However, FTA could 
improve the transparency of changes made to the New Starts program by 
giving project sponsors an opportunity to review and comment on any 
substantive changes before they are implemented. The Freedom of 
Information and Administrative Procedure Acts establish formal 
processes for notifying the public and making changes to federal 
programs, including soliciting comments about proposed changes. If FTA 
officials determine that a formal rulemaking process is unnecessary, 
FTA could still provide project sponsors an opportunity to review and 
comment on any substantive changes proposed for the New Starts program, 
potentially avoiding some of the implementation problems that have 
occurred in the past. In addition, the review and comment period could 
help FTA improve the proposed changes as well as gain industry buy-in 
and support for changes--elements that are critical for success. 

FTA could also strengthen its communication efforts by improving its 
Web site so that project sponsors view it as a viable source for 
obtaining information about changes to the New Starts program. The Web 
site could provide a central forum for comprehensive, up-to-date 
information on the New Starts program and could also be useful for 
publicizing FTA's activities to improve the application, evaluation, 
rating, and oversight processes. Much of this information is already 
available on FTA's Web site. However, the information that remains is 
scattered in different locations and many project sponsors told us that 
it was difficult to locate needed information. Making the information 
easier to find could help reduce confusion about the New Starts 
process. 

Recommendations for Executive Action: 

To ensure that the New Starts regulations reflect FTA's current 
evaluation and rating process, and to ensure that FTA's New Starts 
evaluation process and policies are objective, transparent, and follow 
the intent of federal statute, we recommend that the Secretary of 
Transportation direct the Administrator, FTA, to take the following 
four actions: 

* ensure that the agency's regulations governing the New Starts 
evaluation and rating process reflect FTA's current weighting practices 
for the criteria when the regulations are revised;

* improve the measures for evaluating New Starts projects so that all 
five project justification criteria can be used in determining a 
project's overall rating, or provide a crosswalk in the agency's New 
Starts regulations showing clear linkages between the criteria outlined 
in statute and the criteria and measures used in the rating process;

* publish future changes to the New Starts program in the Federal 
Register and subject future changes to the New Starts program to the 
rulemaking process or, at a minimum, a 30-day informal review and 
comment period, as appropriate. As part of this process, the agency 
should develop criteria for determining which changes should be subject 
to the rulemaking process, as outlined in federal statute, or to an 
informal review and comment period. At a minimum, these criteria could 
include changes that impose new reporting requirements or new analysis 
on project sponsors, changes to the principles used to recommend 
projects for funding, and changes to the weights assigned to the 
criteria used to evaluate and rate projects. The criteria should be 
communicated to Congress and to project sponsors and others in the 
transit community; and: 

* consolidate information and guidance related to the New Starts 
program in one location on the agency's Web site and regularly review 
this information to ensure it is up to date and easy to access. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Department of Transportation 
for review and comment. Officials from the Department and FTA indicated 
that they generally agreed with the report's findings, conclusions, and 
recommendations. FTA officials also provided technical clarifications, 
which we incorporated as appropriate. 

We are sending copies of this report to congressional committees with 
responsibilities for transit issues; the Secretary of Transportation; 
the Administrator, Federal Transit Administration; and the Director, 
Office of Management and Budget. We also will make copies available to 
others upon request. In addition, this report will be available at no 
charge on GAO's Web site at [Hyperlink, http://www.gao.gov]. 

If you or your staff have any questions on matters discussed in this 
report, please contact me at [Hyperlink, siggerudk@gao.gov]. GAO 
contacts and key contributors to this report are listed in appendix VI. 

Signed by: 

Katherine Siggerud: 
Director, Physical Infrastructure: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To address our objectives, we reviewed the administration's fiscal year 
2006 budget request, the Federal Transit Administration's (FTA) annual 
New Starts report, FTA's New Starts regulations, FTA's 2004 and 2005 
reporting instructions for the New Starts program, federal statutes 
pertaining to the new Starts program, and previous GAO reports. We also 
interviewed FTA officials and representatives from the American Public 
Transportation Association, New Starts Working Group, and the 
Association of Metropolitan Planning Organizations. In addition, we 
attended FTA's New Starts roundtables with project sponsors in New York 
and San Francisco in April and May 2005, respectively. 

