[Senate Hearing 111-210]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-210
 
                      A FRESH START FOR NEW STARTS 

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

                                HEARING

                               before the

                            SUBCOMMITTEE ON
           HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT

                                 of the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   ON

   EXAMINING THE IMPORTANT ROLE OF THE FEDERAL NEW STARTS PROGRAM IN 
               FUNDING TRANSIT PROJECTS ACROSS OUR NATION

                               __________

                              JUNE 3, 2009

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs


      Available at: http: //www.access.gpo.gov /congress /senate/
                            senate05sh.html

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

54-280 PDF                       WASHINGTON : 2009 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, 
Washington, DC 20402-0001 






















            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

               CHRISTOPHER J. DODD, Connecticut, Chairman

TIM JOHNSON, South Dakota            RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island              ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York         JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey          MEL MARTINEZ, Florida
DANIEL K. AKAKA, Hawaii              BOB CORKER, Tennessee
SHERROD BROWN, Ohio                  JIM DeMINT, South Carolina
JON TESTER, Montana                  DAVID VITTER, Louisiana
HERB KOHL, Wisconsin                 MIKE JOHANNS, Nebraska
MARK R. WARNER, Virginia             KAY BAILEY HUTCHISON, Texas
JEFF MERKLEY, Oregon
MICHAEL F. BENNET, Colorado

                    Edward Silverman, Staff Director

              William D. Duhnke, Republican Staff Director

                       Dawn Ratliff, Chief Clerk

                      Devin Hartley, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

                                 ______

   Subcommittee on Housing, Transportation, and Community Development

                 ROBERT MENENDEZ, New Jersey, Chairman

           DAVID VITTER, Louisiana, Ranking Republican Member

TIM JOHNSON, South Dakota            KAY BAILEY HUTCHISON, Texas
JACK REED, Rhode Island              ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York         MIKE JOHANNS, Nebraska
DANIEL K. AKAKA, Hawaii              MIKE CRAPO, Idaho
SHERROD BROWN, Ohio                  MEL MARTINEZ, Florida
JOHN TESTER, Montana                 JIM DeMINT, South Carolina
HERB KOHL, Wisconsin
MARK R. WARNER, Virginia
JEFF MERKLEY, Oregon

               Harold J. Connolly, Housing Staff Director

                Michael Passante, Transit Staff Director

              Travis M. Johnson, Republican Staff Director

                    Amit Bose, Legislative Assistant

                  Mitch Warren, Senior Policy Advisor

                                  (ii)












                            C O N T E N T S

                              ----------                              

                        WEDNESDAY, JUNE 3, 2009

                                                                   Page

Opening statement of Chairman Menendez...........................     1

Opening statements, comments, or prepared statements of:
    Senator Schumer..............................................     4

                               WITNESSES

A. Nicole Clowers, Acting Director, Physical Infrastructure 
  Issues,
  Government Accountability Office...............................     3
    Prepared statement...........................................    20
    Response to written questions of:
        Senator Menendez.........................................    49
Gary C. Thomas, President/Executive Director, Dallas Area Rapid 
  Transit, and Vice Chair--Rail Transit, American Public 
  Transportation Association.....................................     6
    Prepared statement...........................................    39
    Response to written questions of:
        Senator Menendez.........................................    50
Richard Sarles, Executive Director, New Jersey Transit...........     8
    Prepared statement...........................................    41
Mariia Zimmerman, Policy Director, Reconnecting America..........    10
    Prepared statement...........................................    44
    Response to written questions of:
        Senator Menendez.........................................    54

                                 (iii)


                      A FRESH START FOR NEW STARTS

                              ----------                              


                        WEDNESDAY, JUNE 3, 2009

                                       U.S. Senate,
    Subcommittee on Housing, Transportation, and Community 
                                               Development,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Subcommittee met at 2:03 p.m., in room SD-538, Dirksen 
Senate Office Building, Senator Robert Menendez (Chairman of 
the Subcommittee) presiding.

          OPENING STATEMENT OF SENATOR ROBERT MENENDEZ

    Senator Menendez. This hearing will now come to order. Good 
afternoon, everyone. Today the Banking Subcommittee on Housing, 
Transportation, and Community Development will have its first 
hearing on public transit as we prepare to write the 
reauthorization of the surface transportation bill. I want to 
thank Chairman Dodd and Senator Shelby for their continued 
leadership on transit issues, and I look forward to working 
with them and Senator Vitter on crafting a strong transit 
title.
    Public transit has not always had the easiest time in 
recent years. The previous administration and many in Congress 
seemed more concerned about transit justifying its existence 
rather than trying to make transit flourish. This has meant an 
increasingly onerous system for transit agencies to get through 
in order to get funding. Projects have to be justified on a 
rigid cost/benefit analysis that can often ignore factors like 
economic development.
    Transit agencies have had to do stringent modeling on 
projected ridership 2 years out, even though these systems will 
be in service for decades. And often, as new requirements have 
been added, agencies have had to go back and redo work already 
completed to meet new standards.
    These new requirements have resulted in the new starts 
process taking 15 to 20 percent longer, according to the FTA, 
and these delays, along with the added costs associated with 
them, mean that we are not building new transit projects at the 
rate we could or should be.
    I want to be clear on one point. I am not questioning the 
excellent work of the Federal Transit Administration. They have 
done a remarkable job of promoting transit in recent years. 
What I am saying to the FTA and to the transit agencies is that 
now, it appears to me, is the time to unleash transit. The 
leadership of President Obama, Chairman Dodd, and the new FTA 
Administrator Peter Rogoff means that transit is no longer 
something we need to justify; it is something we need to 
understand is central to many of our Nation's core policy 
issues.
    Transit can help us rebuild our economy by creating jobs 
and fostering smart economic growth. Transit systems can help 
us out of our housing crisis because new transit can increase 
property values and lower rates of foreclosure. Transit can 
help us improve our energy security by lowering our consumption 
of oil. And transit can also help us lower greenhouse gas 
emissions to help solve our climate crisis. There are few 
things that bring together all of those possibilities as public 
transit can.
    I have personally seen these benefits in the success of the 
Hudson-Bergen Light Rail in New Jersey, which created new 
riders, new ratables, new businesses and investment, new 
employment opportunities, and environmental improvement all 
along New Jersey's Gold Coast. And I could continue to extol 
the benefits of transit, but instead I will let the decisions 
of our constituents speak for themselves.
    Transit ridership is higher now than it has been in 40 
years. Communities around the country, including Denver, 
Houston, Dallas-Fort Worth, Salt Lake City, Atlanta, 
Sacramento, Norfolk, and Charlotte have all made substantial 
investments recently in transit. So it is not just a question 
of meeting our policy goals; it is also a question of meeting 
increased demand for transit.
    This administration has already signaled its intent to meet 
this demand in the Recovery Act, which had $750 million in 
transit funding, created $1.5 billion in additional commitment 
authority for new transit projects, and I am sure that transit 
will play a significant role in the $1.5 billion Transportation 
Investment Generating Economic Recovery Discretionary Grants 
program.
    So as I see it, our job for this reauthorization is to 
continue the work of the Recovery Act and provide the funding 
and a more streamlined process to ensure transit can meet its 
potential. When we are done, transit can come out of the 
shadows and finally be a proud part of the country's 
transportation policy and its future.
    Seeing no other colleagues at this point--we will recognize 
them when they get here--let me turn to our witnesses.
    Ms. Nikki Clowers is currently the Acting Director of 
Physical Infrastructure with the Government Accountability 
Office. In this role, she has led evaluations examining the 
Federal Transit Administration's New Starts program. Ms. 
Clowers has been with GAO for 11 years and has done a lot of 
work reviewing the New Starts program, so we look forward to 
learning from their insights.
    Mr. Gary Thomas is the President and Executive Director of 
the Dallas Area Rapid Transit (DART). In this role, Mr. Thomas 
is responsible for a 13-city transit system over a 700-square-
mile area with bus, light rail, commuter rail, and paratransit 
services. Mr. Thomas is also Vice Chair of Rail Transit for the 
American Public Transportation Association.
    Let me welcome Mr. Richard Sarles, who is the Executive 
Director of New Jersey Transit, whom I have worked quite a bit 
with--you do not look worse for the wear, Richard, so we 
appreciate your service--the third largest transit agency in 
the Nation. Mr. Sarles is responsible for the agency's bus, 
light rail, commuter rail network which has been used by more 
than 240 million people every year. It has been a tough time to 
be head of New Jersey Transit. We have several major capital 
projects going in various stages of construction or planning, 
we have record ridership, and we have severe budget 
constraints. And you have managed to guide New Jersey Transit 
through all of this and to be able to do it without raising 
fares this year, which I for one appreciate.
    Ms. Mariia Zimmerman is Policy Director at Reconnecting 
America, a national transportation nonprofit devoted to 
improving the connection between transportation systems and the 
communities they serve. Mariia brings over a decade of 
experience working on Federal transportation policy, both in 
the Federal Transit Administration and on Capitol Hill with 
Chairman Earl Blumenauer.
    Thank you all very much. I would ask each of you to keep 
your testimony to about 5 minutes. Your full written testimony 
will be entered into the record, and with that, Ms. Clowers, 
let us start with you.

   STATEMENT OF A. NICOLE CLOWERS, ACTING DIRECTOR, PHYSICAL 
               INFRASTRUCTURE ISSUES, GOVERNMENT
                     ACCOUNTABILITY OFFICE

    Ms. Clowers. Thank you, Mr. Chairman, for having me here 
today to speak about FTA's New Starts program, both challenges 
that the program faces as well as options to improve it.
    As you know, the New Starts program is the primary source 
of Federal funding for major transit projects throughout the 
country. However, there are growing concerns that the process 
has become too time-consuming, too complex, and too costly. 
Minimizing the delays and costs of project delivery has never 
been more important as all levels of Government face severe 
financial stress.
    The bottom line is that there are options to help projects 
move through the process more quickly. However, it is important 
that we strike the right balance between speeding project 
development and maintaining a robust evaluation process.
    My testimony will address two topics: first, challenges we 
have previously identified with the program; second, potential 
options to expedite project development. In terms of 
challenges, we have previously identified three key issues.
    First, the New Starts program has experienced a great deal 
of change over the last decade. Although these changes were 
generally intended to make the program more rigorous, the 
frequent changes have at times caused confusion and rework on 
the part of project sponsors, leading to delays in project 
development.
    Second, the current New Starts evaluation process does not 
capture all project benefits, such as economic development, as 
you mentioned. As a result, the process may underestimate the 
benefits of certain projects.
    Third, while project sponsors and the industry experts we 
interviewed generally value the rigor of the New Starts 
process, many are concerned that the process has become too 
complex, too time-consuming, and too costly, leaving some to 
question whether pursuing New Starts funding is worthwhile.
    For example, one project sponsor told us that constructing 
a project with New Starts funding delays the timeline for the 
project by as much as several years, which in turn leads to 
increased project costs, since inflation and expenses from 
labor and material increase with delay.
    With regard to options to expedite project development, we 
have identified a handful of potential options in our ongoing 
work, which are described in my written statement. Each of 
these options has advantages and disadvantages to consider. I 
would like to highlight two of these for you today.
    One option is to tailor the New Starts evaluation process 
to the risks posed by the project. Specifically, the level of 
oversight by FTA and the number of requirements to be fulfilled 
by a project sponsor could vary based on the project's cost and 
scope as well as the experience of project sponsors. This would 
allow low-risk projects to move through the process more 
quickly as well as allow FTA to more efficiently use its 
limited oversight resources.
    Another option is to combine one or more of the project 
development phases. For example, the preliminary engineering 
and final design phases could be collapsed into a single phase. 
This would reduce the number of FTA approvals needed to advance 
the project through the process. Currently FTA must approve a 
project's advancement into the different phases. Gaining these 
approvals can cause delays as project development essentially 
stops as FTA determines whether the project can advance, and 
FTA's reviews can take anywhere from a few weeks to many 
months. Thus, combining project development phases would reduce 
the number of stops and starts projects currently experience 
and reduce the potential for delay.
    In summary, there are several challenges confronting the 
New Starts program, notably concerns that the process has 
become too complex, too time-consuming, and too costly. 
However, there are options to help expedite project 
development. Options to speed project development must be 
balanced with the need to preserve the rigor and accountability 
of the New Starts program.
    We look forward to working with the Subcommittee to further 
explore these options during the upcoming reauthorization, and 
this concludes my testimony, Mr. Chairman. I would be pleased 
to answer any questions that you or the other Members of the 
Subcommittee may have. Thank you.
    Senator Menendez. You are under time and on budget. That is 
always good news.
    Ms. Clowers. That is what we try to do at GAO.
    Senator Menendez. Thank you very much.
    Before I turn to Mr. Thomas, let me turn to my 
distinguished colleague from New York, Senator Schumer.

