Public Transportation: Future Demand Is Likely for New Starts and
Small Starts Programs, but Improvements Needed to the Small	 
Starts Application Process (27-JUL-07, GAO-07-917).		 
                                                                 
Through the New Starts program, the Federal Transit		 
Administration (FTA) identifies and recommends new fixed-guideway
transit projects for funding. The Safe, Accountable, Flexible,	 
Efficient Transportation Equity Act: A Legacy for Users 	 
(SAFETEA-LU) created a separate program, commonly called Small	 
Starts, which is intended to offer a streamlined evaluation and  
rating process for smaller-scale transit projects. FTA		 
subsequently introduced a separate eligibility category within	 
the Small Starts program for "Very Small Starts" projects. These 
are simple, low-risk projects that qualify for a simplified	 
evaluation and rating process. SAFETEA-LU requires GAO to	 
annually review FTA's New Starts process. This report presents	 
information on (1) FTA's fiscal year 2008 funding		 
recommendations, (2) the extent to which the New Starts pipeline 
has changed over time, and (3) future projected trends for the	 
New Starts and Small Starts pipelines. To address these 	 
objectives, GAO surveyed 215 project sponsors--78 percent of	 
which responded--and interviewed FTA officials, 15 project	 
sponsors, and 3 industry groups.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-917 					        
    ACCNO:   A73530						        
  TITLE:     Public Transportation: Future Demand Is Likely for New   
Starts and Small Starts Programs, but Improvements Needed to the 
Small Starts Application Process				 
     DATE:   07/27/2007 
  SUBJECT:   Program evaluation 				 
	     Evaluation criteria				 
	     Cost analysis					 
	     Bus rapid transit					 
	     Program management 				 
	     Mass transit funding				 
	     Budgeting						 
	     Future budget projections				 
	     Procurement planning				 
	     FTA New Starts Program				 
	     FTA Small Starts Program				 
	     FTA Very Small Starts Program			 

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GAO-07-917

   

     * [1]Results in Brief
     * [2]Background
     * [3]FTA Recommended 14 Projects for Fiscal Year 2008 Funding; SA

          * [4]FTA Evaluated and Rated 14 New Starts Projects, and Recommen
          * [5]FTA Evaluated and Rated 4 Small Starts and Very Small Starts
          * [6]The Administration's Fiscal Year 2008 Budget Proposal Reques
          * [7]FTA Is Implementing Several Changes to the New Starts Evalua

     * [8]Changes in the Size and Composition of the New Starts Pipeli

          * [9]The Number of Projects in the New Starts Pipeline Has Decrea
          * [10]FTA and Project Sponsors Attributed the Decrease in the New

     * [11]Future Demand for New Starts Program Expected; Project Spons

          * [12]Project Sponsors Indicated That Future Demand for New Starts
          * [13]Project Sponsors Would Like FTA to Further Streamline the Sm
          * [14]Project Sponsors Seek Additional Application Assistance and

     * [15]Conclusions
     * [16]Recommendations for Executive Action
     * [17]Agency Comments
     * [18]GAO Contact
     * [19]Staff Acknowledgments

          * [20]Order by Mail or Phone

Report to Congressional Committees

United States Government Accountability Office

GAO

July 2007

PUBLIC TRANSPORTATION

Future Demand Is Likely for New Starts and Small Starts Programs, but
Improvements Needed to the Small Starts Application Process

GAO-07-917

Contents

Letter 1

Results in Brief 4
Background 7
FTA Recommended 14 Projects for Fiscal Year 2008 Funding; SAFETEA-LU
Changes to Evaluation and Rating Process Remain 14
Changes in the Size and Composition of the New Starts Pipeline Are Likely
Due to Different Factors 22
Future Demand for New Starts Program Expected; Project Sponsors Seek Small
Starts Program Improvements 30
Conclusions 36
Recommendations for Executive Action 37
Agency Comments 38
Appendix I Scope and Methodology 39
Appendix II GAO Contact and Staff Acknowledgments 43
Related GAO Products 44