We also conducted semistructured interviews with project sponsors from 
the 26 projects that were evaluated and rated in the fiscal year 2006 
evaluation cycle (see table 5). These interviews were designed to gain 
project sponsors' perspectives on a number of topics, including the 
manner in which FTA communicates changes to the New Starts application, 
evaluation, rating, and project development oversight processes; the 
impact of the changes that FTA has made to the application, evaluation, 
rating, and project development oversight processes since the fiscal 
year 2001 evaluation cycle--the first full evaluation and rating cycle 
after the enactment of the Transportation Equity Act for the 21ST 
Century (TEA-21); and the measures FTA uses to evaluate projects. To 
verify the clarity, length of time of administration, and 
understandability of the interview questions, as well as to determine 
whether respondents had sufficient knowledge and information to answer 
the questions, we pretested the questions with three project sponsors. 
We made changes to the content and format of the final set of interview 
questions as a result of these pretests. After conducting the 
interviews with sponsors from all 26 projects, we used a content 
analysis to systematically determine project sponsors' views on key 
interview questions and identify common themes in project sponsors' 
responses. Two analysts reached consensus on the coding of the 
responses, and a third reviewer was consulted in case of disagreements, 
to ensure that the codes were reliable. 

Table 5: Projects Contacted for Our Review: 

Final design or proposed for full funding grant agreement: 

Location: Charlotte; 
Project: South Corridor LRT. 

Location: Las Vegas; 
Project: Resort Corridor Downtown Extension. 

Location: New York City; 
Project: Long Island Rail Road East Side Access. 

Location: Phoenix; 
Project: Central Phoenix/East Valley LRT. 

Location: Pittsburgh; 
Project: North Shore LRT Connector. 

Location: Raleigh-Durham; 
Project: Regional Rail System. 

Location: Washington County; 
Project: Wilsonville to Beaverton Commuter Rail. 

Preliminary engineering: 

Location: Boston; 
Project: Silver Line Phase III. 

Location: Dallas; 
Project: Northwest/Southeast Light Rail MOS. 

Location: Denver; 
Project: West Corridor LRT. 

Location: Fort Collins; 
Project: Mason Transportation Corridor. 

Location: Hartford; 
Project: New Britain-Hartford Busway. 

Location: Los Angeles; 
Project: Mid-City/Exposition Corridor LRT. 

Location: Miami; 
Project: North Corridor Metrorail Extension. 

Location: Minneapolis-Big Lake; 
Project: Northstar Corridor Rail. 

Location: New Orleans; 
Project: Desire Streetcar Line. 

Location: New York City; 
Project: Second Ave. Subway MOS. 

Location: Norfolk; 
Project: Norfolk LRT. 

Location: Northern VA; 
Project: Dulles Corridor Metrorail Extension to Wiehle Ave. 

Location: Orange County; 
Project: Centerline LRT. 

Location: Philadelphia; 
Project: Schuylkill Valley Metrorail. 

Location: Portland; 
Project: South Corridor I-205/Portland Mall LRT. 

Location: Salt Lake City; 
Project: Weber County to Salt Lake City Commuter Rail. 

Location: San Diego; 
Project: Mid-Coast LRT Extension. 

Location: San Francisco; 
Project: New Central Subway. 

Location: Santa Clara County; 
Project: Silicon Valley Rapid Transit Corridor. 

Sources: GAO and FTA. 

Note: LRT = Light Rail Transit; MOS = Minimum Operable Segment: 

[End of table]

To ensure the reliability of information presented in this report, we 
interviewed FTA officials about FTA's policies and procedures for 
compiling the New Starts annual reports, including FTA's data 
collection and verification practices for New Starts information. 
Specifically, we asked them whether their policies and procedures had 
changed significantly since we reviewed them for our 2004 report on New 
Starts.[Footnote 48] FTA officials told us that there were no 
significant changes in their data collection and verification policies 
and procedures for New Starts information. Therefore, we concluded that 
the FTA information presented is sufficiently reliable for the purposes 
of this report. 

We conducted our work from November 2004 through May 2005 in accordance 
with generally accepted government auditing standards, including 
standards for data reliability. 

[End of section]

Appendix II: Projects with Existing FFGAs and Projects in Preliminary 
Engineering and Final Design in the Fiscal Year 2006 Cycle: 

Dollars in millions. 

Projects with existing full funding grant agreements (FFGAs): 

CA; 
Location/project: Los Angeles--Metro Gold Line East Side Extension; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $80.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $490.7. 

CA; 
Location/project: San Diego--Mission Valley East Light Rail Transit 
(LRT) Extension; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $7.7; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $330.0. 

CA; 
Location/project: San Diego--Oceanside-Escondido Rail Corridor; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $12.2; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $152.1. 

CA; 
Location/project: San Francisco--Bay Area Rapid Transit Extension to 
San Francisco Airport; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $81.9; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $750.0. 