            STATEMENT OF SENATOR CHARLES E. SCHUMER

    Senator Schumer. Thank you. First, I want to first thank 
Senator Menendez and Senator Vitter for holding this important 
hearing. I thank the witnesses. I apologize. I cannot stay for 
the hearing with other obligations, but I wanted to be here 
because I think New Starts is a great idea, and I am glad you 
are having this hearing, Mr. Chairman.
    From the Internet to common markets, from higher education 
to startup businesses, the economy is fundamentally based on 
interconnectivity. Allowing ideas and the people who devise 
them to move ever more freely from place to place. That is why 
safe and smooth highways and bridges matter. It is why better 
and faster rail travel matters. And it is why inexpensive, 
reliable mass transit matters. With the unpredictability of 
fuel prices and growing traffic congestion, it is now more 
important than ever that Americans have an affordable 
alternative means of transportation.
    In 2007, Americans took 10.3 billion trips on U.S. mass 
transit. That is the highest number taken in 50 years. Today we 
are in a very promising place. We have an administration that 
understands and is willing to invest in the growing demand for 
transit and an American public whose imagination has been 
captured by the promises that modernized transportation systems 
can deliver. So the environment is ripe to move in a bold new 
direction.
    To take advantage of these new opportunities, we have to 
prioritize the improvement to the Federal Transit 
Administration's New Starts program, a major capital investment 
program that helps localities build fixed guideway systems. New 
Starts has been incredibly important to my home State. In New 
York City, East Side Access, the Second Avenue Subway, and a 
joint project spearheaded by my colleagues, the Chairman of 
this Subcommittee, Senator Menendez, along with Senator 
Lautenberg are all beneficiaries of New Starts. The projects 
will play an instrumental role in relieving roadway congestion 
and reducing New Yorkers' carbon emissions.
    The East Side Access project brings Long Island Railroad 
commuters to a new terminal underneath Grand Central Station in 
Manhattan, allowing them to avoid the congested headache that 
is Penn Station.
    The Second Avenue Subway project will create a two-track 
subway line along Second Avenue from 125th Street to the 
financial district in Lower Manhattan, creating a critical but 
presently missing link in New York City's subway map.
    The ARC Tunnel--and I am sure my friend from New Jersey can 
speak about this, and has probably mentioned it already--will 
double commuter rail capacity between New York and New Jersey 
via two new railroad tunnels underneath the Hudson.
    The existing tracks that are in use are bursting at the 
seams in terms of capacity on both sides of Manhattan--on the 
East River for East Side Access, on the West Side for the 
Hudson River. You get one train stalled during rush hour, and 
everything comes to a standstill because things are so 
congested. So the project is going to provide riders with 
welcome relief.
    But the New Starts program is not without its shortcomings. 
The entire project development process takes anywhere from 6 to 
12 years. This is a lifetime for localities gasping for fresh 
air, anxious to get cars and their accompanying pollution off 
their streets. It took almost 9 years for both East Side Access 
and Second Avenue Subway to receive their Full Funding Grant 
Agreements. ARC is still awaiting the FFGA. Part of the delay 
is due to the FTA's heavy oversight role over each step of the 
project's development.
    While I agree that the Federal Government must monitor the 
use of its funds carefully, especially in multi-million-dollar 
capital projects, I believe the Federal Government must not act 
as a roadblock to the project's completion. Congress must 
examine ways to make the New Starts program more efficient so 
that our localities are encouraged not discouraged from 
applying for projects.
    Another important note on transit investment I would like 
to make is that as we approach the new reauthorization bill, I 
am going to reiterate the importance of striking a proper 
balance between highway funding and mass transit funding. We 
all remember last summer when the Highway Trust Fund nearly 
dried up. The Bush administration's solution was to inject it 
with funds--funds that would be robbed from mass transit.
    Bottom line: You cannot rob Peter to pay Paul. Mass transit 
funds are more precious than ever, and we must dismiss any 
future proposal to subtract funding from mass transit.
    Again, I want to thank Senator Menendez for holding this 
hearing, thank the witnesses, and I will look forward to 
reviewing the record and seeing their testimony.
    Senator Menendez. Thank you, Senator Schumer, for your 
tremendous advocacy in this regard.
    Mr. Thomas.

        STATEMENT OF GARY C. THOMAS, PRESIDENT/EXECUTIVE
  DIRECTOR, DALLAS AREA RAPID TRANSIT (DART), AND VICE CHAIR--
RAIL TRANSIT, AMERICAN PUBLIC TRANSPORTATION ASSOCIATION (APTA)

    Mr. Thomas. Mr. Chairman and Members of the Subcommittee, 
on behalf of Dallas Area Rapid Transit and the American Public 
Transportation Association, we thank you for this opportunity 
to testify before you today on the Federal Transit 
Administration's New Starts program, which provides essential 
funding to cities like Dallas who seek to improve mobility and 
air quality by establishing new transit services. Changes must 
be made to the program that will help streamline the Federal 
transit program, reduce the administrative burdens on transit 
agencies like ours, and help speed project delivery.
    Now, when you think about public transit in the United 
States, DART may not be the first transit authority you think 
of, and let me tell you a little bit about what is going on in 
north Texas. North Texas is the fastest growing region in the 
United States. It is the fourth largest region in the United 
States. DART serves 13 cities in just a portion of that region, 
2.2 million people, over 700 square miles, and we started that 
process in 1983, so we are relatively young when it comes to 
public transportation certainly in the U.S.
    We opened our first light rail section in 1996, and then we 
had an expansion in 1997 and 2002. So we opened with a 20-mile 
starter system. Between 2001 and 2004, we expanded to a total 
of 45 miles on the ground. In that second expansion, we 
received a $333 million Full Funding Grant Agreement. We 
actually came in ahead of schedule and under budget on that 
project, which created somewhat of a dilemma because it had not 
happened very many times in the past. We worked very closely 
with our delegation to reapply some of those funds back to the 
north Texas area.
    As we continue to try to provide this response to the 
insatiable desire for good transportation choices in north 
Texas, where people spend 60 hours on average a year stuck in 
traffic--not in traffic, but stuck in traffic--we continue to 
look at how we can continue to grow. So we have 45 miles of 
light rail on the ground. We also provide commuter rail between 
Fort Worth and Dallas. We operate the HOV lanes, and of course, 
buses, paratransit systems, and other multimodal opportunities 
for people to use, and we are in the process of doubling our 
light rail system again. We have the longest light rail 
construction project underway in North America right now, 28 
miles, the Green Line. Often when I talk to folks in north 
Texas and ask, ``Do you ride the system?'' ``Well, Gary, it 
does not go where I want it to go yet. And how quickly can you 
make that happen?''
    So we are in the process of building the 28-mile Green 
Line; 21 miles of that is federally funded, $700 million Full 
Funding Grant Agreement that we received on July 3, 2006. That 
represented 47 percent of the project cost; 53 percent is 
locally matched. And then, of course, that balance of the 28 
miles, the final 7 miles is all locally matched.
    The process that we went through to get to that point was 
often long and arduous, and to be quite frank with you, sir, 
the FTA was very helpful in that process. They have extremely 
bright people and very helpful people, but the process was 
cumbersome, oftentimes, and it changed multiple times, as we 
heard earlier in the testimony, as we went through that 
process. But we received that Full Funding Grant Agreement. 
That project, the first phase of that project will open 
September 14th of this year. The rest of that Green Line 
expansion will open in December of 2010, but we are not 
stopping there. We have already got an additional 9 miles under 
contract that we just awarded this January as we head toward 
DFW airport and another 5 miles as we head out to the eastern 
suburbs of the Dallas area.
    So total right now today, we have 42 miles of light rail 
under construction. And as we talk to the community, it is, 
``OK, Gary, that is $1.63 billion of construction. What are you 
going to do next? How quickly can you get that next piece? When 
are you going to do this piece?'' And we are looking at how we 
can make that happen as we continue to expand our system.
    We owe a lot to our north Texas delegation, and, of course, 
Senator Hutchison, who serves on this Subcommittee, we 
appreciate what she is doing. As we look forward, the funding 
is absolutely critical, $123 billion is absolutely necessary 
over the 6-year period for transit in the new bill. We would 
like to strengthen the role of the regional FTA offices in the 
New Starts process. We really believe that we need to reform 
the ratings standard to take more benefits of the other 
criteria: land use, TOD, environment. We have almost $8 billion 
of transit development already around our stations, and, of 
course, a greater use of pilot and demonstration projects would 
be beneficial. We have got a second alignment downtown Dallas 
that is a perfect opportunity for this. It does not meet the 
current criteria, but it is absolutely essential, as all lines 
feed into downtown so that we do not create a bottleneck in the 
future.
    I look forward to working with the Subcommittee as we 
continue to develop these rules, and I appreciate the 
opportunity to be here today.
    Senator Menendez. Thank you very much.
    Mr. Sarles.

  STATEMENT OF RICHARD SARLES, EXECUTIVE DIRECTOR, NEW JERSEY 
                            TRANSIT

    Mr. Sarles. Mr. Chairman, it is a pleasure and I appreciate 
the opportunity to give testimony today on the New Starts 
process.
    Congress and the Obama administration, through the American 
Recovery and Reinvestment Act, have sent a strong signal to the 
American public that improving and expanding public 
transportation is a priority.
    It is precisely because we stand at the gateway of a new 
era in transit investment that it is critical to ensure that, 
going forward, we have the most expeditious and transparent 
process to deliver critically needed projects both at the 
agency and Federal levels.
    First, let me say that we are very pleased to be working 
with FTA Administrator Peter Rogoff. The Administrator is an 
extremely knowledgeable transportation expert with considerable 
experience with New Starts through his work on the Senate 
Appropriations Committee. He has been a friend to transit for 
many years and has already hit the ground running, working with 
us closely in New Jersey to advance New Starts projects. I look 
forward to his leadership and partnership at FTA.
    The FTA has an important, welcomed oversight role in the 
New Starts process that was designed to realize the benefits 
for money expended and to ensure both the competitive nature of 
the program and the proper usage of Federal funds.
    What I hope to address today is the fact that the FTA, like 
New Jersey Transit, has limited resources to devote to these 
valuable oversight responsibilities. FTA must focus its 
resources to assure that the costs and benefits of a project 
are fairly presented and that a grantee has in place the 
requisite organization, funding, processes, and controls to 
advance and sustain a project. The FTA does not have nor should 
have the expertise to plan, engineer, and construct major 
projects. Nor should it request or demand reams of 
documentation with multiple revisions from clearly experienced 
agencies to prove that they know how to plan, engineer, and 
construct a New Starts project.
    While we have worked through the years on multiple New 
Starts projects that have yielded tremendous benefits, our 
experience shows a more recent trend toward layers of oversight 
that can create risks to project schedules and budgets.
    Specifically, New Jersey Transit has completed four New 
Starts projects since the program's inception, including the 
Frank R. Lautenberg transfer station, the Hudson-Bergen Light 
Rail Segments 1 and 2 that you referred to earlier, and the 
Newark Light Rail extension. In addition, New Jersey Transit 
has also completed the Riverline Light Rail project with State 
funds only. The total value of these projects was $3.9 billion.
    Let me share New Jersey Transit's experience with the New 
Starts process on two major projects--one in operation, and one 
about to break ground this month.
    The first, the Hudson-Bergen Light Rail project, which is 
operational today, offers frequent and convenient service 
through seven cities along the Hudson River waterfront.
    It is important to note that during the project's early 
stages then-Mayor Menendez of Union City was not only an 
advocate of the project, but convinced New Jersey Transit to 
add a station in Union City, which now has over 5,000 daily 
riders. The HBLR----
    Senator Menendez. By the way, Mr. Sarles, at that time--you 
were not the Executive Director, but at that time I was told 
that was not going to happen. And I told them, ``Then we are 
not going to have a rail line.'' It is the most highly traveled 
passenger location of the entire system, is it not?
    Mr. Sarles. It was a very wise decision.
    Senator Menendez. Thank you. All right. You can have as 
much time as you need.
    [Laughter.]
    Mr. Sarles. The HBLR has been a huge driver for economic 
development in Hudson County. In fact, in a region where cities 
are shrinking, Jersey City in the last quarter-century has 
gained about 30,000 residents, 27,000 jobs, and 18 million 
square feet of prime office space.
    New Jersey Transit's experience with FTA in securing Full 
Funding Grant Agreements for the HBLR in the late 1990s was 
fairly straightforward.
    New Jersey Transit, in partnership with the Port Authority 
of New York and New Jersey, is also in final design and will 
soon break ground on the Access to the Region's Core (ARC) 
project--the first new rail tunnel to be built under the Hudson 
River in 100 years. That was referred to before. This $8.7 
billion project will generate some $45 billion in new regional 
economic activity while providing riders with more frequent, 
direct, and reliable service. The tunnel will accommodate a 50-
percent increase in the number of daily passenger trips beneath 
the river, taking 22,000 cars a day off area highways, and 
reducing greenhouse gases and other pollution by more than 
66,000 tons per year.
    The New Starts process in 2005, when we began submitting 
information for ARC, has changed substantially from the days of 
the HBLR. Some changes were positive. For instance, FTA 
required a fleet management plan for all transit modes, a 
financial plan, a 2030 rail operating plan, and a land use and 
economic development analysis. The process enforces a 
discipline on the logic used to develop and analyze a plan, 
which is useful so that comparisons can be made between 
different proposed transit projects and also so that the 
proposing agencies have the resources and skills they need to 
implement the project. I welcome that discipline.
    However, in an environment where investments need to be 
accelerated to boost the economy and protect the environment, 
review timetables need to be balanced against the need to 
progress through the process with a focus on completion.
    For example, the current New Starts process has evolved to 
include many more layers of review, and re-review, which are 
sometimes onerous and can unnecessarily slow an agency's 
ability to advance on a reasonable schedule. Even modest 
changes to a project now result in more process. In fact, I can 
say with some certainty that if a mayor requested an additional 
station for a New Starts project today--a request that would 
improve the project through increased ridership and economic 
development--the result would be project delay and cost 
overruns or increases.
    With these experiences in mind, I recommend the Committee 
consider the following steps with respect to reforming the New 
Starts process. In order to meet the administration's 
objectives while providing appropriate oversight, the program 
should embody five fundamental principles:
    One, establish a true partnership between the Federal 
Government and State and local governments seeking to improve 
public transit bound together by mutual respect rather than red 
tape.
    Streamline the New Starts process so that predictability of 
the process is a priority. One way to accomplish this is to 
make it more of a ``procurement'' type process.
    Three, realign the review process to account for the 
experience of more established transit agencies.
    Four, acknowledge the fact that the FTA has become the 
minority funding partner and further recognize that a Full 
Funding Grant Agreement limits the exposure of the FTA to fund 
more than a specified amount of the proposed project's total 
cost. At the same time, the local agencies bear the risk of 
cost increases, including those due to delay in decisionmaking.
    Five, encourage the expansion of public transit consistent 
with concerns about production of greenhouse gases and energy 
consumption. The weight given to evaluation criteria categories 
should be revisited.
    I deeply appreciate the Committee's leadership on this 
matter. It is absolutely critical that if we are to achieve the 
ambitious agenda of building and expanding transit 
infrastructure across the country, we need to streamline the 
Federal process and work more urgently together as partners at 
the Federal, State, and local level. I am grateful for the 
opportunity to offer our thoughts today on how we can work 
together to build a better transportation network.
    I would be glad to take questions.
    Senator Menendez. Thank you very much.
    Ms. Zimmerman.

