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



 
  THE FEDERAL TRANSIT ADMINISTRATION'S PROPOSED RULE ON THE NEW STARTS 
                       AND SMALL STARTS PROGRAMS

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



                                (110-72)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HIGHWAYS AND TRANSIT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 26, 2007

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure



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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

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

                                  (ii)


            SUBCOMMITTEE ON HIGHWAYS, TRANSIT AND PIPELINES

                   PETER A. DeFAZIO, Oregon, Chairman

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, Vice Chair    MARY FALLIN, Oklahoma
HARRY E. MITCHELL, Arizona           VERN BUCHANAN, Florida
LAURA A. RICHARDSON, California      JOHN L. MICA, Florida
JAMES L. OBERSTAR, Minnesota           (Ex Officio)
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Huffer, Mark E., Kansas City Area Transit Authority, General 
  Manager, Kansas City, MO.......................................    29
Poticha, Shelley, Reconnecting America, President and CEO, 
  Oakland, CA....................................................    29
Simpson, Hon. James S., Federal Transit Administration, 
  Administrator, Washington, D.C.................................     4
Townes, Michael, Hampton Roads Transit, Executive Director, 
  Hampton, VA....................................................    29
Zimmerman, Christopher, Arlington County Board, Board Member, 
  Arlington, VA..................................................    29

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Mitchell, Hon. Harry E., of Arizona..............................    42

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Huffer, Mark E...................................................    46
Poticha, Shelley.................................................    51
Simpson, Hon. James S............................................    60
Townes, Michael S................................................    78
Zimmerman, Christopher...........................................    83

                       SUBMISSIONS FOR THE RECORD

Simpson, Hon. James S., Federal Transit Administration, 
  Administrator, Washington, D.C.:

  Responses to questions from Rep. DeFazio.......................    67
  Responses to questions from Rep. Napolitano....................    75
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 HEARING ON THE FEDERAL TRANSIT ADMINISTRATION'S PROPOSED RULE ON THE 
                  NEW STARTS AND SMALL STARTS PROGRAMS

                              ----------                              


                     Wednesday, September 26, 2007

                   House of Representatives
    Committee on Transportation and Infrastructure,
                      Subcommittee on Highways and Transit,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2167, Rayburn House Office Building, the Honorable Peter 
A. DeFazio [Chairman of the Subcommittee] presiding.
    Mr. DeFazio. The Subcommittee will come to order. I want to 
thank Members and the witnesses for being here.
    On May 10th we held a hearing on New Starts and Small 
Starts, and at that time the FTA had not yet issued its 
proposed rule for these programs. We had, I thought at the 
time, a pretty frank exchange of views and the Committee made 
clear and underlined what we thought was the legislative intent 
previously. Unfortunately, since that time we now have the NPRM 
on New and Small Starts, and I don't think that, as currently 
written, it reflects the concerns that were raised in that 
hearing. I don't believe it implements the statutory intent, 
and it has caused tremendous concern among transit stakeholders 
around the Country in terms of the long-term implications, 
should it be implemented as currently written. I am hopeful 
that we will see some major changes.
    We understand we are in the comment period. The FTA has 
scheduled some listening sessions, and hopefully not only the 
FTA will be listening, but those others in the Administration 
who have been involved in writing this rule will be listening 
and will be attentive to concerns expressed and perhaps 
conveyed to them by the FTA.
    I will get into the details of my particular concerns after 
we have heard from the Administrator. I appreciate his being 
here today. But I really do feel that this is potentially a 
failed attempt at rulemaking that, as I said earlier, somehow 
there are new provisions that were not authorized by Congress 
that seem to reflect the agenda of other parts of the 
Department of Transportation and the Bush Administration, and 
yet those parts which should reflect the clear statutory 
instructions from Congress are still wanting.
    So I look forward to discussing this rule with the 
Administrator and other witnesses.
    I do have a markup on a very, very critical issue to my 
district--it is also a national issue--in another Committee, so 
at some point I will have to leave, but we will try and move 
things along as quickly as we can.
    With that I turn to the Ranking Member, Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman. You have pretty well 
adequately stated the situation under the Federal Transit 
Administration's New Starts Program. Local transit agencies 
partner with the FTA to develop and construct subway, light 
rail, commuter rail, streetcar, ferry, and bus rapid transit 
projects to try to solve specific local transportation problems 
in their communities. New Starts projects can be brand new 
starter lines or extensions to existing transit systems. The 
size, cost, and complexity of these projects varies widely.
    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. The 
program is designed for simpler, smaller projects and the 
evaluation and rating process is also supposed to be simpler, 
and we hope will allow for faster development and construction.
    The FTA project evaluation and rating process is 
established in law by this Committee. SAFETEA-LU made a number 
of changes to the New Starts program and today's hearing will 
focus on the Notice of Proposed Rulemaking or, as you have 
stated, NPRM, that the FTA has developed to implement those 
changes. Once this proposed rule is finalized--and it always 
amazes me how long it takes to finalize a rule such as this--it 
will govern New Starts and Small Starts policy for years to 
come. It will be at least two years after the next 
authorization bill is passed before changes in that law are 
implemented in a new final rule, so the final rule that results 
from the current NPRM before us will be in place at least 
through 2011, and perhaps longer.
    I have been impressed and do appreciate the responsiveness 
and courtesy which the FTA has shown my staff and my 
constituents in Knoxville in working through a transit center 
land purchase issue there, but I do wish there was more 
flexibility in the rules that the agency is implementing in 
this case. It seems like there is very little room for 
responding to unique circumstances.
    This same concern could also be raised regarding the 
proposed rule on New Starts and Small Starts we are examining 
today. The FTA runs the risk of locking in certain policies too 
timely in the rule and not being able to react to new 
information, including better forecasting tools, ways to 
capture and reflect economic development around transit 
stations and along the corridor, and other benefits.
    The agency needs to carefully consider all the comments it 
receives in the upcoming comment period and build in enough 
flexibility in the New Starts and Small Starts evaluation 
process to help move forward good transit projects. It would be 
a shame and certainly would not reflect the intent of SAFETEA-
LU if this new rule has the effect of discouraging communities 
from considering transit solutions at all.
    I thank you, Mr. Chairman, for holding this hearing and I 
yield back the balance of my time.
    Mr. DeFazio. I thank the gentleman.
    I have been notified that Ms. Matsui would like to make a 
brief opening statement. I would recognize her at this time.
    Ms. Matsui. Thank you, Mr. Chairman. Thank you for calling 
this important hearing. For many of us, our transit systems are 
the backbone of our districts. In many cases, our transit 
systems are also the blueprint for future growth and economic 
opportunity in the communities we represent. In my district, 
and especially within the City of Sacramento, we consider most 
of our future growth and economic development on our 
transportation infrastructure, and specifically our light rail 
system. Therefore, it is important that our New Starts and 
Small Starts programs are responsive to the needs and demands 
of our growing communities.
    My main concern is why isn't the FTA following the 
guidelines and criteria that Congress laid out in SAFETEA-LU. 
Specifically, I am concerned that the FTA is too narrowly 
focused on cost-effectiveness of projects, looking only at the 
time savings and not the full range of the project benefits. 
While this is important and a criteria that should be followed, 
other criteria such as land use decisions and economic 
development opportunities must play a greater role in the FTA 
decision-making process.
    If our light rail systems are truly going to meet the needs 
of our communities, they must be built with the anticipation of 
future regional growth and economic development. Transit should 
be used as a tool to encourage our communities to grow smartly 
and, in some cases, safely. Sacramento is the most at-risk city 
in the Country for catastrophic flooding. In addition, the 
Sacramento region is one of the fastest growing regions in the 
Country. We have to make our land use decisions wisely.
    In short, the principles of transit-oriented development 
must be a strong consideration in the New Starts approval 
process. Over the last decade, public transportation's growth 
rate outpaced population growth and the growth rate of vehicle 
miles traveling our Nation's highways. It is my hope that, as 
we move forward with full implementation of SAFETEA-LU 
programs, that the full intent of the legislation that was 
drafted here in the Committee be followed.
    By this I mean that land use and economic development 
criteria included among the six evaluation criteria be weighed 
on equal footing with other factors, such as cost-
effectiveness. Transit-oriented land use and development are 
demonstrated factors that truly do make projects more cost-
effective in the long run. We need to capture the dramatic 
increase of transit ridership across the Country and marry it 
with the steady population growth many of our communities and 
regions are experiencing. We need a Federal partner that 
responds better to these trends.
    Combining SAFETEA-LU's revised criteria in the New Starts 
FTA decision-making process is an important step in ensuring 
that the projects Congress authorizes and ultimately funds may 
see evolving demand of our regions. Ultimately, fully 
integrating transit-oriented development into the New Start 
decision-making process will be the most cost-effective measure 
we can take to ensure that the investment made by the American 
taxpayers leverage additional private sector investments and 
create more sustainable, livable communities.
    I am looking forward to working on these issues during this 
Congress. Thank you, Mr. Chairman, for calling this hearing. I 
yield back.
    Mr. DeFazio. I thank the gentlelady.
    Any other Members have opening statements?
    [No response.]
    Mr. DeFazio. If not, then we will proceed to the honorable 
witness, Mr. Simpson.

 TESTIMONY OF THE HONORABLE JAMES S. SIMPSON, FEDERAL TRANSIT 
         ADMINISTRATION, ADMINISTRATOR, WASHINGTON, DC.

