[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
 THE FEDERAL TRANSIT ADMINISTRATION'S IMPLEMENTATION OF THE NEW STARTS 
                       AND SMALL STARTS PROGRAMS

=======================================================================

                                (110-41)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HIGHWAYS AND TRANSIT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 10, 2007

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


                    U.S. GOVERNMENT PRINTING OFFICE
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia    JOHN L. MICA, Florida
PETER A. DeFAZIO, Oregon             DON YOUNG, Alaska
JERRY F. COSTELLO, Illinois          THOMAS E. PETRI, Wisconsin
ELEANOR HOLMES NORTON, District of   HOWARD COBLE, North Carolina
Columbia                             JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             WAYNE T. GILCHREST, Maryland
CORRINE BROWN, Florida               VERNON J. EHLERS, Michigan
BOB FILNER, California               STEVEN C. LaTOURETTE, Ohio
EDDIE BERNICE JOHNSON, Texas         RICHARD H. BAKER, Louisiana
GENE TAYLOR, Mississippi             FRANK A. LoBIONDO, New Jersey
ELIJAH E. CUMMINGS, Maryland         JERRY MORAN, Kansas
ELLEN O. TAUSCHER, California        GARY G. MILLER, California
LEONARD L. BOSWELL, Iowa             ROBIN HAYES, North Carolina
TIM HOLDEN, Pennsylvania             HENRY E. BROWN, Jr., South 
BRIAN BAIRD, Washington              Carolina
RICK LARSEN, Washington              TIMOTHY V. JOHNSON, Illinois
MICHAEL E. CAPUANO, Massachusetts    TODD RUSSELL PLATTS, Pennsylvania
JULIA CARSON, Indiana                SAM GRAVES, Missouri
TIMOTHY H. BISHOP, New York          BILL SHUSTER, Pennsylvania
MICHAEL H. MICHAUD, Maine            JOHN BOOZMAN, Arkansas
BRIAN HIGGINS, New York              SHELLEY MOORE CAPITO, West 
RUSS CARNAHAN, Missouri              Virginia
JOHN T. SALAZAR, Colorado            JIM GERLACH, Pennsylvania
GRACE F. NAPOLITANO, California      MARIO DIAZ-BALART, Florida
DANIEL LIPINSKI, Illinois            CHARLES W. DENT, Pennsylvania
DORIS O. MATSUI, California          TED POE, Texas
NICK LAMPSON, Texas                  DAVID G. REICHERT, Washington
ZACHARY T. SPACE, Ohio               CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              JOHN R. `RANDY' KUHL, Jr., New 
BRUCE L. BRALEY, Iowa                York
JASON ALTMIRE, Pennsylvania          LYNN A WESTMORELAND, Georgia
TIMOTHY J. WALZ, Minnesota           CHARLES W. BOUSTANY, Jr., 
HEATH SHULER, North Carolina         Louisiana
MICHAEL A. ACURI, New York           JEAN SCHMIDT, Ohio
HARRY E. MITCHELL, Arizona           CANDICE S. MILLER, Michigan
CHRISTOPHER P. CARNEY, Pennsylvania  THELMA D. DRAKE, Virginia
JOHN J. HALL, New York               MARY FALLIN, Oklahoma
STEVE KAGEN, Wisconsin               VERN BUCHANAN, Florida
STEVE COHEN, Tennessee
JERRY McNERNEY, California
VACANCY

                                  (ii)

?

                  SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

                        PETER A. DeFAZIO, Oregon

NICK J. RAHALL II, West Virginia     JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             DON YOUNG, Alaska
ELLEN O. TAUSCHER, California        THOMAS E. PETRI, Wisconsin
TIM HOLDEN, Pennsylvania             HOWARD COBLE, North Carolina
MICHAEL E. CAPUANO, Massachusetts    RICHARD H. BAKER, Louisiana
JULIA CARSON, Indiana                GARY G. MILLER, California
TIMOTHY H. BISHOP, New York          ROBIN HAYES, North Carolina
MICHAEL H. MICHAUD, Maine            HENRY E. BROWN, Jr., South 
BRIAN HIGGINS, New York              Carolina
GRACE F. NAPOLITANO, California      TIMOTHY V. JOHNSON, Illinois
MAZIE K. HIRONO, Hawaii              TODD RUSSELL PLATTS, Pennsylvania
JASON ALTMIRE, Pennsylvania          JOHN BOOZMAN, Arkansas
TIMOTHY J. WALZ, Minnesota           SHELLEY MOORE CAPITO, West 
HEATH SHULER, North Carolina         Virginia
MICHAEL A ARCURI, New York           JIM GERLACH, Pennsylvania
CHRISTOPHER P. CARNEY, Pennsylvania  MARIO DIAZ-BALART, Florida
JERRY MCNERNEY, California           CHARLES W. DENT, Pennsylvania
BOB FILNER, California               TED POE, Texas
ELIJAH E. CUMMINGS, Maryland         DAVID G. REICHERT, Washington
BRIAN BAIRD, Washington              CHARLES W. BOUSTANY, Jr., 
DANIEL LIPINSKI, Illinois            Louisiana
DORIS O. MATSUI, California          JEAN SCHMIDT, Ohio
STEVE COHEN, Tennessee               CANDICE S. MILLER, Michigan
ZACHARY T. SPACE, Ohio               THELMA D. DRAKE, Virginia
BRUCE L. BRALEY, Iowa                MARY FALLIN, Oklahoma
HARRY E. MITCHELL, Arizona           VERN BUCHANAN, Florida
VACANCY                              JOHN L. MICA, Florida
JAMES L. OBERSTAR, Minnesota           (Ex Officio)
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Gustafson, Rick, Executive Director/Chief Operating Officer, 
  Portland Streetcar, Inc., Portland, Oregon.....................    24
Lewis, David L., Ph.D., Senior Vice President, HDR/HLB Decision 
  Economics, Inc., Silver Spring, Maryland.......................    24
Siggerud, Katherine, Director of Physical Infrastructure, U.S. 
  Government Accountability Office...............................     2
Simpson, James S., Administrator, Federal Transit Administration, 
  U.S. Department of Transportation..............................     2
Snoble, Roger, Chief Executive Officer, Metropolitan 
  Transportation Authority, Los Angeles, California..............    24
Thomas, Gary C., President/Executive Director, Dallas Area Rapid 
  Transit (DART), Dallas, Texas..................................    24
Varga, Peter, Executive Director, Chief Executive Officer, 
  Interurban Transit Partnership (The Rapid), Grand Rapids, 
  Michigan.......................................................    24

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Altmire, Hon. Jason, of Pennsylvania.............................    43
Bishop, Hon. Timothy H., of New York.............................    44
Cummings, Hon. Elijah E., of Maryland............................    45
Ehlers, Hon. Vernon J., of Michigan..............................    50
Hirono, Hon. Mazie K., of Hawaii.................................    51
Holden, Hon. Tim, of Pennsylvania................................    53
Matsui, Hon. Doris O., of California.............................    54
Mitchell, Hon. Harry E., of Arizona..............................    58

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Gustafson, Rick..................................................    63
Lewis, David L., Ph.D............................................    75
Siggerud, Katherine..............................................    82
Simpson, James S.................................................   112
Snoble, Roger....................................................   126
Thomas, Gary C...................................................   141
Varga, Peter.....................................................   148

                       SUBMISSIONS FOR THE RECORD

Gustafson, Rick, Executive Director/Chief Operating Officer, 
  Portland Streetcar, Inc., Portland, Oregon, presentation: ``The 
  Portland Experience: Development Oriented Streetcars''.........    66
Simpson, James S., Administrator, Federal Transit Administration, 
  U.S. Department of Transportation, responses to questions from 
  Rep. DeFazio and Rep. Hirono...................................   118

                         ADDITION TO THE RECORD

Franklin B. Conaway & Associates, Franklin B. Conaway, written 
  statement submitted by Rep. Space..............................   151

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   HEARING ON FTA IMPLEMENTATION OF THE NEW STARTS AND SMALL STARTS 
                                PROGRAM

                              ----------                              


                         Thursday, May 10, 2007

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                      Subcommittee on Highways and Transit,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:05 a.m., in 
Room 2167, Rayburn House Office Building, Hon. Peter A. DeFazio 
[chairman of the subcommittee] Presiding.
    Mr. DeFazio. The Subcommittee on Highways and Transit will 
come to order. We will proceed with brief opening statements.
    When this committee authored SAFETEA-LU, I think there was 
bipartisan consensus at the time--boy, this microphone seems 
very loud today, it is very unusual--that in addressing Small 
Starts and New Starts that we wanted to see different criteria 
implemented by the administration and we wanted to expedite 
these sorts of projects. In particular, the idea of Small 
Starts was that, you know, we wanted to foster sort of a short 
form and move those projects expeditiously in partnership with 
local jurisdictions. From my reading of where we are at today, 
I have a lot of concerns that hopefully will be addressed here 
today about the lack of progress on implementing of the very 
specific statutory direction from Congress on New Starts and 
Small Starts. In fact, it seems that the only new provisions 
that FTA is considering are provisions to implement a pet 
program of the administration regarding basically congestion 
pricing, and giving that bonus points while ignoring the 
statutory criteria that have been set by Congress.
    So I hope that these concerns will be alleviated, dispelled 
or addressed today as we move forward through the hearing. With 
that, I turn to the ranking member, Mr. Duncan.
    Mr. Duncan. Well, thank you, Mr. Chairman. First, I want to 
ask unanimous consent that our colleague, Congressman Ehlers, 
be authorized to participate in this morning's subcommittee 
hearing. One of his constituents is testifying on the second 
panel and he wanted to be here for that.
    Mr. DeFazio. Without objection.
    Mr. Duncan. This program is one that many members really do 
not know about, and I was just told that this is the first time 
in over 5 years that we have held a hearing on what really is a 
very important program. This New Starts program is one of the 
largest and at least at the local level one of the highest 
profile discretionary grant programs in the Federal Government. 
The program has grown from an annual funding level of about 
$400 million in the mid-1980s to $1.8 billion in fiscal year 
2009.
    Under the New Starts program, local transit agencies 
partner with the FTA to develop and construct subway, light 
rail, commuter rail, ferry and bus rapid transit projects to 
solve very specific local transportation programs in a corridor 
or area of their communities. These projects can be brand-new 
starter lines or extensions to existing transit systems.
    New Start projects vary widely in cost and complexity, 
ranging from less than $25 million for upgrading the regular 
bus line to high and express bus rapid transit to more than $7 
billion for an incredibly complex new subway line tunneling 
through a major city's downtown.
    The FTA project evaluation and rating process is 
established and transit law by this committee and the process 
is quite demanding. The Office of Management and Budget, GAO 
and the Department of Transportation Inspector General have all 
recognized the FTA's management of the New Starts program as 
fair and rigorous. The prize these local project sponsors are 
seeking by participating in such a demanding program is to 
secure a full funding grant agreement, a contract with the 
Federal Transit Administration for a certain amount of Federal 
funding provided on an annual payment schedule.
    New Starts projects improve the mobility of millions of 
Americans, help reduce congestion and improve air quality and 
contribute to the economic development and vitality of our 
communities. These benefits are not conferred only on major 
cities like New York and Los Angeles. Smaller cities can and do 
reap these same benefits with projects that are appropriately 
scaled to their transportation and community needs.
    SAFETEA-LU authorized a new Small Starts program within New 
Starts for projects that are less than $250 million in total 
cost and less than $75 million in New Starts funding. This 
program is designed for smaller projects and the evaluation and 
rating process is also simpler and we hope will allow for 
faster project development and construction.
    I am looking forward to the hearing and hearing the 
testimony of the FTA Administrator, Mr. Simpson, about how his 
agency is managing the New Starts program and in particular how 
the Small Starts program is being implemented and hopefully 
expanded.
    Thank you, Mr. Chairman.
    Mr. DeFazio. Thank you, Mr. Duncan.
    With that, we would--no one else having arrived, we would 
move forward to the testimony of the Honorable James Simpson, 
Administrator, Federal Transit Administration. Mr. Simpson.