 STATEMENT OF MARIIA ZIMMERMAN, POLICY DIRECTOR, RECONNECTING 
                            AMERICA

    Ms. Zimmerman. First of all, thank you for your long-time 
leadership on transit and economic development issues, Senator 
Menendez. It is a great pleasure to be here today, and in my 
organization's work managing the federally funded Center for 
Transit-Oriented Development, we have been engaged in a number 
of research projects over the last 5 years to look at the New 
Starts program and, as a co-founder of the Transportation for 
America Campaign, are looking at opportunities in the next 
transportation bill.
    In a report that Reconnecting America released last year, 
we found over 400 rail, bus, rapid transit, and streetcar 
projects that are being proposed in almost 80 communities 
across the country at a proposed worth of $248 billion--far 
more than can be funded through the Federal transit program 
alone and at the current rate would take almost 100 years to 
build these projects.
    Regions are aggressively seeking to use transit investments 
to help focus growth, create sustainable foundations for 
economic development, and provide mobility options for 
residents. My organization joins a growing chorus of voices 
that asks Congress to significantly increase funding for public 
transportation in the upcoming transportation reauthorization, 
and as part of overall energy and climate change legislation 
that may be before the Senate this Congress.
    Increased investment in public transportation should be 
viewed as part of a larger goal to build and maintain an 
integrated national transportation system. And last month, 
Senators Rockefeller and Lautenberg introduced S. 1036, the 
Federal Transportation Policy and Planning Act of 2009. This 
legislation establishes a unifying mission for the Federal 
surface transportation program and sets needed and achievable 
performance targets. This Subcommittee may want to consider 
strengthening that bill to reinforce the linkage between 
housing and transportation through adding performance targets 
that ensure low- and moderate-income communities also share in 
the benefits of a new and improved transportation system. And 
to help meet growing demand for transit, the New Starts 
program, as we have all mentioned, must be significantly 
reformed.
    My organization supports a rigorous and transparent review 
process; however, the unlevel playing field between the current 
process for planning, designing, and constructing a new transit 
line unduly burdens these projects with extra costs and delays.
    Our research on existing and proposed transit projects 
shows that actual ridership on many recently built transit 
lines is higher than predicted by FTA's Transit System User 
Benefit model. This raises significant concerns about the 
substantial weight placed on these model results, and we 
believe validates the need to maintain a multi-measure 
approach.
    Additional suggestions to improve the New Starts project 
delivery process that we believe warrant more consideration by 
Congress include:
    The development of a metropolitan mobility program that 
could allocate formula funding for small start capital transit 
investments, thereby increasing the threshold and maintaining 
an exemption for smaller-scale transit projects;
    The advancement of a set of interrelated expansion 
projects, similar to the approach taken by Salt Lake City and 
being pursued by Houston, Texas;
    And reconciliation of the major capital investment 
alternatives analysis with the NEPA Alternatives Analysis 
requirement to create one integrated comprehensive approach 
instead of a confusing two-step process.
    Finally, I would like to highlight some of the social 
equity needs of transit-supportive land use policies. As the 
transit-oriented development market demand increases, as you 
have seen in New Jersey's Gold Coast, the threat of 
displacement will force the loss of potential affordable 
housing options.
    We commend the recently announced HUD-DOT interagency 
sustainability partnership. But in regards to the New Starts 
process, we feel that more can be done and should be done to 
simultaneously improve project delivery and reward affordable 
housing preservation and creation. One idea is to allow 
communities to count mixed-income housing investments within a 
half-mile of a proposed transit station as a match against 
requested Federal dollars. We also believe that focusing the 
Federal review process on the Federal portion of funding would 
help to incentivize local actions in the realm of economic 
development.
    Another option is to reward communities that implement 
mixed-income housing policies in the land use evaluation 
measure, thus moving beyond just reporting on the number of 
low-income households to actually rewarding those communities 
that take steps to ensure long-term affordability for families 
of a mix of incomes.
    The Federal New Starts program sets the rules for 
engagement in how communities coordinate proposed transit 
investments with larger regional decisions, and as noted, we 
believe the challenges facing our Nation on climate change, 
economic security, energy security, and competitiveness require 
us to make a greater effort to fund transit in a more timely 
and cost-effective manner for transit properties and 
communities.
    Thank you very much for this opportunity to appear before 
the Committee today. My organization looks forward to working 
with you and this Committee in the upcoming bill.
    Chairman Menendez. Well, thank you very much. Thank you all 
very much for some very good testimony. We appreciate it.
    So we will start rounds of questioning, and I don't know if 
other colleagues will make it. If not, believe me, I have a 
series of questions.
    Let me start with you, Ms. Clowers. You note in your 
testimony, in your full written testimony, that economic 
development is a benefit that is not considered when FTA rates 
New Starts projects, and I worry that a project like the 
experience we had in New Jersey along the Hudson-Bergen Light 
Rail, and even listening to Mr. Thomas about some of what he 
described in the development in the DART region, but in the New 
Jersey context alone, it generated well over $5 billion in 
housing development alone, without even getting into the 
commercial aspects of it. It would not be fairly rated if it 
had come through the process today rather than in the 1990s. So 
how can we create a fair measure of economic development so 
that it can become part of the New Starts process?
    Ms. Clowers. As you stated, economic development is 
currently not considered or weighted in the evaluation process. 
Cost effectiveness and land use are each weighted 50 percent in 
the evaluation process. The Transportation System User Benefit 
does capture some economic development benefits. However, we 
found in the past that it doesn't capture all the economic 
development benefits that a project might bring. There are 
models out there that would allow you to predict economic 
development benefits that project sponsors can use and some 
project sponsors have those models. They can be quite 
expensive.
    Another way to incorporate that information into the 
process, if you don't want to go the quantitative approach of 
using models, is to use a more qualitative approach. Currently, 
that is what is done with land use. FTA considers the transit-
friendliness of the policies that a community may have in 
determining the land use benefits and a similar approach can be 
taken for economic development.
    Chairman Menendez. Any other thoughts on that? Does anyone 
want to jump in? Mr. Thomas?
    Mr. Thomas. Yes, sir. I think the modeling is a good idea. 
The land use policies in our particular case are also a good 
idea, but it is somewhat of a challenge with 13 different 
member cities because they all approach it a little bit 
differently. What we would also like to see is some of the 
historical practices that have already occurred around the 
stations, which I think tend to influence other developers and 
tend to gain momentum as we go forward. As I said earlier, we 
have almost $8 billion of development that is either occurring 
around stations or already has occurred around the stations, so 
I think that historical perspective and the past practices of 
what has gone on around those stations, I think is also very 
important.
    Chairman Menendez. Mr. Sarles?
    Mr. Sarles. If I may add, on a very large project, such as 
the ARC project, use of an economic model makes sense and we, 
in fact, did that. On the smaller New Starts, not necessarily a 
small New Start project but smaller ones, I think more of a 
qualitative approach works best in that you see how the 
localities have zoned around the proposed station so that, in 
fact, will encourage that kind of economic development.
    Chairman Menendez. Ms. Zimmerman?
    Ms. Zimmerman. Thank you. We actually have done a fair 
amount of work on this, as well, through the Center for 
Transit-Oriented Development and commissioned some different 
reports to look at this. One of the issues we found frustrating 
to this point has been, I think, a confusion over the 
definitions of economic development, particularly coming out of 
the administration. When we talk to practitioners who are 
looking at economic development, they are really looking at the 
land valuation increases and what policies are communities 
doing to create tax increment financing tools, business 
improvement districts, public-private partnerships, developer 
agreements, and there is a host of these kinds of qualitative 
things that can be evaluated and measured versus more of a pure 
economist perspective of looking at sort of microeconomic 
trends which involve detailed modeling.
    And we feel that there are ways through these qualitative 
measures that it could be analyzed, and that there is a clear 
distinction between land use and economic development if we 
work to clearly define what we mean by these terms. And we do 
find in countries, in Canada and Europe and other places, they 
take more of a full cost-benefit analysis to look at the full 
range of costs and benefits. That may be another approach that 
we would want to consider to sort of get at these bundle of 
issues in the next bill.
    Chairman Menendez. Let me ask you, Ms. Clowers, again, GAO 
has taken some extensive looks at the New Starts program and 
you have issued several reports to the agency. One of the 
issues that I have raised time and time again and we heard it 
here on the panel is that the New Starts process should really 
be quicker. I mean, a decade--there is nothing that a decade 
ago is more expensive then than it is now. It is far more 
expensive now, after a decade, and that is a challenge. The 
question is what recommendations you all may have when it comes 
to how do you shorten the process while still ensuring a fair 
vetting process.
    Ms. Clowers. That is a very good question. We do in our----
    Chairman Menendez. I only ask good questions.
    [Laughter.]
    Ms. Clowers. Absolutely.
    Chairman Menendez. Just kidding.
    Ms. Clowers. We have identified a number of options to help 
streamline the evaluation process. As I mentioned before, we 
could tailor the evaluation process to the risk posed by the 
projects. We also could apply changes to the New Starts program 
or process only to future projects. So, for example, if you are 
already in preliminary engineering and FTA makes a change to 
the process, you would not apply the change to that project. 
Through our past work, we have found that is a significant pain 
point for project sponsors. They feel like the goalposts are 
always changing on them and it again requires rework and delays 
and cost. But as you mentioned, it is key that we strike the 
right balance between speeding project development and 
maintaining a robust evaluation process because we have held up 
the New Starts program as a model for other agencies in terms 
of the rigor and analysis that goes into selecting these 
projects.
    I would go back to the idea of looking really at the risks 
posed by the projects and determining the right balance. What 
is the risk posed to the Federal Government? For example, you 
could tailor the process so that if you are requesting more 
Federal funds from FTA, you would experience greater Federal 
oversight than if you are requesting less.
    Chairman Menendez. What about Mr. Sarles' comments--I was 
taking down your five notes--a recognition that while a full 
funding agreement is something that is desirable to get a 
project going, it also limits the Federal Government's risk, 
right, to the extent that that is the extent of their 
engagement. So if their costs go up, it is the other entity, 
New Jersey Transit or others, who ultimately are the ones 
responsible for the difference.
    Ms. Clowers. Correct.
    Chairman Menendez. You know, I have heard full-funding 
agreements described in many ways. I never really thought about 
it in the context of limiting the government's risk. I think it 
is worthy of noting.
    I want to ask you one other question and then I will turn 
to the others. There were a series, I think, and I would like 
you to talk about it--you know, we all understand that a 
program goes through evolutions and adds things as it learns 
more experiences with specific projects, but can you identify 
for the Committee some of the major requirements the FTA added 
outside of the statutory process via the regulatory and 
administrative changes in the last administration?
    Ms. Clowers. I think one of the most significant regulatory 
changes was the introduction of the Transportation System User 
Benefit, which is used to help calculate cost effectiveness. As 
you know, SAFETEA-LU identifies cost effectiveness as a project 
justification criteria that FTA must use to evaluate projects, 
and then FTA then looks at those criteria and develops certain 
measures. And the TSUB measure was a significant change. I 
think that was in the early 2000s. When that rolled out, that 
caused a great deal of problems for project sponsors. It was a 
new calculation that was very complex, led to rework and some 
delays of projects.