    Mr. Simpson. Good morning, Chairman DeFazio, Ranking Member 
Duncan, and Members of this Subcommittee. Thank you for the 
opportunity to testify today on the recent NPRM on FTA's New 
Starts and Small Starts programs. This proposed rule is 
intended to continue and strengthen our successful management 
of this important program. Our goal for New Starts remains to 
deliver the best projects on time, within budget, and that 
realize the benefits projected. At the same time, we want to 
streamline this process so that decisions are made more quickly 
and projects are delivered sooner.
    As I testified in May, we believe FTA's management of the 
New Starts program fosters highly successful Federal local 
partnerships that benefit millions of Americans across the 
Country on a daily basis. We believe that this NPRM will 
continue this record of success. As you know, FTA issued the 
NPRM on New Starts and Small Starts on August 3rd, 2007. This 
was the culmination of a significant effort to obtain input 
from key stakeholders, which we are continuing.
    In January 2006, we published a series of questions on New 
Starts and an Advance Notice to Proposed Rulemaking on Small 
Starts. FTA then provided an opportunity for public involvement 
by holding three listening sessions. We received over 70 
written comments on the New Starts questions and over 90 
written comments on the Small Starts ANPRM. The NPRM summarizes 
and responds to these comments. Continuing our outreach, we are 
conducting five outreach meetings. At these sessions, FTA staff 
will provide further explanation of our NPRM and related 
proposed evaluation measures, and invite public comment to the 
docket, which closes this November 1st.
    Once the docket closes, we plan on closely examining the 
comments we have received. Given the stakeholder interest on 
this topic, we expect that it will take some time to carefully 
consider and prepare a final rule. We expect that the rule will 
be issued some time in 2008.
    To implement the Small Starts program, the NPRM adds 
eligibility for non-fixed guideway projects, as in SAFETEA-LU, 
and defines the kinds of investments needed to qualify. Small 
Start project justification includes only cost-effectiveness 
and two measures of project effectiveness, that is, land use 
and economic development benefits and mobility. Project 
justification may be made based on simplified travel demand 
forecasts based on year of opening, rather than a complex 20-
year forecast. Local financial commitment is assessed based on 
a plan that demonstrates the capacity to build and operate the 
project during the first year of operation.
    The NPRM proposes that certain simple, low-risk projects, 
which by their very nature have sufficient benefits to rate 
well without further analyses, can qualify as Very Small Starts 
and be subject to a highly simplified project evaluation and 
rating process. A project will be required to contain certain 
features and have a total project cost of less than $50 
million.
    The NPRM includes consideration of all the statutory New 
Starts project justification criteria. The NPRM reorganizes the 
justification criteria into cost-effectiveness and several 
measures of effectiveness, namely, land use and economic 
development benefits, mobility improvements, and environmental 
benefits, and clarifies that operating efficiencies are covered 
by cost-effectiveness.
    The NPRM expands the evaluation of economic development in 
a new combined measure of land use and economic development 
benefits. We continue to believe that it is extremely difficult 
to distinguish economic development benefits from land use 
benefits. However, the NPRM provides an opportunity for input 
on how we might do so and how we might implement improved 
measures of project merit that would include the land use and 
economic development benefits more directly.
    The NPRM includes evaluation of the congestion reduction 
potential of the proposed investment in the assessment of 
mobility benefits. Further, it proposes to consider the 
relationship of the project to road pricing strategies as 
another factor.
    Finally, the NPRM asks for inputs on methods by which FTA 
could include the currently unmeasured highway system user 
benefits in calculating the cost-effectiveness of the proposed 
project.
    The NPRM proposes to make permanent our current policy of 
recommending for funding only those projects that rate at least 
medium on cost-effectiveness. First, this is the only measure 
that compares a project's benefits to its costs. Second, the 
measure of effectiveness we use, user benefits, is an objective 
and quantifiable metric. Third, other benefits such as improved 
accessibility and mobility, the propensity for increase in 
property values, and the likelihood that highway users will 
switch to transit, reducing demand for highway travel, are 
directly related to user benefits. Finally, a project with a 
high rating on cost-effectiveness almost always has high 
ratings on other factors such as mobility improvements and 
environmental benefits.
    Chairman DeFazio, Ranking Member Duncan and Members of this 
Subcommittee, FTA is committed to the New Starts and Small 
Starts programs. We believe that the NPRM we have issued 
provides a good basis on which to make continued improvements 
to the management of this important program. We remain 
committed to streamlining project delivery, while providing 
strong project management oversight to bring good projects in 
on time and within budget. We look forward to working with 
Congress on these and other issues facing our Nation's public 
transportation systems.
    I want to thank you for the opportunity to be here today, 
and I am happy to respond to your questions.
    Mr. DeFazio. Thank you, Mr. Administrator.
    Ranking Member Mica had another commitment, came in late, 
and has an opening statement.
    Mr. Mica.
    Mr. Mica. Thank you. Thank you for yielding, too, and also 
for holding this hearing, Mr. DeFazio and Mr. Duncan. I think 
this is very important. Since we haven't really addressed New 
Starts with the Administration, I wanted to weigh in a little 
bit on a couple of my concerns and also from a policy 
standpoint.
    One of the things that I think is essential, we are all 
trying to find ways to deal with congestion and get people out 
of traffic and into mass transit and other environmentally 
positive modes of transport. One of the frustrations I have--
and I am pleased to see you here this morning, Mr. Simpson--is 
just the sheer amount of time it takes to get into the queue, 
so to speak, with the New Starts program. And I think part of 
the problem I have identified is sometimes Congress, and I 
would ask this question: Have we set too many requirements?
    I don't have a question, but one of the things I would like 
you to do to respond to me and also to the Committee would be 
to provide us with any of your specific recommendations on how 
could speed this process up. I think we are going to hear from 
Norfolk and I will ask the question about their light rail, and 
I think from the entry to P&E it is eight years, I was told.
    I have been involved, as you know, with a commuter rail on 
an existing rail right-of-way. We first proposed this in 1989. 
Of course, communities and partners have to make a decision, 
and they did that, but I know we have been involved in this for 
at least three years, answering some questions that are sort of 
as plain as the nose on somebody's face. We have turned the 
consulting requirements or the requirements to do New Starts 
into a cottage industry that is very costly and time consuming.
    So I want to know how we can speed up the process. Speeding 
it up can also save us time and money.
    The other thing, too, is I can't tell you, having been 
involved in these not just in my district with commuter rail, 
but around the Country, the players change. The local players 
change and the politics, and some of the politics, of course, 
evolve around these questions and they get pretty testy. So the 
longer that takes, the more players we deal with and the 
political challenges become even greater.
    So I compliment you on what you are doing. You have to play 
by the rules that we in Congress set, but anything you can 
recommend or anything you can come up with that can condense 
that period of time to get these New Starts moving.
    Then, looking at exceptions for projects like commuter rail 
on existing rail lines, this isn't exactly rocket science. For 
example, through my communities, I have Amtrak already with a 
franchise. They already make these commuter stops. They could 
probably increase their traffic without all of these studies 
and requirements, but folks are a little bit reluctant to give 
Amtrak any more responsibility based on their performance and 
some of the constraints that they have to operate under.
    So those are just my comments this morning. I look forward 
to working with you. I know Mr. DeFazio and Mr. Duncan are also 
interest in seeing how we can help communities, States, and 
localities that move these new projects forward.
    Thank you, and I yield back.
    Mr. DeFazio. Thank you. I thank the Ranking Member for 
those comments.
    We will now proceed to questions for the Administrator.
    At issue in the earlier hearing, in May, and I believe 
still today, is that I feel you have not delivered on the 
statutory direction, I believe, from Congress regarding 
economic development and land use. They have been lumped into 
one criteria, and I have a couple problems with it. One is that 
it is lumped into a criteria which scores 20 percent, which, 
given the statutory direction, I believe does not adequately 
address the direction from Congress to act in these areas and 
to emphasize projects that would provide benefits in those 
areas.
    Secondly, as I understand the way--I mean, we did have 
testimony later, after you appeared in May, from several 
experts who had models and said there is no big deal or problem 
in predicting or forecasting economic benefits and quantifying 
them; that the work has been done, but somehow the FTA can't 
find that work and implement it. It seems that what you are 
attempting to do is look at the impacts of a limited facility 
on the regional economy, as opposed to just looking at what the 
local transit agencies would look at, which is the economic 
development based on the corridor and the station area economic 
development.
    I think that is part of the problem why FTA can't qualify; 
they are saying, well, we want to look at the impact of this 
line serving this segment, this neighborhood, and what the 
impact would be on the regional economy kind of gets lost. And 
we are going to have testimony a little later representing a 
county in Virginia about how they don't have any trouble 
quantifying exactly what is going to happen when they do the 
streetcar line in terms of the more intense development that is 
going to occur and the economic benefits that are going to flow 
from that.
    So do you think this this part of the problem, Mr. 
Administrator, why you can't get to economic development, that 
you are off chasing the regional benefit, when I believe the 
models that have been developed, and would be more practical 
since these are relatively small projects, to measure the 
benefits on the corridor and the stations?
    Mr. Simpson. Let me answer that two ways. First, let me 
tell you what FTA is doing since the last hearing in terms of 
economic development. Then I can give you my thoughts generally 
on the measurement of economic development.
    First, we have had a two-phased project, one started over a 
year ago, and I mentioned it at my last hearing, where we did a 
study, and the effort included an initial study to develop a 
methodology to forecast changes in economic development 
activity that result from transit capital investment projects. 
The FTA developed and tested two potential approaches. One was 
a regional economic model to forecast changes in jobs and 
income, and, two, to develop a method to forecast station area 
development that would result from transit investments, which I 
think is what you are referring to, Mr. Chairman.
    When we looked at those, we found that the first one, the 
regional economic modeling approach, was rejected due to the 
high cost and complexity of implementing these models, as well 
as concern about the erratic results observed in FTA's test 
cases. I said it in my last hearing, that cost-effectiveness 
gives everybody a lot of grief. These models that we looked at 
would be just as challenging.
    Mr. DeFazio. Right. So why don't we just discard the 
regional approach and focus on the second which you mentioned?
    Mr. Simpson. I'm going to get to that.
    Mr. DeFazio. All right.
    Mr. Simpson. The station area forecasting method was also 
somewhat unsatisfactory in that the impact of the transit 
investment on development patterns was not significant in FTA's 
test cases.
    Now, we didn't stop there. There is more. We have a phase 
two study that seeks to make additional progress in developing 
a method to evaluate the economic development impacts of 
capital transit investments. The first thing we are doing, 
which I mentioned to you previously, is we are convening a 
panel of top experts on economic development impacts which are 
well known to the industry and are leaders in the field. They 
are going to review FTA's results to date and try to come up 
with a program for us. They are going to also assist us in 
consulting and developing a program that can show us which 
methods, if we can achieve them, are likely to succeed. The 
panel is also going to develop a methodology and research 
program based on panel recommendations, and so forth and so on.
    But the bottom line is that, to date, we have not been able 
to find anything that we can use on a cross-cutting basis to 
measure economic development. And just as a sidebar, I have 
been reading Alan Greenspan's book on the age of turbulence and 
he talks about economic forecasting, and he basically says how 
complex the world really is, and when you try to measure 
something, it is just not that easy. And I think that, if you 
will allow me to steal a page from his book, it is pretty much 
the same case here.
    But what we have found consistently throughout the transit 
program at FTA is that when we measure cost-effectiveness, 
which I know gives a lot of folks a lot of grief, there is a 
direct correlation between the cost-effectiveness measure and 
economic development and mobility and all the other factors. 
They are inextricably linked and we just can't uncouple them. 
That is why, when we now have decided to put land use and 
economic development together, we are trying to do a couple 
things: we are trying to show transparency and, as you said at 
your last hearing, we have this mysterious black box that we go 
back to the shop and try to churn out these cost-justifiable 
projects. We are trying to be transparent and to let everybody 
know clearly what we are thinking and how we are thinking, and 
we are making our best attempt at that.
    With respect to economic development and land use, we 
believe that you can't have economic development unless you 
have land use, good land use patterns and policies. So it is a 
no-start if you don't have that in place. So if we rate a 
project with really effective land use and then give another 
measure of economic development, you could be double-counting, 
number one. Number two, even if you do have really good land 
use, it is not enough to make the case that you are going to 
have that economic development; there are other externalities 
that are so great, including--we have had a run-up in real 
estate over the last 17 years. I don't care where you travel 
around the city, every place that I have traveled has seen 
economic development and the redevelopment of cities and 
warehousing districts that have become a great mixed use 
development, and people seem to be moving back to the city. But 
there are other externalities like interest rates, like jobs, 