 TESTIMONY OF JAMES S. SIMPSON, ADMINISTRATOR, FEDERAL TRANSIT 
    ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION; AND 
 KATHERINE SIGGERUD, DIRECTOR OF PHYSICAL INFRASTRUCTURE, U.S. 
                GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Simpson. Good morning, Chairman DeFazio, Ranking Member 
Duncan, and members of the subcommittee. Thank you for the 
opportunity to testify today on the FTA's New Starts and Small 
Starts programs, which are among the Federal Government's 
largest and most highly regarded discretionary programs. I 
would also like to thank the GAO for its hard work and 
dedication reviewing the New Starts program.
    Over the years FTA has made good choices for Federal New 
Starts dollars due in part to our increased commitment to sound 
management practices. FTA's portfolio; that is, the number of 
projects in the construction phase, totals $21.5 billion and we 
are managing the costs to within a half a percent of the full 
funding grant agreement. Based on my experience in both the 
public and private sectors, that level of cost control is 
impressive.
    In our quest for continuous improvement, FTA engaged 
Deloitte Consulting to provide an independent review of the New 
Starts program, focusing on streamlining the process while 
maintaining program integrity and objectives. Deloitte's 
recommendations, which confirmed our own findings, focused on 
four general areas: Streamlining project development and 
evaluations processes, New Starts process management, FTA's 
organizational structure, and improved communications.
    With regard to streamlining project development and 
evaluation processes, we are committed to reducing reporting 
requirements, moving projects faster and shortening review 
times. First, we have already proposed to eliminate a number of 
New Starts reporting requirements. Second, we are now offering 
grantees an opportunity to enter into a project development 
agreement which outlines the respective responsibilities of the 
grantee and FTA in the project delivery schedule. Third, FTA 
will soon unveil new guidance and training for managing project 
development risks such as the potential for cost overruns and 
schedule delays.
    For New Starts process management we are focusing on 
improvements to our industry guidance documents. We intend to 
clarify and simplify procedural requirements for advancing 
projects through the New Starts development process and are 
exploring a more efficient and transparent tracking and data 
collection system to facilitate project development.
    With respect to FTA's organizational structure, FTA is 
implementing New Starts teams consisting of regional and 
headquarter staff who will deliver program and technical 
assistance and will bring a can-do approach to each project.
    In the area of improved communications we believe the New 
Starts process must be as transparent as possible and we strive 
to have a close working relationship with all of our 
stakeholders. I echoed that very sentiment last year during my 
confirmation hearing when I pledged to make FTA more 
transparent and to keep Congress informed. To that end, FTA now 
provides House and Senate committee staffs with individual 
project updates on a monthly basis. We also communicate with 
Congress before each New Starts project proceeds to the next 
stage of development and again before signing the full funding 
grant agreement. FTA continues its efforts to better serve 
individual project sponsors, which includes offering more 
outreach to the public transportation industry.
    Turning now to Small Starts, SAFETEA-LU established a Small 
Starts program to advance smaller fixed guideway and nonfixed 
guideway projects, including bus rapid transit, street cars and 
commuter rail projects and established a streamlined review 
process. We further recognize that simple low cost bus and rail 
improvements in corridors with strong existing ridership 
typically have sufficient benefits to rate well and require 
only minimal assessments. For those projects FTA introduced the 
Very Small Starts concept, which provides for an even more 
simplified project evaluation and rating process.
    When we were preparing the 2008 budget last November, FTA 
found that 4 of the 12 protects projects that applied were 
ready to advance, and we recommended them for funding in 2008. 
We continued to work with several of the applicants as well as 
additional sponsors who have more recently expressed interest 
in applying for entry into project development, and we expect 
to approve more for funding in the future. FTA issued an 
advanced notice of proposed rulemaking on the Small Starts 
program and draft policy guidance on the New Starts program in 
early 2006. Both these programs involve extremely involved 
complex issues, and the comments we received on our proposals 
were extensive. We reviewed and reconciled these comments and 
hope to issue an MPRM for both programs soon.
    In the meantime FTA issued New Starts policy guidance and 
interim guidance on the Small Starts program to aid the 
continued development and advancement of projects. We will 
issue additional policy guidance in the near future followed by 
a final rule on New Starts and Small Starts in 2008.
    Chairman DeFazio, Ranking Member Duncan, and members of the 
subcommittee, FTA is committed to the timely delivery of New 
Starts and Small Starts projects, we realize time is money. In 
the last 9 months we have implemented an FTA-wide quality 
improvement program that implements the Malcolm Baldrige 
National Quality Model, which focuses on leadership, strategic 
planning, customer and market focus, measurement, workforce 
development, process management, and most importantly results. 
We are streamlining New Starts project delivery, providing 
strong project management oversight and bringing good projects 
in on time and within budget. We are enhancing customers that 
are stakeholders' service through improved communications, 
clear guidance and streamline requirements for these programs. 
We look forward to working with the subcommittee on the New 
Starts and Small Starts programs.
    I am happy to take any of your questions. Thank you.
    Mr. DeFazio. Thank you, Mr. Administrator, and now we would 
turn to our second witness, Katherine Siggerud, Director of 
Physical Infrastructure, United States Government 
Accountability Office.
    Ms. Siggerud. Chairman DeFazio, Ranking Member Duncan, 
members of the subcommittee, I appreciate the opportunity to 
provide testimony on the Federal Transit Administration's New 
Starts and Small Starts programs. As you know, GAO has been 
required in TEA-21 and SAFETEA-LU to report annually on the New 
Starts program. We will be issuing our full report for this 
year in July, but I can provide some preliminary information 
today on our results of work to date.
    My testimony today examines first, FTA's implementation of 
SAFETEA-LU changes to the New Starts programs, second, the 
extent and nature of changes in the New Starts pipeline since 
the fiscal year 2001 evaluation and rating cycle, and third, 
projected trends for the New Starts and Small Starts programs. 
In doing this work, we surveyed all potential project sponsors 
that are located in urbanized areas with populations over 
200,000 and that have an annual ridership on the transit 
systems of 1 million. In total, we surveyed 215 potential 
project sponsors, asked them about their past experiences with 
the New Starts program and plans to apply in the future.
    With regard to implementation of SAFETEA-LU changes, FTA 
has issued guidance for the New Starts program and interim 
guidance for the Small Starts program and is working toward a 
comprehensive notice of proposed rulemaking, as Administrator 
Simpson explained. I wanted to mention two areas where project 
sponsors that we have contacted have high expectation of these 
regulations, further streamlining of the Small Starts program 
and fully incorporating economic development into the New 
Starts and Small Starts evaluation and rating process.
    With regard to the Small Starts application process, the 
current interim guidance has fewer requirements for Small 
Starts than for New Starts projects. Project sponsors would 
like to see additional streamlining by, for example, 
eliminating unneeded information requested in the required 
worksheets. FTA told us it is considering changes in this area 
using the upcoming rulemaking guidance. In addition, project 
sponsors would like to see more explicit incorporation of the 
economic development criteria as required by SAFETEA-LU. This 
is a technical challenge in that the potential benefits of 
economic development resulting from new transit service are 
difficult to separate from the benefits of improved mobility 
and land use. FTA officials told us that they understand the 
importance of the economic development in the transit community 
and the concerns raised by project sponsors and said they are 
working to develop an appropriate economic development measure 
through the upcoming rulemaking process.
    With regard to changes in the New Starts pipeline, as I 
mentioned, we review the New Starts program every year. And it 
became apparent to us the pipeline has changed in size and 
composition since the fiscal year 2001 evaluation and rating 
cycle. Since then the number of projects in the New Starts 
pipeline has decreased by more than half. In addition, the 
types of projects have changed, as bus rapid transit projects 
are now more common than commuter or light rail projects, 
though this still represents a small amount of projects in the 
pipeline.
    FTA officials told us the major reason for the decrease in 
the number of projects in the pipeline is that FTA increased 
its scrutiny of applications to help ensure that only the 
strongest projects enter the pipeline. FTA also took steps to 
remove projects that were not advancing or that did not 
adequately address identified problems, although in most cases 
project sponsors voluntarily withdrew projects once FTA brought 
these projects to their attention. Project sponsors we 
interviewed provided other reasons for the decrease in the New 
Starts pipeline; in particular, they maintained the New Starts 
process is complex, time consuming and costly. Our surveyed 
results confirmed some of the reasons offered by project 
sponsors. Among the potential project sponsors we surveyed with 
completed transit projects, the most common reasons given for 
not applying to the New Starts program were that the process 
was too lengthy or that the process wanted to move the project 
along quickly. The lengthy nature of the New Starts process is 
due in part to the rigorous and systematic evaluation and 
rating process established by law which we have previously 
noted could serve as a model for other transportation programs.
    As Administrator Simpson explained, FTA has recognized the 
process can be lengthy and in 2006 commissioned a study that he 
spoke about in his statement to examine opportunities for 
accelerating and simplifying the process. FTA is currently 
reviewing the studies and findings and recommendations, and we 
heard Mr. Simpson give an update on that today. Despite the 
decrease in the pipeline, our survey of potential project 
sponsors indicated that there would be future demand for New 
Starts Small Starts and Very Small Starts funding.
    The potential project sponsors we surveyed reported having 
137 planned projects; that is, projects that are undergoing an 
alternative analysis or some kind of corridor-based planning 
study. According to the project sponsors, they are considering 
seeking New Starts, Small Starts or Very Small Starts funding 
for about three-fourths of these projects.
    Project sponsors we surveyed also indicated they were 
considering range of project types. The most commonly cited 
alternatives were bus, rapid transit, and light rail. Our 
survey results also indicate that through the Small Starts and 
Very Small Starts program FTA is attracting project sponsors 
that either would not otherwise apply for a New Starts program 
or have not previously applied. For example, of 28 project 
sponsors that intend to seek Small Starts or Very Small Starts 
funding for their projects, 13 have not previously applied for 
New Starts Small Starts or Very Small Starts funding.
    Mr. Chairman, that concludes my statement. I am happy to 
answer any questions.
    Mr. DeFazio. Thank you. At this point we would proceed to 
questions.
    Administrator Simpson, first I want to congratulate you on 
your work to attempt to make more transparent and streamline 
the processes of the agency and we appreciate that work. 
However, I have concerns regarding the criteria that are being 
applied in evaluating the viability of new projects, and it 
seems that this problem precedes your position in the job, but 
the former Administrator issued something that was referred to 
as a "Dear Colleague" directive regarding criteria that would 
be used and she did that on March 9, 2005. And she talked about 
targeting funding recommendations 2006 that proposed New Starts 
able to achieve a medium or higher rating for cost 
effectiveness. She went on to note that people had raised 
concerns about that with the pending legislation but she said, 
you know, essentially it was neither necessary or advisable. 
The same project has not received at least a medium rating on 
the single cost effectiveness evaluation and it will face 
serious barriers.
    Now, I don't believe even at the time that she wrote that 
that it was consistent with the law. And in fact the Federal 
Register back in December 7, 2000 stated, it is important to 
note the measure for cost effectiveness is not intended to be a 
single standalone indicator of the merits proposed in the New 
Starts project. It is but one part of the multiple method that 
FTA uses to evaluate project justification under statutory 
criteria. While cost effectiveness is an important 
consideration, so are mobility, environment and other factors. 
And of course since that time we have added economic 
development and other factors.
    So I am concerned. It seems that FTA is following the "Dear 
Colleague" exposition of the former Administrator, which even 
then seemed to contradict your own existing regulations. Could 
you address that issue, please?
    Mr. Simpson. Sure. Mr. Chairman, I am going to use an 
analogy. The cost effectiveness measure is one of multiple 
assessments that we look at. However, having said that, cost 
effectiveness--let's look at the program. The program is a 
discretionary competitive program, not dissimilar to applying 
to a--let's call it an Ivy League school. And you need a 
multitude of criteria. But when you are trying to have an 
objective criteria that cross cuts through the whole country 
and to have different communities sort of have a similar 
footing and a similar kind of a rating, the cost effectiveness 
measure stands out like the SAT score, and a SAT score, it does 
give you the aptitude toward math and all of that. But when we 
look at cost effectiveness, on the surface it looks like we are 
just looking at like perhaps the cheapest ride to get somebody 
from point A to point B. But cost effectiveness, the measure 
has gotten pretty sophisticated and it actually takes into 
account mobility improvements and also operating efficiencies. 
And when we look at cost effectiveness, we are looking at--it 
is the closest thing that we have to a cost/benefit analysis 
that takes a look at the cost of the project relative to the 
amount of riders and the benefits of the project. And it even 
gets more complicated. But just to keep it on the surface, the 
state of the art of the model now for cost effectiveness even 
takes into benefit, it takes into benefits that would normally 
not be associated with the project, and we call it transit 
system user benefits. So this cost effective measure looks at 
mobility and even in an odd sort of a way, even has a little 
bit of an economic development measure to it.
    So it is a very heavy criteria, it is an objective 
criteria. And it is the only thing that we have that can 
measure--that can cross cut projects and quantifiably take a 
look at all the projects and measure it effectively.
    Mr. DeFazio. But the particular measures used for operating 
in efficiency and mobility improvements really seem fairly 
antiquated and prejudice toward--basically toward bus, and I 
mean and so we couldn't anticipate the revival of streetcars 
since they have been gone for 70 years. You know, can you 
address that? If we are really talking about the--you know, 
things that really would favor, you know, suburb or urban 
center, moving people quickly in a bus transit lane or 
something like that as opposed to movement within, and again I 
don't quite see where the mandated, statutorily mandated 
emphasis on a factor of economic development is being really 
quantified here. I don't see that. Maybe tangentially.
    Mr. Simpson. Are we talking particularly streetcars right 
now?
    Mr. DeFazio. Well, streetcars are a particular problem and 
I think we have discouraged many people from applying because 
of what they perceive as a bias in the program.
    Mr. Simpson. Well, if we take a look at the lesser 
alternative or the baseline measure, which would be a bus as 
opposed to a streetcar, obviously the extra--the additional 
cost of the streetcar if there are no time saving benefits, you 
could say under the cost effectiveness measure, yeah, maybe it 