CO; 
Location/project: Denver--Southeast Corridor LRT; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $80.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $525.0. 

IL; 
Location/project: Chicago--Douglas Branch Reconstruction; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $45.2; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $320.1. 

IL; 
Location/project: Chicago--North Central Corridor Commuter Rail; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $20.6; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $135.3. 

IL; 
Location/project: Chicago--Ravenswood Line Extension; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $40.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $245.5. 

IL; 
Location/project: Chicago--South West Corridor Commuter Rail; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $7.3; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $103.0. 

IL; 
Location/project: Chicago--Union Pacific West Line Extension; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $14.3; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $80.8. 

MD; 
Location/project: Baltimore--Central LRT Double-Track; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $12.4; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $120.0. 

NJ; 
Location/project: Northern New Jersey--Hudson-Bergen Minimum Operable 
Segment (MOS)-2; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $100.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $500.0. 

OH; 
Location/project: Cleveland--Euclid Corridor Transportation Project; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $24.8; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $82.2. 

OR; 
Location/project: Portland--Interstate MAX LRT Extension; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $18.1; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $257.5. 

PR; 
Location/project: San Juan--Tren Urbano; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $10.2; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $307.4. 

WA; 
Location/project: Seattle--Central Link Initial Segment; 
Overall project rating/status: FFGA; 
Fiscal year 2006 recommended funding: $80.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $500.0. 

Subtotal; 
Fiscal year 2006 recommended funding: $634.6; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $4,899.6. 

Projects recommended for FFGAs: 

AZ; 
Location/project: Phoenix--Central Phoenix/East Valley LRT; 
Overall project rating/status: Recommended; 
Fiscal year 2006 recommended funding: $90.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $587.2. 

NC; 
Location/project: Charlotte--South Corridor LRT; 
Overall project rating/status: Recommended; 
Fiscal year 2006 recommended funding: $55.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $192.9. 

NY; 
Location/project: New York--Long Island Rail Road East Side Access; 
Overall project rating/status: Highly recommended; 
Fiscal year 2006 recommended funding: $390.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $2,632.0. 

PA; 
Location/project: Pittsburgh--North Shore LRT Connector; 
Overall project rating/status: Recommended; 
Fiscal year 2006 recommended funding: $55.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $217.7. 

Subtotal; 
Fiscal year 2006 recommended funding: $590.0; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $3,629.8. 

Projects in final design: 

MO; 
Location/project: Kansas City--Southtown Bus Rapid Transit (BRT); 
Overall project rating/status: Exempt; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $12.3. 

NC; 
Location/project: Raleigh-Durham--Regional Rail System; 
Overall project rating/status: Not rated; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $416.1. 

NV; 
Location/project: Las Vegas--Resort Corridor Downtown Extension; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $159.7. 

OR; 
Location/project: Washington County--Wilsonville to Beaverton Commuter 
Rail[A]; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $51.8. 

TN; 
Location/project: Nashville--East Corridor Commuter Rail; 
Overall project rating/status: Exempt; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $23.5. 

Subtotal; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $663.4. 

Projects in preliminary engineering: 

AK; 
Location/project: Wasilla--South Wasilla Track Realignment; 
Overall project rating/status: Exempt; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: N/A. 

CA; 
Location/project: Los Angeles--Exposition Corridor LRT; 
Overall project rating/status: Not rated; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $276.0. 

CA; 
Location/project: Orange County--CenterLine LRT; 
Overall project rating/status: Not rated; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $482.8. 

CA; 
Location/project: San Diego--Mid-Coast LRT Extension[A]; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $65.8. 

CA; 
Location/project: San Francisco--Central Subway; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $762.2. 

Projects in preliminary engineering: 

CA; 
Location/project: Santa Clara County--Silicon Valley Rapid Transit 
Corridor; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $973.0. 

CO; 
Location/project: Denver--West Corridor LRT[A]; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $249.0. 

CO; 
Location/project: Fort Collins--Mason Transportation Corridor; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $33.0. 

CT; 
Location/project: Hartford--New Britain-Hartford Busway; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $168.5. 

DE; 
Location/project: Wilmington--Wilmington to Newark Commuter Rail 
Improvements; 
Overall project rating/status: Exempt; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $24.9. 

FL; 
Location/project: Miami--North Corridor Metrorail Extension; 
Overall project rating/status: Not rated; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $421.3. 

FL; 
Location/project: Tampa Bay--Tampa Bay Regional Rail[B]; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $727.7. 

LA; 
Location/project: New Orleans--Desire Streetcar Line; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $68.7. 