and all those other things that are really hard to try to put 
into a formula and put into our so-called black box and churn 
out a metric that is cross-cutting throughout the whole Country 
and that is meaningful.
    The second thing with economic forecasting is we have got 
our transportation model, as I spoke about, and some of this 
economic forecasting is almost a second level of economic 
forecasting. So I think that, in a certain way, it explains 
what our predicament is here.
    Mr. DeFazio. Right. Well, if we can come back to earth for 
a minute.
    Mr. Simpson. Okay.
    Mr. DeFazio. I think you can look at projects that have 
been completed and, yes, you do have land use, which is a 
theoretical underpinning, but land use potential is only 
realized in certain instances; there is a lot of potential that 
isn't realized. So I wouldn't say just having that and then 
counting the actual economic benefits and/or more intense 
development that resulted from the construction of the transit 
project are the same thing at all.
    I mean, land use provides the potential, but the potential 
often is not realized until there is a project. And if you just 
look at the nodes that have developed just right over here in 
Virginia and around the D.C. area, the intense development has 
taken place and you can measure within a certain distance of 
each of the transit stations the values that have occurred. You 
can do so, similarly, in Portland, Oregon, where they have put 
a streetcar. You can see where, along that line, they have the 
same zoning on one side of the river and the other, but the 
more intense development has been realized along the streetcar 
line because that became a magnet for the development.
    So I have got to disagree, and I think that we just gave 
direction that doesn't require consulting with Alan Greenspan 
or these other exotic metrics, but just the reality of will 
economic development follow this project and will there be 
value created. I think that is a fairly simple thing, I 
believe, to quantify. Having studied economics, I know it is 
not a science, so let's discard the scientific stuff and go to 
observational reality and direction from Congress, which is we 
want economic development and we don't want it to be part of a 
criteria which is only 20 percent and which is totally trumped 
by the black box of cost-effectiveness.
    And then going to cost-effectiveness, part of that goes to 
another concern, which is trips not taken. Again, we don't seem 
to be putting any value on avoiding automobile use and/or 
commuting. I just had the Chairman out to ride a tram in 
Portland, and you were on that same tram. It has now been 
operational. They say they have had a million riders in less 
than a year on the tram, and what they are finding is at the 
base of that tram, which is also served by a streetcar line, a 
lot of people who work at Oregon Health Sciences University are 
relocating there.
    So they are either abandoning their cars or only using 
their cars infrequently. But there wouldn't be any credit for 
that, it is a trip not taken. They are living on a transit 
line, they are living on a tram. You are not involving the 
tram. But the point is we are missing a lot of the benefits 
here.
    And then we also wanted to have environmental criteria, 
which go to trips not taken, congestion, lack of pollution, all 
those things, and now you have brought in this new criteria. So 
this is going to be a two-part question. One, why can't we 
measure trips not taken and why isn't that a benefit, because I 
think it is an avoided cost?
    Secondly, how is it that we would penalize a transit agency 
which, in most jurisdictions, has no control, none whatsoever, 
over policy relating to roads, bridges, and highways, if their 
local jurisdiction, which they don't control, doesn't impose 
tolling and congestion pricing over here, then you are going to 
penalize the transit project which is proposed over here to 
mitigate congestion with trips not taken? I mean, you are 
putting the transit agency in a bit of a difficult position 
here.
    Mr. Simpson. Mr. Chairman, we are in agreement with you 
that we should measure the trip not taken. We asked the 
question in the NPRM, and just to try to stay on earth, the 
problem that we have experienced with the trip not taken, it is 
sort of like the second order of magnitude or it is the 
forecast on the forecast. In other words, we are trying to 
forecast a certain development and a certain economic 
development, so that is a forecast, so we have got this one 
forecast.
    Now, off that forecast, we are going to try to forecast 
again behavior patterns, travel patterns, where people won't 
need to use their automobiles. So it is the second order of 
magnitude in a forecast, so the----
    Mr. DeFazio. Maybe we ought to just count the number of 
people that use the transit.
    Mr. Simpson. Well, we should.
    Mr. DeFazio. Right.
    Mr. Simpson. We do. I think we do. But this trip not taken 
is a very difficult----
    Mr. DeFazio. And distribute a survey to them and say before 
you moved here, how did you get to work.
    Mr. Simpson. Right. You know, I understand the trip not 
taken, having lived in an urban environment, so I understand 
it.
    Mr. DeFazio. Right.
    Mr. Simpson. But let me just say again that we are asking 
that question. We do believe that it should be counted. And I 
know that there are one or two models out there that are 
counting the trip not taken, or proposing to count the trip not 
taken. Once again, when we put it into a national program, we 
have to make sure that we have a product that is not usable in 
one county and not used in the rest of the Country.
    Mr. DeFazio. Okay, but then how about my second part of the 
question? Transit agencies often do not control other modes of 
transportation and/or the policies that relate to them. So why 
should a transit agency be penalized in applying if their local 
jurisdiction has not adopted congestion pricing?
    Mr. Simpson. The proposal is not to penalize anybody.
    Mr. DeFazio. Well, I understood the first proposal was just 
to give them extra points. As I understand the NPRM, you could 
get demerit points for not having that, in addition to getting 
extra points.
    Mr. Simpson. Not to my knowledge, but could you hold on one 
second?
    Mr. DeFazio. Yes.
    Mr. Simpson. It is only a matter of boosting, Mr. Chairman. 
It would only help, it wouldn't hinder. And it also----
    Mr. DeFazio. So you are going to filter, but you are going 
to filter--I mean, it seems like pretty broad language. The 
first proposal was we are going to take something that wasn't 
statutorily authorized by Congress----
    Mr. Simpson. Right.
    Mr. DeFazio.--that is an obsession of this Administration, 
particularly a few ideologues from right-wing think tanks who 
have positions of power, that relate to theories of market and 
congestion pricing, and we are going to use it anywhere and 
everywhere we can. So now we have added it on to transit. We 
had this discussion last time, so I am not going to totally 
revisit that in terms of whether or not you are discouraging 
transit at this point with this. So you are just saying this 
so-called filter is essentially the same thing you proposed 
before, which is if an agency, which you don't control, in your 
vicinity adopts congestion pricing, you will get extra points 
on your transit project even though you had nothing to do with 
it.
    Mr. Simpson. That is correct. But most planning is not----
    [Laughter.]
    Mr. Simpson. Well, wait a minute, now, Mr. Chairman. Most 
planning is not done in a vacuum. Typically, you have got the 
whole MPO and the whole planning process. So we are saying if 
an area were to adopt a congestion pricing strategy that would 
help transit, because now you are getting more vehicles off the 
road and you have more people riding transit, we would look at 
things like, in the mobility factor, fewer vehicle miles 
traveled----
    Mr. DeFazio. But when we are talking about New Starts and 
Small Starts, we are not talking about--many projects are not 
deep into suburban areas.
    Mr. Simpson. Right.
    Mr. DeFazio. So when you include that--I mean, for the 
inner city folks, I guess we would have to be talking about 
cordon pricing and saying if you want to use your car today, it 
is going to cost you $15 or $20. We are going to be like 
London. Of course, they have slightly different land use 
patterns in Europe. Again, the transit agency doesn't control 
that, and it is beyond me why that should be a factor.
    I can see, in some limited instances, when you are dealing 
with light rail versus, say, streetcar or true Small Starts, 
something that is an extensive system which serves suburban 
areas, that you might get some extra points with the idea that 
you are going to somehow drive people onto that and they are 
going to utilize it more. I believe if you do it right and you 
make it convenient, they will use it, and I don't believe that 
we need to penalize people to make them do it, and the Chairman 
of the full Committee shares my concern about this.
    Mr. Simpson. Mr. Chairman, I don't want to take up the 
Committee's valuable time to discuss this, but from everything 
that I know and speaking to the folks at FTA, we know of no 
area where anybody would be penalized as a result of not 
implementing a congestion strategy----
    Mr. DeFazio. Right. But again, the point is that transit 
agencies don't control these other policies. Transit agencies 
we want to be run efficiently, we want them to bring in 
projects on budget or under budget, we want them to run 
efficiently, and we want them to serve the general public. None 
of that, again, externalities that might or might not drive 
customers toward them, that are beyond their control, I don't 
believe, in most instances, should be scored.
    Mr. Simpson. This is an NPRM and the point is well taken. 
But if I could just continue for the record for one second.
    Mr. DeFazio. Sure. I am well over my time.
    Mr. Simpson. With respect to congestion, as you know, and 
we have said it before and it is mentioned throughout the 
statute, the Department believes, first of all, that it is one 
DOT, and we are not looking at highway versus transit. As in 
the MPO planning process, we are trying to look at 
transportation solutions for a corridor, and it could be a 
mixture of transit and highway projects. You know, since 
SAFETEA-LU was written, which was probably five or six years 
ago, we have got a national crisis that is on the front page 
every day on congestion, and the Department is trying to take a 
proactive stance to try to solve the problem that perhaps 
wasn't thought about when SAFETEA-LU was written.
    Mr. DeFazio. Well, I beg to differ. I think it was a major 
consideration when SAFETEA-LU was written. This Committee 
attempted to have about another $70 billion or $80 billion to 
invest over the term of the bill, which the White House fought 
tooth and nail, and in the end we got a bill that wasn't 
adequate in terms of investment, and now they are trying to 
make up for that by saying, well, we will just use market 
forces, and I have just got to disagree with this cockamamie 
theory.
    Thank you. I am going to turn now to the Ranking Member.
    Mr. Duncan. Well, thank you, Mr. Chairman.
    Mr. Administrator, you know, the problem that I see is 
this. I have great respect for Mr. Greenspan and I agree with 
most of what he says on things, and I understand your quote 
that he said the world is a lot more complicated than people 
realize. On the other hand, a lot of people feel that the 
government, and particularly the Federal Government, makes 
things a lot more complicated than they really need to be.
    So, in SAFETEA-LU we had these laws trying to come up with 
some sort of environmental streamlining to speed up some of 
these projects because people on both sides of the aisle agreed 
that all of these projects were taking far too long. Where 
there is really a desire to move fast, we can do so. We showed 
that on the bridge out in Minneapolis. I mean, we passed a $250 
million bill within just a few days of that happening.
    We always hear, and it gets sort of old to me to say that 
we are in a global marketplace now or we have to compete 
globally, and yet we see all these other countries that are so 
dynamic economically moving really fast on major projects, 
major highway projects, major aviation projects. I chaired the 
Aviation Subcommittee for six years and I will never forget the 
main runway in Atlanta. It took 14 years from conception to 
completion. It only took 99 days of actual construction, and it 
was primarily due to all the environmental rules and 
regulations and red tape. Certainly, we don't want to do to the 
environment what they are doing in some of these places like 
China and other places, but we have to do better. We have got 
to have a better balance in there because we have got to speed 
up these projects. A few months ago we had testimony in here 
about a highway project they have been working on in California 
since, I think, 1990, 17 years, and it was only 12 miles.
    So what I am getting at through all this is what do you 
think your proposed rule will do to contribute to faster 
decision-making and project development, particularly in regard 
to the New Starts, the bigger programs?
    Mr. Simpson. Your question really gets to the question or 
statement, rather, that Congressman Mica made earlier, so maybe 
I can address it in that context. I mean, the environmental is 
one piece of it, but with a lot of these projects--I know it 
varies on the complexity. We talk about the length to bring a 
project from the planning cycle to the revenue date or the date 
that a project opens--there are a whole bunch of reasons for 
them and they don't all wind up at the doorstep of the Federal 
Government.
    We find that most of the projects--and I think you asked 
that question last time, Congressman, local commitment, rather 
than cost-effectiveness, is the reason why many projects fail 
and don't proceed through fruition, and that holds true for the 
delay in projects. We find that in many times, as Congressman 
Mica was so eloquent in explaining it, there are changes in 
political parties, there are changes in transportation 
officials, and what was once a priority may not be a priority 
or other things happen, and you thought you had local 
commitment and now you no longer have commitment. So that is 
one reason why.
    The other thing is transportation planning. Sometimes, when 
we plan these projects--and we have a project very close to 
Washington, D.C. that is like that--that the scope gets changed 
and people think about, midstream, well, maybe we are not going 
to have an aerial alignment, maybe we should do a tunnel, and 
that is perfectly within the local jurisdiction. That also 
slows up projects.
    Our NEPA process, we are trying to do the best that we can 
with respect to NEPA and with respect to the processes that go 
on in FTA. We have commissioned Deloitte and we have 
implemented many of the changes, and I won't take the 
Committee's time to tell you them now, but I would be more than 
happy to send them to you for the record. Then we have also 
improved the product at FTA over the years. You know, there was 
a time, maybe 10 or 12 years ago, where not our forecasting, 
but the grant recipients' forecasts on ridership were woefully 
inadequate and low, and their costs were a lot lower than what 
the actual costs would be. Now, you know what the rationale is 
for that: we need to get projects funded, so let's keep the 
ridership numbers as optimistic as we can and the costs as low 
as possible.
    So FTA, with the help of Congress, clamped down on that and 
we are moving forward with a Contractor Performance Assessment 
Report. We started our own risk analysis to try--we do a lot, 
but basically what I am saying is we are trying to keep 
projects on time and on budget because we would rather be here 
talking about this than why the project blew the estimate by 50 
percent. And we are trying to streamline the process as much as 