is not as competitive. But that is only one part of the cost 
effectiveness measure. The other part is, we know--and this 
cost effectiveness forecasting model, we know that people like 
reliability, they like to know where they are going, they like 
permanency, the basic attributes of a rail system. So what we 
do is we have these--it is very complicated. But I will try to 
keep it simple and I apologize. We take all these attributes 
and we associate time with them so that we are not just looking 
at time savings. We are taking a look at the other attributes 
like the additional amenities that a streetcar would have that 
a bus would not have. And we formulate it into the equation, 
and we call it time savings and transit system user benefits.
    The other thing that we have now that is----
    Mr. DeFazio. If you have a relatively short ride, you are 
not going to find much time saving.
    Mr. Simpson. But then that would be the same with a bus as 
well. Not everybody is having a short--if you were going to get 
on a bus and go a couple of blocks, you could also go on a 
streetcar.
    Mr. DeFazio. Generally the bus--we don't develop many bus 
systems that cover such a short distance. You may have, you 
know, a streetcar that covers a relatively short distance in a 
very dense area. It enhances densification, utilization of, you 
know, much higher utilization of the adjoining properties, 
whereas the bus just sort of goes through there on a longer 
route.
    Mr. Simpson. Understood. But the point I guess, Mr. 
Chairman, that I would like to get across is that we understand 
that and we have attributes in the cost effectiveness measure 
that can take into account those measures. The problem with 
some streetcar projects--and I only say a problem like this 
because it is not your typical streetcar in some cases. There 
is a project now that we are working with that we have accepted 
into the program, for example, that has to cross a bridge. And 
8 percent of the cost of the project is for structure, 
additional structure to the bridge. Now I don't know at this 
point if it is because of weight of trucks or the extra weight 
of the streetcars. In addition to that, the project that we 
have accepted into the program has a flyover, a major highway 
and a flyover for railroad. Typically streetcars don't have 
elevated flyovers. So this, you know, makes the project that 
you know if you think about--when we were in Portland together, 
it is not the typical streetcar that I rode on. This has got a 
lot more to it.
    So by working with the grant recipient, by taking into 
account this thing called a modal constant that takes together 
all the attributes, to look at if there are ways to move this 
along and look at the bridge in another fashion, we are working 
with the grant recipient, but the cost effectiveness measure 
really is not that biased, if it is biased at all, towards or 
against the streetcar.
    Mr. DeFazio. Mm-hmm. So you don't anticipate significant 
revisions of the criteria pursuant to the directives of 
SAFETEA-LU?
    Mr. Simpson. Absolutely not. If you are referring to 
economic development, we absolutely positively are working 
towards economic development. But what we want to do is the way 
economic development is now, we have got land use and we have 
got economic development. They are interlocked, they are 
interconnected. You cannot have economic development unless you 
have supportive land use. So if we have supportive land use, we 
are measuring the land use. And we are weighing that equal with 
cost effectiveness, it is 50 percent of the two equations. So 
we are measuring land use.
    So now we are trying to follow the statute, which is 
economic development, which is not necessarily land use. But 
when we reach out to the industry--and it depends who you talk 
to. We have talked to five or six different people. Everybody 
has a different definition of what economic development is. We 
have gone out and last year we went out, we just got back a 
study that looks at measuring economic development. But what we 
really want to do is if we are talking about economic 
development we want to measure it and we want to make it 
quantifiable because, believe me, this administration and this 
department is for knowledge-based management and looking at all 
the benefits, including economic development and all the costs. 
But when we are looking at a project and we have got a four-
page qualitative report that says, yeah, maybe we are going to 
do all these things in the future and it is qualitative and we 
have this other measure cost effectiveness that truly looks at 
mobility and for a transit project to be--for a transit 
project--the transit project needs to have mobility or else you 
are not going to have economic development. People are not 
going to travel from point A to point B if there is no time 
savings. So you need to have a certain amount of time in that.
    I guess in closing, we are working towards economic 
development. I am with you. I understand there are attributes.
    Mr. DeFazio. For instance, on measuring economic 
development or land use, which I do think are measurable 
together, and for instance, if you could build up to 10 stories 
or have a certain density on a particular property, without the 
streetcar you may well not go there, with the streetcar you 
may. And as I understand the current criteria, those people who 
might locate and live there and travel a relatively short 
distance, not drive a longer distance with an automobile 
causing congestion, we are not really capturing those measures. 
And apparently they also--I was told, this seems particularly 
odd to me, they don't even count because they didn't get to the 
starting point by another mode of transportation. They just 
live there. And so they wouldn't figure into the current 
criteria either. So I mean, it seems like there is a lot of 
ground that needs to be covered here that isn't being--it is, 
you know, the world is changing here, and you know we want to 
encourage energy efficiency, the environmental benefits, the 
economic development and some of these other measures just 
don't seem to be capturing that because there is a project that 
may not have been built there absent the streetcar. In fact, we 
can pretty well prove that in certain instances.
    Mr. Simpson. I understand that.
    Mr. DeFazio. And I think your new criteria are going to 
capture that.
    Mr. Simpson. Our new criteria is working towards capturing 
all that, and that is why we have the NPRM for additional 
comment.
    Mr. DeFazio. Okay. One other and then I will defer to the 
ranking member. But this other thing that I find as a strain 
through all of the testimony we are receiving from the 
administration, the various parts of the Department of 
Transportation keeps popping up, and I find this a bit odd. It 
says that FTA is proposing a ratings bonus to a project sponsor 
who can demonstrate and is provided the opportunity for 
operation and maintenance of the project to be contracted out. 
That is number one. And then, increase the project 
justification rating of a new or Small Start project that is a, 
quote, principal element of a congestion management strategy in 
general and a pricing strategy in particular, end quote.
    Now I don't know that you were at the hearing where I was 
asking another administration witness about the inherent 
conflict here. I think--or maybe you were--between if we are 
trying to--and I don't agree with it, but if the administration 
wants to, you know, drive Americans out of their cars by 
pricing them off the public roadways, which apparently is 
what--you know, what we are looking at here, then you are going 
to get them into a transit system where you are going to 
implement punitive pricing at peak times also? I mean, it seems 
to me, you know, you are either trying to get the people out of 
their cars and get them on transit, which means, you know, you 
don't need to penalize them to get them--if you penalize them 
to get them out of their cars, which I don't agree with, but 
then you are going to force them on a transit where you are 
going to penalize them again. How do they escape? Do they have 
to move to the suburbs and change jobs? I mean what is the 
deal? So this, you know, congestion management strategy in 
general, pricing strategy in particular.
    Mr. Simpson. Yeah. You asked--I think you were touching on 
two separate subjects. And actually when I read that testimony, 
those sentences, I apologize. When you read it six or seven 
times, sometimes you are not as careful.
    Those sentences don't gel well. Let me try to clarify. In 
SAFETEA-LU, one of the things that we were granted in SAFETEA-
LU was the Penta-P program, the Public-Private Partnership 
Pilot Program. We were allowed to choose three projects and to 
see how we can inject the private sector into not only the 
delivery of operations in a cost effective manner but also 
thinking out of the box, as the Secretary likes to say, 21st 
century solutions to 21st century problems. But when we talked 
about--well, when we talk about the--I think the first 
sentence, you talked about contracting out. I think what we are 
talking about, there are alternative delivery methods for 
projects like design, build, operate, maintain. And that is a--
we already have a New Starts project that has it. We have the 
Bergen light rail in New Jersey, which is a light rail line in 
New Jersey into Bayonne. That project came in years ahead of 
schedule and millions of dollars ahead of budget, and it is 
operating fairly. We wanted to take a look at that more, and 
SAFETEA-LU directed us to do that.
    Mr. DeFazio. As a pilot project; not as a programmatic 
change but as a pilot project?
    Mr. Simpson. Right. As a pilot project. We are not talking 
about the congestion, just the contracting out. That is what we 
are referring to there. The other part of the Penta-P program 
was--and I will use New York as an example. Well, let me not do 
that. Let me just make up an example. We have situations where 
for the first time ever, I think, we are at a tipping point 
with transit in this country, where the private sector has 
finally realized the value of transit, not to necessarily come 
in and buy up the infrastructure, but the value of transit is 
keeping people mobile to compete globally.
    We had a grant recipient come into my office with the 
private developer who said, listen, we can't make this cost 
effectiveness. We have this project and we want to build this 
light rail project. You know, the developer owns the property 
on all sides of the proposed rail line. Well, the developer was 
willing to pay for the track and the station but there is no 
ridership there. And who knows when there is going to be 
ridership there. But the developer believes that if you build 
this, that the property value goes up, people will--you know 
the rest of the equation.
    So as a potential Penta-P program, we would look at that 
project, and the costs that were born by the private sector, 
those benefits that are accruing to the taxpayer at no taxpayer 
expense, we would deduct from the cost effectiveness ratio as 
part of the Penta-P and to have the private sector inject 
themselves more into public sector projects that really truly 
capture all the value of transportation projects.
    Mr. DeFazio. Okay. All right. We have got that one. What 
about----
    Mr. Simpson. Congestion.
    Mr. DeFazio. Yeah. I don't--I am trying to understand the 
objective here. I mean, what are we talking about when we talk 
about a pricing strategy when you are talking about transit?
    Mr. Simpson. Okay. The congestion strategy--the congestion 
strategy is a department-wide program. Every mode of 
transportation, as you know, is plagued with congestion, 
whether it be the airlines or the freight rails or the 
highways. Transit is a solution--is part of the solution for 
reducing dependence on oil and all those other components that 
you know about. SAFETEA-LU, as one of its subcomponents, lists 
clearly at the beginning of SAFETEA-LU, is we are trying to 
have congestion mitigation. Where transit fits in in that area, 
if you have got this congestion pricing, this highway pricing, 
you will have more transit ridership and that will support--
that will support--we are always trying to get riders to offset 
our overheads and to have full capacity and all that. So the 
degree that you could get people out of the cars and have them 
ride on transit that increases transit.
    The other part of that, which is where we are trying to get 
to for mobility, if there is a measure, if we can get people 
out of the cars and get them on transit those who stay in the 
cars now have travel time savings because you don't have--if 
you can get 8 percent of the cars off the road, you typically 
can get free flow. I have seen it in New York.
    Mr. DeFazio. Mr. Administrator, I understand that but I am 
finding an inherent--I just don't understand where--so the 
pricing strategy doesn't apply even though it appears to in 
talking about a Small Start to the Small Start having 
congestion pricing on the transit. But you are talking about 
there is congestion pricing elsewhere in the system, and 
therefore, you would favor a Small Start in a system where the 
objective was to drive people off the roads and onto that Small 
Start; therefore, that Small Start would get some additional 
scoring because it is part of an integrated program. Is that 
what you are saying here? I am trying to understand.
    Mr. Simpson. Not necessarily. It could be a situation where 
we have a city----
    Mr. DeFazio. What is a principal element of a congestion 
management strategy in general and a pricing strategy in 
particular? As it pertains to Small Starts, what does that 
mean?
    Mr. Simpson. It would be for--either for Small Start or New 
Start, if a city can demonstrate a congestion reduction 
strategy, which can include telecommuting, it can include 
technology with ITS, pricing hot lanes, that the community or 
the transit authority would get a bonus under the mobility 
factor for a project as a result of that because it is 
achieving--you know, it is reducing congestion, reducing 
pollution.
    Mr. DeFazio. It is contained within--that is what I thought 
I just said, a greater strategy by----
    Mr. Simpson. Yes.
    Mr. DeFazio. But we aren't talking about inherently 
contradictory ideas, which it seemed at the last hearing had 
been surfaced, which is we were both going to price--we were 
going to have congestion pricing on transit, that is the 
pricing----
    Mr. Simpson. No.
    Mr. DeFazio. And we are going to have congestion pricing on 
the roads, which leaves people little alternative.
    Mr. Simpson. I mean, the transit would be congestion prices 
as well?
    Mr. DeFazio. Yes.
    Mr. Simpson. No, not at all. That is not what we are 
talking about at all.
    Mr. DeFazio. I think the wording is----
    Mr. Simpson. I apologize.
    Mr. DeFazio. Thank you. The ranking member.
    Mr. Duncan. Thank you, Mr. Chairman. I think the 
environmental groups are going to price us out of our 
automobiles by not letting us drill for any oil. But Ms. 
Siggerud, the GAO and you and your associates found that in the 
2008 budget submission there are less than half the number of 
New Starts projects in the pipeline than in 2001. Why is that? 
And also I understand that you surveyed 250 transit systems and 
there is a great interest or a tremendous interest in the Small 
Starts program.
    Ms. Siggerud. Yes, Mr. Duncan. We did do that survey. Let 
me address the first part of your question first. There is a 
decrease by half both in the number of projects that are in the 
pipeline and the number of projects that are rated each year. 
If you look at the 2008 budget submission, we identified a 
number of reasons for that. One is very clearly action by the 
Federal Transit Administration to try to encourage projects 
that were not getting a local financial commitment or making 
progress in designing and making final decisions about their 
projects out of that pipeline, and that is a part of the issue 
as well.
    We are seeing some concerns from project sponsors about, as 
well, the length and costliness and time issues associated with 
moving through the New Starts process. I am not sure that is 
necessarily a bad thing. If there are projects out there that 
can obtain State, local and private money and build projects on 
their own, I think that that is probably fine. On the other 
hand, the purpose of the program is of course to provide 
capital assistance to communities that would like to build new 
or extend their existing transit systems. And to the extent the 
program itself is deterring that, I think that is an issue for 
the FTA and for the committee to be concerned about.
    With regard to our survey, we did identify many of the 
large--we did survey many of the larger transit agencies and 
what they told us is they have got somewhere in the 
neighborhood of about 130 projects that are in alternative 
analysis or a corridor-based planning study, meaning that they 
are taking a pretty serious look at building this transit 
project. About three-fourths of those are thinking about using 
the New Starts, Small Starts or Very Small Starts program to 
fund a portion of that project.
    Mr. Duncan. Let me see if I understand. You found in this 
250-transit system survey, you found 130 projects that they are 
considering bringing forward to the FTA? Administrator Simpson, 