MA; 
Location/project: Boston--Silver Line Phase III; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $468.3. 

MN; 
Location/project: Minneapolis-Big Lake--Northstar Corridor Rail; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $132.5. 

NY; 
Location/project: New York--Second Avenue Subway MOS[A]; 
Overall project rating/status: Highly recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $1,300.0. 

OR; 
Location/project: Portland--South Corridor I-205/Portland Mall LRT; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $296.2. 

PA; 
Location/project: Harrisburg--CORRIDORone Rail MOS; 
Overall project rating/status: Exempt; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $24.9. 

PA; 
Location/project: Philadelphia--Schuylkill Valley MetroRail; 
Overall project rating/status: Not recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $2,071.1. 

RI; 
Location/project: Providence--South County Commuter Rail; 
Overall project rating/status: Exempt; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $24.9. 

TX; 
Location/project: Dallas--Northwest/Southeast Light Rail MOS[A]; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $700.0. 

TX; 
Location/project: El Paso--Sun Metro Area Rapid Transit Starter Line; 
Overall project rating/status: Exempt; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: N/A. 

UT; 
Location/project: Salt Lake City--Weber County to Salt Lake City 
Commuter Rail[A]; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $466.8. 

VA; 
Location/project: Norfolk--Norfolk LRT; 
Overall project rating/status: Not rated; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $100.7. 

VA; 
Location/project: Northern Virginia--Dulles Corridor Metrorail Project- 
Extension to Wiehle Avenue; 
Overall project rating/status: Recommended; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $760.5. 

Subtotal; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $10,598.8. 

Total; 
Fiscal year 2006 recommended funding: $1,224.6; 
Total New Starts funding scheduled by FFGA or requested by project 
sponsors: $19,791.6. 

Source: FTA. 

Note: Totals may not add due to rounding. 

[A] Projects proposed for potential federal funding commitments outside 
of full funding grant agreements. 

[B] This project has since withdrawn from the New Starts application 
process. 

[End of table]

[End of section]

Appendix III: Status of Previous GAO Recommendations for Improving the 
New Starts Evaluation Process: 

Report: GAO/T-RCED-00-104; 
Recommendation: The Federal Transit Administration (FTA) should 
prioritize the projects it rates as highly recommended or recommended 
and ready to receive New Starts funds; 
Status: FTA officials told us that their recently implemented cost- 
effectiveness practice was partly in response to this recommendation. 
FTA will generally not recommend funding for a project that does not 
achieve at least a "medium" cost-effectiveness rating. 

Report: GAO-01-987; 
Recommendation: FTA should make commitment authority allocated to 
projects for which the federal funding commitments have been withdrawn 
available for all projects competing for New Starts funding (i.e., 
"release" the funding); 
Status: In fiscal year 2003, FTA released $157 million in commitment 
authority reserved for a Los Angeles Mid-City subway project that had 
been suspended for more than 3 years. 

Report: GAO-03-701; 
Recommendation: FTA should amend its regulations governing the level of 
federal funding share for projects to reflect its policy of favoring 
projects that request less than 60 percent New Starts funding; 
Status: FTA disagreed with this recommendation, arguing that its 
preference policy is not a legally binding requirement and therefore 
should not be reflected in the New Starts regulations. However, the 
agency did change the way it characterized the policy in its fiscal 
year 2006 New Starts annual report. This document states that FTA 
"generally" will not recommend funding for projects that request more 
than a 60 percent New Starts share of funding. 

Report: GAO-03-701; 
Recommendation: FTA should issue additional guidance to transit 
agencies describing FTA's expectations regarding the local travel 
forecasting models and the specific type of data FTA requires to 
calculate the Transportation System User Benefits measure; 
Status: FTA completed several actions and has other ongoing efforts to 
address the recommendation. (1) FTA provided additional guidance in its 
reporting instructions, clarifying the practices that must be followed 
in preparing the Transportation System User Benefits measure. (2) FTA 
provided additional guidance in July 2003, on how it would evaluate the 
measures in the fiscal year 2005 rating process. (3) FTA held several 
special workshops for transit agencies on Transportation System User 
Benefits, travel forecasting, and development of transit alternatives. 
(4) FTA initiated a proactive outreach to project sponsors to help them 
prepare and evaluate the measure, identifying weaknesses in their 
proposed measure and suggesting improvements. (5) FTA has a number of 
ongoing planned improvements to its guidance, including developing a 
users guide to the Summit software, developing case studies and 
exemplary practices, and updating its guidance on travel forecasting 
for New Starts projects. 