    Other requirements that would fall more into the 
administrative regulatory realm, they mentioned risk 
assessments for projects and those risk assessments have 
evolved over time in terms of its complexity and the timing of 
the risk assessments. They have also introduced ``make the 
case'' documents where projects are required to submit a three- 
to four-page narrative that explains the benefits of the 
projects in layman's terms. That might not sound like a lot of 
work in terms of the three to four pages, but there is a lot of 
back and forth between project sponsors and FTA in terms of 
getting the document to look like what FTA wants.
    There has been a significant number of other changes made. 
I think about 3 years ago, we identified about 16 
administrative or regulatory changes that FTA had made, and 
importantly, a number of those changes had not been made with 
the review and comment period. And so we recommended to FTA 
that they ensure that all project sponsors have an opportunity 
to review and comment on proposed changes because we think that 
is important to get both input from the project sponsors, sort 
of real-world perspective about what those changes will do, and 
also to avoid confusion and delay.
    Chairman Menendez. Mr. Sarles, Senator Schumer mentioned 
something that we have all regionally been working on and break 
ground Monday, I understand, the new Trans-Hudson Rail Tunnel 
project, and that has undergone an incredibly strenuous 
process. If you could change one thing about the New Starts 
program, what would it be so that the next nationally 
significant project can complete the process in less than a 
decade, which is what this took?
    Mr. Sarles. If there was one thing I would do, it is to 
considerably improve the predictability of the process, the 
timing of it. As it is set up now, there really is no specific 
deadline to move on to the next phase of the evaluation.
    I had mentioned in my testimony to maybe have sort of like 
a procurement process, where every year, once a year, 
properties that are interested in applying for the New Starts 
program have to submit their proposal. The FTA could then spend 
2 months evaluating them and scoring them and picking out the 
successful ones, and the ones that were unsuccessful will have 
an opportunity to come back, learning from the first round.
    Interestingly enough, yesterday, I was at the FRA's 
workshop on implementing the $8 billion high-speed rail 
stimulus program and they talked about exactly that process, 
where they are going to submit, I think toward the end of this 
month, guidance. In 2 months, organizations are to submit the 
applications, and they are going to have a first round of 
choices after evaluating the various proposals. Something like 
that moves things along, gets decisions made, and continues on.
    Chairman Menendez. Mr. Thomas, you in your testimony, you 
mentioned that adding capacity in the core area of your central 
business district as the type of project that does not meet the 
current New Starts requirements. How do you think, and do you 
think we should make projects such as expanding station 
platforms or similar efforts a part of the future New Starts 
program, or do you think core capacity should be its own 
program?
    Mr. Thomas. You know, I think at every level, as you 
improve a system, I think those should be opportunities for 
Federal funding. Now, I also think that the level of review by 
the FTA should be commensurate with the size of the project. In 
other words, one of the challenges we have right now is that it 
doesn't really matter what size the project is. You get the 
same approach and the same level of review.
    So if it is a station expansion that may be absolutely 
critical to the continued success of the system and to the 
folks that are riding the system, if you have to go through 
that same process, you are going to, as Mr. Sarles said, early 
on, you have got to make a decision. Am I going to follow the 
Federal process? Am I going to pursue Federal funds or am I 
not? And we as providers have to make that decision early on in 
the process because sometimes that can mean millions of dollars 
of additional cost and years of additional time, and so we have 
got to weigh those risks. But I think all projects certainly 
should have the opportunity.
    In our particular case, our system right now is a hub-and-
spoke kind of system. We are early in our development of the 
second Downtown Dallas alignment. Although we will have almost 
93 miles on the ground by 2014, all of those lines come into 
downtown, and by adding that second alignment, the TSUB number 
really doesn't work out. We don't meet the criteria. But it is 
absolutely vital to the success of the system that we don't 
bottleneck through that single alignment that we have right 
now. And so I think there is certainly a need to either change 
the criteria to allow those types of projects or to have more 
flexibility and demonstration projects on how we can do some 
things differently and what those options might be.
    Chairman Menendez. Ms. Zimmerman, let me ask you, you 
mentioned in your oral testimony about the survey your 
organization has done with reference to how many more projects 
seeking New Starts funding there are than, in fact, funding 
that is available. Do you have an estimated amount of annual 
New Start funding that would address the need you anticipate in 
the next transportation bill so that we can seek to accomplish 
some of our economic recovery, energy savings, and land use 
costs?
    Ms. Zimmerman. Sure. Thank you. Of the almost 400 projects 
that we have identified, a number of those for reasons cited 
are going outside of the New Starts project, and I think it is 
actually a fair expectation that the Federal Government does 
not need to pay for every single new transit project in the 
country. But we do feel that the Federal funding level should 
be significantly increased. It has been about one to one-and-a-
half to now $1.9 billion for New Starts funding per year. We 
think that we should see at least $6 to $8 billion per year in 
the next bill or through bringing in other additional climate 
change monies or other revenues to help move this forward. We 
also believe that by tailoring the Federal financial 
contribution to the Federal risk, we could also unlock really a 
tremendous amount of local and private investment that actually 
would like to happen in transit.
    But right now, you are actually penalized from bringing in 
more private or local revenue. There are a number of projects, 
for instance, where they have wanted to do a tunneling project 
or they wanted to do stationary improvements. Of course, that 
adds to the cost and they actually have local money or private 
entities who are willing to pay for that cost, but right now, 
you are penalized for anything that adds any cost to a project. 
And so both increasing the Federal New Starts funding levels, 
which we think could help get through the pipeline, but also 
really opening up to leverage the tremendous interest that is 
out there by the private sector right now.
    Chairman Menendez. Great. One last question. Mr. Sarles, 
the agency, New Jersey Transit, is among others that has 
delivered, in your case, four New Starts projects. So it is a 
mature agency, and there are others, as well, that have 
succeeded in this regard. Should such agencies with a proven 
track record be able to forego the step of proving they are 
capable of delivering a New Starts project on time and on 
budget? If there is a case to be made for that--I am not 
advocating it, I am not sure whether that is--but it seems to 
me that if you have a historical pattern of engaging, 
succeeding, and meeting or in some cases being on time or early 
and under budget, that why do we have to go through the whole 
process in that particular context of the process. Would that 
help reduce project delivery time and costs and free FTA's time 
to assist other projects that are new to the process?
    Mr. Sarles. A most emphatic yes to that.
    Chairman Menendez. Could you use the microphone, for this 
gentleman down here? I heard you, but----
    Mr. Sarles. I will get trained yet. A most emphatic yes. 
FTA should focus on where the risk areas are, and if we have in 
our case demonstrated time after time that we can deliver 
significant projects within the criteria, and we have already 
proven it, then we don't have to make reams of paper submittals 
to prove that we have the competence to do it.
    Chairman Menendez. Any other thoughts on that?
    Mr. Thomas. I certainly agree, and I can appreciate both 
sides. As we went through this last and most recent FFGA 
process, we had gone through a couple of FFGAs prior to that, 
both at the very least on schedule and on budget. And as I 
said, the 2000-2001 version was ahead of schedule and under 
budget, and right now, we are in that same process where we are 
ahead of schedule and under budget again. So I think that that 
track record certainly ought to count for something, because 
those processes transcend the people in the organization, 
basically showing that you have got the processes in place that 
allow that to happen, that force that to happen, that put the 
controls there to encourage those kinds of performances. So 
those things transcend the people, yes, sir.
    Chairman Menendez. Yes, Ms. Zimmerman?
    Ms. Zimmerman. I would add a slight addendum to that, 
however, in that I think what we have seen in our research is 
because particularly the cost effective index model and other 
things are so complex they require a tremendous amount of 
technical capacity. We are seeing most of the recent New Start 
projects that have received FFGAs are sponsored by larger 
agencies with more technical capacity, and that have been 
through the ratings process before. So while I think we should 
be recognizing that, I think we also need to be aware there are 
a lot of new communities and medium-sized communities that are 
wanting to invest in transit, and right now, the current 
process is very hard for them, not having that capacity to do 
it.
    The Small Starts program, which was supposed to be a 
streamlined process, you know, we still don't have the guidance 
that actually has a streamlined process. FTA came up with a 
very Small Starts process, but I think for those communities 
that are new to the process or smaller communities, I would say 
the current system really does unduly burden them in going 
through it. So I think it is balancing both those needs.
    Chairman Menendez. Well, you can achieve both, though.
    Ms. Zimmerman. Yes.
    Chairman Menendez. You could achieve helping new entities 
be able to have a legitimate but fully vetted timeframe and 
having seasoned entities that have a proven track record not 
necessarily have to go through that element, right?
    Ms. Zimmerman.
    [Nodding head.]
    Chairman Menendez. I would be remiss after everything we 
went through in Congress in trying to get transit funding, how 
are you both doing in terms of deploying those funds, if you 
could give us a sense of it.
    Mr. Sarles. We received $424 million applying to 14 
projects. Five of them are already underway. Jobs have been 
created and people are working. We have put shovels in the 
ground on a couple of new contracts already. We have others out 
to bid. We will have all the money obligated well within the 
timeframe.
    Mr. Thomas. I am envious of Mr. Sarles, but certainly 
appreciative of the $62 million that we received. We applied 
that to the first phase of the Orange Line as well as some 
additional parking and radio communications systems. We have 
already received the first half of that $62 million, so it is 
putting quite a few people to work.
    We also received an advance on our Full Funding Grant 
Agreement, moving a 2014 payment up to this year, $78 million. 
And while we stress that is not new money, certainly the time 
value of money is new and that equates to $10 million. So it 
allows us to pursue additional projects, as I said earlier, as 
the region continues to ask, how can we get these other 
projects advanced? We have a 2030 plan, Mr. Chairman, that 
people are already trying to figure out how we can advance 
projects by up to 15 years sooner in our financial plan, and so 
we are looking at every possible opportunity of project 
delivery as we go through that review, including the Buy 
America Bonds that are available now.
    We anticipate going to the bond market here in about a week 
and a half for about $1 billion of bonds, $750 million in Buy 
America Bonds and $250 million in the tax-exempt bonds. It is 
going to benefit our financial plan tremendously. We do a 20-
year financial plan that identifies what we can spend and when 
we can spend it. But we have estimated--we have actually 
budgeted a 5.25 percent interest rate on that bond issuance, 
and if we were to do it last week, the combined rate based on 
that issuance would be somewhere in the neighborhood of 4.3 
percent, which all those things combined put us in a much 
better situation, certainly as we look at what the economy is 
doing throughout the country. It puts us in a good situation.
    Chairman Menendez. So the aggressive timeframes that the 
Congress put in there are being met by both of you?
    Mr. Thomas. Yes, sir.
    Mr. Sarles.
    [Nodding head.]
    Chairman Menendez. Thank you very much.
    Let me thank all the witnesses for their testimony, seeing 
no other colleagues here at this point. Your entire, as I said, 
written statements will be entered into the record and the 
record will remain open for 1 week for Members' questions, for 
their statements and other supporting documents. If, in fact, 
you do get questions from the Committee, we urge you to be as 
responsive as quickly as possible to them and we appreciate 
your collective appearance.
    With that, the Subcommittee is adjourned.
    [Whereupon, at 3 p.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]

                PREPARED STATEMENT OF A. NICOLE CLOWERS
                            Acting Director,
    Physical Infrastructure Issues, Government Accountability Office
                              June 3, 2009