how many Small Start projects are in your pipeline now, as far 
as you know?
    Mr. Simpson. In the pipeline I think we have got five. We 
had 13 people apply. Let me just double check. That is correct.
    Mr. Duncan. Five in the pipeline?
    Mr. Simpson. Five in the pipeline. Four have been approved 
and they are approved, into project development. Five--excuse 
me, five in project development.
    Mr. Duncan. Five are in project development?
    Mr. Simpson. Yes.
    Mr. Duncan. And what did you say, 13?
    Mr. Simpson. There were 13 that applied. The other ones we 
are working on for additional application.
    Mr. Duncan. Yes, Ms. Siggerud.
    Ms. Siggerud. Mr. Duncan, what I do want to clarify is of 
those projects that are out there that are potential applicants 
for the New Starts program the majority of them are in fact 
traditional New Starts projects in terms of what these transit 
agencies told us. However, there were about 43 projects that 
were interested in either the Small Starts or the Very Small 
Starts programs some time in the future.
    Mr. Duncan. And in your work that you did on this--on the 
New Starts program, what is your opinion of this program? Is it 
an effective work--is the program working now in the way you 
feel it should?
    Ms. Siggerud. Mr. Duncan, I do believe for the most part 
the program results in the selection of projects that are 
effective and especially recently on time and on budget. We 
have seen an improvement in this program in terms of those two 
issues of timeliness and costliness, and these projects are in 
fact often meeting or exceeding their ridership estimates 
today.
    There are some concerns we have raised over the years with 
regard to this project, with regard to transparency, with 
regard to changes in the program and the extent to which there 
is the opportunity to provide notice and comment, for example, 
as the application process changes from year to year. And we 
made some recommendations in that area and SAFETEA-LU did in 
fact adopt those changes. And FTA is now using an annual notice 
and comment process to notify potential project sponsors and 
applicants about these changes to get comment and to work those 
in before making final decisions about whether or how to change 
the New Starts process.
    Mr. Duncan. All right. Thank you. Administrator Simpson, 
you recently had--or there recently was completed, the Deloitte 
Consulting study. How much did that study cost? And what did 
you get from it? What action items are you doing or are you 
contemplating doing based on that study? What good did it do?
    Mr. Simpson. The study cost $350,000.
    Mr. Duncan. And what did you learn from it?
    Mr. Simpson. We learned that process improvement really 
needed to happen at the FTA, that the folks--it is sort of like 
a--you know, you have got really hard working people really 
dedicated to the process, and I call it fully functioning 
people in somewhat of a dysfunctional environment when the 
politicals come and go and all that, and it would be very hard 
for a private sector company to operate like that, but that is 
the way it is. So you have got this process that gets 
interrupted periodically, and it is sort of like a 
manufacturing line when you want to build a car and everybody 
is dedicated to get that car out the door but for a whole bunch 
of reasons you are looking at the same toolbox, and if you only 
have one screwdriver, two people are trying to get the screw 
driver at one time, so it is kind of like who's on first?
    So we take a look at that. We have 10 regional offices, 
plus we have headquarters, and we said, you know, we are going 
to need to blow the whistle here and we need to streamline the 
process and we need to establish roles and responsibilities and 
goals. It is just really good business practices. So we have a 
report of about 300 pages. Our staff went through the report. 
It focuses on four different areas, and we are implementing a 
whole bunch of common-sense kinds of things from who is the 
point person for the New Starts program, let's look at teams, 
let's quantify everything.
    I will give you an example. We have one project in the 
pipeline, which is the East Side Access Project, $7.5 billion. 
If you assume that that project increases the cost at 5 percent 
a year and there are 260 workdays in the year, that is a $1.3 
million that is lost if that file is sitting on somebody's 
desk. So we are taking that kind of pragmatic business approach 
saying, where are the projects in the pipeline, what kind of 
technology can we bring to bear, looking for something off the 
shelf that is cost effective, and let's start to benchmark and 
measure all those things, including communication with the 
stakeholders, a lot of which has been happening.
    So I would be more than happy to share the report with you. 
We can give you the full report plus the condensed version. 
This is a part of a continuous improvement program. You can't 
put everything into effect immediately, but it is really just 
good housekeeping and utilizing a consultant rather than people 
in the house prevents what I call functional fixedness. Where 
you are doing the job all the time, you never can really see 
the forest for the trees. So it was a fresh approach and 
believe me, it was money well spent.
    Mr. Duncan. Well, let me ask you this just so I can learn a 
little bit more about this and understand it a little bit 
better. In this New Starts program, your agency has provided 
many billions over the past several years. It is your largest 
discretionary program, so you have a lot of power over it. It 
is rising to, I think, $1.8 billion roughly. Give me an 
example, and I assume you don't stay in the office all the 
time, that you have gone out there to see some of these 
projects. Give me an example of a--tell me a specific city and 
a specific program that you are proud of and what you think it 
has accomplished. Just give me an example.
    Mr. Simpson. This all precedes me. Fist of all, I want to 
say that I am proud of the entire workforce at FTA because I 
have been in the private sector and I have also been involved 
in the public sector for 10 years at the New York State 
Metropolitan Transportation Authority. It is almost unheard of 
to have over $22 billion in projects that you can manage within 
a half a percent. I mean it really doesn't happen in capital 
major infrastructure projects. But projects that I am 
particularly proud of was the T-REX project, which was the 
Denver project, which was the joint Federal highway. And a 
Federal transit project with the joint highway, joint FTA, one 
NEPA document that saved a ton of time, and the project, 
because of the way it was handled and the teamwork between 
Federal highway and FTA and the entire process and the good 
technical capacity of the folks out in Denver, the project was 
brought in on time and on budget.
    I am also proud of the fact that all the projects in Lower 
Manhattan that are $4.5 billion worth of work on in Lower 
Manhattan as a result of 9/11 are way underway with great FTA 
staff and great oversight from the IG's office, and everybody 
is looking at that model of risk assessment, where you have 
projects like Lower Manhattan, where you are actually across 
from the FTA's office in Lower Manhattan. They actually have to 
blow dynamite up while the city that never sleeps--they are 
actually using dynamite and they blew windows out on the new 
ferry terminal that we paid for. You don't project that kind of 
thing to happen. These the are the kinds of things that we are 
faced with. To be able to do these real major capital 
infrastructure projects, to bring them in on time, on budget, 
on schedule is a tremendous feat for the Federal Government and 
all the recipients.
    Mr. Duncan. Give me an example of one of the Small Starts 
projects that you have approved and how much you have provided 
and how much you are going to provide for it and what you think 
it is going to accomplish.
    Mr. Simpson. Fine. We have four----
    Mr. Duncan. Just give me one example.
    Mr. Simpson. Well, they are BRTs. Actually we have one in 
Chairman DeFazio's area. It is going to be the second phase of 
a project from Springfield and Eugene. And the first phase has 
been up and running--this was not a Small Start project but it 
was a BRT and the second phase is going to be just like it. The 
first phase of the project, they spoke to the general manager 
last week. Ridership is up 60 percent over the local bus 
service that was there before because of this new BRT, which is 
catching on like wildfire.
    The second phase is in our New Starts pipeline and we 
expect--and it is 98.5 percent on time. It started at 96 
percent on time. It is 98.5 percent scheduled on time and we 
expect the second phase of that project to be the same way. 
That is one of the four projects that are coming online. The 
second one is this gap closure in Los Angeles which is going to 
do so much for the area of Los Angeles to improve their 
existing transit system. So we have got four projects that are 
already in the 2008 budget and more in the pipeline.
    Mr. Duncan. All right, last question, because we need to 
get to Chairman Oberstar. Ms. Siggerud, in all your 
investigative work you have done into this program over the 
years, have you found any problems? I mean, for instance, over 
the years we have read many negative stories about the Big Dig 
project in Boston and so forth. Are there any--have you found 
any scandals, any problems?
    Ms. Siggerud. I would not say we have found scandals, Mr. 
Duncan. There have been projects up to say around 2000 and 
earlier that had been over cost and over budget. And we have 
reported on some of those and IG has also done some excellent 
work on those. I would say we have seen----
    Mr. Duncan. All those are just up to 2000?
    Ms. Siggerud. Well, early 21st century, shall we say. I 
don't want to say that all the problems were solved at that 
time.
    Mr. Duncan. Mr. DeFazio's--Clinton Administration.
    Ms. Siggerud. That wasn't what I meant to say. But in 
general what we have seen is an improvement in timeliness and 
cost and in staying within cost estimates in this project. We 
have made a number of recommendations over the years. They have 
focused more on transparency, accountability, performance 
orientation than----
    Mr. Duncan. Most of those recommendations have been 
accepted?
    Ms. Siggerud. Most of those recommendations have been 
accepted, yes.
    Mr. Duncan. Thank you very much.
    Mr. DeFazio. I recognize the chairman of the full 
committee. We are going to have one hour of votes so after the 
chairman finishes his questions, depending on time, we may have 
time for one other person. Other than that, if people--can the 
Administrator, can you be available?
    Mr. Simpson. Absolutely, positively.
    Mr. DeFazio. Ms. Siggerud? I apologize, but we don't 
control the floor.
    Mr. Chairman?
    Mr. Oberstar. Thank you very much. I really appreciate your 
holding this hearing, and the work of Mr. Duncan as well and 
the very thoughtful questions that he asked. And the reports 
that GAO has provided for us in your testimony, Mr. Simpson. 
When are we going to get a rulemaking on the New Starts and the 
Small Starts program?
    Mr. Simpson. Mr. Chairman, I hope that that rule is out 
within the month.
    Mr. Oberstar. By the end of May?
    Mr. Simpson. By the end of May. That is my hope.
    Mr. Oberstar. And meanwhile what troubles me is--I mean 
this--it is not all on your call, on your account, but it is 2 
years since we got the bill enacted. It has taken a 
frustratingly long time to do this. But in the meanwhile FTA is 
administering this program on the cost effectiveness index, and 
what I have heard directly from various community transit 
agencies, and what our committee staff has gathered from a 
wider inquiry than I have been able to make, just my individual 
visits to various spots, is that FTA is giving undue weight to 
the cost effectiveness part of the index, and not to the 
broader benefits of transit. Why is that?
    Mr. Simpson. Mr. Chairman, you know even when I came to FTA 
and I started looking at cost effectiveness I had one view 
towards it until I got deeper involved into the whole 
composition of this cost effectiveness factor. It is akin to--I 
use this--I apologize because I used this example earlier. But 
this cost effectiveness factor--this is a competitive program 
and we obviously want to advance the best of the best, and we 
know that that changes from time to time. But it is very 
similar--if I could use the cost effectiveness measure as 
really, really the SAT score, one were to go to an Ivy League 
college, all the other measures, the qualitative stuff. So when 
we are trying to advance the national program and we are trying 
to have a level playing field for everybody, we need one 
objective, measurable criteria and this objective criteria is 
cross-cutting because it talks about operating efficiencies, it 
talks about mobility, it talks about accessibility. The other 
thing because the state of this cost effectiveness model, it 
brings into a whole host of benefits that would accrue.
    I will give you an example. If you had a bus service and we 
know people like rail as opposed to bus because you know where 
the tracks go and the stations are really nice and you have 
amenities like maybe you can buy coffee. Those things are now 
picked up as benefits and equated to time. The function of a 
transit project is to save people time first and relative to 
the cost that you are spending for it. The second part is all 
the benefits, those extra benefits that go along with it----
    Mr. Oberstar. Are you calculating those?
    Mr. Simpson. Yes, we are absolutely. We are calculating 
that into the cost effectiveness model. But where I think that 
you are hearing some of these issues is that we are wrestling 
with and we are going to get there. I promise you we are going 
to get there with the economic development index. It is so 
closely aligned with land use that you can't have economic 
development without good land use, so we are measuring the land 
use.
    Mr. Oberstar. And that is the point I wanted to bring out. 
And I am glad you raised it. Where in the case of the Dallas 
Area Rapid Transit East, which is now underway, and West, which 
is completed, the West portion had 20 miles, now has a billion 
dollars in private sector capital investment clustered around 
the stops. Before they even put a shovel in the ground on DART 
East they had over $120 million in private sector capital 
investments announced and ready to go. Would that count in your 
cost effectiveness index? Going forward.
    Mr. Simpson. I don't want to be cute about this by saying 
yes and no. The way you expect it to be counted in the cost 
effectiveness, no. But when you look at the--but there is a 
deeper answer to that. In order for a transit project to have 
value, there has to be some mobile benefit to it. You have to 
get people from point A to point B, I don't think we could 
argue that more effectively by taking a bus or car or something 
like that. That mobility factor is measured in cost 
effectiveness. But I know what you are speaking of because we 
have spoken prior about this, is the economic development-land 
use factor. Yes, we capture it in land use and what the issue 
that is really on the table that we are wrestling with, that we 
know we are going to accomplish but it will take time, is the 
measure of economic development, which is more than land use 
because there are other macro issues that you really need to be 
involved with. What is the interest rate? What is the mortgage? 
What is the job force role? We can get there. It is just that 
we are not there yet, and we have asked them, the AMPRM for the 
industry, to come out and tell us what you would feel economic 
is relative to land use and all that. But for now they are 
inextricably linked. The goal is to have them detached so we 
can measure one and measure the other one.
    We are working towards that. We had one report that went 
out. We commissioned one study. We got the results back and we 
are looking towards a second phase, but we need to get this 
right. It is really complicated. We don't want to put something 
out on the street that it is so burdensome that it becomes like 
another forecasting model for cost effectiveness. Because that 
is what we are looking at and if you think we have problems 
now, it is really that way, and we are trying to streamline it.
    Mr. Oberstar. I appreciate it and you are in the midst and 
you are working toward it. We want to follow up on this and 
stay closely engaged in the future development. I want to 
close--maybe get one more member in. Regrettably Ms. Matsui 
went off to vote. Sacramento, which she represents, is one of 
the great examples of mobility on the South line, which is 
creating 2,210 new transit trips weekly. It provides 
transportation for people who didn't have transportation before 
to get them to jobs in the Hispanic, Asian, African American 
section of Sacramento. Enormous success. And now they are 
building on that success, moving to the next extension.
    Isn't that a mobility factor?
    Mr. Simpson. Absolutely positively. I met with the general 
manager from Sacramento about 2 weeks ago and they were very 
innovative. They took older light rail cars and had them 
refurbished and saved them a lot of money and they are looking 