Tables

Table 1: Projects Recommended for an FFGA and Other Funding, Fiscal Year
2008 15
Table 2: Small Starts and Very Small Starts Projects, Fiscal Year 2008 16
Table 3: Implementation of SAFETEA-LU Changes to the New Starts Evaluation
and Rating Process, as of July 2007 19
Table 4: Number of Projects in the Pipeline, and Evaluated and Rated, by
Fiscal Year 23
Table 5: Total Dollar Amounts and Numbers of New Starts FFGAs, by Fiscal
Year 24
Table 6: New Starts, Small Starts, and Very Small Starts Application
Requirements 33

Figures

Figure 1: Planning and Development Process for New Starts Projects 9
Figure 2: Project Evaluation Criteria for New Starts Projects 10
Figure 3: Planning and Development Process for Small Starts and Very Small
Starts Projects 13
Figure 4: Planned Uses of the Administration's Proposed Fiscal Year 2008
Funding for the Capital Investment Grants Program 18
Figure 5: Types of Projects in the New Starts Pipeline, by Fiscal Year 25
Figure 6: Project Sponsors' Expected Use of New Starts Funding for Planned
New Starts, Small Starts, and Very Small Starts Projects 31

Abbreviations

FFGA full funding grant agreement
FTA Federal Transit Administration
PCGA project construction grant agreement
SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act:
  A Legacy for Users

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
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separately.

United States Government Accountability Office
Washington, DC 20548

July 27, 2007

The Honorable Christopher J. Dodd
Chairman
The Honorable Richard Shelby
Ranking Member
Committee on Banking, Housing, and Urban Affairs
United States Senate

The Honorable James L. Oberstar
Chairman
The Honorable John L. Mica
Ranking Republican Member
Committee on Transportation and Infrastructure
House of Representatives

Since the early 1970s, a significant portion of the federal government's
share of new capital investment in mass transportation has come through
the Federal Transit Administration's (FTA) New Starts program. Through
this program, FTA identifies and recommends new fixed-guideway transit
projects--including heavy, light, and commuter rail; ferry; and certain
bus projects--for grants, typically through full funding grant agreements
(FFGA).1 An FFGA establishes the terms and conditions for federal funds
available for the project, including the maximum amount of federal funds
available. Over the last decade, the New Starts program has provided state
and local agencies with over $10 billion to help design and construct
transit projects throughout the country.

More recently, the Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users (SAFETEA-LU) created, and FTA implemented,
what is commonly called the Small Starts program.2 This program is
intended to advance smaller-scale projects through an expedited and
streamlined evaluation and rating process. Small Starts projects are
defined as those with a need for less than $75 million in funding from
this program and a total capital cost of less than $250 million.3 FTA
subsequently introduced a new eligibility category within the Small Starts
program called Very Small Starts, which is for projects with a total
capital cost of less than $50 million. Very Small Starts projects will
qualify for an even simpler and more expedited evaluation and rating
process than other Small Starts projects. In July 2006, FTA issued interim
guidance on Small Starts, including Very Small Starts, to govern the
administration of the program until the final rule is issued. FTA expects
to issue the final rule in April 2008.

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

Although SAFETEA-LU made a number of changes to the New Starts program,
including the creation of the Small Starts program, it also maintained
many program requirements imposed by previous authorizing legislation. For
example, FTA must continue to prioritize projects for funding by
evaluating, rating, and recommending potential projects on the basis of
specific financial commitment and project justification
criteria--including mobility improvements, cost-effectiveness, economic
development, land use, environmental benefits, and operating efficiencies.
Using these statutorily identified criteria, FTA evaluates potential
projects annually and as a condition for advancement into each phase of
the process, including preliminary engineering, final design, and
construction. FTA refers to projects in the preliminary engineering or
final design phases as the "pipeline" through which successful projects
advance to receive funding. FTA determines which projects to fund through
an evaluation and rating process, whereby projects are evaluated on the
basis of various criteria and then are assigned a "high," "medium," or
"low" rating.