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                  PREPARED STATEMENT OF GARY C. THOMAS
  President/Executive Director, Dallas Area Rapid Transit (DART), and
 Vice Chair--Rail Transit, American Public Transportation Association 
                                 (APTA)
                              June 3, 2009
Introduction
    Mr. Chairman and Members of the Subcommittee, on behalf of Dallas 
Area Rapid Transit (DART) and the American Public Transportation 
Association (APTA), we thank you for the opportunity to testify before 
you today and to submit our written testimony on the Federal Transit 
Administration's (FTA) New Starts program. The New Starts program, 
which provides essential funding to cities like Dallas, Salt Lake City, 
Charlotte, Phoenix, and Portland who seek to improve mobility and air 
quality by establishing new transit services needs a ``fresh start.'' 
Changes must be made to the program that will help streamline the 
Federal transit program, reduce administrative burdens on transit 
agencies and help speed project delivery.
About APTA
    APTA is a nonprofit international association of nearly 1,500 
public and private member organizations. This includes transit systems 
and high-speed, intercity and commuter rail operators; planning, 
design, construction, and finance firms; product and service providers; 
academic institutions; transit associations and State departments of 
transportation. APTA members serve the public interest by providing 
safe, efficient, and economical transit services and products. More 
than 90 percent of the people using public transportation in the United 
States and Canada are served by APTA member systems. I have the 
pleasure of serving as the Vice Chair--Rail Transit of this great 
organization.
About DART
    Dallas Area Rapid Transit (DART) provides direct access throughout 
Dallas and 12 surrounding cities with modern public transit services 
and customer facilities tailored to make each trip fast, comfortable 
and affordable. Our extensive network of bus and rail services moves 
more than 220,000 passengers per day across our 700-square-mile service 
area.
    To promote ridesharing, we also operate a system of high occupancy 
vehicle (HOV) lanes allowing carpoolers to bypass freeway traffic jams. 
More than 145,000 commuters use our HOV lanes each weekday.
    Through 2013, the DART Rail System is slated to double in size to 
90 miles. With $700 Million in assistance from the New Starts program, 
DART is currently constructing the Green Line from Southeast Dallas to 
the northwest through downtown Dallas, past the American Airlines 
Center, the Dallas Medical/Market Center, and Love Field Airport, to 
the cities of Farmers Branch and Carrollton. At 28 miles, this is the 
longest light rail construction project underway in North America. 
Revenue service on this corridor will begin September 14 of this year. 
We will add light rail service to Rowlett, Irving and DFW International 
Airport between 2011 and 2013. A second alignment in the Dallas central 
business district will begin in 2016.
Current State of the New Starts Program
    I thank the Subcommittee for allowing me to share our views on the 
New Starts program as you begin efforts to write the transit title of 
the next surface transportation bill. As this Subcommittee is well 
aware, we face extraordinary challenges as we look for ways to finance 
our transportation needs. The mass transit account of the Federal 
Highway Trust Fund is on a path to insolvency. While the transit 
account is in less immediate danger than the larger highway account, 
the balances in both are falling at a rate that will undermine their 
ability to support current obligation levels. We support maintaining 
the current basic Federal transit funding structure: a separate Mass 
Transit Account (MTA) within the Highway Trust Fund, crediting the MTA 
with at least 20 percent of motor fuel taxes, and preserving the 
current 20 percent General Fund contribution to the transit program.
    Even with that funding structure in place, the New Starts program 
needs a fresh start. Changes must be made to the program that will help 
streamline the Federal transit program, reduce administrative burdens 
on transit agencies and help speed project delivery. Many of the 
agencies receiving these funds are in fast-growing regions. These 
agencies have to be creative, resourceful, and nimble to respond to 
increased congestion and decreased mobility. In our area of North 
Texas, for example, we are again this year the fastest growing region 
in the United States. Over the past decade we have added a million new 
residents--a trend that is continuing. This year commuters in our 
region will spend 60 hours stuck in traffic. We simply must build more 
transit infrastructure, and we must do so today.
    With the assistance of both the FTA headquarters and regional 
office staff, DART successfully navigated the New Starts program for 
the Green Line receiving just under 50 percent of the Federal project 
cost. The New Starts program provided DART with an additional funding 
source that allowed for the use of local dollars on other expansion 
projects, benefiting our customers and sustaining our capital expansion 
program.
    As reported in the ``New Starts Program Assessment'' prepared by 
Deloitte Consulting in 2006 for FTA, the New Starts program submittal 
requirements or guidance changed several times during the development 
of the Green Line project. This led to $100 million dollars in 
additional finance charges and escalation costs as a result of 
continuing review, as well as 6-8 months of delay by FTA to review the 
regional travel demand model and user benefit calculation that did not 
significantly alter our findings. Nevertheless, the New Starts program 
is a valuable funding mechanism and should be continued, but with 
modifications.
    We began development of the Green Line in 1998 and received our 
Full Funding Grant Agreement (FFGA) in July 2006. We made our first New 
Starts submittal in 2000 and made a subsequent submittal each year 
thereafter. We completed alternatives analysis in 13 months, 
preliminary engineering in 48 months and final design in 12 months. The 
additional time for preliminary engineering was directly related to 
resolving the alignment issue adjacent to Love Field Airport. All local 
parties wanted a direct connection via a tunnel and had identified the 
financial resources to pay for most of the cost that could have made 
for a better project. However, the additional capital cost had a 
substantial impact on our user benefit calculation that would have 
resulted in a ``Not Recommended'' rating. We strongly suggest that the 
cost calculation should only consider the Federal project cost--local 
sponsors should be able to add project features at their own expense 
without harming their cost-effectiveness rating.
    The role that the FTA regional office plays in the New Starts 
process needs to be better defined and strengthened. It is through 
these staff that transit properties work on a daily basis and who have 
a greater understanding of the local issues and the purpose and need of 
a project. The regional staff has traveled the local corridors and has 
been stuck in the same congestion problems we are trying to explain to 
Washington. Regional staff members have ridden DART and understand the 
need for change and the value of the improvement. During the Green Line 
project, DART requested headquarters staff to come visit Dallas and see 
what we were describing and experiencing, but they were unable to do 
so. The local staff, who had seen the DART project first hand had to 
defer to headquarters because that's where the reviews took place. It 
is cases like this one that point out the need for the regional office 
to have a stronger role in project review.
Recommendations for Improving the Programs Application and Evaluation 
        Process
    The Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU) expires at the end of the current 
fiscal year.
    As Congress considers a new authorization bill, APTA has developed 
a set of recommendations that calls for a significant increase in 
Federal transit investment and improvements within the New Starts 
program.
    Both DART and APTA urge Congress to provide FTA no less than $12.4 
billion to fund public transportation programs, representing the first 
year's installment of public transportation investment. This level is 
consistent with APTA's recommendations for FY2010 under the next 
surface transportation authorization bill. APTA also recommends a 
significant increase in Federal public transportation investment, with 
no less than $123 billion provided over the six-year period.
    In addition to seeking an increase in funds, we recommend several 
key changes to the New Starts program structure. These changes will 
help streamline the Federal transit program, reduce administrative 
burdens on transit agencies and help speed project delivery. These 
include:

    We encourage a simplified and streamlined review, rating 
        and approval process for all New Starts projects. Projects are 
        currently strangled in red tape, which unnecessarily delays 
        project construction and increases project costs.

    Strengthen the role and involvement of the FTA regional 
        office in the New Starts process including both reviews and 
        determinations. The local office has a clearer perspective of 
        local issues and how the transit improvements will benefit that 
        specific community.

    Re-establishment of an exempt category of New Starts 
        projects that require small amounts of funding.

    We support major reforms to the New Starts rating standard. 
        The current standard, as implemented by FTA, does not 
        adequately take into account the full range of benefits due to 
        New Starts projects, especially land use, economic development 
        and environmental benefits. In addition, the cost calculation 
        should only consider the Federal project cost--local sponsors 
        should be able to add project features at their own expense 
        without harming their cost-effectiveness rating.

    Re-establish the Program of Interrelated Projects provision 
        of the Intermodal Surface Transportation Efficiency Act 
        (ISTEA). Local sponsors should be able to advance multiple 
        projects simultaneously in such a program in order to reduce 
        costs.

    Greater use of Pilot and Demonstration projects to 
        acknowledge the fact that not all projects fit the requirements 
        of the New Start programs. Our Central Business District 
        Transit Study (D2) is an example. We need to provide for 
        additional capacity in the core area, but do not currently meet 
        the requirements of a New Start. We would like to work with FTA 
        to develop and implement a Demonstration Project to develop new 
        criteria for nontypical projects.

    There should be an opportunity to explore new ways to be 
        flexible and responsive to changing conditions such as 
        increasing fuel costs. As you know, transit agencies around the 
        Nation were challenged to respond to the dramatic ridership 
        increases due to rising fuel prices. Perhaps a pool of 
        emergency operating funds could be made available to support 
        agencies as they deliver more service in response to an 
        immediate need without extensive time lost in processing.
Summary
    We face both remarkable opportunities and serious challenges in the 
days ahead. President Obama recognizes the central importance of our 
transit systems to our quality of life and the quality of our 
environment. He has spoken of the need to invest adequately and to 
invest efficiently. The President has stressed repeatedly the role that 
public transportation must play in reducing pollution, including 
greenhouse gas emissions, and moving towards energy independence by 
diminishing our reliance on foreign oil.
    We look forward to working with the Subcommittee to make the 
necessary changes and investments to grow the public transportation 
program. We urge the Subcommittee to invest in public transit by 
authorizing the funds necessary to sustain the growing interest and 
value that public transit provides in communities across the country 
through the New Starts program. Finally, we support the efforts of 
Congress thus far to invest in a sustainable high-speed rail system and 
encourage your Subcommittee to continue building upon the foundation 
established in the American Recovery and Reinvestment Act of 2009. It 
is an exciting time for public transportation and a critical time for 
our Nation to continue to invest in transit infrastructure that 
promotes economic growth, energy independence, and a better way of life 
for all Americans.
    Mr. Chairman, this concludes my presentation to the Subcommittee. I 
will be happy to answer any questions you have. Again, thank you for 
the opportunity to testify before you today.
                                 ______
                                 

                  PREPARED STATEMENT OF RICHARD SARLES
                          Executive Director,
                           New Jersey Transit
                              June 3, 2009
    Chairman Menendez, Ranking Member Vitter and distinguished Members 
of the Subcommittee--my name is Richard Sarles and I am the Executive 
Director of NJ TRANSIT. NJ TRANSIT is the Nation's largest statewide 
public transportation system providing nearly 900,000 weekday trips on 
2000 buses, 3 light rail lines, and 11 commuter rail lines.
    Congress and the Obama Administration--through the American 
Recovery and Reinvestment Act (ARRA)--have sent a strong signal to the 
American public that improving and expanding public transportation is a 
priority.
    It is precisely because we stand at the gateway of a new era in 
transit investment that it is critical to ensure that, going forward, 
we have the most expeditious and transparent process to deliver 
critically needed projects both at the agency and Federal levels.
    First, let me say that we are very, very pleased to be working with 
FTA Administrator Peter Rogoff. The Administrator is an extremely 
knowledgeable transportation expert with considerable experience with 
New Starts through his work on the Senate Appropriations Committee. He 
has been a friend to transit for many years and has already hit the 
ground running, working with us closely in New Jersey to advance New 
Starts projects. I look forward to his leadership and partnership at 
FTA.
    The FTA has an important, welcomed oversight role in the New Starts 
process that was designed to realize the benefits for money expended, 
and to ensure both the competitive nature of the program and the proper 
usage of Federal funds.
    What I hope to address today is the fact that the FTA, like NJ 
TRANSIT, has limited resources to devote to these valuable oversight 
responsibilities. FTA must focus its resources to assure that the costs 
and benefits of a project are fairly presented and that a grantee has 
in place the requisite organization, funding, processes, controls and 
personnel to advance and sustain a project. The FTA does not have nor 
should have the expertise to plan, engineer and construct major 
projects. Nor should it request or demand reams of documentation with 
multiple revisions from clearly experienced agencies to prove they know 
how to plan, engineer, and construct a new starts project.
    While we have worked through the years on multiple New Starts 
projects that have yielded tremendous benefits, our experience shows a 
more recent trend towards layers of oversight that can create risks to 
project schedules and budgets.
    Specifically, NJ TRANSIT has completed four New Starts projects 
since the program's inception, including the Frank R. Lautenberg 
transfer station, the Hudson-Bergen Light Rail Segments 1 and 2, and 
the Newark Light Rail extension project. NJ TRANSIT also completed the 
Riverline Light Rail project with State funds only. The total value of 
these projects was $3.9 billion.
    Let me share NJ TRANSIT's experience with the New Starts process on 
two major projects--one in operation, and one about to break ground 
this month.
    The first, the Hudson-Bergen Light Rail (HBLR) project, which is 
operational today, offers frequent and convenient service through seven 
cities along the Hudson River waterfront.
    And it is important to note that during the project's early stages, 
that then-Mayor Menendez of Union City was not only an advocate of the 
project, but convinced NJ TRANSIT to add a station in Union City--which 
now has over 5,000 daily riders. HBLR has been a huge driver for 
economic development in Hudson County, in fact, in a region where 
cities are shrinking; Jersey City in the last quarter-century has 
gained about 30,000 residents, 27,000 jobs and 18 million square feet 
of prime office space.
    NJ TRANSIT's experience with FTA in securing Full Funding Grant 
Agreements for the HBLR in the late 1990s was fairly straightforward.
    NJ TRANSIT, in partnership with the Port Authority of New York and 
New Jersey, is also in Final Design and will soon break ground on the 
Access to the Region's Core (ARC) project--the first new rail tunnel to 
be built under the Hudson River in 100 years. This $8.7 billion project 
will generate some $45 billion in new regional economic activity while 
providing riders with more frequent, direct and reliable service. The 
Tunnel will accommodate a 50 percent increase in the number of daily 
passenger trips beneath the river, taking 22,000 cars a day off area 
highways and reducing greenhouse gases and other pollution by more than 
66,000 tons per year.
    The New Starts process in 2005, when we began submitting 
information for ARC, had changed substantially from the days of the 
HBLR. Some changes were positive. For instance, FTA required a fleet 
management plan for all transit modes operated by NJT, a financial 
plan, a 2030 rail operating plan, and a land use and economic 
development analysis. The process enforces a discipline on the logic 
used to develop and analyze a plan, which is useful so that comparisons 
can be made between different proposed transit projects and also so 
that the proposing agencies have the resources and skills they need to 
implement the project. I welcome the discipline.
    However, in an environment where investments need to be accelerated 
to boost the economy and protect the environment, review timetables 
need to be balanced against the need to progress through the process 
with a focus on completion.
    For example, the current New Starts process has evolved to include 
many more layers of review, and re-review which are sometimes onerous 
and can unnecessarily slow an agency's ability to advance on a 
reasonable schedule. Even modest changes to a project now result in 
more process--in fact, I can say with some certainty that if a Mayor 
requested an additional station for a New Starts project today--a 
request that would improve the project through increased ridership and 
economic development--the result would be project delay and cost 
increases.
    With these experiences in mind, I recommend the Committee consider 
the following steps with respect to reforming the New Starts process. 
In order to meet the Administration's objectives while providing 
appropriate oversight, the program should embody five fundamental 
principles:

  1.  Establish a true partnership between the Federal Government and 
        State and local governments seeking to improve public transit 
        bound together by mutual respect rather than red tape.