for the next phase and they have a great hybrid bus program as 
well in Sacramento.
    Mr. Oberstar. Thank you. To be continued.
    Mr. DeFazio. We have 7 minutes left until the vote. Ms. 
Hirono will be next in order, if you would like to take a few 
minutes now and if we don't complete, you can come back.
    Ms. Hirono. Thank you, Mr. Chairman. In the interest of 
time, I would like your permission to submit a statement for 
the record and I would also like to submit three questions in 
writing to Mr. Simpson relating to the streamlining of the FTA 
approval process, and whether there are any caps on how much a 
New Start program can obtain. Thank you.
    Mr. DeFazio. Okay. That was very efficient.
    Mr. Simpson. Thank you.
    Mr. DeFazio. Okay. Without objection. We are now down to 6 
minutes. So I think at this point--but I think we are going to 
reconsider the strategy since last night we fell into the 
parliamentary black hole during a motion to recommit. It took 
quite a while. We will go through the two 5-minute votes and 
then Mr. Duncan and I will come back and any one else who 
wishes to rush back. Then we will be able to proceed during the 
debate on the motion to recommit and through most of that vote. 
So that should give us a 20-minute block about in there. So we 
will at this point recess for approximately 15 minutes or so, 
or 20 minutes and then come back. And I thank you for your 
indulgence.
    Mr. Simpson. Thank you.
    [Recess.]RPTS BINGHAMDCMN MAGMER
    Mr. DeFazio. Hearing will come back to order.
    I will ask questions in the absence of other members at 
this point, out of turn.
    Again, further, Mr. Simpson, I am just pursuing you seemed 
a bit puzzled when I raised a question last time about user 
benefits. This is in a memo directed to you from the New Starts 
Working Group, and I am reading--this is a little long, but I 
will read it to you because maybe it perhaps makes the point a 
little more cogent than I do.
    In developing ridership calculations for projects, which is 
very important in determining the number of riders that would 
realize user benefits, FTA has chosen not to allow project 
sponsors--not to allow--project sponsors to include non-
motorized trips while providing the highest time value of 4 
minutes to auto trips to Park and Ride lots. Thus, FTA is 
promoting automobile travel while providing half the value to 
all other trips to the proposed project. This has the effect of 
discouraging the use of transit or the establishment of good 
land use and encouraging or discouraging development adjacent 
to transit that will result in automobile trips never being 
taken, the trip not taken.
    In the case of non-motorized trips, they receive no value 
from FTA, while the use of transit to connect to transit 
receives half the value of a Park and Ride trip.
    Question: Per the memo, shouldn't FTA be in the business of 
encouraging transit use for the person's entire trip? That is 
the point I was trying to make last time, which is if we get 
building adjacent to, say, streetcar, those people walk to the 
streetcar, that is of no value--no calculable value under the 
current scheme; and, in fact, it has a negative value. Because 
if all those people instead chose to live in the suburbs and 
drive to a Park and Ride, there would be more credit.
    Mr. Simpson. Mr. Chairman, you got me on that one. But that 
is a highly technical question. The short technical answer is 
that we want to make sure there is no double counting, but I 
would love to get back to you on the record on that because----
    Mr. DeFazio. The problem with the TSUB calculation is, as I 
understand it, this is--you know, it is--I think it is a 
particular problem. It does go back to the issue of the 
criteria we want to encourage; and, hopefully, this would be an 
issue that would be substantially addressed in the new 
rulemaking that is upcoming.
    Absent other members, I am going to think of other 
questions to ask. I got back here very quickly.
    Look, we have questions for the GAO. I have been 
neglecting----
    Ms. Siggerud. I will try to answer them.
    Mr. DeFazio. You thought you were going to get off easy.
    Over the years, GAO has made a number of recommendations to 
FTA on ways to improve the New Starts program. What types of 
improvements have you most recently recommended to FTA and how 
responsive has FTA been?
    Ms. Siggerud. Mr. DeFazio, in answering that, I am going to 
go back just a couple of years. I think those are the most 
relevant ones we have made under the later part of the TEA-21 
authorization period.
    In 2004, we made a recommendation to FTA to be clear on 
what is the intent and the method for funding other projects 
outside of full funding grant agreements. FTA did respond to 
that and added an explanation and some criteria for that in the 
following year's report.
    In 2005, we recommended a couple of things. We did bring 
attention to the issue of the rating of the various criteria 
and the fact that some were not considered in the--rating 
annually of these projects; and SAFETEA-LU, of course, did 
respond to that.
    We also recommended that FTA look into a better way of 
communicating with its stakeholders as it made changes to the 
application process. We have gotten a lot of feedback from 
project sponsors that there was sort of a churn in the program 
in terms of every year new or different requirements without 
perhaps some consultation with the stakeholders that might have 
identified issues that resulted in different kinds of outcomes. 
SAFETEA-LU adopted notice and comment and FTA has gone through 
this notice and comment process every year when it wants to 
make changes to the application process.
    My sense from talking with both FTA and from project 
sponsors is that they see this as a significant improvement 
over past practice. So, in general, FTA has been quite 
responsive to the recommendations we have made.
    Mr. DeFazio. I now turn to the ranking member.
    Mr. Duncan. Well, just one more question.
    Administrator Simpson, do you have any New Starts funds for 
fiscal 2007, any New Starts programs that are going to be 
allocated to receive money?
    Mr. Simpson. Yes, the projects that are in the 2007 
budget----
    Mr. Duncan. I am sorry--for the Small Starts program.
    Mr. Simpson. No, not at this time. Not at this time. If we 
could maybe get an '08 project in sooner we will look at that.
    Mr. Duncan. Okay, well, thank you very much.
    Thank you, Mr. Chairman.
    Mr. DeFazio. There is one last question, unless other 
members show up, and I would direct this to both.
    But, first, Ms. Siggerud, you recommended that all--I would 
agree with this being a lawmaker--that the statutorily defined 
criteria be used to evaluate New Starts; and, obviously, 
currently, they are not. We have already had that discussion, 
and they are working out a rulemaking to achieve that.
    But focusing on an interim action that was taken in I think 
it was February where FTA announced they will no longer request 
information on either operating efficiencies or environmental 
benefits criteria, would you like to comment on that?
    Ms. Siggerud. Yes, Mr. DeFazio. My understanding of those 
two criteria is that, in fact, they have not historically been 
used----
    Mr. DeFazio. They are statutorily required, is that 
correct?
    Ms. Siggerud. Yes, statutorily required and that this is, 
in fact, part of the rulemaking process. Of course, we haven't 
seen the proposed rules, so at this point I can't comment on 
how those are handled.
    What our recommendation was in the past is that either 
these criteria should be used or if they are in fact subsumed 
or related to a different criterion then there should be a 
crosswalk that makes transparent, for example, what the 
relationship of operating efficiency might be to, say, cost 
effectiveness or the other criteria. So that it becomes clear 
that all of them are addressed in some way, even if there are 
several criteria that are closely related to each other.
    Of course, until we see the new rulemaking, I am not sure 
how that will come out with regard to bringing in both 
operating efficiency and the economic development one that we 
have been talking about as well as the environmental benefits.
    Mr. DeFazio. And, again, just talking about statutorily 
defined criteria, you just mentioned economic development. I 
guess what would--have you looked at the issue of the bonus 
points for being partnered?
    Ms. Siggerud. We haven't looked at that.
    Mr. DeFazio. Sure. I was going to address this to both of 
them. Then we will go back.
    So I would address the same question--I mean, again, I 
congratulate you in streamlining, but I am not sure that 
eliminating consideration of statutorily required criteria 
constitutes what at least on my side I would think of as 
streamlining. I find it puzzling that we have been able to 
establish, you know, bonus points for a high priority of the 
administration, which is congestion management through a 
pricing program, but we haven't been able to either evaluate 
these criteria or get economic development on track.
    Mr. Simpson. Mr. Chairman, I understand your concern; and I 
will address them. You know, no good deed goes unpunished. The 
environmental benefits, we do capture the data; and if there is 
an unattainment area, one project would be rated a little 
higher than the other. But if you look at all the projects 
along the spectrum when you are competing, we have not been 
able to measure the differences from one transit project--the 
benefits from one transit project to another transit project. 
So they are all pretty much rated the same.
    So what we are saying is we still want the data you give 
us, but basically we are going to streamline it. Don't go 
through the calculation. We are going to call up the EPA, and 
we will take care of that for you. Then that annual report that 
you fill out every year, don't give it to us again. That is 
with respect to environmental benefits. Because we are looking 
in the context of a competitive program; and all of these 
transit projects have environmental benefits, obviously.
    With respect to operating efficiencies, once again, we are 
getting that data in cost effectiveness. We are getting the 
data that we need in cost effectiveness. So we are telling the 
folks that you need not report that data in that format, but 
that cost effectiveness measure does roll up operating 
efficiencies, so we are not getting anything extra from it. It 
is being measured, but if you just read the text it looks like 
it is really not being measured, but it is being measured in 
the cost-effectiveness equation.
    Mr. DeFazio. But because of some of the other problems in 
calculating pieces or your other cost-effectiveness measures, 
you might miss an operating--it seems like what you are 
weighting--you know, where does the operating efficiency weight 
in there versus some of these other more arbitrary measures in 
this kind of black box that we are getting into here?
    It is a bit troubling. I am hoping that the new proposal to 
meet the statutory criteria, particularly economic development, 
that can be expedited as much as is possible within the 
rulemaking context and that we have a much more transparent 
calculation that we can fully understand how things are 
weighted and what went into it. So that is just----
    I turn to the ranking member.
    Mr. Duncan. I know we need to get to the next panel very 
quickly, and hopefully these will be two very brief questions.
    But, one, have you ever met with or discussed with the Army 
Corps all the process that they do go through in analyzing 
their projects, the cost-benefit analysis, the economic 
development? You know, they have been doing this type of work 
for years.
    Mr. Simpson. Actually, to my knowledge, the Army Corps of 
Engineers just recently reached out to us because they heard 
about our program and how effective it was with keeping 
projects on time and on budget. So thank you for that question. 
Is that allowed?
    Mr. Duncan. Secondly--I guess I think a little bit more 
highly of the Army Corps than the chairman does, but, at any 
rate, let me ask you this.
    The way I understand this, if a city wants to get into one 
of the programs, the New Starts or the Small Starts--and 
sometimes I say one when I mean the other I think--but, anyway, 
they have to file an application to get into the preliminary 
engineering phase. Now how long, on average, does that take? 
And then how long, on average, does the project take to go from 
preliminary engineering to the full fund and grant agreement, 
on average?
    Mr. Simpson. On average, once you are in preliminary 
engineering, it is 2 to 3 years in preliminary engineering and 
then final design and both--obviously, these numbers, depending 
on the complexity of the project, final design into 
construction is 3 to 7 years.
    Mr. Duncan. So 2 to 3 years in preliminary engineering 
stage.
    Mr. Simpson. Yeah. We are averaging for the whole process--
if you want to look at full funding grant agreements from PE to 
the agreement up to the time of construction, we are looking at 
about, on average, 4.9 years.
    Mr. Duncan. And it could take as long as 10 years then when 
you said that 3 to 6?
    Mr. Simpson. Yes, it could. It could take longer than that, 
and there is a whole host--Second Avenue subway is so complex, 
eastside access, also.
    Mr. Duncan. And it takes some time those for these cities 
to come up with the applications to again even get approval for 
the preliminary engineering phase.
    Mr. Simpson. That is the other side of the equation. A lot 
of time it is not FTA it is local communities that want to 
change scope midstream after they selected the locally 
preferred alternative. So we go back up.
    Mr. Duncan. On average, how long does that process usually 
take? Two or three years?
    Mr. Simpson. I can't tell you. But if you want to use an 
example--I hate to use examples, but it depends on how long the 
local grant recipient decides on what it is they want to do 
once they are in PE and also where they are going to get the 
commitment of funds.
    Mr. Duncan. The thing that gets me, I have gone into a lot 
of other countries and have led a lot of codels. I do go into 
these other countries, especially the Chinese and Japanese, and 
some of them, boy, I will tell you they can do these mega 
projects and, man, they move them in 2 or 3 years. It is just 
unbelievable.
    And then we take--I remember they said it took 14 years 
from conception to completion for the main runway at the 
Atlanta Airport, but it took only 99 days of actual 
construction, and they did those 99 days in 33 days because 
they were so happy to get the approval that they worked full 
24-hour days with full staffs.
    But, my goodness, it seems to me we have to try to speed up 
these things or we are going to lose out in a lot of different 
ways to these other countries.
    Thank you, Mr. Chairman.
    Mr. DeFazio. I agree with the ranking member; and, in fact, 
in subsequent testimony we are going to hear from Roger Snoble 
points--and I guess I would ask the Administrator this.
    He talks about once the Record of Decision is issued, you 
know, normally an underlying Federal action can proceed. But he 
says, however, under the FTA New Starts process, there are 
additional new time-consuming post-Record of Decision steps and 
approvals that must occur before a grantee may actually 
commence design and construction--specifically, the often 
lengthy process of obtaining FTA's approval to enter final 
design and the detailed and time-consuming development of the 
FFGA package and the accompanying reports.
    Can you address this.
    Mr. Simpson. We are about all that streamlining. That is in 
the weeds once again. But once the Record of Decision is 
achieved to get to final design it is really about other 
things, plans for preliminary engineering, more scoping on 
where the costs are.
    The goal of the FTA is to--once the projects get into 
preliminary engineering, from that point we believe that we 
want them to succeed and to reach full funding grant agreement. 
And we are trying to do--I like to say the five Ps: Prior 
planning prevents poor performance. So, way before me, we 
realized let's not utilize taxpayers dollar and bring a lot of 
projects into PE if they have no chance of going anywhere. So 
we want to do a lot of that up-front work early from 
alternative analysis. Once they are in PE, they are on their 
way and let's get them so the--believe me, FTA wants to get 
them to the finish line as quickly as we can.
    And it is sort of like this balance, Mr. Chairman. On the 
one side, we are keeping projects on time and within a half 
percent on budget. I would rather be looking at you today 
talking to you about why is it taking somewhat longer. We want 
to improve what we can, rather than hear, why are we over by 50 
percent? Why do we have big digs?
    So it is a constant struggle. We realize that. We truly do. 
And we are trying to maintain a good balance, and that is what 
good process management is all about.
    Mr. DeFazio. You definitely would hear about overruns to 
the tune of the big dig, any fraction thereof.
    I want to thank both of you for your testimony and time and 
appreciate it.
    Mr. Simpson. Thank you, Mr. Chairman. It was an honor to be 
here today. Look forward to the next hearing, sir.
    Ms. Siggerud. Thank you.