Report: GAO-04-748; 
Recommendation: FTA should clearly explain the basis on which it 
decides which projects will be recommended for funding outside of full 
funding grant agreements, and what projects must do to qualify for such 
a recommendation. These explanations should be included in FTA's annual 
New Starts report and other published New Starts guidance; 
Status: In its fiscal year 2006 New Starts report, FTA described its 
criteria for recommending projects for funding outside of full funding 
grant agreements. These criteria include projects that were in or 
nearing final design, received overall highly recommended or 
recommended ratings, and had cost-effectiveness ratings above a "low." 

Report: GAO-04-748; 
Recommendation: FTA should examine the impact of its preference policy 
on projects currently in the evaluation process, as well as projects in 
the early planning stages, and examine whether its policy results in 
maximizing New Starts funds and local participation; 
Status: FTA has not implemented this recommendation. 

Source: GAO. 

[End of table]

[End of section]

Appendix IV: Key New Starts Provisions Contained in House and Senate 
Reauthorization Bills: 

Provision: Streamline the New Starts evaluation process for projects 
under $75 million; 
Senate proposal: 
* Allows the Secretary of Transportation discretion to develop a 
streamlined evaluation process for projects requesting less than $75 
million in New Starts funds; 
* Eliminates the "exempt" classification for projects requesting less 
than $25 million in New Starts funding and allows FTA to analyze and 
rate all projects through a streamlined process; House proposal: 
* Establishes a "Small Starts" program for projects requesting between 
$25 million and $75 million in New Starts funding, with a total project 
cost of less than $200 million. These projects would be evaluated 
through a streamlined rating process; 
* Maintains the "exempt" classification for projects requesting less 
than $25 million in New Starts funding. 

Provision: Expand the definition of eligible projects; 
Senate proposal: 
* Allows nonfixed-guideway transit projects (e.g., bus rapid transit 
operating in nonexclusive lanes) requesting less than $75 million to be 
eligible for New Starts funding; House proposal: 
* Expands New Starts funding eligibility to include nonfixed-guideway 
projects with a majority of fixed-guideway components seeking between 
$25 million and $75 million as part of its "Small Starts" initiative. 

Provision: Change the rating categories; 
Senate proposal: 
* Revises the current rating system (that uses "highly recommended," 
"recommended," and "not recommended" ratings) to five levels of 
ratings: "high," "medium-high," "medium," "medium-low," and "low."; 
House proposal: 
* Maintains the current rating system. 

Provision: Maintain a maximum federal New Starts share at 80 percent; 
Senate proposal: 
* Maintains the maximum New Starts share at 80 percent for individual 
projects (in contrast to the administration's reauthorization proposal, 
which would lower the maximum New Starts share to 50 percent); House 
proposal: 
* Maintains the maximum New Starts share at 80 percent for individual 
projects; 
* Specifically prohibits FTA from requiring a nonfederal share that is 
more than 20 percent of the project's cost. 

Provision: Formalize communication about changes; 
Senate proposal: 
* Requires FTA to issue periodic descriptions of the review and 
evaluation process and criteria and allow for public comment; House 
proposal: 
* Requires FTA to provide notice and an opportunity for comment at 
least 60 days before issuing any nonregulatory substantive changes. 

Sources: H.R. 3, 109TH Cong. (2005), and 151 Cong. Rec. S5667-S5669 
(daily ed. May 20, 2005). 

[End of table]

[End of section]

Appendix V: FTA's Project Justification Measures for Evaluating and 
Rating New Starts Projects: 

Criterion: Mobility improvements; 
Measure: Transportation System User Benefits per project passenger mile 
(normalized travel time savings); 
Definition: Annual Transportation User Benefits (user expenditure 
savings between New Starts baseline and build alternatives) per 
forecasted project passenger mile, divided by total Transportation 
System User Benefits per passenger mile. 

Criterion: Mobility improvements; 
Measure: Low-income households served; 
Definition: Estimated number of low-income households (i.e., households 
below the poverty level) located within 1/2 mile of boarding points 
(transit stations) on the proposed New Starts project. 

Criterion: Mobility improvements; 
Measure: Employment near stations; 
Definition: Number of jobs within 1/2 mile of the New Starts project's 
proposed transit stations. 

Criterion: Environmental benefits; 
Measure: Change in criteria pollutant/precursor emissions; 
Definition: Annual number of tons of emissions forecast for the region--
comparing conditions under the New Starts investment to the New Starts 
baseline alternative--for carbon monoxide, particulate matter, nitrogen 
oxides, volatile organic compounds, and carbon dioxide. 