  2.  Streamline the New Starts process so that predictability of the 
        process is a priority. One way to accomplish this is to make it 
        more of a ``procurement'' type process.

  3.  Realign the review process to account for the experience of more 
        established transit agencies.

  4.  Acknowledge the fact that the FTA has become the minority funding 
        partner and further recognize that a Full Funding Grant 
        Agreement limits the exposure of the FTA to fund more than a 
        specified amount of the proposed project's total cost. At the 
        same time the local agencies bear the risk of cost increases, 
        including those due to delay in decision making.

  5.  Encourage the expansion of public transit consistent with 
        concerns about production of green house gases and energy 
        consumption. The weight given to evaluation criteria categories 
        should be revisited.
True Partnership
    Transit agencies need to renew partnerships with FTA that are bound 
together by mutual respect and trust, not one bound together by red 
tape. Over the years, additional requirements, many to do with the 
level of detail for reporting information and how different sets of 
analytic results need to link together, have been added to the New 
Starts process. The FTA should be aggressive in reviving the spirit of 
partnership that should exist between transit agencies and the Federal 
Government and permit more flexibility in project development.
Streamlined Process
    One option worth considering is streamlining New Starts into more 
of a ``procurement'' type process. Rather than continuous reviews of 
projects, reorganize the new starts process as though FTA is 
``procuring'' transit expansion projects. All proposals would be due on 
a specific date each year and would be evaluated in a process similar 
to evaluating a design build proposal--a value based proposal. Projects 
would be scored and the value put against their respective costs. After 
reviewing proposals from various transit agencies, FTA would execute 
FFGAs for the best projects that year.
    Again, many components of the New Starts process are helpful and 
necessary--what is needed is predictability. I can't emphasize this 
enough--the timetable for the New Starts process, including receiving 
approvals, should be known and certain. Today the length of time to go 
through the process is difficult to predict, so the projects become 
even more difficult to schedule. In the early 1980s, New York City made 
similar improvements to its land use review process. Today there is a 
``clock'' that moves project review from start to finish in a specified 
amount of time.
Established and Experienced Public Transit Agencies
    While the FTA is seeking to employ a process it intends to be fair 
and complete, it should also acknowledge that there is less need to 
probe the management and operations of more established and experienced 
transit agencies that have demonstrated the ability to build and 
operate public transit systems and receive triennial reviews by the 
FTA. Staff and funding resources are too limited at all transit 
agencies and the FTA, to spend time on multiple, sometimes unnecessary 
reports.
Federal Funding Participation
    Project reporting and oversight by the FTA should reflect its 
relative commitment of capital funding to the total project cost. 
Oversight responsibility should reflect the fact that a Full Funding 
Grant Agreement provides a cap on the Federal funding responsibility 
and the fact that the FTA is the minority funding contributor.
Accounting for New Concerns
    Our Nation's appropriate new focus on reducing green house gas 
emissions and the use of petroleum based fuels requires that the 
criteria used in deciding which projects should receive Federal funding 
should be changed. There is also a need to recognize the positive value 
of transit investment in stimulating economic development consistent 
with the aforementioned concerns. The strong emphasis now given to the 
Cost Effectiveness Index and how the mathematics behind the Index is 
organized should be revised to encourage construction of more transit 
lines as a means of achieving a reduction in green house gas emissions 
and energy use rather than limiting them.
    I deeply appreciate the Committee's leadership on this matter. It 
is absolutely critical that if we are to achieve the ambitious agenda 
of building and expanding transit infrastructure across the country, we 
need to streamline the Federal process and work more urgently together 
as partners at the Federal, State, and local level. I am grateful for 
the opportunity to offer our thoughts today on how we can work together 
to build a better transportation network.
    I would be glad to take your questions.
                                 ______
                                 

                 PREPARED STATEMENT OF MARIIA ZIMMERMAN
                            Policy Director,
                          Reconnecting America
                              June 3, 2009
    Chairman Menendez, Ranking Member Vitter, and distinguished Members 
of the Subcommittee, thank you for the opportunity to appear before you 
today. I am Mariia Zimmerman, Policy Director for 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. Reconnecting America is a cofounder 
of the Transportation for America campaign, and we also host the 
national Center for Transit-Oriented Development (CTOD), a partnership 
with two other groups: the Center for Neighborhood Technology and 
Strategic Economics.
    CTOD is federally funded to provide standards, guidance, and 
research on transit-oriented development (TOD), including a web-based 
resource of best practices and cutting edge research, and the National 
TOD Database, the only database of every existing and planned fixed 
transit station in America. We provide technical assistance to the 40 
regions that either have transit or are planning to build new transit 
lines.
    Today I would like to share with you some of the larger trends that 
are reshaping consumer preferences, business trends and the real estate 
market, creating an unprecedented opportunity for transit in defining 
the future sustainability of our communities. The way the Federal 
Transit Administration evaluates proposed transit investments has a 
direct bearing on whether or not regions are able to fully realize the 
potential of these trends.
    In a 2008 study by Reconnecting America, we found that the demand 
for transit is soaring across the country, with 400 new rail, streetcar 
and bus rapid transit projects proposed in almost 80 communities across 
the country at a proposed worth of $248 billion--far more than can be 
funded through the Federal transit program alone. \1\ Transit ridership 
is at a 52-year high; since 1995, ridership has increased 38 percent; 
nearly triple the rate of population growth. \2\ There are a host of 
reasons for this boom in demand for transit. Mayors value transit in 
helping to 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 be a powerful tool to improve 
quality of life and help lower costs of living.
---------------------------------------------------------------------------
     \1\ ``Jumpstarting the Transit Space Race: How the New 
Administration Could Make America Energy-Independent, Create Jobs and 
Keep the Economy Strong.'' Reconnecting America, 2008.
     \2\ American Public Transportation Association, 2009.
---------------------------------------------------------------------------
    CTOD has estimated the demand for housing near transit to increase 
to almost 15 million U.S. households by the year 2030, roughly a 
quarter of all renters and buyers, and a more than doubling of demand 
from the 6 million households that live near transit today. \3\ This is 
a tremendous potential increase. If we are to come even close to 
achieving it, we need more transit investment and we need to reduce 
regulatory barriers that still make mixed-use, more compact development 
illegal in many communities. In addition, we need to maximize 
opportunities to leverage public resources and reduce the funding and 
bureaucratic silos between housing, transportation, and economic 
development.
---------------------------------------------------------------------------
     \3\ ``Hidden in Plain Sight: Capturing the Demand for Housing Near 
Transit.'' Reconnecting America, 2005.
---------------------------------------------------------------------------
    Regions are aggressively seeking to use transit investments to help 
focus growth, create a sustainable foundation for economic development 
and provide mobility options for residents. Take into consideration 
Denver. In 2004, residents of the region voted to tax themselves to 
build five new transit lines in 15 years. They're making a $6.4 billion 
investment in their future and focusing a significant percentage of 
regional growth into neighborhoods around each station. Virtually every 
major job center will now be connected by transit and the remaining 50 
stations will accept about a quarter of the region's housing. In 
Orlando, the Central Florida commuter line will not only provide much 
needed congestion relief, but will provide the impetus for community 
revitalization in those towns with transit stops. The proposed Gold 
Line in Los Angeles is seen as a central strategy to curb sprawl in the 
Inland Empire and focus growth around the Claremont Colleges and a 
thriving medical complex. We're seeing similar investments in the Twin 
Cities, Houston, Dallas-Fort Worth, Salt Lake City, Atlanta, 
Sacramento, Norfolk and Charlotte, North Carolina--regions that even a 
few years ago wouldn't immediately come to mind as transit-based 
places.
    Given the tremendous demand for new transit service, many 
communities are seeking new ways to fund and expedite project 
development. Federal funding for new transit lines has remained 
relatively stable, between $1.5 billion and $1.9 billion annually, 
while the time to successfully navigate the Federal New Starts process 
has increased from 5 years in 1991 to 10 years in 2004. \4\ To cite one 
example, both the Seattle, Washington, streetcar, which did not go 
through the New Starts process and Charlotte, North Carolina, South 
Corridor light rail line, which did, opened at the end of 2007. But the 
Seattle streetcar was proposed 5 years after the Charlotte project.
---------------------------------------------------------------------------
     \4\ ``Planning for the Future: New Starts Projects Must Address 
Next Generation of Transit Projects.'' APTA, October 2006.
---------------------------------------------------------------------------
    The relatively low level of transit investment in the United States 
stands in stark contrast to funding in other parts of the world. China, 
for example is dedicating $88 billion for construction of 1,062 miles 
of rail over the next 6 years. India has announced it will spend $56 
billion to expand its rail system over the next 5 years. In London, the 
United Kingdom is spending $32 billion on just one subway project--the 
74-mile Crossrail subway in London.
    It is clear from the growing domestic demand for transit, and the 
need to address our global competitiveness and reduce our dependence on 
foreign oil that more transit investment is warranted. My organization 
joins a growing chorus of voices that asks Congress to significantly 
increase funding for public transportation in the next surface 
transportation reauthorization, and as part of overall energy and 
climate legislation that may also be before the Senate this Congress.
    Increased investment in public transportation should be viewed as 
part of a larger national goal to build and maintain a national 
transportation system that includes a well connected and integrated 
highway, transit, and rail network. Last month, Senators Rockefeller 
and Lautenberg introduced S. 1036, ``The Federal Transportation Policy 
and Planning Act of 2009.'' This legislation sets a bold new vision for 
Federal transportation policy in order to address the current and 
future needs of our economy, energy, environment and health. The 
measure establishes a unifying mission for the Federal surface 
transportation program and sets needed and achievable performance 
targets, including goals to increase system safety, to repair and 
maintain existing assets, and to reduce congestion and carbon emissions 
through increased use of transit, rail, marine, and nonmotorized 
transportation. The Transportation for America campaign supports this 
legislation and hopes that these performance targets will be 
effectively integrated into the Federal transportation planning process 
as part of the next transportation bill.
    As Congress works to reform Federal transportation policy, it will 
be important to ensure that it benefits those communities that have 
been historically disadvantaged by how our Nation has chosen to invest. 
This Subcommittee may wish to see included performance targets which 
speak to the critical need to better coordinate transportation with 
housing, land use and social equity goals--all objectives which fall 
within your Subcommittee's jurisdiction. Towards this aim, T4America 
recommends the following additional national transportation performance 
targets:

    Achieve zero percentage population exposure to at risk 
        levels of air pollution;

    Reduce average household combined housing + transportation 
        costs 25 percent; and,

    Increase by 50 percent essential destinations accessible 
        within 30 minutes by public transit, or 15-minute walk for low-
        income, senior, and disabled populations.