we can without jeopardizing the integrity of the program. It is 
a multifaceted approach and the project time line did go from 
3.7 years to 4.9 years, where it is at now,--I guess it has 
been over the last 10 years--but then again we are handling 
like $22 billion worth of projects within 99.5 percent of 
construction costs, which is unheard of. We don't have that 
anywhere, and I think it is a testament to the risk program. So 
we are working what we can, it is just that there are so many 
partners involved--between the local governments, the Federal 
Government, the funding partners--that it is not as easy as 
that when you build these major capital infrastructure 
projects.
    And with respect to the rest of the world, I only know that 
we have rules and regulations that protect everybody, and I 
know other countries sometimes don't have the same 
environmental guidelines or they don't need to get consensus 
from the community. We have all that public involvement.
    Mr. Duncan. Well, I have certainly seen and read about what 
you are saying, you know, one mayor will start a project and be 
real enthusiastic about it, and the next mayor is not quite so 
enthusiastic or whatever. But I also have heard through so many 
Subcommittee hearings on several different Subcommittees in 
this Committee, I have heard local officials, I have heard 
academic experts, I have heard private business, you know, the 
contractors and so forth, say that all these projects that we 
deal with in this Committee--highways, water projects, aviation 
projects, the whole kit and caboodle--that, on average, these 
things take about three times as long and tossed about three 
times as much as they should. If we really had the desire to 
speed some of these things up, if we all joined together and 
made that our main----
    What do you think is the most time-consuming process for 
New Starts projects sponsors in fulfilling the evaluation 
requirements?
    Mr. Simpson. Well, it depends on the project. I mean, a lot 
of it is we have got some projects where they haven't done all 
the environmental protocols correctly or their forecasting is 
not--you know, we have seen projects before and we will have 
projects come in where the forecasting doesn't look right, 
where you will see forecasting on the date when the project is 
scheduled to be completed and 10 years later you have seen--
this is just an example--or 100 percent increase in ridership, 
things that are out of the norm. So we see less of that today, 
but those are the kinds of things that we have to put the 
paperwork back to the grant receiver and say, you know, this 
really doesn't look right, you need to look at your travel 
models and you need to look at this and you need to look at 
that. So it is hard to just say any one thing, it is a whole 
host of things, and it is a cumbersome process.
    Mr. Duncan. Well, we have other Members here. I don't want 
to take up too much time, but let me just ask one last 
question. At our May hearing that the Chairman mentioned, the 
GAO testified that there is less than half the number of New 
Starts projects in the pipeline in fiscal year 2008 than there 
was in 2001. Is that from State and Federal funding? What is 
the situation?
    Mr. Simpson. No. I think it was we had a lower bar. In 
other words, sort of like if you just decided--I like to use 
the SAT as an example for the New Starts program, with the SAT 
score being cost-effectiveness. It is almost like if we throw 
away the SAT, let everybody come in to preliminary engineering, 
let's bring everybody in, which was happening for a long while 
because of political pressures and other and lower standards. 
So we found out, with our limited assets of full-time 
equivalents, that we had our staff at FTA working on a 
multitude of projects, probably half of which aren't going to 
make it past PE.
    So I think you brought this up last time, so I do have some 
extra data. From 1999 to 2005, which is what you are talking 
about, we found that 56 percent of the projects are out of the 
process because of a lack of local commitment. So there is a 
lack of local commitment, which seems to trump everything else, 
where projects fall out, number one. Number two, we have 
certain standards now, and if you would like to, I can 
articulate them. Certain things have to happen before we allow 
a project into preliminary engineering, because once we allow 
the project in preliminary engineering, that is when the 
resources of the Federal Government or local government, they 
start spending money and putting a lot of resources into a 
project. We want to make sure that projects now that come into 
preliminary engineering have a really good shot of being 
funded. The short answer is we didn't do that in the past.
    Mr. Duncan. All right. Thank you very much.
    Mr. DeFazio. Okay, we will turn to Members in the order in 
which they arrived for questions. Ms. Hirono would be first on 
the Democratic side.
    Ms. Hirono. I know that we are, today, addressing the 
proposed rule, however, on July 20th, 2007, the FTA issued the 
New Starts and Small Starts evaluation and rating process, 
which I think are the guidelines that FTA intends to use, and 
pretty much this rating process issuance incorporates many of 
the factors in the proposed rule. So what is the intention of 
the rule if you already have guidelines that incorporate these 
rules and you intend to use those guidelines, I assume, 
regardless of whether the proposed rules go into effect or not?
    Mr. Simpson. Congress asked us to be more transparent in 
what we do and to look at economic development and other 
factors, and at the last hearing we heard from some Members 
that we weren't really paying enough attention to environmental 
benefits and the like, so, as the program changes, we are 
trying to change along with the requirements that Congress has 
enacted. So we are putting this proposed rule out to get 
comment.
    Ms. Hirono. My understanding is that this July 20th 
issuance already incorporates the weight to be given to the 
cost benefit aspects of New Starts and Small Starts, so it 
seems as though you are already going in that direction under 
these guidelines that have already been issued, so I need 
clarification from you.
    Mr. Simpson. Yes. Particularly the Small Starts was a new 
program and we didn't have the rule out. We put out what we 
thought would be--I guess what we thought might work in the 
short run, until we had a final rule. So there was a certain 
logic that went along with that, and I think you will see that 
that logic follows what the proposed rule is now, particularly 
for the Small Starts program. Once again, this is for comment, 
so we are expecting a lot of comment from all the stakeholders 
before we initiate a final rule.
    Ms. Hirono. In other words, then, just so I am very clear 
on this, then, the final rule will trump or will supersede 
whatever is in your July 20th, 2007?
    Mr. Simpson. Yes. Right now we have guidance. We have 
guidance right now.
    Ms. Hirono. Okay.
    Mr. Simpson. We needed a place to start, a placeholder, and 
we are moving towards the final rule, and hopefully that final 
rule will come out sometime in 2008.
    Ms. Hirono. I have one more question. Has any New Starts 
project ever received a high financial rating, as opposed to 
the medium rating?
    Mr. Simpson. Yes. Yes. Quite a few.
    Ms. Hirono. Could you provide the Committee with a list of 
those New Starts that achieved a high financial rating?
    Mr. Simpson. Yes. We will do that, absolutely.
    Ms. Hirono. Thank you.
    Thank you, Mr. Chairman.
    Mr. DeFazio. That was of interest to me also. We would like 
to see a list of those that have achieved a high rating.
    Mr. Simpson. Matter of fact, yours received a high, your 
BRT project in your town received a high rating.
    Mr. DeFazio. New Starts and Small Starts.
    Mr. Simpson. New Starts as well.
    Mr. DeFazio. Okay. Thank you.
    Ms. Hirono, are you----
    Ms. Hirono. I yield back my time. Thank you, Mr. Chairman.
    Mr. DeFazio. Okay.
    Mr. Coble. Thank you, Mr. Chairman.
    Mr. Simpson, the gentleman from Tennessee put a question to 
you that concerns me, and that is the apparent lack of increase 
in the starts that are in the pipeline, and I know you 
responded to that, but am I correct in concluding that maybe 
one of the reasons for this is that it is so difficult that the 
local authorities just can't get their hands around it?
    Mr. Simpson. No, I wouldn't call it that. It is difficult, 
but we give a tremendous amount of technical assistance in 
outreach to anybody that is interested in a New Starts. It is 
just that there are certain milestones that you need to achieve 
in order to get into the preliminary engineering stages where 
basically the Federal Government starts to follow the projects 
through to construction. As I said, years ago the entry was 
very simple. If you had a project, pretty much you could get it 
into the preliminary engineering, and we found that there was a 
high failure rate.
    So we figured that sort of prior planning prevents poor 
performance. Let's try to do as much planning and let's try to 
do as much work so that if you do get into preliminary 
engineering, because there's a lot at stake once it's in PE, 
there's an expectation that you are going to have a project, so 
let's not disappoint communities and the like, so let's work 
with folks. And once they're in PE, many times when projects 
get into this preliminary engineering stage, we work with 
projects that may not be viable and we help--because we have 
been building projects all over the Country and this may be a 
community's first project, so there are many projects that come 
to us.
    Once they meet the PE milestone, we work with them just 
like partners, investment bankers, and we tell them, you know, 
maybe your project is too long, or you need fewer stations or 
you need more stations, or have you thought about transit-
oriented development and the like, have you thought about 
alternative forms of financing. So we really work very hard 
with the--we take ownership of the project, basically. We work 
very hard with the grant recipients, and it is very timely. So 
whatever shortfalls the local community or the transit agency 
may lack, we really try to help them and we give them proper 
guidance. It is really in that way. I say that seriously. We 
take ownership of the project.
    Mr. Coble. Mr. Simpson, there have been concerns voiced 
about the proposed rules expanded eligibility to allow New 
Starts funds to be used to build high occupancy toll lanes, 
popularly referred to as HOT lanes, in addition to the high 
occupancy vehicle, HOV, lanes, which are currently allowed. 
What is the FTA's statutory authority to amend this regulatory 
definition, and will this change make the treatment of HOT 
lanes consistent under highway and transit law?
    Mr. Simpson. We are really trying to help transit projects 
as much as we can, and what we found over time, you don't see 
bus lanes being constructed any longer, and it is our belief 
that one of the reasons is that cost of a bus lane--I know from 
my personal experience in the northeast, particularly in my old 
community in Staten Island, we have exclusive bus lanes that 
travel probably about 15 miles from one of the suburbs to the 
center of Manhattan or to the tunnels that connect the highway 
to Manhattan, and those bus lanes typically run at about 30 to 
40 percent of capacity. So on existing bus lanes that transit 
authorities, in this case, the City of New York, they have a 
bus lane where they are running buses, great express bus 
service, and they have only got 30 to 40 percent of capacity.
    So it was our thinking, to try to be creative and look for 
alternative financing methods and to help transit, that the use 
of an HOT to make a bus lane or another lane, an HOT lane, as 
long as you maintain that flow of traffic so that the buses are 
not bogged down, that the HOT lane or the pricing lane, if you 
will, is incidental to the main purpose of the bus project, but 
it is also subsidizing the bus project.
    So if you can envision a bus lane that is maybe 30 to 40 
percent of capacity, now you put cars on the lane up to the 
point where you have real-time pricing, up to the point so that 
you don't bog down that lane and it meets the requirement of at 
least 5 miles of the speed limit, all those cars that are on 
the lane that are getting that what we call free flow, there is 
a lot of revenue to be picked up off of those people that feel 
that time is money. That actually goes to subsidize transit 
projects. So the person who is sitting in the bus, looking out 
the window of the bus as it travels down the exclusive HOT 
lane, the cars that are on that lane are subsidizing the fare 
box to promote more transit.
    It is very similar to what New York City Transit does when 
they build a tunnel and they put telephone wires and cable and 
a whole host of things in that tunnel. Now, that is an 
incidental purpose; they didn't build that subway tunnel--they 
built the subway tunnel to drive the train through it, but they 
are picking up huge revenues to help offset the fare box by 
allowing these incidental purposes or uses to the tunnel.
    So that's what the thinking was there. It is a new 
innovative way of thinking to help alleviate traffic 
congestion, because now, whatever cars that you take off those 
other free lanes, you are helping everybody there. So you are 
using unused capacity, and we believe that since that is not 
the main purpose of the HOT lane, it is incidental, it is an 
ancillary purpose, that we are perfectly within the statutory 
authority to do that.
    Mr. Duncan. Well, I think, Mr. Chairman, any time we can 
take action to improve congestion, which inevitably negatively 
impacts productivity, results in additional consumption of 
gasoline, I am endorsing that. Thank you, Mr. Chairman.
    Mr. DeFazio. Mr. Simpson, if you could, since you gave a 
long explanation, but at the very end I thought you sort of 
brushed over the question. Again, he started the question with 
what do you believe is your explicit statutory authority. Could 
you just get back to that? It sort of was incidental at the 
end. I think what you said was because it's incidental, or 
something, that somehow you found it was statutory.
    Mr. Simpson. I think it is best if I give you another 
example.
    Mr. DeFazio. No, I don't want examples. Just what statute 
are you referring back to? I mean, what is the expressed 
statutory authority to use these funds for HOT lanes? Because 
you could argue the other side of the argument, which is the 
Federal funds that go to construct the HOT lanes are 
subsidizing the non-transit use of that lane, at least 
initially, because later, perhaps, you will realize the 
potential of those additional revenues and maybe you will pay 
back the additional investment was made. So what is the 
statutory authority?
    Mr. Simpson. Well, first, our intent is that whatever 
Federal dollars from the FTA program are utilized, it is for 
the transit portion of the project only. That is what our 
intent is. Secondly, can I get back to you for the record fully 
with where in our statute, because I don't have that?
    Mr. DeFazio. Yes, we would like that. Thank you.
    Mr. Simpson. Okay, thank you.
    Mr. DeFazio. Mr. Mitchell. He left also? Okay, then we go 
to Mr. Bishop from New York.
    Mr. Bishop. Thank you, Mr. Chairman.
    I want to just follow up on the question that you were just 
asking. In the Notice of Proposed Rulemaking, you also create a 
new category called Very Small Starts. So my first question is 
what is the explicit statutory authority under which you are 
creating that category.
    Mr. Simpson. Well, I don't know that we have an explicit 
statutory authority, but, once again, we have a lot of really 
good thinkers at FTA that do a lot of transportation modeling, 
and we have got economists. We know that when you build a 
transit project, the complexity of forecasting and all those 