Criterion: Environmental benefits; 
Measure: Change in regional energy consumption; 
Definition: Net impact on energy savings as a result of changes in 
automobile and commercial travel in the region, offset in part by the 
energy requirements for operation of the proposed transit investment, 
measured in British Thermal Units. 

Criterion: Environmental benefits; 
Measure: Current Environmental Protection Agency regional air quality 
designation; 
Definition: U.S. Environmental Protection Agency's current air quality 
designation for the region, reflecting current compliance with the 
National Ambient Air Quality Standards, reported as attainment, 
nonattainment, or maintenance for transportation-related pollutants 
including ozone, carbon monoxide, particulate matter, and nitrogen 
oxides. 

Criterion: Operating efficiencies; 
Measure: Operating cost per passenger mile; 
Definition: Change in systemwide operating cost per passenger mile in 
the forecast year, comparing the New Starts build alternative to the 
baseline alternative. 

Criterion: Cost-effectiveness; 
Measure: Incremental cost of Transportation System User Benefits; 
Definition: Annualized capital and operating costs divided by 
Transportation System User Benefits (annual user expenditure savings) 
of the New Starts project as compared to the baseline. 

Criterion: Land use; 
Measure: Existing land use; 
Definition: Includes corridor and station area development, character 
(i.e., residential, commercial, mixed-use), pedestrian facilities, and 
parking supply. 

Criterion: Land use; 
Measure: Transit supportive plans and policies; 
Definition: Includes growth management, transit supportive corridor 
policies, supportive zoning regulations near transit stations, and 
tools to implement land use policies. 

Criterion: Land use; 
Measure: Performance and impact of policies; 
Definition: Includes performance of land use policies and potential 
impact of transit project on regional land use. 

Source: FTA. 

[End of table]

[End of section]

Appendix VI: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Katherine Siggerud, (202) 512-2834, [Hyperlink, siggerudk@gao.gov]; 
Nikki Clowers, (202) 512-4010, [Hyperlink, clowersa@gao.gov].

Staff Acknowledgments: 

In addition to the individuals named above, other key contributors to 
this report were Bert Japikse, Jessica Lucas-Judy, Sara Ann Moessbauer, 
and Gary Stofko. 

[End of section]

Related GAO Products: 

[End of section]

Highway and Transit Investments: Options for Improving Information on 
Projects' Benefits and Costs and Increasing Accountability for Results. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-172] 
Washington, D.C.: January 24, 2005. 

Mass Transit: FTA Needs to Better Define and Assess Impact of Certain 
Policies on New Starts Program. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-748] 
Washington, D.C.: June 25, 2004. 

Mass Transit: FTA Needs to Provide Clear Information and Additional 
Guidance on the New Starts Ratings Process. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-701] 
Washington, D.C.: June 23, 2003. 

Mass Transit: Status of New Starts Program and Potential for Bus Rapid 
Transit Projects. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-840T] 
Washington, D.C.: June 20, 2002. 

Mass Transit: FTA's New Starts Commitments for Fiscal Year 2003. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-603] 
Washington, D.C.: April 30, 2002. 

Mass Transit: FTA Could Relieve New Starts Program Funding Constraints. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-987] 
Washington, D.C.: August 15, 2001. 

Mass Transit: Implementation of FTA's New Starts Evaluation Process and 
FY 2001 Funding Proposals. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-00-149] 
Washington, D.C.: April 28, 2000. 

Mass Transit: Challenges in Evaluating, Overseeing, and Funding Major 
Transit Projects. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-RCED-00-104] 
Washington, D.C.: March 8, 2000. 

Mass Transit: "Mobility Improvements" Is One of Many Factors Used to 
Evaluate Mass Transit Projects. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-00-6R] 
Washington, D.C.: October 15, 1999. 

Mass Transit: Status of New Starts Transit Projects With Full Funding 
Grant Agreements. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-99-240] 
Washington, D.C.: August 19, 1999. 

Mass Transit: FTA's Progress in Developing and Implementing a New 
Starts Evaluation Process. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-99-113] 
Washington, D.C.: April 26, 1999. 

(542050): 

FOOTNOTES

[1] Fixed guideway systems use and occupy a separate right-of-way for 
the exclusive use of public transportation services. They include fixed 
rail, exclusive lanes for buses and other high-occupancy vehicles, and 
other systems. 

[2] This is the amount appropriated through fiscal year 2005, according 
to FTA. 

[3] Pub. L. No. 105-178, 112 Stat. 107 (1998). 