    In addition to providing more Federal resources for transit and 
clearly articulate a set of national transportation objectives, the 
Federal partnership can also be improved through major reform of the 
Federal New Starts process. I commend the Subcommittee for beginning to 
address this important issue through today's hearing. There appears to 
be general agreement that the current program has lost its way and 
become overburdened by existing statutory and regulatory requirements. 
My organization supports a rigorous review process to ensure that 
Federal investments are being wisely made and to ensure transparency 
and oversight. However, the unlevel playing field between the current 
process for planning, designing, and constructing a new transit project 
versus a new highway project severely handicaps transit projects from 
moving forward and unduly burden transit projects with increased 
project costs.
    We recognize the challenge the administration has in developing a 
fair and rigorous review process. We are encouraged by some of the 
proposed changes in the May 2009 Proposed Guidance on New Starts/Small 
Starts Policies and Procedures, particularly reinstating a multi-
measure evaluation rating system. I'd like to use my testimony to 
highlight two measures particularly important to my organization: land 
use and economic development.
    There is a growing concern among local project proponents, 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 Federal Cost 
Effectiveness Index has lead some communities to shortchange the number 
of transit stations, rail cars, or corridor enhancements that would 
help meet or even exceed 20-year ridership projections.
    Our research shows that actual ridership on many recently built 
transit lines is higher than predicted by the FTA's Transit System User 
Benefit or ``TSUB'' model. \5\ This raises significant concerns about 
the substantial weight placed on these model results, and we believe 
validates the need to maintain a multi-measure approach to evaluating 
projects, including qualitative and quantitative measures.
---------------------------------------------------------------------------
     \5\ ``Destinations Matter: Building Transit Success.'' 
Reconnecting America, May 2009.
---------------------------------------------------------------------------
    The overall data show that the majority of recent rail lines built 
with Federal funding through the New Starts program are performing at 
least as well as pre-construction projections. 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. 
It is interesting to note that some of these lines would not have been 
funded if rated solely on their Cost-Effectiveness rating. For example, 
the Hiawatha Line received only a low-medium Cost Effectiveness rating. 
This presents both good and bad news.
    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 the region. The bad news is that 
these over performing lines indicate that cost reductions in the 
planning stage are resulting in a shortage of transit vehicles, parking 
spaces, inadequate tracking or maintenance facilities or may have 
contributed to a downgrading of technology.
    Reconnecting America continues to support changes made in SAFETEA 
to raise the significance of land use, and to add economic development 
to the list of project justification criteria. These are not 
insignificant changes. They recognize what we know about the potential 
power of transit investments to generate a host of benefits, beyond 
cost and travel time savings.
    Such an approach is similar to that taken by Canada and the United 
Kingdom in allocating their national transportation funding. Those two 
countries give much stronger consideration in their analysis to a full 
range of benefits including environmental impacts, specifically the 
reduction of greenhouse gas emissions, and for Canada, consideration of 
economic development benefits as measured by public/private rates of 
return. I find it curious that other countries, and indeed American 
developers, companies and even local economic development agencies can 
separate and evaluate land use and economic development, yet our 
Federal Government continues to find this a challenge.
    Strictly defined from a traditional economist's perspective, 
economic development is the measure of productivity derived from a 
specific investment--a difficult and abstract concept. The 
practitioners' definition for economic development encompass the much 
easier to measure realm of real estate development, employment gains, 
access to jobs, concentration of economic activity and return-on-
investment. This approach can include the capitalization of user 
benefits (e.g., users expending less on transportation costs and travel 
time which can be spent on other goods and services), redistributive 
economic development benefits represented through revenue generation 
from increased property values and ridership, and the benefits of 
agglomeration, or the potential for increased business transactions due 
to densification and proximity of uses. There are a number of proxies 
that could be used to evaluate potential economic development impacts 
of transit investments, ranging from housing, employment and population 
projections to developer agreements, local financial contributions to 
the corridor and targeted public finance tools such as Business 
Improvement Districts and tax increment financing. In short, we believe 
that there are a number of commonly used indicators of economic 
development that could be incorporated into the transit project 
evaluation process.
    We do not agree with the argument that economic development and 
land use are too difficult to measure separately, but we do feel that 
given the confusion over these terms it may be useful to better define 
each in the next transportation bill or to develop a fresh New Starts 
process that incorporates more of a ``warrants'' approach in the 
evaluation process to help to expedite project delivery. The basic 
concept is that a set of corridor and project characteristics and 
conditions (referred to as warrants) would be established. These could 
include factors related to employment and population density, or 
threshold ridership levels, for example. FTA would determine that 
projects meeting these pre-defined warrants have met the statutory 
criteria and would be advanced into New Starts or Small Starts project 
development, and could be recommended for funding.
    Additional suggestions to improve the project delivery process for 
New Starts that warrant more consideration by Congress include:

    Development of a metropolitan mobility program that could 
        allocate formula funding for small start capital transit 
        investments, thereby avoiding the Federal review process but 
        still ensuring these projects are evaluated through existing 
        Federal environmental and planning requirements.

    Advancement of a set of interrelated expansion projects, 
        similar to the approach taken by Salt Lake City, Utah, and 
        Houston, Texas.

    Reconciliation of the major capital investment alternatives 
        analysis with the Alternatives Analysis requirement in NEPA, to 
        create one integrated comprehensive analysis instead of a time-
        consuming and confusing two-step process.

    I'd also like to highlight some of the social equity needs of 
transit-supportive land use policies. Over the past 5 years, CTOD has 
worked with the Federal Transit Administration, HUD, AARP, and 
affordable housing advocates on a series of reports highlighting the 
importance of transit to racially and economically diverse 
neighborhoods. Neighborhoods within a half-mile of a fixed transit 
station are home to a greater share of a region's lower-income 
households, and also contain a high number of federally assisted 
housing stock. \6\ The data also shows that in three-quarters of these 
``transit zones''--defined as the half-mile radius around stations--
households have one car or no cars. \7\ This low-rate of auto ownership 
indicates that residents do realize the cost-savings that comes from 
lower auto ownership. Our work, sponsored by the Brooking Institution, 
found that while the average American family spends roughly 19 percent 
of its household budget on transportation, households with good access 
to transit spend just 9 percent. \8\
---------------------------------------------------------------------------
     \6\ ``Preserving Opportunities: Saving Affordable Homes Near 
Transit.'' National Housing Trust and Reconnecting America, 2007.
     \7\ ``Preserving and Promoting Diverse Transit-Oriented 
Neighborhoods.'' Center for Transit-Oriented Development for the Ford 
Foundation, 2006.
     \8\ ``The Affordability Index: A New Tool for Measuring the True 
Affordability of Housing Choice.'' Center for Transit-Oriented 
Development and the Center for Neighborhood Technology for the 
Brookings Institution's Urban Markets Initiative, 2006.
---------------------------------------------------------------------------
    But as the demand increases and the market heats up for land and 
housing in these neighborhoods, the threat of displacement will force 
households to lose potential affordable transportation and affordable 
housing options if they are pushed out of transit accessible 
neighborhoods. The affordable housing opportunities that are lost 
cannot be regained without an enormous public expenditure.
    One way to ensure the market provides housing opportunities for 
families of all income levels is through well-designed policies that 
ensure that housing near public transit is permanently affordable to 
families at a mix of incomes--both on the rental side and on the 
ownership side. The New Starts program and transportation 
reauthorization provide Congress an opportunity to encourage localities 
to make investments and adopt land use policies to support both 
proposed transit investments and address long-term affordability. 
Reconnecting America, together with the National Housing Conference, 
has convened a group of national housing and transportation 
organizations to help identify ways that our Federal housing and 
transportation programs could be better coordinated.
    We commend the recently announced HUD-DOT interagency 
sustainability partnership and look forward to working with both 
agencies to identify and implement strategies that make it easier for 
communities to successfully integrate housing and transportation 
investments. In regards to the New Starts process, we feel that more 
can be done to simultaneously improve project delivery and reward 
affordable housing preservation. One idea we are vetting is to allow 
communities to count investments in housing affordable to families with 
a mix of incomes within a half-mile of a proposed transit station as a 
match against requested Federal dollars. Another option may be to 
reward communities that implement mixed-income housing preservation and 
creation policies in the land use evaluation measure; thus moving 
beyond just reporting on the number of low-income households currently 
residing in a proposed corridor, to actually rewarding those 
communities that take steps to ensure long-term affordability to 
households at a mix of income levels. For example, a growing number of 
States including New Jersey, North Carolina, Illinois, and California 
already give higher credit in the allocation of State low-income 
housing tax credits to areas well served by transit.
    The Federal New Starts and Small Starts program sets the rules for 
engagement in how communities coordinate proposed transit investments 
with larger regional decisions about population growth and economic 
development. Our Nation is facing significant challenges to maintain 
our economic competitiveness, address energy security, meet the demands 
of projected population growth, and preserve our quality of life. 
Expanding the number of regions with high quality transit, and growing 
existing transit systems is critical to achieving these goals.
    Thank you very much for this opportunity to appear before the 
Committee today, and my organization looks forward to working with you 
on giving the New Starts and Small Starts program a fresh start in the 
next surface transportation bill.
       RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ
                     FROM A. NICOLE CLOWERS

Q.1. Some have said that the FTA may be using the approval 
process to slow down some projects to fit the amount of 
commitment authority they have available. Do you think that is 
true? If so, should there be a mechanism for FTA to use so that 
it can prioritize projects rather than just slowing some down 
with red tape?

A.1. According to FTA officials, the number of projects 
recommended for funding each year reflects the project's 
readiness for a full funding grant agreement, not the amount of 
commitment authority available. Specifically, to be eligible 
for an FTA funding recommendation, proposed New Starts and 
Small Starts projects must complete the appropriate steps in 
the planning and project development process and, per SAFETEA-
LU, receive an overall project rating of medium or higher. 
Furthermore, FTA officials told us that not all project delays 
can be attributed to FTA or the New Starts process. FTA 
officials cited a number of reasons that a project could be 
delayed during preliminary engineering or final design that are 
outside FTA's control, such as changes to a project's scope, 
changes in local political leadership, or the loss of local 
financial commitment.
    In contrast, many within the transit industry point to the 
New Starts process as being the cause for delays in project 
development, arguing that the process has become too time 
consuming, costly, and complex. To expedite project development 
within the New Starts program, industry stakeholders and 
consultants, and transportation experts we interviewed 
identified the following options. While each option could help 
expedite project development, each option has advantages and 
disadvantages to consider. In addition, each option would 
likely require certain trade-offs, namely reducing the level of 
rigor in the evaluation process in exchange for a more 
streamlined process.

    Tailor the New Starts evaluation process to risks 
        posed by the projects. FTA could adopt a more risk-
        based evaluation process for New Starts projects based 
        on the project's cost or complexity, the Federal share 
        of the project's costs, or the project sponsor's New 
        Start experience. By adopting a more risk-based 
        approach, FTA could allow select projects to move more 
        quickly through the New Starts process and more 
        efficiently use its scarce resources.

    Consider greater use of letters of intent and early 
        systems work agreements. The linear, phased evaluation 
        process of the New Starts program hampers project 
        sponsors' ability to utilize alternative project 
        delivery methods, such as design-build, according to 
        project sponsors. These alternative project delivery 
        methods have the potential to develop a project cheaper 
        and quicker than traditional project delivery methods 
        can. However, project sponsors told us it is difficult 
        to attract private sector interest early enough in the 
        process to use alternative project delivery methods 
        because there is no guarantee that the project will 
        ultimately receive Federal funding through the New 
        Starts program. To encourage the private sector 
        involvement needed, project sponsors, consultants, and 
        experts we interviewed suggested that FTA use letters 
        of intent or early systems work agreements.

    Consistently use road maps or similar project 
        schedules. Project sponsors said that FTA should more 
        consistently use road maps or similar tools to define 
        the project sponsor's and FTA's expectations and 
        responsibilities for moving the project forward. 
        Without establishing these expectations, project 
        sponsors have little information about how long it will 
        take FTA to review its request to move from 
        alternatives analysis to preliminary engineering, for 
        example. This lack of information makes it difficult 
        for the project sponsor to effectively manage the 
        project.

    Combine two or more project development phases. 
        Project sponsors and consultants told us that waiting 
        for FTA's approval to enter preliminary engineering, 
        final design, and construction can cause delays. While 
        FTA determines whether a project can advance to the 
        next project development phase, work on the project 
        essentially stops. To reduce the ``start/stop'' 
        phenomena project sponsors described, FTA could seek a 
        legislative change to combine two or more of the 
        statutorily required project development phases.

    Apply changes only to future projects: Project 
        sponsors told us that the frequent changes to the New 
        Starts program can result in additional costs and 
        delays as project sponsors are required to redo 
        analyses to reflect the changes. To avoid this rework, 
        some project sponsors, consultants, and experts we 
        interviewed suggested that FTA apply changes only to 
        future projects, not projects currently in preliminary 
        engineering.
                                ------                                


       RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ
                      FROM GARY C. THOMAS

Q.1. How do you envision a program to help transit agencies 
create additional core capacity in their city centers? Do we 
alter New Starts criteria or do we create a new program? If 
possible I would appreciate hearing specific suggestions on how 
the next bill could address this urgent need.

A.1. A core capacity constraint is defined as a limitation on 
transit system capacity that prevents service expansion, 
without significant capital investment, to meet growing 
ridership demand. Ridership has or can be expected to exceed 
the system's design capacity.
    In many of the largest urban regions in the Nation, transit 
plays a key role in the regional transportation system and 
``transit bottlenecks'' have the potential to contribute to 
travel delays and decreased mobility. The issue is most 
pronounced on commuter rail, heavy rail and light rail systems 
in large metropolitan areas that have faced rapid increases in 
ridership over a number of years. As transit ridership 
continues to rebound, a number of the Nation's largest cities 
like New York, Chicago, Washington, DC, and Dallas are facing 
this issue and may need to make significant capital 
investments. The demographics of increasing urbanization and 
limited options for roadway expansion means that the issue of 
core capacity is likely to become more significant and affect 
an increasing number of urban systems. The issue has potential 
regional and even national significance for the Nation's 
transportation system. Some of the most important 
considerations in developing a national approach to the issue 
include:

    The lack of an industry definition for a transit 
        bottleneck does not readily allow for an assessment of 
        the national need for capital investments to address 
        current bottlenecks--though a recent survey by APTA 
        suggests the identified need approaches $25 billion;

    Potential short-term effects of not addressing 
        transit bottlenecks include an increase in transit 
        operating cost, reduced reliability, and an inability 
        to meet regional travel demand;

    The negative effect of transit bottlenecks on 
        transit service has the potential to shift travel from 
        transit to the automobile in major urban centers and 
        increase regional highway congestion, potentially 
        reducing regional air quality;

    Potential long-term effects include a dispersal of 
        residential and job growth away from existing transit 
        lines to areas not as readily served by transit; and

    FTA's current funding structure does not 
        specifically target core capacity constraints with a 
        designated funding source and large capital projects 
        intended to address core capacity compete with an 
        already highly competitive underfunded New Starts 
        Program.