other things increases exponentially the larger the project is. 
So when you start to get to like your project on the Long 
Island Railroad, the East Side Access project, as these 
projects start to get complex, the forecasting, all those 
things and all those requirements that you need to measure in 
order to determine whether you are going to rate the project a 
pass or a fail, get a lot harder.
    We just happen to know, from working with all of these 
transportation models, that if you have at least 3,000 riders a 
day,--and there are two or three other requirements--that the 
project is no more than a $3 million a mile, and a couple of 
other things, that it automatically would meet our requirements 
because we have just seen that over the pipeline. So it is sort 
of like a preapproval, if you will.
    Mr. Bishop. Let me just stay on that for a second. The $3 
million per mile, in response to a question from Mr. Coble, you 
just indicated that one of the goals was to help transit 
projects as much as you could. By creating or imposing this $3 
million per mile limit on Very Small Starts, does that not 
eliminate certain types of transit projects like streetcars?
    Mr. Simpson. No, not at all, no. See, what we are saying 
is--I left out the most important thing. The project has to be 
less than $50 million. So if you happen to have a project that 
is less than $50 million, it costs less than $3 million a mile 
to implement, and it has got 3,000 riders a day, it is 
basically a preapproval. We know that that will meet the 
requirements because it is really small in nature, the 
complexity is not there, and we just happen to know, in 
studying these projects and funding projects before we had the 
Small Starts program, even, or these exempt projects, that 
these projects meet the criteria.
    You know, it is a proposal. If the desire of Congress is 
not for us to label that or have that, we will note that in the 
comment here today. But it is certainly not to exclude any 
project, because there is the regular, you have got the Small 
Starts program and you have got the New Starts program as well. 
So there is no limitation on anything, it is just that, hey, by 
the way, community, if you happen to have a project that meets 
that litmus test, it looks good.
    Mr. Bishop. And, again, not to be difficult, but in 
response, I believe, to a question from Ms. Hirono, you 
indicated that one of the goals here was transparency, improved 
transparency. Are you not at odds with that goal by virtue of 
layering all these both new designations and new requirements 
onto the NPRM?
    Mr. Simpson. I kind of think we are just trying to be 
customer-focused. It is like if you go into a bank and buy a 
mortgage, you want a fixed rate, an adjustable rate, or a one-
year ARM. It is just another option for people that may have a 
small project that they need to fund quickly. So I don't really 
know how to respond to that other than, when we get the 
comment, if the transit industry or the stakeholders don't like 
it, this is a Notice of Proposed Rulemaking.
    Mr. Bishop. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. DeFazio. If I could, just following up on that. I would 
agree with the gentleman from New York. I believe that the $3 
million per mile yardstick would exclude any streetcar 
project--and that is the consensus in the transit community 
across America--from the Very Small Starts program. We are not 
aware of any that have been built for less than that. In fact, 
it would exclude many BRT projects that have enhanced guideways 
and those sorts of things.
    So, pretty much, I think we are just going down to--maybe 
this would help the HOT lane issue or something. I don't know 
what the objective is here, but you are excluding streetcars, 
as far as I am aware. If you have any evidence of any streetcar 
project that came in and has applied for Very Small Starts 
under $3 million a mile----
    Mr. Simpson. The only streetcar project that we have right 
now is a project that is out on the West Coast at about $140 
million or $150 million.
    Mr. DeFazio. Right. And people aren't applying because they 
just know they can't meet the criteria.
    Mr. Simpson. I don't know that that is the case, Mr. 
Chairman, but we will note that.
    Mr. DeFazio. Well, anecdotally, I mean, you say you want to 
be customer focused--I guess let me just ask this and then we 
will go on the next. If you are going to be customer-focused, 
you are going to be real attentive, then, to the majority 
opinion expressed on the NPRM, which I believe will be echoing 
a number of the concerns you have heard here today.
    Mr. Simpson. Mr. Chairman, but to answer the earlier 
question, if they don't meet the criteria, they can still apply 
under the Small Starts program.
    Mr. DeFazio. I know. But you are basically excluding them 
from the Very Small Starts program.
    Mr. Simpson. Well, no, we are saying--no, we are not.
    Mr. DeFazio. Because you are establishing----
    Mr. Simpson. No, I don't believe that we are. I really 
hadn't given it that much thought, but I asked Mr. Steinmann 
and he said no.
    Mr. DeFazio. Well, you set the $3 million bar, which isn't 
part of Small Starts.
    Mr. Simpson. But all that we know now is that if you meet 
these requirements, the project works. Once you get beyond any 
of those limitations, then we really have to study the project. 
That is all we are saying.
    Mr. DeFazio. Yes, but you are excluding a mode is I think 
the point. Anyway, we won't belabor it.
    We will turn now to Ms. Fallin.
    Ms. Fallin. Thank you, Mr. Chairman.
    Mr. DeFazio. You will probably be the last set of questions 
before the votes. Go ahead.
    Ms. Fallin. All right.
    I have one question, Mr .Simpson. How does the new rule 
requiring the FTA to incorporate congestion relief benefit into 
the New Starts process? We talked a lot about congestion on our 
highways. How will that new rule help with that?
    Mr. Simpson. Well, one of the things that we are doing is 
right now, if we had a congestion program with a pricing 
component--or let me just back up a step. We don't measure now 
the impacts and the benefits. When we build a transit project, 
there will be a certain amount of cars that come off the 
highway as a result of that, and the people that remain on the 
highway receive a benefit because there are fewer cars. We 
don't measure that in our cost-effectiveness, so we think that 
it is a benefit that is really out there for people.
    So the first question is to ask that and to try to--we are 
going to work with the Federal Highway Department to try and 
come with a model so we can measure that benefit, because it 
will help all projects, particularly projects--well, any 
transit project. It will help any transit project. So that is 
the first thing that we are asking the question and proposing 
to do.
    The second thing we are saying is that if you have got a 
congestion program in place in your town and it happens to 
coincide with a transportation project, that we will give you a 
benefit as a result of that. If you have a pricing strategy, we 
will give you one up tick in your rating because you are, in 
effect, getting more cars off the road and there is a benefit 
to transit that we don't capture that now. When we do our 
forecasting to figure out the ridership that supports the 
finances of a transit project, we have got no method of--
because this is somewhat of a new kind of thing, these HOT 
lanes and all that. We have no way to measure the extra riders 
that would ride on transit as a result of that.
    So we are saying we think we have some things right now 
with VMT reductions, vehicle miles traveled, and the like, and 
we are also trying to respond to the fact that we know we have 
a nationwide crisis on highway congestion, and we are trying to 
do whatever we can to alleviate that and to assist transit 
while we do so. I think that sums it up.
    Mr. DeFazio. Okay, thank you.
    Mr. Baird, go ahead. We are going to have two votes, so Mr. 
Baird will ask his questions, then we will recess and come back 
for a few other questions.
    Mr. Baird. First question is very quick. Under the fixed 
guidelines proposal, would ferries still qualify?
    Mr. Simpson. I believe they do. Yes.
    Mr. Baird. That's good. Secondly, in my district, we are 
working on the Columbia River Crossing project, and there is a 
debate right now, should we go light rail, should we go buses. 
The advocates of light rail point out that we can connect to 
the very successful light rail system that Portland and 
vicinity have put in place; others look at buses as having 
relative advantages.
    To what extent do you prejudice the decision through your 
proposed rulemaking and to what extent would you take into 
account, if there were to be a light rail proposed, because it 
links up to existing light rail, how would that decision-making 
process be affected by your proposal?
    Mr. Simpson. Well, it is a simple question with a difficult 
answer, and I will try to be as quick as I can with it. We 
measure each project on its own merit and we look at the 
alternatives. Basically, a bus rapid transit or a bus project 
would be less expensive than a fixed guideway project like 
light rail.
    So, before we look at the cost-effectiveness, we say, okay, 
where do we need to be out in terms of our transportation 
alternatives? What is the best thing we can do short of the 
fixed guideway? And we do a model on that. Then we figure what 
is the delta, the difference in cost between that bus project, 
if you will, and the fixed guideway project. We take the cost 
of that plus the operating costs and we look at the differences 
in travel time savings, how much more time do we save with the 
fixed guideway project, which creates a problem for some folks, 
but it is a metric that we use and we have used it 
consistently.
    Then there are other attributes that are associated to a 
fixed guideway project like the reliability of rail; you don't 
have to worry about traffic jams. People like to sit in a rail 
car; they know where the tracks are. There are a bunch of 
things we call a modal constant. So we give another benefit to 
the fixed guideway in terms of time, because we want to keep it 
consistent, so the whole thing is done in time.
    So we look at that project and we look at all of our 
metrics and we say, okay, now, based upon what the alternative 
was and this new project, does the project meet our cost-
effectiveness criteria along with the other statutory 
requirements, weighting cost-effectiveness as a key indicator, 
50 percent of them.
    Mr. Baird. So stay with the practical application. It is 
helpful.
    Mr. Simpson. Yes.
    Mr. Baird. So in our community we have got a citizens' 
commission plus the two departments of transportation trying to 
make decisions. What are the relative differences? They are 
trying to decide right now which do we go with.
    Mr. Simpson. Right.
    Mr. Baird. How do they factor in your decision-making 
process and outcome in terms of deciding what they think is the 
right thing to do?
    Mr. Simpson. They have a transportation plan, a long-term 
plan, a medium plan. Typically, it is financially constrained; 
how much money do they have to do the project. And when they 
look at a corridor, they look at the transportation problem and 
how best to solve it, and they decide, the local community, not 
FTA, decides on locally preferred alternative. The folks that 
really do their planning in advance have an idea whether or not 
those guidelines, if they wanted a light rail, whether it would 
meet the Federal requirement or not. So there is a lot of that. 
That is why we want to get with the MPOs in the transit 
agencies early in the process so we can help them, so they 
don't bring us an alternative that might not be----
    Mr. Baird. What would be the funding difference? What kind 
of magnitude of funding difference might--let's suppose our 
community comes to you and says if we go light rail, it will 
cost X, if we go bus rapid transit, it will cost Y. How much do 
you kick in on the choice?
    Mr. Simpson. Do you mean how much is the Federal share?
    Mr. Baird. Yes.
    Mr. Simpson. We look at the project, we look at the size of 
the community, the benefits that are derived. On average, we 
look at a 50/50 contribution. If it is a mega project, if it is 
a project that is in the billions of dollars, around a third, 
because we do have a limited amount of funding.
    Mr. Baird. But my point would be if it's 50/50, would you 
fund 50/50 for bus and also, then, 50/50 for light rail, if 
they choose that?
    Mr. Simpson. It depends. We would look at really what 
project winds up coming through the pipeline. We try to have 
those discussions as early as possible so the transit agency 
knows what the financial commitment is of the Federal 
Government.
    Mr. Baird. Might you be in a position to say we will match 
50 percent if you do bus rapid transit, but only 20 percent if 
you do light rail? Or if they choose light rail----
    Mr. Simpson. No, we don't do that because we believe it is 
a local decision. We really don't directly--maybe indirectly if 
they don't meet cost-effective, but we don't directly tell 
which city what mode, whether it be a fixed guideway or----
    Mr. Baird. So they don't necessarily have to factor that 
in.
    Mr. DeFazio. There are three minutes remaining to the vote, 
Brian. You have a little bit of time left, so you can finish up 
when we come back.
    Mr. Baird. We will get to this later.
    Mr. Simpson. Okay.
    Mr. DeFazio. Thank you.
    We will recess probably for 10 to 15 minutes.
    Mr. Simpson. Thank you.
    [Recess.]
    Mr. DeFazio. The Subcommittee will come back to order.
    We appreciate the Administrator's and the other witnesses' 
tolerance of our hectic schedule.
    I guess, sort of following up on a subset of Mr. Baird's 
questions. First, as I would understand, when you are talking 
about approximately 50/50, you are talking about very large 
projects, where a smaller share was requested, is that correct?
    Mr. Simpson. Usually, the grant recipient comes to us with 
a plan. We take a look at a whole bunch of things: how we 
funded other projects, how much money is left in our statutory 
authority, things like that; what is the ability of the grant 
recipient to pay their share. So there are a whole host of 
things, and it is usually--that is never really an issue, Mr. 
Chairman, with a grant recipient, in terms of funding projects. 
But we don't dictate in any way what the Federal share is.
    Mr. DeFazio. But this all then gets back somewhat to cost-
effectiveness. I mean, the issue is if in a local jurisdiction 
there are contributions that constitute betterments that are no 
burden on the Federal taxpayer, contributed by the local 
business community, developers, whatever, local improvement 
district was formed that paid for them, however they were paid 
for, do those get cranked into the cost-effectiveness? And if 
so, why, because I don't think that they should be.
    Mr. Simpson. Mr. Chairman, you are not alone in that 
regard. We actually asked the question in the NPRM. Right now 
there are two things. You can have several definitions of 
betterments, but betterments are components of the project that 
are not essential, so that if you do away with the betterments, 
you still get all the benefits of the project. An example might 
be--although my wife wouldn't like this example--art work in 
the stations. Art is a betterment.
    So right now the betterments are captured, so what we do 
sometimes, we tell the grant recipient, if they don't meet 
cost-effectiveness, are there any betterments that you can take 
out? You know, how many betterments can you take out and still 
keep the project?
    So we are trying to get to the point where, hey, what are 
the essential components of a project. Then we ask the 
question, in terms of betterments, do we need to count those or 
should we count those, because, particularly with the private 
sector, as you hit on, private sector sees the value in 
transportation projects and currently, if there was any private 