[4] New Starts commitment authority is the amount of funding Congress 
has authorized FTA to commit to New Starts projects for a given 
authorization period. 

[5] See the list of related GAO products at the end of this report. 

[6] The fiscal year 2006 evaluation cycle began in May 2004, with the 
issuance of the New Starts reporting instructions. Applications were 
due in August 2004, and FTA's evaluation of the applications was 
conducted in the fall of 2004. The annual report was published in 
February 2005 and included funding recommendations for fiscal year 
2006. 

[7] The New Starts Working Group is an organization of New Starts 
project sponsors, metropolitan planning organizations, and private 
industry transit firms who advocate on behalf of the New Starts program 
and specific projects. 

[8] FTA rated 27 projects in the fiscal year 2006 cycle, but one of 
these projects subsequently withdrew from the New Starts process; 
therefore, we interviewed sponsors from 26 projects. 

[9] "Guaranteed" funds are subject to a procedural mechanism designed 
to ensure that a minimum amount of funding is made available each year 
over the life of the project. 

[10] During the preliminary engineering phase, project sponsors refine 
the design of the proposal, taking into consideration all reasonable 
design alternatives, which results in estimates of costs, benefits, and 
impacts (e.g., financial or environmental). According to FTA officials, 
to gain approval for entry into preliminary engineering, a project must 
(1) have been identified through the alternatives analysis process, (2) 
be included in the region's long-term transportation plan, (3) meet the 
statutorily defined project justification and financial criteria, and 
(4) demonstrate that the sponsors have the technical capability to 
manage the project during preliminary engineering. Some federal New 
Starts funding is available to projects for preliminary engineering 
activities. 

[11] Final design is the last phase of project development before 
construction and may include right-of-way acquisition, utility 
relocation, and the preparation of final construction plans and cost 
estimates. 

[12] The administration's funding recommendations are made in the 
President's budget and are included in FTA's annual New Starts report 
to Congress, which is released each February in conjunction with the 
President's budget. 

[13] FTA does not evaluate and rate projects with existing FFGAs, that 
are in alternatives analysis, or that are statutorily exempt because 
they are requesting less than $25 million in New Starts funding. 

[14] FTA uses the incremental cost per hour of TSUB for assessing a 
project's cost-effectiveness. 

[15] For more information about the problems project sponsors 
encountered in implementing these changes, see GAO, Mass Transit: FTA 
Needs to Provide Clear Information and Additional Guidance on the New 
Starts Ratings Process, GAO-03-701 (Washington, D.C.: June 23, 2003). 

[16] See GAO, Mass Transit: FTA Needs to Better Define and Assess 
Impact of Certain Policies on New Starts Program, GAO-04-748 
(Washington, D.C.: June 25, 2004). 

[17] While the total number of projects in preliminary engineering and 
final design has fluctuated from year to year, this includes the 
statutorily exempt projects. Once these projects are excluded from the 
total, the number declines steadily each year. 

[18] GAO-04-748. 

[19] TEA-21 limits the amount of New Starts funding that can be used 
for purposes other than final design and construction to not more than 
8 percent of funds appropriated. 

[20] The Surface Transportation Extension Act of 2005 (P.L. 109-14) 
extended the programs until June 30, 2005. 

[21] We compiled a list of changes that FTA has made to the 
application, evaluation, rating, and project development oversight 
processes from TEA-21, FTA regulations, annual reports and reporting 
instructions, and previous GAO reports. We verified this list of 
changes with FTA officials and project sponsors. We chose the fiscal 
year 2000 evaluation cycle as our baseline because this was the first 
cycle to reflect some TEA-21 changes. TEA-21 formalized many pre- 
existing FTA practices, so we did not include those in our review. FTA 
has also made other minor modifications to the New Starts process, 
which we did not include in our review. 

[22] This change was included in the formal rulemaking process 
initiated after TEA-21 and was published as part of the New Starts 
program regulations in December 2000. 

[23] In response to project sponsor requests, in June 2005, FTA e- 
mailed two examples of the "make the case" document to those project 
sponsors who had registered for the 2005 New Starts roundtables. 

[24] Both the TSUB and the Before and After study requirements were 
included in the formal rulemaking process, and were implemented as part 
of the New Starts program regulations in December 2000. 

[25] For example, see GAO-04-748 and "The Rating and Evaluation of New 
Starts Transit Systems," Statement of the Honorable Kenneth M. Mead, 
Inspector General, U.S. Department of Transportation, before the 
Committee on Appropriations, Subcommittee on Transportation, Treasury 
and Independent Agencies, U.S. House of Representatives, April 28, 
2004. 