     STATEMENTS OF ROGER SNOBLE, CHIEF EXECUTIVE OFFICER, 
METROPOLITAN TRANSPORTATION AUTHORITY, LOS ANGELES, CALIFORNIA; 
GARY C. THOMAS, PRESIDENT/EXECUTIVE DIRECTOR, DALLAS AREA RAPID 
TRANSIT (DART), DALLAS, TEXAS; PETER VARGA, EXECUTIVE DIRECTOR, 
 CHIEF EXECUTIVE OFFICER, INTERURBAN TRANSIT PARTNERSHIP (THE 
   RAPID), GRAND RAPIDS, MICHIGAN; RICK GUSTAFSON, EXECUTIVE 
  DIRECTOR/CHIEF OPERATING OFFICER, PORTLAND STREETCAR, INC., 
   PORTLAND, OREGON; AND DAVID L. LEWIS, PH.D., SENIOR VICE 
  PRESIDENT, HDR/HLB DECISION ECONOMICS, INC., SILVER SPRING, 
                            MARYLAND

    Mr. DeFazio. We can probably squeeze in two, if we move 
very quickly, at least one of the next witnesses. We have 
someone who needs to catch a plane who would like to go first, 
which would be Peter Varga.
    Peter, quickly assume a microphone; and we will move ahead. 
Don't worry about your name tag. We will figure out who you 
are.
    Mr. Varga, do you want to proceed? Go right ahead.
    Mr. Varga. Thank you, Chairman DeFazio, Ranking Member 
Duncan. I appreciate you taking me out. I didn't realize--I 
should allow myself more time in Washington if I am asked to 
come and provide testimony.
    I am Peter Varga. I am the CEO of the Interurban Transit 
Partnership, also known as The Rapid. We are a small system, 
not like these big guys here next to me. We operate 19 fixed 
bus routes and carry 7.4 million riders each year. Ridership 
has grown 43 percent since 2000. We were the AFTA Best Transit 
System recipient in 2004, and I know Mr. Snoble was in 2006.
    The Grand Rapids region began a study of MIS options early 
in 2003, so you can see how far back we started. We really were 
trying to get into the New Starts process, and we created a 
program called Great Transit, Grand Tomorrows which is 
community leaders to identify what the locally preferred 
alternative would be. We quickly shifted our focus to this new 
Small Starts program, since it provided the best opportunity 
for us to develop a transit project that was consistent with 
the scale of project most appropriate for a city like Grand 
Rapids.
    Two separate projects emerged out of that MIS: first, a 10 
mile Bus Rapid Transit project from downtown Grand Rapids along 
Division Street south into two other cities and two townships. 
Then a second one is a downtown streetcar circulator of 
approximately 2.2 miles in length that will connect major 
destinations and trip generators downtown. And these two would 
feed into each other. However, only the BRT will be submitted 
under the very Small Starts program, while local and private 
sector funds are being sought for the downtown street 
circulator program. We have to take that program out of the 
whole Federal process because we are not going to be able to 
move it into any Very Small Starts process.
    You are very familiar with the Very Small Starts process. 
It is in my testimony. We meet all the criteria of that.
    Projects containing these characteristics, after preparing 
basic information on the project, would receive a medium rating 
on each of the principal criteria: cost effectiveness, land 
use, and effect on local economic development.
    In contrast, a streetcar project would be required to 
prepare information pursuant to a reduce New Starts process and 
would be subject to the current measure for cost effectiveness. 
Moreover, the effect of the project on economic development 
would be relegated to being considered an "other factor" and 
not given the same weight as the other criteria.
    The Grand Rapids region quickly concluded that under the 
FTA criteria for the Small Starts and Very Small Starts program 
that the greatest prospect for securing Federal funding would 
be realized by pursuing funding for the BRT project through the 
Very Small Starts program. Therefore, we have worked very 
closely with the FTA over the past several months as we 
developed the supporting documentation to seek FTA approval to 
advance the BRT project into the next phase--project 
development. I must say FTA has given us invaluable technical 
assistance through this process.
    The board of The Rapid approved the BRT project as its 
locally preferred alternative on January 24, 2007; and, 2 weeks 
ago, our NPO, the Grand Valley Metropolitan Council, approved 
unanimously the inclusion of the BRT project on the regional 
Transportation Improvement Program and the long range plan. We 
will be submitting our project information to FTA probably at 
the end of this month or in June and seeking approval to enter 
project development later this year.
    There continues to be considerable interest in a downtown 
streetcar project. However, a decision was made not to seek 
Small Starts funding because the project would not meet the 
eligibility criteria for the Very Small Starts program, based 
on the $60 million cost of the project and the fact that the 
Small Starts program, as implemented to date by FTA, does not 
establish a project approval framework that is favorable to 
streetcar projects. Thus, we will seek to build the project 
without Federal funding.
    You might ask why we believe the project would not fare 
well under the Small Starts program criteria.
    First, we understand the Small Start program to offer a 
simplified process, but the process established by FTA is 
essentially the existing New Starts project approval process 
which is very data and time intensive.
    Secondly, I understand it was the intent of Congress to 
place a greater emphasis on land use and the effect of a 
project on economic development, but FTA has opted to relegate 
economic development to an "other factor" and maintain the 
project approval process used for the New Starts program.
    It is our understanding that FTA has taken a position that 
Congress was not clear that cost effectiveness, land use and 
the effect of the project on economic development are to 
receive equal weight in the project review and evaluation 
process. Any legislative language or other directive to FTA to 
clarify your intent would be very helpful in reinforcing the 
change in the law made by Congress.
    Third, FTA continues to rely on a cost-effectiveness 
measure that places an emphasis on long distance trips and 
comparing options based on travel time which is not the 
transportation role for a streetcar project.
    Fourth, review of the fiscal year 2008 and proposed fiscal 
year 2009 guidance would indicate that FTA does not embrace 
streetcars based on the fact that project sponsors can't count 
pedestrian trips generated as a result of availability of the 
streetcar, the reluctance to develop and implement a measure 
for the effect of a project on economic development even as the 
statute requires the agency to do, and the lack of recognition 
of ability of a streetcar operating in a denser urban 
environment to eliminate auto trips due to its accessibility 
and availability.
    Thus, while we will proceed with the BRT project through 
the Very Small Starts program and we are very grateful that it 
now exists, we remain interested in a streetcar project and 
would seek Federal funding if the project review criteria were 
revised by FTA. We are going to have to do it through a public-
private method locally, but, meanwhile, the BRT project, since 
it fits the Very Small Start criteria, will move that forward.
    I thank you for the opportunity to testify before the 
subcommittee today and to present our perspectives on the Small 
Starts or Very Small Starts program. Thank you.
    Mr. DeFazio. Okay. Thank you, Mr. Varga. I think you have 
really underlined some of the concerns that were raised in the 
earlier questioning; and, hopefully, the concerns you are 
raising here which underline those will be addressed in the 
forthcoming rulemaking. Because I believe the intent of 
Congress was quite clear that we wanted the pre-existing 
criteria to be equally rated, which they weren't; and we 
certainly wanted to include the new criteria, including 
economic development.
    You said it would be a $60 million cost. Did you have any 
calculation of the economic benefit that would accrue to that?
    Mr. Varga. Well, you know, we went around to look at 
different communities; and we believe that there is enough data 
to indicate that it could be almost 10 times the amount of the 
investment, at least in our area, in terms of development.
    The issue for us has to be with how much of the streetcar 
would be in existing development that has just grown in the 
downtown area and how much we can generate new development 
right at the fringe of the downtown area. But 10 times the 
value I think is what we were thinking.
    Mr. DeFazio. That seems like a fairly extraordinary cost-
benefit ratio. But I guess under the TSUB process you come out 
on the inverse side, which would be, you know, a cost benefit 
that was rated rather low.
    Again, thank you. I understand you have to catch a plane, 
and I have to catch a vote, so we will recess this. I think 
there is one subsequent, probably 15 minutes, hopefully less.
    Thank you.
    [Recess.]
    Mr. DeFazio. Okay, committee will come back to order; and 
we will continue with the testimony. And you want to go from 
right to left, you like that? Okay, for a change, we will go 
from right to left.
    Mr. Snoble, you will be next.
    Mr. Snoble. Thank you, Mr. Chairman. It is a pleasure to be 
back in front of the committee this afternoon now to be able to 
testify on something that is really a very important topic to 
us, and I appreciate the opportunity.
    This is really an important issue. I have been working in 
transportation for more than 40 years now and have been 
involved in the construction and implementation of several 
major new fixed guideway projects in Los Angeles County as well 
as teaching Gary how to do it in DART before I left DART; and, 
before that, I was general manager of San Diego Transit 
Corporation.
    The LA Metro is largest agency of its kind in the United 
States, and that includes the operation of the third-largest 
public transit system in the country. We are responsible for 
transportation planning, coordination, design, construction 
operation of bus, subway, light rail, Bus Rapid Transit. We get 
involved with Caltrans and highway improvements. We build 
carpool lanes. We are involved in goods movements and all the 
different kinds of things that get into transportation issues.
    Metro serves a population base larger than 43 States in 
this country, with approximately 200 bus routes, 73 miles of 
rail lines, and over 400 miles of carpool lanes.
    First, let me start out by saying we are one of the 
approved Small Start projects for this year we have been 
talking about. We do see an improvement in that process. We 
worked very closely with FTA to try to make that an easier 
process, and so we do see some improvement there, and I want to 
make that clear. But mostly what I want to talk about is the 
New Starts.
    Over the past 25 years, Los Angeles has had one of the most 
ambitious and aggressive programs of new fixed guideway 
construction in the United States. During that time period, we 
have spent over $8.6 billion building nine new fixed guideway 
projects in Los Angeles County. Over 60 percent of that funding 
came from State and local sources.
    Metro has extensive experience with the FTA New Starts 
project development process. Four of our projects were built or 
are being built under the New Starts project, and five have 
been designed and constructed without Federal New Starts 
funding.
    The goals of the Federal New Starts process and the 
objectives of the congressional and the Department of 
Transportation efforts to develop evaluation criteria and a 
rating system for New Starts project are well intended as a 
matter of public policy. The FTA staff we deal with at both the 
Federal and regional level are very well qualified, very 
dedicated, very hard-working people; and we do appreciate their 
efforts. But the fundamental problem we see in the New Starts 
process is the unreasonably onerous process for grantees.
    In its efforts to exercise due diligence over Federal 
funds, FTA has developed a system so complex, so replete with 
reports and analyses and so fraught with delays and schedule 
uncertainties that it now obstructs one of the agency's 
fundamental goals to assist urban areas in building critically 
needed transit systems in a cost-effective manner.
    We have experienced firsthand significant differences 
between advancing a project under the Federal New Starts 
process and developing a project without that process. The most 
significant differences are in schedule and cost. We estimate 
that the Federal New Starts process can add 1 to 2 years to the 
project schedule.
    For example, on the Federally funded eastside project, 
Metro received a Record of Decision in June of 2002 and 
executed our full funding grant agreement 2 years later in June 
of 2004, which finally allowed us to start construction. By 
contrast, on the non-Federally funded exposition project, we 
received a Record of Decision in February of 2006 and actually 
started design and construction a month later, in March.
    Second, we estimate that the Federal process adds 10 to 15 
percent overall costs to the project. This added cost has two 
elements. One is the significant soft costs, primarily the 
staff consultant time required to prepare and revise the 
extensive documents and reports required by FTA, consult and 
meet regularly with FTA staff and its consultants, submit New 
Starts reports, and the list goes on.
    In addition, there are escalated costs incurred simply 
because the engineering, design and construction takes longer 
under the Federal process. Even if escalation is relatively 
modest, at 5 percent per year, for example, the cost of a 1-
year delay in a billion dollar project would be about $50 
million in taxpayers' expense.
    One critical aspect of this comparison bears some emphasis 
here. We have found that the current level of Federal oversight 
has--we have not found it has any actual demonstrable yield in 
terms of project success or performance. Our Federal New Starts 
projects do not have a better record of being completed on time 
and within budget than our non-Federal projects. Nor am I aware 
of any empirical evidence on a nationwide basis that the ever-
increasing levels and layers of Federal review have actually 
resulted in better-performing projects.
    The unfortunate fact is that, in the implementation of a 
New Starts project, one of the biggest risk factors has in fact 
become the Federal Government's well-intentioned but 
ineffective rule governing the New Starts process.
    However, I do have some suggestions for steps that can be 
taken to improve this; and I know that there is some efforts 
going on at FTA. In my written testimony, I go into a lot more 
detail, but let me just really quickly summarize them for you.
    First, we would like to see the New Starts program be 
improved by reducing the Federal due diligence role and making 
the local project sponsor responsible for its own risk 
assessment and related risk. The local sponsor really is the 
one that has the risk. The Federal Government caps their risk.
    Number two, the program can be improved by simplifying and 
streamlining the FTA evaluation and rating process. We talked 
about that a lot today, and we have some views on that as well.
    Number three, the New Starts program can be improved by FTA 
committing to a milestone schedule for its actions and 
approvals. Everybody else in the process has time frames. FTA 
does not.
    Four, we could improve the program by reducing the time 
between the issuance of the environmental Record of Decision 
and the start of design and construction.
    And, five, and one that I have preached forever, the 
program really needs more money. The intense competition really 
drives a lot of this, and if we had more money there would be--
the competition would be better to handle.
    That concludes my testimony. I will be happy to answer 
questions.
    Mr. DeFazio. Thank you, Mr. Snoble.
    Mr. DeFazio. Mr. Thomas.
    Mr. Thomas. Thank you, Chairman DeFazio. I appreciate the 
opportunity to appear before you today.
    My name is Gary Thomas. I am the President and Executive 
Director of Dallas Area Rapid Transit. I did have the good 
fortune to follow Mr. Snoble in Dallas, and I appreciate the 
groundwork that he laid.
    Also, on behalf of the board and the staff, I would like to 
take this opportunity to thank the north Texas delegation, 
especially Congressman Johnson, who was here earlier. Because 
of their exemplary leadership, their vision and unwavering 
support, we have been able to do a lot of things in north Texas 
relative to public transportation that no one, quite frankly, 
thought we would be able to do.
    DART started 24 years ago, in 1983. Thirteen cities voted 
to tax themselves an additional 1 percent sales tax, and that 
really is what started us down this path. In 1996, we opened 
our first light rail system; and today we run a system of 
buses, light rail, commuter rail, HOV lanes, carpool, 
Paratransit. Literally, at the end of the day, we have carried 
330 to 350,000 people from point A to point B safely, 
efficiently and effectively.
    One of the more exciting things that is happening in Dallas 
is we have 45 miles of light rail currently on the ground and 
we are in the process of doubling that system. So by 2013 we 
will have 93 miles.
    In July--July 3rd, to be specific--this past summer--I 
think the only day that it rained in north Texas this past 
summer--we actually received our full funding grant agreement 
of $700 million. At the time, it was the second largest full-
funded grant agreement the FTA had issued.
    It was a process. It was a team effort. We actually worked 
through that FTA process with the FTA as they were going 
through a lot of transitions, a lot of changes. So I guess you 
could kind of say we were the beta test case, and we all 
learned a lot from that process.
    As I said, we got that full-funded grant agreement in July. 
In August, we actually issued our first notice to proceed to 
our contractor; and just this past Tuesday our board approved 
the second construction contract for $467 million for the 
second phase of that project.
    Approaching it just a little bit differently than the 
design, bid, bill approach, we are actually using a modified 
construction manager at risk, a CM at risk. We call it our 
CMGC, construction manager general contract, approach, where we 
actually bring the contractor on early in the process. They 
work with us through the design process, and then we actually 
negotiate a guaranteed maximum price which helps us through 
