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What's New in New Starts: The Map-21 Reforms

In June of 2012, to the surprise of many in the industry, Congress passed and the President signed the Moving Ahead for Progress in the 21st Century Act (MAP-21). The legislation is a watershed for the Federal Transit Administration (FTA) and its grant programs supporting public transit. While the act authorizes funding for just two years, and keeps overall transit funding levels essentially unchanged, it makes significant changes in the structure of the FTA programs and associated requirements. Some grant programs are consolidated, while others are eliminated, such that a larger percentage of FTA funds will be apportioned to grantees by formula. The law places greater emphasis on performance measures and asset management. It provides new federal oversight authority for transit system safety, and requires that metropolitan planning organization (MPO) policy boards include transit agency representation. And the law provides very significant reforms in the Section 5309 New Starts program.

Small Starts is a special category of projects within the New Starts program. These are fixed guideway and significant corridor-based bus projects that cost less than $250 million and require no more than $75 million of discretionary funds through the program. Lower in cost and risk than New Starts, these projects were offered a streamlined process and criteria under SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users). Some of this streamlining is removed under MAP-21.The Section 5309 New Starts program provides discretionary funding for fixed guideway transit projects—new heavy rail and light rail lines, commuter rail, bus rapid transit, and the like—and extensions to existing fixed guideway systems. Due to its discretionary nature, the New Starts program has unique procedures and project evaluation criteria to manage the competition for funds. These procedures and criteria, as well as the kinds of projects eligible to compete for New Starts funds, are substantially changed by MAP-21.

For those interested in New Starts, this short-term legislation will be remembered for the longer term changes to eligibility, process, and criteria that are likely to remain in place well beyond the two-year term of the legislation, shaping the funding ground rules for years to come. This article summarizes these changes, while noting the implications of MAP-21 funding levels for the next two years.

Funding Availability

MAP-21 authorizes $1.9 billion for New Starts per year (FY13 and FY14). While this amount is less than the funding made available in FY12, it is comparable to the funding available during the SAFETEA-LU authorization period. At the authorized level, existing funding commitments are expected to consume virtually all of the New Starts available in FY13 and FY14.

Unlike SAFETEA-LU, MAP-21 does not set aside funding specifically for Small Starts. These lower cost projects are apt to face stiffer competition when going head to head with New Starts. Anticipating that New Starts funding may be tight for years to come, FTA is encouraging project sponsors to look to other sources of funding and financing to supplement New Starts grants. Recent projects have included funds from highway tolls and value capture mechanisms, for example, in addition to the more typical sources of local funds (e.g., dedicated sales taxes and other broad based revenue sources). Since MAP-21 expands the TIFIA (Transportation Infrastructure Finance and Innovation Act) program’s capacity seven-fold, project sponsors are being encouraged to look to TIFIA loans, loan guarantees, and credit enhancements to help implement their projects.

Changes to Eligibility

MAP-21 creates a new category of projects that are now eligible for funding through the New Starts program—“core capacity” projects that promise to increase the capacity of existing fixed-guideway systems. Such projects might include platform extensions to allow longer trains, or signal system upgrades to allow for shorter headways. Fleet expansion is also eligible when combined with other physical improvements. As a pipeline of core capacity projects develops over the next few years, many expect the demand for New Starts funds to increase. 

The act also changes the eligibility of bus rapid transit (BRT) projects. To be eligible for New Starts and Small Starts funds, BRT projects must emulate rail, meaning that they must include defined stations, traffic signal priority, and short headway bidirectional service on both weekdays and weekends. Two different types of BRT are recognized: “fixed guideway BRT,” where more than half operates in a transit-only right-of-way during peak periods, and “corridor-based BRT,” where less than half is in a transit-only right-of-way. Corridor-based BRT projects are eligible as Small Starts only. A special rule in the law directs FTA to fund up to three BRT projects each year at an 80 percent New Starts share.

Changes to the New Starts Process

Particularly significant are the changes to the planning and project development process. Seeking to streamline local and federal decision making, Congress restructured the process and reduced the number of FTA approval points. Box 1 illustrates the old New Starts process that has been in place for more than 20 years and the new New Starts process established by MAP-21, as understood by Parsons Brinckerhoff’s reading of the legislation. Noteworthy changes include:

  • Alternatives analysis, a required phase of New Starts planning since the 1970s, is no longer required. Alternatives analysis was the phase that supported local decisions on a project’s mode, general alignment, and termini. FTA used the results to evaluate a project’s merit prior to approval into preliminary engineering. Under MAP-21, project sponsors have greater latitude to develop their own planning process to support local decisions and lay the foundation for the National Environmental Policy Act (NEPA).