[26] The Department of Transportation publishes and stores on-line 
information about proposed and final regulations, copies of public 
comments on proposed rules, and related information on its Docket 
Management System. The department uses this docketed material when 
making regulatory and adjudicatory decisions, and makes docketed 
material available for review by interested parties. 

[27] 65 Fed. Reg. 76864 (Dec. 7, 2000). The Federal Transit Act of 
1998, within TEA-21, required FTA to publish regulations on the manner 
in which proposed projects will be evaluated and rated. 

[28] At the time this report went to print, the House and Senate were 
in conference and no conference report was available. 

[29] H.R. 3, Sec. 3031, 109TH Cong. (2005). 

[30] 151 Cong. Rec. S5668 (daily ed. May 20, 2005). 

[31] FTA cited the delay in the implementation of the TSUB measure as 
an example of FTA providing additional time for project sponsors to 
comply with a change. 

[32] See GAO, Highlights of a GAO Forum: Mergers and Transformation: 
Lessons Learned for a Department of Homeland Security and Other Federal 
Agencies, GAO-03-293SP (Washington, D.C.: Nov. 14, 2002). 

[33] A webinar is a seminar or workshop that is conducted 
electronically over the World Wide Web. A listserve is an electronic 
mailing list that allows subscribers to send and receive information on 
a particular topic. 

[34] Specifically, when mobility improvements are rated "low," the 
summary rating will "round down" to the lower of the two ratings; for 
all other mobility improvement ratings, the rating is "rounded up" to 
establish the summary project justification rating. 

[35] 49U.S.C. 5309 (e)(6). 

[36] U.S. Department of Transportation, Federal Transit Administration, 
"Report to Congress on Evaluating New Starts Projects," January 3, 
2005, p. 6. 

[37] 65 Fed. Reg. 76875 (Dec. 7, 2000). 

[38] 65 Fed. Reg. 76873 (Dec. 7, 2000). 

[39] For the financial rating, the criteria also serve as the measures. 

[40] The current mobility improvements and cost-effectiveness measure 
(i.e., TSUB) does not include highway congestion relief benefits. 

[41] The rating for the mobility improvements may be used as a tie- 
breaker between cost-effectiveness and land use ratings--that is, a low 
mobility improvements rating will round down the summary rating and a 
mobility improvements rating above a low will cause the summary rating 
to be rounded up. However, FTA officials told us that ties have been 
rare in the last several years. The "other" factors will also be 
considered if there is a compelling reason to do so; however, an FTA 
official told us that to the best of his knowledge these other factors 
have never changed a project's rating. 

[42] For more information on double-counting the benefits of 
transportation investments, see GAO, Highway and Transit Investments: 
Options for Improving Information on Projects' Benefits and Costs and 
Increasing Accountability for Results, GAO-05-172 (Washington, D.C.: 
Jan. 24, 2005). 

[43] The U.S. Environmental Protection Agency designates each region as 
in attainment, nonattainment, or maintenance--reflecting current 
compliance with the National Ambient Air Quality Standards under the 
Clean Air Act--for transportation-related pollutants including ozone, 
carbon monoxide, particulate matter, and nitrogen oxides. Geographic 
areas that have levels of a pollutant above those allowed by the 
standard are called nonattainment areas. Areas that did not meet the 
standard for a pollutant in the past but have reached attainment and 
met certain procedural requirements are known as maintenance areas. 

[44] "The Rating and Evaluation of New Starts Transit Systems," 
Statement of the Honorable Kenneth M. Mead, Inspector General, U.S. 
Department of Transportation, before the Committee on Appropriations, 
Subcommittee on Transportation, Treasury and Independent Agencies, U.S. 
House of Representatives, April 28, 2004. 

[45] GAO-05-172. 

[46] FTA introduced the Summit software in the fiscal year 2004 rating 
cycle to improve the accuracy of local travel models used to support 
New Starts projects. According to FTA, Summit has provided a means to 
identify and diagnose travel forecasting problems related to 
assumptions regarding fare and service policies, regional 
transportation networks, land use, and economic conditions. The 
software has also helped ensure that local forecasts are utilizing 
comprehensive and up-to-date data on travel behavior and local 
transportation systems. 

[47] See GAO, Tax Administration: IRS Needs to Further Refine Its Tax 
Filing Season Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 
22, 2002). 

[48] GAO, Mass Transit: FTA Needs to Better Define and Assess Impact of 
Certain Policies on New Starts Program, GAO-04-748 (Washington, D.C.: 
June 25, 2004). 

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