sector contribution, we count that.
    So the question that we ask is if we have a particular 
project--and there are a lot of projects where developers, 
landowners, private interests see tremendous value that accrue 
to them as a result of this federal-State investment--should we 
or could we exclude those contributions to cost-effectiveness. 
And the rationale for that would be if it is not costing the 
taxpayer any money, there is a betterment as a result of that, 
there is something that is accruing, like a donation from the 
private sector, so we believe that that has merit to look at, 
so we have asked the question.
    And that might also help some of these other projects that, 
as you mentioned, streetcars, where there is certainly a value 
to developers and people particularly close to the investment. 
They see a value, and many streetcar projects are being funded 
privately, so we asked the question if we have a project that 
were to come forward before the FTA, if there is a private 
contribution, should we exclude the private contribution from 
the project and from cost-effectiveness.
    Mr. DeFazio. So that is outstanding as one of the questions 
in the rule?
    Mr. Simpson. Yes.
    Mr. DeFazio. And you are taking comments on that?
    Mr. Simpson. And would like to get comment on that.
    Mr. DeFazio. Because it seems to me part of the rationale 
for the cost-effectiveness criteria is, one, to have a screen, 
but, two, theoretically, to look at what is the cost-benefit 
for Federal taxpayers. You are also looking essentially at 
financial soundness, risk, debt, those sorts of things, and if 
the betterments are not constituting a financial overhang that 
has the potential to bring this system down, I don't see why 
they would have to be calculated in at all; and/or if you built 
the system and the betterments were essentially an add-on and 
someone added on the betterment after the system was approved 
or built, we wouldn't count it. I mean, at that point you can't 
count it, right?
    Mr. Simpson. I can't express my view on it because we have 
the rule, but I hear what you are saying.
    Mr. DeFazio. I understand.
    Mr. Simpson. You know, that might also--you know, when we 
talk about economic development with respect to certain 
projects, that we are not measuring economic development, 
particularly, you know, we put the cards out on the table, this 
streetcar projects, addressing that question might be able to 
give you the--what is the true economic value of a streetcar 
project? Well, maybe it is that value that the private sector 
decides that they feel that it is worth that is given as a 
contribution to a project and excluded from cost-effectiveness.
    Mr. DeFazio. Again, further on economic development, you 
mentioned in your testimony that you have engaged a consultant?
    Mr. Simpson. Yes.
    Mr. DeFazio. Are the results of that consulting going to be 
accommodated in the rule or is this consulting result going to 
come in after the rule is already finished? What is the timing 
on that?
    Mr. Simpson. I can't give you an answer on that right now, 
I don't know.
    Mr. DeFazio. Okay. But it seems that if you have gone to 
the trouble and expense of engaging a consultant, that 
hopefully that contract will be structured in such a way that 
it will inform the rule, since it is a statutory criteria.
    Mr. Simpson. Absolutely. And it is a priority and we have 
got a meeting here in Washington, D.C. on October 17th with 
nine of the Nation's top transportation experts to discuss 
economic development as part of the phase two.
    Mr. DeFazio. Okay. Could we get a list of those and what 
firms or organizations they represent?
    Mr. Simpson. Yes, you can.
    Mr. DeFazio. Okay, great. Thank you, Mr. Administrator. 
Appreciate that.
    Now, I have a question, and it seems to me it is a no-
brainer, but apparently there is some theory or controversy out 
there, and that is the issue of does transit provide 
significant--in fact, there was a press conference going on 
upstairs just before this with APTA talking about the benefits 
of mass transit in terms of congestion mitigation and the 
amount of fuel it saves. I mean, you can quantify it to a great 
extent. So is it the position of the department that these 
projects, absent this ancillary action by another body to 
impose congestion pricing or something, but just the 
construction of a transit project itself, is it intended to 
mitigate congestion?
    Mr. Simpson. A transit project serves a whole host of 
purposes. As you know, it promotes good economic development, 
environmental benefits, and also to alleviate congestion, as 
outlined in SAFETEA-LU.
    So I don't know if I understand the question, but I am 
agreeing with you that it achieves all of those things.
    Mr. DeFazio. All right. Okay. Well, no, there are some 
people out there saying transit sort of exists, but it is 
really not addressing congestion; they sort of take it for 
granted and don't--I mean, if you had a strike tomorrow and 
shut down the New York subway, I think what a benefit it had 
been.
    Mr. Simpson. That is exactly what thought came to mind when 
you mentioned that. If somebody is not sure that transit fights 
congestion, then they need to take a look at the articles in 
New York or anyplace else that had a transit strike, or even 
just a service failure or disruption of service as a result of 
a power outage.
    Mr. DeFazio. Right. Okay. I see that I have been joined by 
the Ranking Member.
    Oh, do you have some questions? Okay, I recognize the 
gentleman, Mr. Dent.
    Mr. Dent. Thank you, Mr. Chairman.
    Mr. Simpson, I realize I came in after you presented your 
testimony, but I just wanted to relay some comments to you and 
just ask for your response. In my community there is a lot of 
talk about passenger rail from the New York metropolitan area 
into the Lehigh Valley of Pennsylvania--Allentown, Bethlehem, 
and Easton. The lines currently run to around Clinton, New 
Jersey, and getting them from Clinton to the western edge of 
New Jersey and Phillipsburg is, of course, a challenge. There 
is talk about running passenger rail from Lansdale, just north 
of Philadelphia, up to a community called Quakertown, a lot of 
talk about it.
    And I would like you to comment, too, if the community were 
to express interest in a New Starts program or Small Starts, 
what should I tell them about the local matching requirements? 
What would be their obligation for that type of a passenger 
rail project?
    Mr. Simpson. First of all, I am very familiar with that 
alignment. I have spent, I don't know, hundreds of days in 
Allentown and the whole 78 corridor, and was just in Clinton, 
New Jersey two weeks ago.
    Mr. Dent. And there is a study going on right now on the 78 
corridor.
    Mr. Simpson. There is a study. I think in that particular 
case, I think there would be some sort of a bi-State agreement 
between New Jersey and Pennsylvania.
    Mr. Dent. That is correct. First phase was completed as it 
relates to non-rail options and we are developing the rail 
phase now.
    Mr. Simpson. Not dissimilar to what we do elsewhere, I 
think that we would need to get all the stakeholders in a room 
and determine who would be the grant recipient for the project; 
what would be the entity, do you need to create a new entity; 
and what is the--you know, you have got two States, so what is 
the share of the dollars that would flow through. You may have 
to develop a port authority or some sort. But if you would 
like, we would be more than happy to contact your office after 
we leave here and fill you in, because the FTA would be very 
helpful in assisting your community with that proposed commuter 
rail line, I believe it is.
    Mr. Dent. Yes, commuter rail. And I guess that is the 
question, too. Oftentimes I tell the community that there will 
be a local match requirement.
    Mr. Simpson. Right.
    Mr. Dent. And what are you stating as official policy for 
the FTA now in terms of local match for these types of New 
Starts?
    Mr. Simpson. Official policy is that you need to come up 
with at least 20 percent, and we would encourage an overmatch, 
anything above that; and then it depends on the community's 
ability to contribute their share, along with what we have done 
historically in the past, we like to have a level playing, and 
within the transit community there is sort of an understanding 
of how much money you should ask for given the certain size and 
complexity of a project.
    Mr. Dent. Is that local funding requirement consistent for 
both New Starts and Small Starts?
    Mr. Simpson. It is the first thing we look at, and that is 
where we get into a lot of problems, where we believe there is 
a commitment on a local level and then, as time passes, for one 
reason or another, the local commitment fades, and that is why 
the project becomes a no-start.
    Mr. Dent. Well, I would be very happy to further discuss 
this issue with you.
    Mr. Simpson. Absolutely. We will contact you as soon as 
soon as we leave here.
    Mr. Dent. Thanks for your testimony.
    Okay. And just one final question that I have. The FTA, as 
you know, has been working with FHWA to develop a mobility 
measure that explicitly includes congestion relief benefits to 
highway users and pedestrian ridership of transit systems. What 
is the status of that effort?
    Mr. Simpson. We have allocated some research dollars. I 
believe it is $100,000. We are working with FHWA as we speak 
because, as this Committee asks us to do all the time, to 
measure all of the benefits that accrue to a given 
transportation project, and what we don't measure right now is 
if we were to build a new transit project in a corridor--let's 
take your project. Let's say we build your project.
    What we haven't been able to do is--and let's say I-78 from 
Allentown going to Newark, everybody wanted to go to Newark on 
I-78, and we are at peak period in the travel, you know, it is 
congest. The I-78 can get congested, as you know. So let's say 
the transit project is good enough where we are able to take 
off a portion of those vehicles that now ride transit. Well, we 
pick up the benefit of the folks riding transit, but we don't 
pick up the travel time savings that accrue to the people that 
stay in the automobiles.
    So what we are saying is--I mean, this would be the best 
case scenario--if it took an hour to get from Allentown to 
Clinton in traffic, maybe it would take 40 minutes for all 
those other drivers if we took 5 percent of the drivers off the 
road. We want to be able to measure that and measure that 
within cost-effectiveness, because it truly is a benefit of 
travel time savings.
    Mr. Dent. Thank you. I will yield back to the Chairman.
    Mr. DeFazio. Ms. Hirono, do you have further questions?
    [No response.]
    Mr. DeFazio. Mr. Boozman?
    Mr. Boozman. Very quickly. We appreciate your being here. 
You said that you needed at least 20 percent. In reality, what 
is that percent really, though? Now, because of the----
    Mr. Simpson. An average? I would say it is averaging about 
50 percent.
    Mr. Boozman. So it is about 50. And that is just because of 
the competition, the people that are saying that they will come 
up with 50 percent?
    Mr. Simpson. Well, you know, it is a whole host of things. 
I mean, if we have got a couple of projects in New York that 
were mega projects, literally in the billions, so you could 
easily wipe out 20, 30 percent of the statutory authority if 
you were to fund it at the maximum. So we really work closely 
with the transit agencies, and that has really not been a 
problem with us. We bend where we have to. You know, I am 
surprised that there are that many questions on that topic, but 
that is something that never crosses my desk, it is really 
never an issue. I guess there is an understanding out there 
with the transit properties where we are at on that.
    Mr. Boozman. So there is enough competition out there that 
people will come up with the dollars up to the 50 percent?
    Mr. Simpson. Yes.
    Mr. Boozman. It makes it tough if somebody without as much 
resource only has a 20 percent. That really----
    Mr. Simpson. We understand that and we work with the grant 
recipients.
    Mr. Boozman. Okay. Thank you very much. Thank you for being 
here.
    Mr. Simpson. Thank you.
    Mr. DeFazio. One last question. SAFETEA-LU authorized a 
study that is being, as I understand it, done jointly under the 
auspices or sponsorship of FTA and HUD, Reconnecting America, 
which is to--we have been talking about sort of the economic 
benefits that result from transit projects, but we haven't 
really gotten into this aspect of it, which is the linkage 
between affordable housing and transit, and I am wondering when 
that study's results are going to be available. Again, it is 
sort of like my last question. Are those results going to be 
available before you finalize your NPRM?
    Mr. Simpson. Mr. Chairman, to my knowledge, that study has 
been published and it has been out for at least six months.
    Mr. DeFazio. Okay.
    Mr. Simpson. And if you would like to talk about the 
results of the study, I can, but the study has been--and I 
apologize if your office has not gotten a copy of it.
    Mr. DeFazio. So, again, those results will inform the rule 
to some extent. To the extent they find there is a linkage 
between affordable housing or the potential for affordable 
housing would seem to me, again, to be a benefit that would 
need to be looked at in evaluating transit projects.
    Mr. Simpson. You know, we do that within the mobility 
factor, but I will tell you what the takeaway for me was with 
that study. We have said it here, that as a result of building 
transportation multi-use development around transit nodes, the 
price value goes up. It is more expensive to rent an apartment 
or to buy an apartment or a home which is within walking 
distance of a transit property. And the people who need to be 
able to walk and to get to work the most are the people 
sometimes who can't afford it, and it is a concern that we have 
at FTA and it is a concern that HUD has, and we have talked 
about it.
    Mr. DeFazio. Sure. Well, that is a general urban 
redevelopment rule of thumb, but some communities, for 
instance, not to be totally parochial, but Portland has a 
requirement on the developers that they provide a certain 
number of affordable units in doing their developments. So, I 
mean, the question is since we talked about you get scored for 
planning and those sorts of things, would you get some benefit 
or scoring for having a policy to provide affordable housing in 
these corridors?
    Mr. Simpson. Absolutely. We capture it under transit 
dependent mobility, and it is----
    Mr. DeFazio. So that will be expressed in the final rule, 
then, that this would be----
    Mr. Simpson. Well, the proposal that we have right now on 
the street clearly articulates that.
    Mr. DeFazio. Because it certainly would--some entities 
haven't done that, and it would certainly potentially encourage 
entities who are interested in qualifying a project to 
undertake to see that, as the development took place, that they 
were providing for some place for affordable housing.
    Mr. Simpson. Well, FTA and the DOT believes in that and HUD 
believes in that and the Administration believes in that, so we 
will make sure that it is part of it.
    Mr. DeFazio. Okay, thank you. I have no further questions.
    Mr. Duncan?
    [No response.]
    Mr. DeFazio. All right, with that, we thank you once again 
for providing your time and your expertise, Mr. Administrator, 
and we look forward to a totally transmogrified final rule.
    Mr. Simpson. It has been a pleasure and honor to be here, 
and as I said in the past, I look forward to our next hearing.
    Mr. DeFazio. I would call the next panel: Mr. Christopher 
Zimmerman, Arlington County Board Member; Mr. Michael Townes, 
Hampton Roads Transit; Mr. Mark E. Huffer, Kansas City 
Transportation Authority; and Ms. Shelley Poticha, Reconnecting 
America, although she does have an Oregon connection.