Transit Bottlenecks at DART

    DART light rail ridership has increased significantly over 
the past several years. On average, more than 65,000 people a 
day are riding light rail during the week, compared with 63,000 
riders during the same period last year. This increase in 
ridership is occurring while unemployment rates are up and 
regular gas is selling for about $2.40 on average as opposed to 
the $4 a gallon rate last summer. As a result of this increased 
ridership and anticipated future demands for service, DART is 
advancing a major construction program to double the size of 
the system to meet the anticipated additional demand. Without 
significant capital investment to expand the core capacity of 
the system, it is likely that DART will be unable to address 
growing demands. As ridership continues to grow, we will be 
operating near or in excess of our physical capacity.
    No single source of information exists that effectively 
frames the magnitude of the core capacity issue nationally. A 
more specific definition of a bottleneck or core capacity 
constraint is necessary for transit agencies to consistently 
identify these constraints and provide a national picture of 
need. Some agencies have identified specific projects that very 
likely fall into the definition. DART is conducting a Dallas 
Central Business District Transit Study to address the issues 
of regional transit capacity, service reliability, providing 
operational flexibility through downtown Dallas for all transit 
services, and improving access and circulation. A recent survey 
conducted by APTA estimated the cost of addressing existing 
core capacity issues at almost $25 billion, although the 
variation in cost across agencies suggests that a consistent 
definition is not being applied. Continued increases in 
ridership--expected by a number of large urban transit 
systems--are likely to increase the number of systems facing 
core capacity constraints.

How Can Bottlenecks Be Fixed?

    The relative challenge of solving bottlenecks varies. 
Bottlenecks might be addressed through minor capital 
improvements or relatively inexpensive operations strategies, 
or they can be very hard to resolve, such as where there are 
limits on the line-haul capacity of rail lines into the cores 
of major metropolitan areas such as New York or Washington, DC. 
Specific strategies to address transit bottlenecks will vary 
depending on the identified constraint. Specific ``point'' 
improvements can be made, but the nature of the problem may 
require more systemic approaches--fixing one point may just 
transfer the problem to a different point on the same line.
    Potential strategies to address core capacity or 
``bottlenecks'' include:

    Changes in transit operations;

    Managing peak demand through fare policies or other 
        targeted efforts to spread the peak demand;

    Upgrading existing equipment to allow for increased 
        operations (e.g., switching or electrical);

    Expanding capacity on existing lines (e.g., 
        addition of a passing tracks or additional track);

    Expansion of station facilities (e.g., platform 
        expansion, station egress expansion); and

    Construction of parallel facilities on a new 
        alignment.

Proposal: National Transit Bottleneck Mitigation and Core Capacity 
        Program

    Core capacity constraints are currently addressed through a 
variety of funding sources through FTA, though no targeted 
program is in place and the source of funds varies.

  1.  The New Starts program is the first option and the major 
        funding source for the three New York MTA projects, 
        East Side Access, the Second Avenue Subway, and the 
        ARC.

  2.  Rail modernization is an option for needed investments to 
        upgrade existing rail systems that result in an 
        enhanced system capacity.

  3.  Formula funds are an option, though the total dollars 
        available are limited. Finally, some flexible funds 
        under the Federal Highway Administration programs may 
        also be used for transit purposes, at the direction of 
        the State, such as the Congestion Mitigation and Air 
        Quality (CMAQ) in nonattainment areas and the Surface 
        Transportation Program (STP).

    There are several options available to develop a more 
systematic, national approach to target core capacity 
constraints. The first is to use the existing New Starts 
Program with an expansion of funding and the second is to 
establish an independent program specifically targeted at core 
capacity on existing systems.

Expansion of the New Starts Program

    A number of existing projects in the New Starts Program, as 
discussed in this paper, are using the New Starts Program to 
fund projects that are attempting to relieve core capacity 
constraints. The current funding stream for New Starts does not 
provide sufficient funding for the multitude of projects that 
have been justified with less than $1.5 billion in funding 
proposed for the program in Fiscal Year 2007. The actual 
Federal share of funding for projects is now at 50 percent or 
less (even though the projects remain eligible for funding at 
the 80 percent level) and projects still face delays due to a 
lack of funding. By effectively rationing New Starts dollars 
with this lower Federal match, compared to the 80 percent 
Federal match for new capacity highway projects, the 
inadvertent result is that a transit investment may become less 
competitive in regional prioritization plans, particularly when 
leveraging of Federal funds is considered.
    The advantage to expanding the existing New Starts Program 
is that it has developed a detailed process to evaluate the 
user benefits of projects that can be applied to core capacity 
projects. However, there are two important issues to consider 
with the current process. First is the possibility that a core 
capacity project may not be deemed eligible under New Starts 
definitions, which require the inclusion of certain fixed 
guideway infrastructure elements. Second is how such projects 
might rate according to the established New Starts criteria 
measures. Because some core capacity projects are likely to 
involve upgrades to existing transit elements that improve 
operations and reliability but do not result in major changes 
to travel time--the key measure used by FTA to rate New Starts 
projects--the projects may not be deemed ``meritorious.''
    A further disadvantage is the sheer magnitude of cost of 
these projects and the political implications of projects that 
benefit only a single metropolitan area. A single core capacity 
project, like the East Side Access project at $7.8. billion, 
with more than $2.6 billion proposed from the New Starts 
Program, is almost twice the annual funding for New Starts. 
This project would consume a large share of the New Starts 
Program funding and potentially delay a number of other 
projects across the country. This has political implications 
and sets up direct competition between large urban centers with 
older transit systems and many smaller to mid-size urban 
regions attempting to introduce rail into their regional 
transportation systems. Projects at the scale of those 
attempting to address core capacity issues often face funding 
delays and are under pressure to increase the share of local 
funding. In the case of East Side Access, Federal funding is 
proposed at just 34 percent of the project.

Distinct Core Capacity Program

    An alternative, given the potential benefits of some of 
these investments, is consideration of a targeted program to 
address transit core capacity constraints. Similar to the New 
Starts Program, any targeted program should establish a 
mechanism to assess the relative value of projects based on 
specific criteria and user benefits. The program should provide 
the flexibility to fund a range of potential strategies. The 
challenge is to establish a new program, with sufficient 
funding, without taking away funding from existing capital 
programs. If insufficient funding is provided to a targeted 
program, projects with significant funding requirements would 
likely face delays due to insufficient funding. Further, the 
targeting of funding to what may be a small number of existing 
systems may create equity issues for other urbanized areas that 
have adopted their own strategies and supplied their own funds 
to provide adequate transit capacity.

Demonstration Project

    DART is proposing that the new Transportation Authorization 
Bill or under FTA's research activities authorized by 49 USC 
5312, Research, Development, Demonstration, and Deployment 
Projects include new demonstration projects that would look at 
the current capacity and ridership of a select number of 
transit systems to determine how close they are to capacity and 
project when they will reach capacity. The study would also 
look at the cost and effectiveness of various infrastructure 
investments (automated operation, additional vehicles, 
substations, energy storage technologies, track structure 
improvements, etc.) to increase capacity and how long it would 
take to put them into place. Ultimately, the study will provide 
sufficient information for the issue to be thoroughly addressed 
by the FTA and the Congress.
                                ------                                


       RESPONSE TO WRITTEN QUESTIONS OF SENATOR MENENDEZ
                     FROM MARIIA ZIMMERMAN

Q.1. You indicated in your testimony that your organization has 
suggestions on how to institute an economic development measure 
for the New Starts program. Should the measure be qualitative 
such as zoning laws and land use planning, or should it be 
based on some sort of economic modeling?

A.1. In our work on economic development impacts of transit 
investments, Reconnecting America has identified both a set of 
localized economic impacts being pursued by localities and 
regions as part of the reason behind their support for fixed-
guideway investment. This includes not only the job creation in 
building a new transit line and in operating it, but the 
desired increase in property values, economic activity and 
long-term community benefits associated with the investment. 
These types of benefits are not well captured by current 
economic models that predict economic development. Such models 
tend to be used for evaluating regional economic development 
impacts associated with redistributive growth. Both have merit, 
but also trade-offs in terms of their ability to ensure that a 
project's economic development benefits are evaluated in a 
reliable, predictable and easy to use process that ensures that 
they are distinguishable from other criteria.
    Reconnecting America has recommended to FTA that it pursue 
a mix of quantitative and qualitative measures of economic 
development. We recommend that FTA require project sponsors to 
provide benchmarks on a set of qualitative measures backed by 
quantitative data and applicable across project types to 
describe the anticipated economic development impacts and 
identify the commitment of public and private revenue towards 
development and infrastructure improvements within the transit 
corridor. \1\
---------------------------------------------------------------------------
     \1\ The term corridor refers to the geographic area/alignment of 
the transit investment, be it a traditional light rail corridor, a 
fixed-guideway route for bus rapid transit (BRT), or a streetcar 
alignment. Similarly, the term stations includes both rail stations and 
fixed streetcar or BRT stops.
---------------------------------------------------------------------------
    Potential metrics that could be implemented today include :

  A.  Determination of the Economic Development Environment for 
        the Proposed Project

      Existence of development agreements and other 
        private sector financial contributions towards proposed 
        transit project or ancillary infrastructure 
        improvements (i.e., sidewalk, sewer, station area 
        improvements) and tied to focusing new development and/
        or serving existing development around the transit 
        stations.

      Existence and extent of Urban Renewal Districts, 
        LIDs, BIDs and Tax Increment Financing with funding 
        allocated to the transit corridor (not representative 
        of new private revenue, but rather reflect a commitment 
        of public revenue within transit corridor towards 
        necessary infrastructure improvements that can generate 
        further economic development).

      Projections regarding affect of proposed project 
        on the number or proportion of properties with an 
        improvement-to-land value ratio of greater than one in 
        the project area.

      Describe the project's proximity and relationship 
        to: (1) other primary transit lines and/or facilities; 
        (2) employment centers; (3) activity centers; (4) 
        economic development zones; (5) central business 
        districts, (6) other.

      Existence and extent of TOD-supportive 
        comprehensive plan amendments and transit overlay 
        districts--this should be given greater weight in the 
        Transit-Supportive Land Use review, not included as an 
        economic development measure.

  B.  Anticipated Economic Development Impacts of Proposed 
        Project

      Projections of new and existing housing and 
        commercial space to be developed within half-mile 
        radius of proposed station locations. \2\
---------------------------------------------------------------------------
     \2\ For streetcar projects which typically include a larger number 
of stops in close proximity, this could be measured as the amount of 
housing and commercial space to be developed within half-mile buffer of 
the alignment.

      Projections of population/household growth within 
        half-mile of proposed station locations. \3\
---------------------------------------------------------------------------
     \3\ Ibid.

      Projection of new and existing employment and 
        diversity of job types within one-mile buffer of the 
---------------------------------------------------------------------------
        proposed corridor.

      Projected tax receipts from increased values and 
        economic activity occurring within the proposed 
        corridor as a result of the transit investment.

      Projected transportation efficiencies (e.g., cost 
        per trip and estimated transportation cost savings to 
        households within the corridor).

      Describe any past experience with similar 
        existing projects that have had effects similar to 
        those anticipated by the project and describe how past 
        development experience within the proposed project area 
        has differed from that of the existing projects. Use 
        quantitative and qualitative descriptions, with 
        documentation when available.

Q.2. FTA says that it is difficult to distinguish environmental 
benefits of one project from another, but from what we hear 
from transit agencies they believe they have to buy the 
cheapest and most inefficient equipment available in order to 
keep the project with a good cost benefit rating. Is there a 
way to reward projects that attempt to maximize environmental 
benefits of their projects without jeopardizing the cost/
benefit analysis process?

A.2. There is currently no incentive in FTA's cost-
effectiveness index to acquire additional property, incorporate 
sustainable design in facilities or to add any additional costs 
to the project. If we want to shape land use and development, 
there needs to be land use policies and station area plans, but 
also some incentive to acquire property or engage in value 
capture to shape economic development. Data from the green 
buildings community has documented higher upfront costs for 
sustainable building design and materials, many of which are 
recaptured within several years. However, incorporating such 
design technologies is not encouraged under current policy.
    Finally, there are diminutive environmental benefits when 
comparing one transit project to another or even one transit 
project to the overall region. Moreover, the environmental 
impacts of the project over the forecast period are enhanced to 
the extent there is a greater emphasis on development since we 
have enough data on the relationship of transit and land use on 
reducing VMT. However, those benefits are reduced when measured 
at a project level as opposed to regionally until the system is 
built out. In order to address these challenges, the following 
policy changes may be warranted:

    Allow project sponsors to remove or apply a weight 
        to project costs associated with improved environmental 
        and energy efficiency so that these are not penalized 
        in the project development process and cost 
        effectiveness index.

    Amend Title 49, Section 5309 funds for land 
        acquisition to specifically allow land acquisition for 
        transit-oriented development as part of development of 
        corridors under subsections (d) and (e).

    Require environmental analysis to consider regional 
        benefits that capture corridor and network 
        environmental benefits.