that risk assessment process which, quite frankly, has helped 
us to circumnavigate the incredible increases in construction 
prices over the last 2 to 3 years.
    But most importantly what I would like to talk about is the 
transit-oriented development that has occurred around our 
stations. When we first opened our light rail starter system in 
1996, we weren't thinking about transit-oriented development. 
Fortunately, there were some developers that were; and today we 
have some of the best examples of TOD around light rail 
stations in the entire country.
    As people saw what could happen around the station, as 
people saw what could develop and how you could take advantage 
of it--it is not just about moving people from point A to point 
B. Although that is our critical mission. It is also about 
congestion relief, it is also about air quality, which are 
certainly important, but people realize there is an economic 
value. There is an economic opportunity here.
    So as we started our next expansion to the other parts of 
Dallas and suburbs, we are interested in Plano and Garland. 
Those cities were working concurrently on their transit-
oriented development as we were working on design and 
construction.
    Now as we are doubling the system, those cities are--the 
cities that we are going to now, Carrollton, Farmers Branch, 
Irving and other parts of Dallas, are way ahead of us. They 
already have stationary plans in place. They already have their 
designs, in some cases, in place.
    Today, actually, 2005, we commissioned a study and 
completed $3.3 billion worth of economic development around our 
stations at that point in time. Irving, which we are not even 
scheduled to open our light rail system until 2011 in phases 12 
and 13, has already got $3.5 billion worth of economic 
development scheduled around our stations that we are planning 
to build in Irving. So economic development, transit area 
development becomes a key part of this whole process.
    As we have heard earlier, the TSUB number was what it was 
all about as we went through the process. That was the 
competitive deciding factor.
    We have talked at length with the FTA to work with experts, 
to work with agencies to quantify the land use and economic 
development benefits, with a focus on the undervalued property 
and the prospects of increasing the value of those properties 
as a surrogate for development potential. Actual commitments 
and adoption of land use actions to increase densities around 
stations should obviously be recognized as real measures of 
change that will benefit transit and reduce vehicle trips on 
our thoroughfares.
    With that, I conclude. I appreciate the opportunity and 
would be happy to answer any questions.
    Mr. DeFazio. Thank you.
    Mr. DeFazio. Mr. Gustafson.
    Mr. Gustafson. Thank you. Thank you, Chairman DeFazio and 
members of the committee.
    My name is Rick Gustafson. I am Executive Director of 
Portland Streetcar, Inc. It is a nonprofit corporation that 
contracts with the City of Portland to design, build, operate 
and maintain the Portland Streetcar system.
    The system was opened in 2001 without Federal funds, 
totally funded locally. It is 4 miles in length and handles 
over 3 million riders a year and has been a phenomenal success 
in the economic development of the central city. Over $2.8 
billion of new development has occurred within 3 blocks of the 
streetcar line since it was announced in 1997.
    Next.
    Before we talk about Small Starts, I want to congratulate 
the committee on including language to establish a special 
grant for a prototype manufacturer by a U.S.-owned 
manufacturing company. This grant was made to the TriMET in 
Portland, and we participated--Portland Streetcar, Inc. has 
participated with them in selecting a manufacturer that is now 
under contract, Oregon Iron Works, expecting delivery of a car 
in 2008. This is a visionary in that the streetcar is a growing 
interest in the country, with over 80 cities studying 
streetcars; and potential for additional orders in this country 
are enormous.
    But penetrating that market--we had a similar situation in 
the middle '80s with no light rail systems, and now there are 
over 23 in the United States and over 2,500 cars delivered, not 
one by a U.S.-owned manufacturing company. We are hoping we can 
prevent that and return the U.S. to its dominance that it had 
in the early 1900s when the PCC car was the dominant 
manufactured car in the world, and with this effort and your 
leadership we have been able to start that process.
    Next. Portland has applied for a Small Starts grant under a 
project called the Portland Streetcar loop. The total cost is 
$152 million. It is an extension of our existing line 
connecting the entire central city and crossing a bridge and 
connecting the east side of our downtown. The Federal share 
would be limited to $75 million. We applied it on February 9th. 
We received approval from FTA on March 20th, and they notified 
Congress on April 16th. They have handled that very 
expeditiously, very efficiently, as you can see, in carrying 
our project through the initial application process.
    On April 26th, though, we did receive a letter from FTA 
indicating that, instead, we have an overall rating of medium 
but that we would be required to meet the cost-effectiveness 
criteria.
    Next. The current FTA cost-effectiveness criteria that is 
used for New Starts has been calculated both for our existing 
line and for the new proposed extension. The one we submitted 
to FTA, our Portland Streetcar loop, rated at $35.00 under the 
FTA criteria; and to reach a medium you have to get down to 
22.99 not 22.49.
    Now there are new rules that are being issued, and we are 
working on those and waiting for those, and there seems to be 
some belief that we will be able to qualify. But it still 
leased the TSUB as, in essence, a trumping criteria so that no 
matter how high your rating is on land use or economic 
development you are still forced to reach a medium rating on 
the cost-effectiveness and TSUB rating. That is a major 
contention in our discussion. Because, in the case of the 
streetcar project, it has benefits that are far--that are not 
necessarily reflected in the current cost-effectiveness 
criteria outlined by FTA.
    Next. This is just a selected photo from Portland. It gives 
you an idea of what happens in economic development. The first 
in the foreground are townhouses and row houses which were the 
preference of developers in in-town development prior to 
experiencing a higher quality of transit access. You notice 
in--you can barely see, but the tracks are in the street. But 
some 10 years after that row house and townhouse project came, 
the streetcar was extended down to that end. The result was the 
new construction of the Strand, which is right behind it, the 
high-rise condominiums.
    Next. What we did was an economic study, before and after 
study in Portland. Before 1997, no streetcar on our corridor. 
The average density--the city is zoned for density, high 
density in central city--the average density was 30 percent 
that developer would build. Since 1997, the average that the 
developers have built along the streetcar line within 1 block 
has been 90 percent of the allowed density. We are experiencing 
the development that was actually planned.
    The reason for that is developer's confidence that with all 
of the amenities--and the streetcar is not the only one--but 
with the streetcar and higher quality of access they have the 
confidence they can build and sell a higher density product.
    Next. Probably the item that is missing the most in the 
criteria for cost effectiveness is really, as you change the 
land use type--we have done detailed analysis of travel 
behavior in the Portland area. Families that live in good 
transit/mixed use neighborhoods travel about 58 percent of 
their trips by automobile and walk to most of their 
destinations for 27 percent of their trips. You can see the 
difference between the Portland suburbs and the good transit/
mixed use environment. The net result is that families that 
live in a good transit/mixed use environment would travel 9.8 
miles a day in vehicles, where the similar family--the same 
family--would travel 21.79 miles in the suburbs.
    The result for our existing current streetcar line is we 
have submitted 59 million fewer vehicle miles traveled in our 
roads than if those houses were located in the suburbs.
    The proposed streetcar loop that we have submitted has 28 
million annual vehicle miles saved. These factors, easily 
calculable, part of a regional development, are part of what we 
are talking about in terms of combining that economic and land 
use as an important criteria in measuring effectiveness.
    Next. Last point that I would make is, in the 
reauthorization, the exempt projects were removed from 
eligibility, and two streetcar projects notably are very 
successful projects which would fall within that exempt 
category. The Seattle project, which opens in December, should 
be a very strong success, modeled very much after Portland; and 
Little Rock, which is already a very successful operation with 
one additional extension, also operated under the exempt 
project category.
    Next. The streetcar potential is high. There are 80 cities 
in the United States that are studying it. Portland is the 
first project to receive project development approval from the 
FTA. We believe there are many more that ought to be encouraged 
to apply.
    What I would urge you to do is to support establishing a 
U.S. manufacturer for streetcars, to require that change and 
continue the testimony you have had today on the cost-
effectiveness criteria to reflect all of the transit benefits 
associated with these developments, to balance it with land use 
and economic development and restore the exempt projects.
    Thank you for the opportunity.
    Mr. DeFazio. Thank you.
    Mr. DeFazio. Dr. Lewis.
    Mr. Lewis. Good morning, Mr. Chairman. My name is David 
Lewis. I am the Senior Vice President and Chief Economist at 
HDR Decision Economics, a division of HDR Engineering. I would 
like to thank the subcommittee for inviting me to be here 
today. It is my purpose to try and place questions about the 
New Starts process in the broader context of economic value.
    The principal message I wish to leave with you is that, in 
not recognizing the full economic value of transit projects, 
the Federal response process creates a risk of underinvestment 
in transit and, hence, a risk of the marginalization of public 
transportation in American urban development.
    Whereas the New Starts process quantifies ridership as the 
principal source of benefit of New Starts projects, the 
economic benefits of transit actually fall into three 
categories: congestion management, mobility for transit users 
and community economic development. While all three are 
measurable, albeit with uncertainty, the New Starts program 
focuses on ridership alone, which is actually a sub-set of one 
of the three categories, that being the mobility category.
    Regarding congestion management, increased use of transit 
in lieu of automobiles can obviously lead to improved highway 
traffic flow, shorter highway travel times, reduced 
unpredictability, fewer total trips. Such benefits accrue to 
both automobile users and, I would add, to shippers of freight, 
to trucks. Whereas the benefits of highway capacity expansion 
and congested corridors can erode as new demand is induced to 
use the facility, my studies for FTA demonstrate that rail 
systems in congested highway corridors serve to stabilize 
roadway congestion in the face of population growth and land 
development.
    Regarding mobility, increased use of transit creates 
mobility benefits for all riders. For low-income individuals--
something we don't talk about enough I think--transit is often 
used in lieu of taxis and other higher-cost modes today, and it 
thereby liberates scarce household financial resources for more 
high-value uses such as shelter, nutrition and child care.
    Now, regarding economic development, transit does create 
statistically measurable economic value for communities, with 
benefits that extend to both transit users and non-users. This 
value is manifest in the increased land values and rents that 
is created by the demand for residential and commercial space 
in transit-oriented environments. Studies indicate that rail 
transit stations can yield in the range of $16 to $20 per 
square foot greater residential equity value for each foot 
closer a property is to the station.
    For San Francisco, for example, this means that the average 
home carries between 15 and $20,000 more equity value for each 
1,000 feet it is closer to a BART station.
    For here in Washington, D.C., for the average-sized 
commercial property, we find that each 1,000 foot reduction in 
walking distance to a Metro rail station increases the value of 
a commercial property of that size by more than $70,000.
    For proposed New Starts and extensions, such as rail 
investments our proposals have recently evaluated in 
Minneapolis, Austin and Toronto, the cumulative projected 
effect of development of such projects in downtown and suburban 
economic development value is in the hundreds of millions of 
dollars. In fact, it is in the billions of dollars. I am only 
counting the part that is actually additive to the congestion 
benefit and the mobility benefit. That is to say, a portion of 
the increased development value associated with transit-
oriented development actually represents the capitalization of 
time savings in the value of land, and that is already 
reflected in the measurement of congestion benefits.
    But transit also gives rise to urbanization and amenity 
effects that are valued by people who do not use transit, and 
that is what gives rise to the additivity of that urban 
economic development value and congestion and time-saving 
values.
    In short, the New Starts framework does not seek to 
determine whether projects are economically worthwhile but 
rather to rank them against one another as a basis for 
distributing a predetermined allocation of congressionally 
appropriated funds. Yet, without economic yardsticks, 
decisionmakers cannot ask how much transit investment is 
actually worthwhile, nor how transit projects stack up in 
relation to highway alternatives.
    Broadening the New Starts process to recognize the full 
economic value of transit proposals would help create a level 
playing field for urban transportation investment and elevate 
transit's status in resource allocation decisions accordingly. 
But this should not, in my view, be executed in such a way as 
to complicate the already long and involved New Starts 
procedure. I make the following recommendations:
    In addition to the benefits directly associated with 
ridership which FTA measures today, FTA should encourage 
localities to examine the congestion, mobility and economic 
development value of transit; and, furthermore, that FTA should 
recognize such values in Federal investment decisionmaking.
    Thank you, sir.
    Mr. DeFazio. Thank you, Doctor.
    I guess, sir, a general question to the entire panel. What 
do you think TSUB is really measuring? I mean, it seems to me 
it is kind of like a black box here. I still don't understand 
it. I have been trying. Can anyone explain it to me simply?
    Mr. Snoble. Mr. Chairman, if I might, the original intent 
was to try to come up with a score, and we have tried and 
worked with this many times, and it gets into the whole 
modeling exercise. And the modeling exercise works up to the 
point where you start to have to start to make assumptions, and 
then that is where it kind of falls apart, because you have to 
make these assumptions, and then different things happen based 
on those assumptions, plus the model has gotten very, very 
complicated.
    And when I started, and I started on a transportation study 
actually doing the field work, the transportation study in 
northern Ohio. The simple premise was so much land generates so 
many trips, and then you can go from there and divide them up.
    The model today is so complicated. It is kind of mind-
boggling. We have a special Ph.D. on staff that just works on 
the model, works very closely with FTA staff. They have spent 
the last year and a half trying to get the model to the point 
where they all agree, and we think they finally did that just 
last week.
    So it is very complicated, but it just ends up being a 
score. And I think what you are hearing here is it really 
doesn't measure true ridership. For example, when we build a 
line in Los Angeles, we would like to very much extend the 
subway. If we went through this process, we would only count 
new riders to the subway even though that corridor today 
carries 80,000 boardings on the bus system today, and none of 
those would be counted because they are bus riders already in 
the system. You are not attracting that many more new ones, but 
you are sure accommodating our existing bus riders in a better 
way than they would in the bus that highly moves along Wilshire 
Boulevard. So it really doesn't recognize all your ridership, 
it just recognizes the new kinds of riders.
    And I think it is very important what you are hearing about 
the land use development, because when I started in 
transportation, it was a highway that created land development. 
The interstate system was just great at that time, and that was 
the only land-shaping tool we knew really worked.
    Well, now for the last 20 years, you have started to see 
where light rail and heavy rail can be a very big land-shaping 
tool. And Gary has talked about Dallas, which was one of my 
favorite examples because nobody thought it could happen in 
Dallas. It happens hugely in Los Angeles. We already have large 
densities we are fielding much more. We have $8 billion of 
economic development going on right now on our existing rail 
lines, and that is just a huge part.
    And as you have been hearing, there is so many benefits 
from that, by cutting down the lengths of trips, from 
eliminating the need for cars altogether, in many cases from 
accommodating work trips much better, from being able to 
encourage more pedestrian types of trips, and that kind of gets 
lost in the process, too.
    I think Congress was on the right track when it came up 
with different kinds of things, and we should go into the 
process, and we were part of that process, and we all agree 
that those are the kinds of things you should be looking at. 
And it has been hard to pull them all together into some kind 
of real consensus type of model. So what happens is some of 