  TESTIMONY OF CHRISTOPHER ZIMMERMAN, ARLINGTON COUNTY BOARD, 
  BOARD MEMBER, ARLINGTON, VA; MICHAEL TOWNES, HAMPTON ROADS 
   TRANSIT, EXECUTIVE DIRECTOR, HAMPTON, VA; MARK E. HUFFER, 
  KANSAS CITY AREA TRANSIT AUTHORITY, GENERAL MANAGER, KANSAS 
CITY, MO; AND SHELLEY POTICHA, RECONNECTING AMERICA, PRESIDENT 
                      AND CEO, OAKLAND, CA

    Mr. Zimmerman. I have always thought it should be a 
prerequisite for service in higher office that one serve in 
local government first.
    Thank you, Mr. Chairman and Members of the Subcommittee. I 
am pleased to be here this morning. I am Chris Zimmerman, a 
member of the County Board of Arlington, Virginia, right here 
across the river, in which capacity I serve on the various 
regional transportation bodies around here, like the Washington 
Metropolitan Area Transit Authority and the Northern Virginia 
Transportation Authority.
    I have submitted, of course, a full statement for the 
record, but I just wanted to make a few comments and then 
answer your questions.
    The community that I have the opportunity to represent is 
today a very thriving urbanizing community that enjoys 
extremely low employment, extremely low office vacancy rates, 
and is widely cited as a model of what is now called smart 
growth nationally and even internationally. Five years ago, 
when the Environmental Protection Agency gave their first smart 
growth award for overall excellence, it was to Arlington for 
the Roslyn-Ballston corridor.
    That stands in contrast to where it was a generation ago, 
when it was a fairly typical declining inner ring suburb, with 
declining population, with schools that were emptying out, with 
retail that was really dying. When you wanted to go to a 
restaurant, you went outside. When you wanted to go shopping, 
you went outside.
    It has really turned around in the last generation largely 
because of the foresight of people who served before me, but 
also because they were able to leverage a big public investment 
with a significant Federal contribution in the Metro system, 
and then use that effectively to create the Roslyn-Ballston 
corridor and the Jefferson Davis corridor, which are about 10 
percent of the land area of my very small county, smallest 
county in America, effectively at 26 square miles. Ten percent 
of that land is generating half the tax revenue that we 
collect.
    The 26 square miles in Arlington, out of a Northern 
Virginia region of over 1,000 square miles, accounts for about 
60 percent of the transit ridership. Sixty percent of all trips 
in Northern Virginia begin or end in Arlington. We have some of 
the highest transit usage, with over 23 percent of rush hour 
trips being made--of workday trips, I should say, being made on 
transit; and in our Metro corridors it is more like 40 percent.
    Now, the reason I cite all this is that I believe that if 
the rules that are in place now, or that are proposed now, were 
in place at the time, that that transit investment could not 
have been made. I don't believe Arlington would have qualified 
for the funding that made this possible under the regulations 
as they are now being pursued by the FTA. As it happens, today 
we are looking at the next generation of transit development, 
and we are looking both to redevelop in the Crystal City area, 
where we have the biggest impact of BRAC from the last round 
anywhere in the Country, with 18,000 jobs scheduled to leave 
Crystal City; and we are looking at what has to be done to make 
it again a vibrant economic center, and we are looking at 
transit investments obviously as part of that.
    Not far from there and connected to it, hopefully, is the 
Columbia Pike corridor, where we are looking to transform what 
has been an automobile-oriented strip into a more walkable main 
street, and we have a streetcar project, very much modeled on 
the Portland streetcar, which we think has the same kind of 
potential for economic growth and transforming an area, really, 
that you have seen in Portland.
    However, we don't think that the current rules will make it 
possible for us to get any help from the FTA and the Federal 
Government the way they are proposed now, and we are looking at 
what we have to do and what we can accomplish on our own 
because we really don't see any way that we would qualify. The 
specific rules that are being promulgated would make it very 
difficult for our projects to qualify, which seems fairly 
strange because they look like exactly the kind of projects 
that you intended in passing the last law.
    The Columbia Pike streetcar project, for instance, which is 
about a five to six mile stretch, is a project under $250 
million, probably $120 million, $140 million, something like 
that. If we could get 50 percent money, then $60 million, $70 
million, something like that, would seem to be within the 
parameters. But the way the rules are being promoted, we would 
not likely qualify.
    The ridership that we have been able to encourage already 
is held against us rather than working for us. The additional 
funds that we will put in and the higher costs that are 
involved in an urban area work against us, even when we are 
spending our own money. So, in short, this is fairly 
frustrating and seems to us to be counter to the intentions of 
Congress in passing the last act.
    Finally, let me just say that I think our commitment to 
transit as an integral part of community and economic 
development would be the model that was intended and that you 
would want to promote in the interest not only of our region, 
but the Nation, but it doesn't seem to be the model that the 
proposed regulations would promote.
    Again, Mr. Chairman, thank you very much for inviting me 
here. I look forward to your questions.
    Mr. DeFazio. Thank you, Mr. Zimmerman.
    Mr. Townes.
    Mr. Townes. Thank you, Mr. Chairman. It is an honor to be 
here with you today. I appreciate the opportunity to testify on 
the Notice of Proposed Rulemaking. I want to note that while I 
am the incoming chair of the American Public Transportation 
Association, the testimony that I present today represents my 
views, and not those of APTA, regarding the proposed 
rulemaking.
    I also want to note that on October the 1st, the City of 
Norfolk, Virginia, the entire Hampton Roads region and HRT will 
celebrate the signing of a full funding grant agreement for 
$232.2 million for a 7.4 mile starter light rail line in the 
City of Norfolk. I want to thank Congresswoman Drake, who was 
here earlier, for her strong consistent support of this 
project, as well as Administrator Simpson for making this 
project a reality.
    I don't have enough time to touch on all the points that I 
think are important with the proposed rulemaking, but I will 
touch on three in the time that I have, and that includes 
provisions not included in SAFETEA-LU that are in the proposed 
rulemaking, the land use and economic development measures 
weights, and the weight given to cost effectiveness, things you 
have talked about earlier today.
    The Notice of Proposed Rulemaking contains provisions that 
were not addressed by Congress when it adopted the Safe 
Accountable Flexible Efficient Transportation Equity Act, a 
legacy for users, but represents substantial changes to the New 
Starts program. The proposed rulemaking would change the 
definition of fixed guideway and allow New Starts and Small 
Starts funds to be used for high occupancy toll lanes. This 
proposed change is not found anywhere in 49 U.S.C. 5309. This 
change is intended to alter the purpose and focus of the New 
Starts program. The only conclusion that can be drawn from this 
proposed change is that the FTA intends to diminish the 
historical investment and traditionally fixed guideway 
projects.
    I would also note that there is no requirement that the 
transit service which served to establish the amount of the 
section 5309 investment be maintained after the project is 
built. Now, why would the FTA support funding a project where 
there is no ongoing commitment to maintaining transit service 
in the corridor?
    The proposed rulemaking also seeks to redefine these 
projects that are eligible under the Small Starts program and 
develop a program that is not neutral as to project eligibility 
or the level of project review.
    I have identified those changes in my written testimony; I 
won't belabor that point.
    With regard to land use and economic development measures 
and weights, Congress amended section 5309 in SAFETEA-LU by 
emphasizing the importance of land use and economic development 
when it moved these criteria from the consideration subsection 
to the project justification subsection. To the outside 
observer, it seems clear that the intent of Congress was to put 
greater weight and emphasis in the New Starts project 
evaluation and review process on land use and economic 
development. Instead, the proposed rulemaking diminishes the 
weight to be given to land use by combining it with economic 
development as a single factor and assigning only 20 percent to 
that weight.
    Moreover, 5309 establishes separate criteria for land use 
and economic development, which would appear to clearly 
indicate an intent by Congress to develop separate measures for 
each. Instead, the proposed rulemaking not only reduces the 
weight and emphasis given to land use and economic development, 
but merges them into a single criteria rather than developing 
separate measures.
    Furthermore, FTA states that the cost to develop a measure 
for economic development that is distinctive from land use is 
overly costly and burdensome. Now, I don't recall that the cost 
or burden on transit authorities was an issue when FTA 
developed the Summit software and implemented the TSUB measure 
for cost-effectiveness in 2002. While I don't know what it 
costs FTA to develop the software and implement TSUB, many 
communities, including mine, were required to spend several 
hundred thousand dollars to revise travel demand models to be 
able to interact with Summit and capture the user benefits in 
ridership.
    Finally, FTA should be rewarding communities that seek to 
concentrate economic development in project corridors or at 
stations through the use of local policies and incentives. The 
benefits of a project are not measured solely in terms of 
mobility improvements, but also on the impact of shaping 
economic development patterns.
    Finally, weights given to cost-effectiveness. Prior to the 
March and April Dear Colleague letters, FTA employed a multiple 
measure approach that enabled a medium or medium-high rating 
for land use to offset a medium-low rating for cost-
effectiveness. Even with a medium-low rating on cost 
effectiveness, a project could not obtain an overall project 
rating of medium, based on receiving a medium or high rating on 
the land use plans in the region where the project was being 
built.
    The March and April 2005 Dear Colleague letters changed 
FTA's policy, but were not implemented as a permanent change to 
regulation. In the Notice of Proposed Rulemaking, FTA has not 
only chosen to require 50 percent weight for cost 
effectiveness, which effectively trumps all the other project 
evaluation or review criteria, but also attempts to make it 
permanent law through inclusion in the notice.
    I hope the Committee would agree that the proposed 
allocation of weight and excessive emphasis on cost 
effectiveness is contrary to your intent when you adopted 
SAFETEA-LU, and I hope that you would agree that the 
incorporation of specific weighting of criteria should not be 
included in the final rule, but continue to be left to guidance 
documents to enable FTA to shift the allocation of weights as 
might be appropriate in the future.
    Thank you for the opportunity.
    Mr. DeFazio. Thank you, Mr. Townes.
    Mr. Huffer.
    Mr. Huffer. Good morning, Mr. Chairman and Members of the 
Committee. My name is Mark Huffer. I am the General Manager of 
the Kansas City Area Transportation Authority, also known as 
KCATA, and we are the regional transit authority serving the 
Kansas City, Kansas-Kansas City, Missouri metropolitan area.
    While we are pleased to make comments on the NPRM today 
regarding the New Starts program, I am going to limit my 
comments to the Small Starts and Very Small Starts categories 
only, as they are most closely related to two recent major 
capital investment projects in the Kansas City area, one of 
which is already implemented and the other one is planned.
    In 2005, KCATA opened the region's first bus rapid transit 
project known as MAX. MAX was built at a cost of approximately 
$3 million a mile and would have met all the criteria of a New 
Starts program had they been in place at that time. Since New 
Starts program was not in existence in 2002 through 2005, when 
we constructed this project, Federal funding was instead 
attained through a series of discretionary grants spread out 
over four Federal fiscal years.
    The uncertainty of Federal funding and the timing of the 
revenue stream presented significant challenges in making 
construction awards and phasing implementation of this project. 
Without a long-term Federal commitment, the scope and size of 
the project was changed numerous times.
    MAX has been an unqualified success. Ridership in the 
corridor is up over 40 percent. Thirty percent of our customers 
are new to public transit, and customer satisfaction is 
exceptionally high. Because of the success of this program, FTA 
has been very supportive of KCA's effort to expand into other 
corridors in the community and, in fact, MAX has already 
received Federal funding commitments of $24 million under the 
New Starts guideline to expand into the Troost corridor in 
2009.
    In general, we applaud the congressional decision to 
establish a separate Small Starts category for New Starts 
funding in SAFETEA-LU. This program will allow projects like 
ours to move quickly, allowing the community to benefit from 
these projects at a quicker pace.
    I want to comment on Small Starts right now, and that is 
that the NPRM defines a Small Starts project as one with a 
total project cost under $250 million, with 5309 funding not to 
exceed $75 million. While we fully support the concept of Small 
Starts, we are concerned that the proposed changes do not go 
far enough in streaming the New Starts process for projects 
under Small Starts category. The process of getting to an FTA 
funding decision on a Small Starts project still appears to be 
arduous and time-consuming, requiring nearly the full range of 
FTA New Starts criteria and processes.
    We believe it was Congress's intent to enable recipients to 
expedite implementation of significant capital investments; 
yet, the New Starts evaluation criteria require a full 
alternatives analysis, as well as a NEPA environmental study, 
regardless of the nature of the project. These two elements are 
among the most burdensome and deliberative steps in receiving 
Federal funds. There is little advantage to seeking Small 
Starts funding as long as these requirements are not changed.
    Additionally, we believe that FTA should reconsider and 
clarify the provision that prohibits a corridor project from 
being divided into several Small Starts projects. We concur 
that a corridor should not receive several Small Starts funding 
for projects concurrently, and that projects should not be 
artificially segmented just to qualify as a Small Start. 
However, given the long lead times and high capital costs for 
implementation of major capital investment projects, phased 
implementation is a realistic approach, and the benefits of 
such approaches should be recognized.
    For example, if a metropolitan area makes a decision to 
build a 20 mile corridor, it might choose to implement the 
system in three separate phases over several years. If the 
phasing is appropriate and NEPA requirements met, FTA should 
consider each phase for Small Starts funding eligibility, even 
though the total 20 mile line might otherwise qualify for New 
Starts.
    In regards to Very Small Starts, this has been a program 
that we believe will be beneficial to Kansas City. As a result 
of the less stringent requirements for the Very Small Starts 
program, we will be able to implement the Troost BRT-MAX 
corridor project within four years of corridor planning. We are 
generally supportive of FTA's Very Small Starts requirements, 
but we believe that FTA should consider eliminating the local 
financial commitment criteria regarding local overmatch of 
Federal funds. We recognize that FTA will not rate any project 
below medium for failure to overmatch, but question whether it 
should be an evaluation criteria for projects of this size at 
all.
    Similar comments in New Starts regarding Small Starts. We 
believe FTA should reconsider and clarify how the requirement 
requiring all projects in the corridor to be considered 
together for evaluation purposes will be implemented. If 
multiple-phase projects qualify and are appropriately defined 
with independent utility, KCATA believes each phase should be 
independently evaluated as a Very Small project.
    We do have a concern that the $3 million per mile 
threshold, even exclusive of vehicle acquisition, will result 
in a modal bias toward bus projects. Further, we encourage FTA 
to consider raising that threshold or at least indexing it to 
allow for inflationary growth, because it is very possible that 
within several years, even BRT projects will not be able to be 
built at $3 million a mile.
    Finally, we react very favorably to the concept of the 
project construction grant agreement for Very Small projects. 
We find this to be a beneficial requirement that will provide 
the same assurance as a full funding agreement for much larger 
projects.
    We thank the Congress for your interest in this. We support 
the direction taken by Congress and FTA to streamline the New 
Starts process and encourage FTA to consider all possibilities 
to continue to make the process from beginning to end more 
expedited.
    Mr. DeFazio. Thank you, Mr. Huffer.
    Ms. Poticha, we have about seven and a half minutes to go, 
so rather than hurry through your testimony, I think we will 
reserve your testimony until after the short recess, and then 
we will proceed to questions. At that point, I have to go to 
the markup in resources and Ms. Hirono will take the chair, 
unless Chairman Oberstar wants to take the chair. He can always 
have the chair whenever he wants.
    So, with that, we will stand in recess until probably about 
15 minutes ago. Thank you.
    [Recess.]
    Ms. Hirono. [Presiding] We are back. Good afternoon. Okay, 
we are on Ms. Poticha. Please proceed.
    Ms. Poticha. Good afternoon, Members of the Committee. 
Thank you very much for the opportunity to appear before you 