  • A new phase called “project development” is established. FTA may accept projects into this phase when a project sponsor submits a request along with a project description. No FTA evaluation of project merit is required at this milestone. During project development, the project sponsor and FTA complete the NEPA process, along with the engineering necessary to complete NEPA. For New Starts, but not for Small Starts, MAP-21 places a two-year timeline on the project development phase, while authorizing FTA to approve a time extension where justified.

  • A new phase called “engineering” is established to advance New Starts projects beyond the NEPA process to the point where a federal funding commitment can be made. This phase does not exist for Small Starts.

  • New Starts projects must meet the New Starts criteria prior to approval into engineering. For Small Starts, the evaluation occurs during project development and prior to grant award.

  • Core capacity projects will follow a similar process to New Starts.

 

Changes to New Starts Criteria

MAP-21 also changes the criteria that FTA uses to evaluate projects for justification and local financial commitment. Historically, FTA’s project justification evaluation has focused on transportation cost effectiveness. The law redefines this measure, directing FTA to substitute cost per rider for cost per hour of user benefit. This change is apt to make urban circulator projects, like streetcars, more competitive. Congress also added a new criterion for congestion relief.

The local financial commitment criteria were restructured. As before, FTA will review the sponsor’s ability to fund the proposed project while operating and maintaining its overall system. While the non-5309 share is no longer an explicit criterion, the competition for limited funds is likely to keep the typical New Starts share at 50 percent or below.

MAP-21 expands the criteria for evaluating Small Starts. Under SAFETEA-LU, Small Starts projects were evaluated on three project justification criteria: cost effectiveness, land use, and economic development. MAP-21 requires applicants to evaluate Small Starts using the same project justification criteria as New Starts. Core capacity projects must meet a similar set of criteria,

but in place of land use, MAP-21 requires FTA to consider capacity needs.

Programs of Interrelated Projects

This new statutory provision allows transit agencies to advance more than one New Starts and/or Core Capacity project forward as a “program.” Rather than evaluating each project individually, FTA would evaluate the entire program of projects as one package. MAP-21 provides several provisions that limit the scope of a program. Projects in a program of interrelated projects must have “logical connectivity” and be built within a “reasonable time” of each other.

Project sponsors taking advantage of this provision are expected to complete the entire program. If the program is not fully implemented, for reasons within the grantee’s control, FTA is directed to seek reimbursement for grant funds it has contributed to the program.

New Pilot Programs

Two new pilot programs are authorized in MAP-21:

  • Transit-oriented development (TOD) planning: MAP-21 authorizes funding for land use planning to promote TOD around fixed-guideway transit stations.


  • Expedited project delivery: FTA will be seeking three projects that can demonstrate innovative project development and delivery methods or innovative financing arrangements to expedite project delivery.

As FTA works out the details, applications will be solicited for each of these pilots. Meanwhile, agencies are already starting to think about how they might take advantage of the opportunities.

Environmental Streamlining

The highway title of MAP-21 includes 23 provisions to streamline the NEPA process. Examples include provisions allowing planning studies to be used in the NEPA process, and an expanded list of categorical exclusions. While congressional staffers insist that they intended these provisions to apply to transit, it is not clear that the statute is written in such a way that FTA and transit project sponsors can take full advantage.

Implementation

The New Starts program has always been complicated, with a unique set of rules and policies. With MAP-21, transit project sponsors are faced with a new and very different set of requirements, very little guidance thus far from FTA, and uncertain funding levels beyond FY14. The path forward for existing and new projects is unclear. Eventually, FTA regulations and guidance will flesh out many of the particulars. To its credit, FTA is using MAP-21 as an opportunity to step back and reexamine many aspects of the process, with industry input, even if that means that regulations and guidance take longer to complete. In the meantime both project sponsors and FTA are asking such questions as:

 

 

  • What are the prerequisites for acceptance into project development?

  • What will be required for approval into engineering?

  • Which of the environmental streamlining provisions in the highway title can be used on FTA projects?

  • How will pipeline projects be handled?

Understandably, some project sponsors are inclined to wait and see, putting their studies and projects on hold until FTA provides further guidance. Others are pressing ahead with local planning studies and NEPA to reach local decisions, despite uncertainty at the federal level, realizing that clarity could take months or years. Those that press ahead are more likely to be near the head of the line for discretionary funding should additional funding become available after FY14.

 

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