those other things get looked at, but they aren't really part 
of the problem, because you are coming right back to the one--
the one number that really is the determining factor. So if we 
could come up with a simplified process that really is more 
comprehensive, I think that would be far more desirable.
    And I do have to say that working with the FTA and Small 
Starts, they have started to recognize that and started to look 
at these things much differently and much more effectively, 
because in the Rapid bus system it is much simpler; you know, 
you have lots of examples. In our case we will have 28 Rapid 
bus routes. Well, many of them have exactly the same profile. 
So it really isn't a huge question or a huge risk problem to go 
through that process. And it is pretty well self-described. So 
I think there is some efforts to make this a lot simpler.
    Mr. DeFazio. Okay. Anybody else want to address----
    Mr. Thomas. Just very quickly. The TSUB number, generally 
there is a value associated with congestion, and I think the 
TSUB number, in my mind, tries to determine the value saved or 
the value of the time saving associated with the folks using 
the transit system.
    I think as we look back in history, though, when we first--
we had actually our first full-funding grant agreement on the 
last expansion in roughly 1997. There was a $333 million full-
funding grant improvement, and by the way, we did come in under 
budget and ahead of schedule on that program. But the 
competition wasn't nearly as severe as it is now. And the 
process was just catching on. Of course, Portland was one of 
the leaders in the country, and we had had a few other examples 
where people were just starting to realize that we had to do 
something. We weren't going to be able to build enough roads to 
build our way out of this problem as we look forward.
    So then as we came into the next round of the process, all 
of a sudden the competition was much, much more severe. There 
were a lot more people throughout the country that were trying 
to figure it out. And my understanding was that the FTA was 
trying to figure out some objective measure that could look at 
that. You know, as you said, if you put everything into this 
black box and grind it up, it spits out that number, and as I 
said earlier, we were kind of part of that process, being 
ground up in that box as we went through.
    And Mr. Snoble said, the modeling became a challenge. Our 
Council of Governments was very, very progressive in their 
modeling efforts and looking at the modal splits on the 
different corridors that we were analyzing through our 
alternatives analysis. The challenge that we ran into is a lot 
of the other properties throughout the country weren't as 
aggressive and weren't as advanced in their modeling, so we 
actually had to slow down so a lot of folks could get caught up 
and everybody would be on the same footing, on the same page as 
we went through that process.
    And I will turn it over.
    Mr. Gustafson. Our criticism of the TSUB is simply that is 
too dependent on travel time savings. So it places too high a 
priority on the travel time savings issue. There are a lot of 
other benefits to transit besides that. So the model can--if it 
can be modified to reflect what we think are the broader base 
of benefits, and the streetcar project is part of that 
demonstration where we experienced 30 to 40 percent more 
ridership than a comparable bus line in the same corridor 
because it attracts riders for different reasons. And it isn't 
because of travel time savings, because the street car operates 
in the street with the same speed as a bus.
    Mr. DeFazio. Mr. Lewis?
    Mr. Lewis. I will give the economist answer.
    Mr. DeFazio. All right.
    Mr. Lewis. Just to say two points. One, I think it is fair 
to say that the process that--the cost, the FTA scoring process 
is a cost-effectiveness measure and as such does not pretend or 
set out, rightly or wrongly--and I think many would disagree, 
would say wrongly--but it does not set out to measure the 
economic value of the transit project. It sets out to compare 
an incoming set of proposals to one another in terms of what 
started out to be a convenient cost per unit of ridership 
index. That ridership has since been translated into time 
savings and a number of other--to try to reflect the metrics. 
But it is fundamentally not the kind of technique that the 
planning or economics community would--including FTA--would 
seek to adopt. It was trying to measure the net economic value 
and net benefits of the projects that were coming in. It is an 
attempt, rather, to score a fixed set of projects so as to 
allocate a fixed set of funds in the least bad way.
    It is not the only approach available. There is cost-
benefit analysis that has been around for--well, since the 
Corps of Engineers started to make good use of it in the 1930s. 
In many ways it is a more transparent, more auditable 
framework, and a framework that is more amenable to local 
engagement, citizen engagement, in seeking to understand the 
values that one might wish to place on the effects of capital 
investment in public transportation.
    And within the cost-benefit analysis framework, the kind of 
things that we are worrying about today, economic development, 
congestion, and environmental benefits and so on, are all not 
without the risk of error, but they are all quite measurable. 
There is nothing avant-garde about it. It is--and we see in 
other countries, in Great Britain, in Canada, they don't call 
it the New Starts process, but the same investment problem is 
not done as a top-down, methodological, cost-effectiveness 
sorting problem, but as a bottom-up framework wherein cities 
that can bring the best value proposition to the table do two 
things. Collectively they identify how much public 
transportation appears to be worthwhile in total. And secondly, 
it helps national decisionmakers make decisions about Federal 
and national government grants. So we do see cost-benefit 
analysis in application in the U.K. and Canada.
    Mr. DeFazio. Yeah. I was puzzled earlier when the 
Administrator said that the Corps was consulting with FTA, 
because I am somewhat familiar with the Corps process, and I 
think it is a little bit more, I don't know--I understand it 
better than I understand--I don't understand T.
    Mr. Lewis. My understanding what the Administrator said was 
that the Corps comes to FTA to understand how they are doing 
risk management and assessing probability cost overruns.
    Mr. DeFazio. Okay. All right.
    Mr. Lewis. And FTA is doing a superb job. I have been 
involved in it, though I don't take credit for their superb job 
of bringing statistical probability into the means by which 
capital costs and schedule overruns are avoided, and the Corps 
is looking to learn from that. That is something that I, too, 
am aware of about the Corps, looking to those methods. I don't 
think the Corps was coming to FTA--well, I don't know, I wasn't 
privy to it. But from the answer, as I understood it----
    Mr. DeFazio. Yeah. So we could either look at the British 
model, the Canadian model, or indigenously the Corps model, the 
cost-benefit, take the criteria which Congress has laid out 
statutorily, and you think we could construct a usable way to 
measure a cost-benefit?
    Mr. Gustafson. I do. I think it behooves--I think the 
process would be a bottom-up process; that that analysis would 
best be done, as it is in other countries, locally and audited 
and informed by the Federal Government. I think I would add 
insult to injury if I said let's just add another layer of 
complexity to the process, but, yes, I do believe that to be 
true, yes.
    Mr. DeFazio. Okay. All right. Well, that is helpful.
    Mrs. Napolitano, do you have some questions?
    Mrs. Napolitano. You bet. Thank you.
    Being fairly new to this subcommittee, there is a lot I am 
learning about in regard to the different programs that the FTA 
has, and this is one of them that really is going to be one 
that I can sink my teeth into, if you know what I mean, simply 
because my area--it is outside the city of Los Angeles, it is 
in the County of Los Angeles, and while, Mr. Snoble, MTA has 
great transportation, my area--I call it something of the L.A. 
County, which is not very nice to say in public, because I 
don't have the bus lines, I don't have the ability to move the 
masses that are within my jurisdiction. So programs like this 
would be great to be able to expand that service into the area.
    The green light stops at Norwalk, which is a far cry from 
the rest of my area. We have very, very little other kind of 
transit. I have congestion of 18 miles on the freeway that is 
polluting my whole area, and when there is an accident, people 
get off and go through the cities and congest the normal 
population there.
    It is a matter of environment, I mean, all these things 
that you talk about. We are recipients, unfortunately, of that 
bottleneck. And to be able to hear that some areas are 
benefiting, I need to maybe pick a little bit more brain onto 
how we are able then to move into an era where the smaller 
communities who don't have the ability to have the expertise to 
apply; and we have the Council of Governments, which you know 
about that, can go in and tell the Federal Government we are 
ready to do these things. But the funding then goes into other 
areas so that we are not the recipients of the ability to 
determine on our own our area, our own necessities, answers or 
our own solutions, if you will.
    So I am wondering whether those of you who have dealt with 
this--and I am reading some of the testimony that I received 
yesterday, but didn't have a chance to read today's because I 
got it here on committee--is the fact that it is perceived that 
utilizing the Federal money on this Small Starts program delays 
projects. How can we suggest to them what they need to do, how 
they need to do it, and how they need to expand this to those 
communities that can really benefit to move to protect, to 
provide safety, because it is a safety issue, too.
    One of my cities, Pico Rivera, not too long ago was the 
number one polluted city in the whole State of California in 
terms of exhaust. Well, that is not good news to the people who 
live there. So I am telling you because you may need to use 
that as an ability to say to the Federal Government, this is an 
added fact that we need to look at; there is a protection of 
the health of the people that we are going to try to help move 
this traffic along.
    What do you see, number one, that we need to tell the FTA 
on this program to be able to expedite the process in the 
funding, in looking at projects that really have merit based on 
many of the factors you are talking about, not just factors 
that are perceived necessary by the Federal Government?
    Mr. Snoble. If I may go first, Congresswoman Napolitano, 
probably Gary can talk a little bit because he has similar 
problems within the DART area because it has smaller cities as 
well. The last transportation bill actually started to make a 
very major step in coming up with these projects, Small Starts 
and now the Very Small Start projects, in recognition of the 
fact that there are other needs other than the big cities have. 
Like in Los Angeles we use New Starts moneys, those are really 
big, big projects. The Small Start actually gives us an 
opportunity to have smaller projects. We did apply, and we were 
approved in Los Angeles to be able to better improve our Rapid 
bus system. As you know, we are building a big Rapid bus system 
that--the buses move much faster going through the area.
    Mr. Napolitano. Excuse me, Mr. Snoble. That is in downtown 
L.A. And many other areas, not necessarily the area that I 
represent.
    Mr. Snoble. The Rapid bus program is of a lot of the 
county. It is more than just the city of Los Angeles.
    Mr. Napolitano. It goes to Pamona. I was at the opening, 
the grand opening, yes.
    Mr. Snoble. And we are about halfway through with the 
expansion. In another couple of years we will have 28 routes, 
and some of those will be in your area as well. But this money 
will then enable us to make those buses go through even faster 
by going to an intelligent transportation system and doing the 
kinds of things that will give us the priority for the bus on 
the streets. So that can make a big difference. And that was a 
first start.
    The other really big point that is important here that we 
are trying to make is that when we go through the Federal 
process, it costs us more for the project because there is so 
much red tape to it. If we didn't have that additional cost, or 
it was a much smaller amount----
    Mrs. Napolitano. What is the recommendation, sir?
    Mr. Snoble. --the money would go much further. If we could 
simplify some of the process and the recommendations we have 
made and other people have made to make this process simpler to 
run and make it less onerous for the sponsors of the program so 
they can move much more quickly to actually get something 
built, because the longer you spread out the construction, the 
more costly it gets, and if we could accomplish some of those 
things, then we would have more money available to be able to 
go to other projects.
    Mrs. Napolitano. Understood. Mr. Snoble. Unfortunately the 
focus of MT has been mostly bus. I am looking at light rail, 
the expansion of the green line, other areas that are going to 
move the masses. And beyond that, doing a subway, a Metro, 
being able to move people from--and get them out of their cars 
to reduce the pollution we all talk about.
    To my freeways, we have 50,000 cars and trucks, or another 
25,000 trucks a day. So pollution is one of the major factors 
that we are trying to ameliorate by allowing people options. 
Right now there are no options. I used to take a bus. I go to 
Alameda, which is about 7 minutes away. Somebody would drop me 
off. I would take a bus. It would take me 45 minutes to go 11 
miles. I could get in my car and be there in 15 minutes. So 
that is not helpful for people who need to get to their jobs, 
to get to their offices, et cetera. And somehow we need to tell 
Small Start the way to address it is work with the Council of 
Governments besides the big cities to be able to assist them in 
making decisions that affect those smaller areas. And that is 
what I was trying to get to. What is the recommendation? What 
can we tell----
    Mr. DeFazio. If the gentleman would briefly address this. 
She is well over her time. You can briefly address the 
question, and then we can turn to Mr. Poe.
    Mr. Snoble. Collectively we made a lot of different 
proposals to help FTA come up with a more streamlined model.
    Mr. DeFazio. I think a lot of this was the subject of the 
first panel, if I may, and the Administrator and the criteria 
and why people aren't applying for a subway, why they aren't 
applying for a streetcar, which go to the failures of the 
criteria more than--I think it may well be local jurisdictions 
need--are not applying because they just don't think they can 
match the criteria is what we--some of what we have heard.
    Mr. Poe had some questions.
    Mr. Poe. Thank you, Mr. Chairman. I will be brief.
    I would like to center my questions on--regarding DART, Mr. 
Thomas. I am very impressed with DART. I wish DART could 
encompass the Houston area. Much to the chagrin of Metro, DART 
seems to be doing everything right. And you are selling the 
project DART to the Dallas community very well. You know, we 
had resistance of Metro down there in Houston. The rail we have 
is 4 miles long.
    But my question is, according to your testimony, when you 
build it, they build around it, and it increases their property 
value. And the question I have is, you say you get private 
involvement in DART. What does that mean?
    Mr. Thomas. Thank you, Congressman.
    We do have a lot of economic development around our 
stations, and it is a combination. First of all, developers 
have realized that there is an opportunity to make money, and 
we want to help them make their money, but we also--what we are 
really looking for is that increased sales tax, increased 
property values, and increased ridership that benefits us.
    The other part of it is--is getting the city to understand 
that and making sure that they are removing any impediments 
from those development opportunities around the station.
    And then the third part is--and we have people on staff 
that actually facilitate that. In many cases we don't own the 
property, but we can help the developer and the city get 
together, and then we can help identify development types that 
really lend themselves to what works around the transit station 
and what does not work around the transit station.
    Now the third component of that, though, is that we do own 
a lot of property around some of our stations in the former 
parking lots, and initially when you build those stations, 
those parking lots may be 10, 12, 15, maybe even 20 acres of 
surface parking. At some point there is a higher and better use 
for that parking lot, and we have got to be able to recognize 
that. And at the same time that we are serving our customers' 
needs, we are also looking at how we can redevelop that 
property into a more useful development that, again, adds 
property taxes.
    As I mentioned earlier, we had $3.3 billion in transit-
oriented development around our stations. That has produced--
through 2005 that has produced $78 million in annual property 
tax revenues, $40.6 million in retail sales tax income for the 
State, and then $6.5 million for our local municipalities in 
just those sales taxes.
    So it really does make a huge difference, and in our case, 
because we are so new in the transit world, a lot of our time 
is spent educating folks. Now, people are catching on pretty 
quick, certainly, but it is educating folks, making them 
understand, and then making sure that we have a development 
that serves our customers as well as the entire community.
    Mr. Poe. Well, you are to be congratulated, Mr. Thomas.
    Thank you, Mr. Chairman. I yield back my time.
    Mr. DeFazio. Thank you, Mr. Poe.
    I want to thank the panel. Thanks for your patience while 
we had the series of votes and interruptions. I hope we didn't 
delay your schedules too much, and you know we will be looking 
forward to you to helping us help the FTA move to a more 
transparent formula that better measures the benefits of 
transit, that promotes, you know, not just one sector because 
of a prejudice within the way they measure things. So thanks 
very much. Appreciate it.
    [Whereupon, at 1:07 p.m., the subcommittee was adjourned.]

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