today. I am Shelley Poticha, President of Reconnecting America, 
a national nonprofit dedicated to using transit investments to 
spur a new wave of development that improves housing 
affordability and choice, revitalizes downtowns and urban and 
suburban neighborhoods, and creates lasting value for our 
communities.
    We host the Center for Transit-Oriented Development, and 
thanks to language included by this Committee in SAFETEA-LU, we 
receive Federal funding to provide standards, guidance, and 
research on transit-oriented development for the 40 regions 
that either have or are planning new transit lines.
    As I go from region to region, it is clear that there is a 
thirst for new and increased investments in transit. First of 
all, transit ridership is at a 40-year high, with three-
quarters of the growth coming from heavy, light, and commuter 
rail. We are finding that mayors value transit to help spur 
urban regeneration and reduce traffic congestion; businesses 
value transit because employees can get to work on time; and 
transit is viewed as a key amenity in attracting the highly 
desirable creative class to local economies Developers see an 
untapped market for housing near transit and are designing new 
products and new neighborhoods to meet this demand. And 
communities recognize that when all the pieces come together, 
transit can help improve the quality of life and lower cost of 
living.
    A common thread in every one of these places is the 
recognition that transit is a powerful tool that is made more 
powerful when combined with proactive land use an economic 
development strategies.
    Despite these encouraging trends, we hear frequent 
complaints about the Federal partnership. Funding for transit 
is not keeping up with demand or rising construction costs. The 
length of time, the complexity, and the added cost of trying to 
navigate the Federal New Starts process is increasing and 
placing an undue burden on transit projects, while high rate 
projects receive much less scrutiny. There is a growing 
concern, whether real or perceived, that including a full range 
of amenities, streetscape improvements, and pedestrian safety 
enhancements in a proposed transit project will jeopardize 
Federal funding.
    Yet, these are the very features that help maximize walking 
trips to transit and create high value urbanism. Local concern 
over meeting the cost-effectiveness index has led some 
communities to short-change the number of transit stations, 
rail cars, or corridor enhancements that would help meet or 
even exceed 20 year ridership projections.
    In addition, our research shows that actual ridership on 
many recently built transit lines is higher than predicted by 
FTA's Transit System User Benefit or TSUB model. Some lines, 
such as Minnesota's Hiawatha Light Rail and the Metro Red Line 
in Houston are outperforming their ridership estimates 15 years 
ahead of projections. This raises significant concerns about 
the substantial weight placed on these model results.
    The good news is that over-performing lines give transit 
agencies and communities the momentum and political capital to 
expand their transit systems to benefit more of a region, but 
the bad news is that these over-performing lines are resulting 
in a shortage of transit vehicles, parking spaces, inadequate 
tracking or maintenance facilities, or the inaccurate 
evaluation may have contributed to a downgrading to lower 
capacity technologies. Ridership numbers are the primary input 
into the FTA's model to compute cost-effectiveness.
    Last fall, in response to requests by FTA for specific 
guidance on how economic development could be evaluated and 
defined apart from the land use criteria, our Center for 
Transit-Oriented Development commissioned research on the 
topic; convened meetings with academics, practitioners, and 
economists; and we found that there are different definitions 
of economic development that are being used.
    Without congressional direction on how to interpret 
economic development, FTA appears to be trying to define 
economic development as the impact of a proposed transit 
investment on the regional economy; whereas, local governments 
and practitioners are trying to maximize and coordinate the 
transit investment to leverage and focus economic development 
and growth in a proposed corridor.
    We believe that there are a number of commonly used 
indicators and metrics for evaluating economic development that 
could be incorporated into the transit evaluation process, and 
they do not require the creation of a new black box model.
    The Federal New Starts and Small Starts programs sets the 
rules for engagement in how communities coordinate proposed 
transit investments with larger regional decisions about 
population growth and economic development. I urge you to 
remain steadfast in your intent to implement this congressional 
directive. We need a strong partner for communities that are 
trying to create new transit investments that provide residents 
with greater transportation choices, use transit as a 
development strategy, and promote more travel options that 
reduce greenhouse gas emissions.
    We cannot afford a Federal transit policy that may result 
in less transit being built or that makes it more costly and 
uncertain to obtain Federal funding. We would welcome the 
opportunity to work with FTA on these processes and rules to 
help create a fair economic development and land use set of 
evaluation processes.
    Thank you very much for the opportunity to appear before 
you today.
    Ms. Hirono. Thank you very much to all of the panelists, 
and we will begin questioning.
    I would just like to start by asking Mr. Zimmerman, you 
heard me question Mr. Simpson regarding the directive that they 
issued in July of this year. Do you have a concern that FTA 
will use their July 20th directive, which does give weight to 
the cost benefit factor, that they would use that in their 
analysis of New Starts and of Small Starts pending the adoption 
of the new rules, which could take a while?
    Mr. Zimmerman. Yes, that is precisely the concern. Of 
course, the way it is drawn up, the cost factors seem to work 
against us; the benefit factors work against us with things 
multiplied by cost--you know, costs including things 
potentially that desire expense, in any case, or enhancements 
we may make that may make the investment more valuable in the 
long-run; and, on the other hand, the benefit side not counting 
for some of the real reasons for making the investment in the 
first place, which the statute seem to include as two distinct 
criteria. So, you know, with the indication that that is the 
way they are going to evaluate any proposal, it leads me to 
question whether there is any point in submitting such a 
proposal.
    Ms. Hirono. So pending the adoption of the new rules--and 
we hope that they will be changed to reflect the will of 
Congress and the underlying legislation--what can we do so 
that--I am a new Member of Congress, so I need to ask these 
questions. What can we do to direct the FTA to not impose these 
kinds of percentage requirements that are not in the statute?
    Mr. Zimmerman. Well, it would be my hope that Congress 
could give pretty clear direction that it meant what it said, 
perhaps by some of the things that I think Ms. Poticha was 
suggesting, you know, perhaps providing a more clear 
definition, you know, going beyond what you have already done. 
I mean, I imagine it must be very frustrating, frankly. The 
government I work in, the management doesn't get to not do what 
we put in law. But that certainly looks to me like what is 
happening here. But if you can't get them to do what you 
already told them, perhaps you have to give them more specific 
instruction. Other than that, I am not really sure.
    Ms. Hirono. Thank you.
    Mr. Huffer, you indicated that you basically support the 
direction of these new rules as it relates to your State and 
what you are doing there, is that correct?
    Mr. Huffer. Generally for and in particularly for Very 
Small Starts program.
    Ms. Hirono. Very Small Starts. You heard some of the other 
testimony that the proposal for the Very Small Starts could 
actually push a lot of jurisdictions into going in that 
direction so that they don't have to undergo the full range of 
analysis and assessment. Is that of concern to you?
    Mr. Huffer. Our primary concern with Very Small Starts 
relates to the cost per mile. We think that that probably 
prohibits streetcars and forces communities into bus rapid 
transit. We have two bus rapid transit projects, one developed 
that was under $3 million per mile, including vehicles, and one 
that is being developed that will be under $3 million excluding 
vehicles. But we fully believe that we would never be able to 
do even a BRT in future years with that $3 million threshold in 
there.
    Ms. Hirono. So aside from wanting to increase that $3 
million per mile, you don't share the concerns expressed by I 
think it was Mr. Townes, that the new Very Small Starts would 
actually move a lot of projects into those modes of 
transportation that would be covered under----
    Mr. Huffer. Our primary concern, again, is that it would 
prohibit communities from proceeding with a streetcar project. 
But what we do like is that, as Administrator Simpson said, 
those projects are small enough that they pretty much 
automatically qualify for Federal funding, and you can really 
expedite that process at that point. But we do have issues with 
some of those items as it relates to Very Small Starts.
    Ms. Hirono. Thank you.
    Do the Members have any questions? Mr. Boozman?
    Mr. Boozman. Thank you, Madam Chair.
    Mr. Townes, congratulations on moving your Norfolk light 
rail project through the New Starts process and executing your 
full funding grant agreement next Monday, October 1st. Having 
just been through this process under the current New Starts 
rules, do you believe that any of the changes in the new 
proposed rule will make the process easier or faster than for 
the project sponsors? You are a guy that has just gone through 
this. Are any of the proposed changes, do you feel like that 
will help or speed up the process?
    Mr. Townes. No, sir, I don't believe that the process, as 
outlined in the Notice of Proposed Rulemaking, will go any 
faster or be any less complicated, and I don't think it is fair 
or reflects the intent of this Committee or Congress in terms 
of bringing new measures into the process so that the true 
benefits, not just the cost-effectiveness benefits, of these 
projects are recognized.
    Mr. Boozman. Okay. Very good.
    Mr. Huffer, do you believe that a bus rapid transit project 
such as the Metro Area Express or the Troost corridor BRT 
generates transit-supportive land use and positive economic 
development effects? And can you give us some examples?
    Mr. Huffer. Sure. We will say, first o fall, yes, we do 
believe that it does produce positive economic development 
effects and does help with transit corridor development, but 
not to the extent to rail. We would never believe that to be 
the case.
    But I think a good example is on our main street MAX, our 
first project that was open, the businesses in that corridor 
formed a community improvement district by which they tax 
themselves and hired additional security, additional people to 
clean litter control, just because they saw that as an 
advantage; they saw that MAX was working in the corridor, and 
to them it was helping to bring new businesses in, and they 
wanted to present additional face. So they actually tax 
themselves to form a CID.
    Mr. Boozman. Ms. Poticha, did I get that right?
    Ms. Poticha. Poticha.
    Mr. Boozman. Good.
    Ms. Poticha. Yes. Thanks.
    Mr. Boozman. I am Boozman, Bozeman, whatever.
    [Laughter.]
    Ms. Poticha. I can relate.
    Mr. Boozman. Reconnecting America, has it looked at better 
ways to estimate and incorporate the New Starts evaluation 
process pedestrian use of transit? You touched on that earlier, 
I think, about pedestrian being important, to get there so you 
can get on the--can you kind of elaborate on that a little bit?
    Ms. Poticha. Well, we have a database of every fixed 
transit station in the United States and we are able to pull 
data on how people get around in the neighborhoods that touch 
the transit stations, and what we have done is that people who 
live in areas within a half mile of a transit stop walk, bike, 
and take transit four times as much as their peers in the 
region.
    I think one of the challenges in the way that transit 
projects are evaluated now is that the measurement of those 
pedestrians is often lost in the computer modeling, and, in 
fact, although I am not a modeling expert, I have heard from 
many of the academics and practitioners that the current models 
that generate ridership are not sensitive to pedestrians and 
don't fully measure those.
    That is part of the reason why we have been doing research 
on the tracking of projected ridership that is being generated 
through this FTA computer model and actual ridership, and what 
we are finding is that in many, many cases the ridership 
exceeds or is far accelerated beyond what is estimated by the 
computer model. I think much of this may be coming from this 
wave of transit-oriented development that has happened in the 
last 10 years around many, many transit stations in the United 
States, creating this whole market for neighborhoods where 
people can walk to transit, walk to services. And, yet, I think 
in many ways that is not being captured very well by the 
current system.
    Mr. Boozman. Well, thank you all very much. I appreciate 
it. This is so important. You know, we talk about economic 
development; we talk about the benefit of reducing emissions, 
all of the things that we are concerned about, but also it 
really is important for single moms and single dads who don't 
have the resources to commute. If you can't do that, you can't 
have a job, and then also for our seniors. You know, many of 
them are able to continue to live in their homes because they 
can get out and shop and do the things that they need to do 
with just a little bit of help of transportation.
    So, again, thank you all very much.
    Ms. Hirono. I have a few more questions.
    Some of you may be aware, possibly not, that Honolulu is 
one of the New Starts cities, and I know that, in working with 
the mayor there on obtaining Federal funding, that it is 
certainly not just a question of cost-effectiveness, but there 
is a lot of discussion around how can we revitalize those areas 
that the transit stops will be in and economic development. 
Those are very real issues just because FTA may not have quite 
the models that they feel are reliable.
    I have a question for Ms. Poticha. FTA has argued that it 
is too difficult and costly to separate land use from economic 
development factors and is, thus, proposing a single combined 
measure of effectiveness. What are your thoughts about this 
approach?
    Ms. Poticha. Well, I have been an urban planner for about 
25 years, and a vast majority of my career has been around 
working with communities who are trying to build communities 
around transit. It is very important for communities to plan 
the kinds of land uses that happen around transit to change 
their zoning codes so that mixed use walkable neighborhoods can 
actually be built. In many places, as these transit lines come 
in, the rules don't allow those kinds of neighborhoods to be 
built and so there is an effort that needs to be done to 
prepare the land use policies to even allow these neighborhoods 
to be possible.
    But that is not sufficient, in my opinion, to generate the 
kinds of neighborhoods that truly capture the value that 
transit provides, and what we are seeing is the most successful 
places are places that have put in place financial tools that 
help support and incentivize development to come to these 
areas; that create the sites where development can actually 
happen. In many of these places you are running your transit 
line through an existing community. You might have a zoning 
that allows transit-oriented uses, but that is often prevented 
because the land maybe hasn't been assembled in any real way.
    So there are a whole set of tools that can be used to work 
with the private sector to ensure that economic development 
happens and that this kind of glomeration and clustering of 
uses and activity truly takes place. So I would say that they 
are related, but they are different, and both are necessary in 
order to truly maximize the public's investment in this 
transportation infrastructure.
    Ms. Hirono. So would you agree that FTA is perhaps jumping 
the gun in trying to codify certain percentages that does not 
give the kind of weight that some of us would like to give to 
those other factors?
    Ms. Poticha. Well, I have heard a lot about the challenges 
of creating a predictive computer model that would generate an 
estimate of economic development benefits from a particular 
transit investment, and I had always thought that the most 
appropriate way to evaluate transit projects was a combination 
of predictive models and some qualitative measures, because 
communities are very complex places. And as we are now learning 
when we look at these ridership models, they are not 
necessarily accurate.
    So I would--one of the things that we found through all of 
our research and commissioning papers from various academics 
and practitioners who work with economic development on a 
regular basis is that probably the best way to look at economic 
development is a combination of qualitative and quantitative 
metrics.
    Ms. Hirono. That sounds like a yes answer to me. Yes. Thank 
you.
    Ms. Poticha. Well, I would also say that we looked at some 
of the full funding grant agreements that have been made since 
2000, and one of the things that is a worry to me is that there 
are 14 projects on this list--which I can submit to you--that 
received either a low or a medium-low cost-effectiveness rating 
through the FTA's evaluation process. And yet, when land use, 
which was one of the factors, was included into the evaluation, 
they rose up high enough in order to get funding.
    So, clearly, there is a recognition of the benefits of 
these other factors, and I would say that we should continue to 
do that and improve upon it.
    Ms. Hirono. Thank you. And I would like you to submit the 
14 projects.
    Ms. Poticha. I would be happy to.
    Ms. Hirono. If there are no further questions, thank you. 
This hearing is adjourned. I would like to thank once again all 
of the panelists for giving us the benefit of your views.
    [Whereupon, at 1:12 p.m., the Subcommittee was adjourned.]
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