2Although SAFETEA-LU did not create a separate Small Starts program, it
established various requirements to be applied to projects receiving
capital investment grants of less than $75 million and where the total
estimated net capital cost of the project is less than $250 million. FTA
consistently refers to this authority as the Small Starts program in its
regulations, annual report, and guidance. Thus, for the purposes of this
report, we refer to Small Starts as a program. Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for Users, Pub. L.
No. 109-59, title III, S 3011, 119 Stat. 1573 (2005), codified as positive
law at 49 U.S.C. S 3509. See, in particular, 49 U.S.C. S 3509(e).

3Transit projects that qualify for the Small Starts program are referred
to as "Small Starts projects" in this report as well as in FTA's guidance
and reports. Transit projects that do not qualify for the Small Starts
program because they request more federal funding, or are larger in scope,
than is permitted by 49 U.S.C. S 5309(e) are referred to as "New Starts
projects." Thus, in this report, we use the term "New Starts" in two
contexts: (1) to identify projects that are larger in scope than is
permitted by 49 U.S.C. S 5309(e) and (2) as a reference to the entire
capital investment grants program that is subject to 49 U.S.C. S 5309(d)
or (e). As used in this report, "New Starts projects" refer to projects
that do not qualify as Small Starts, while "New Starts program," "New
Starts funding," and "New Starts pipeline" refer generally to the capital
investment grants program.

We are required to report each year on FTA's processes and procedures for
evaluating, rating, and recommending New Starts projects for federal
funding and on FTA's implementation of these processes and procedures.4
This report examines (1) how many and what types of projects FTA
evaluated, rated, and recommended for funding in the fiscal year 2008
evaluation and rating cycle, and the extent to which FTA has implemented
SAFETEA-LU's changes to the New Starts evaluation and rating process; (2)
the extent to which, if any, the New Starts pipeline has changed since the
fiscal year 2001 evaluation and rating cycle, and the factors that
contributed to any such trends; and (3) any projected trends for the New
Starts and Small Starts pipelines and the views of project sponsors on the
Small Starts program. To address these objectives, we surveyed all project
sponsors that are located in urbanized areas with a population of over
200,000 and that have an annual transit ridership of over 1 million.5 In
total, we surveyed 215 project sponsors, asking them about their
experience to date with the New Starts program and plans to apply for the
program in the future. Of the 215 project sponsors, 168 responded to the
survey--for a survey response rate of 78 percent. The survey and a more
complete tabulation of the results can be viewed at
www.gao.gov/cgi-bin/getrpt? [21]GAO-07-927SP . We also interviewed 15
project sponsors, including the 10 sponsors that applied for funding for
Small Starts projects, including Very Small Starts projects, for the
fiscal year 2008 evaluation cycle. We selected the other 5 project
sponsors that we interviewed on the basis of their agencies' experience
with the New Starts processes, size, and location. In addition, we
interviewed FTA officials and representatives from transportation industry
associations. We also reviewed FTA's New Starts and Small Starts guidance,
the Advanced Notice of Proposed Rule Making for Small Starts, and the
statutory provisions that address the New Starts program. In May 2007, we
reported on preliminary findings from our work.6 We conducted our work
from November 2006 through July 2007 in accordance with generally accepted
government auditing standards. (See app. I for more information about our
scope and methodology.)

449 U.S.C. S 5309(k)(2).

5Project sponsors that we surveyed may or may not have previously applied
to the New Starts program, but because of their size and ridership, these
sponsors would be more likely to plan the types of transit projects that
would potentially qualify for New Starts funding. Project sponsors are
typically transit agencies, but they may also include city transportation
offices and metropolitan planning organizations, among other entities. In
this report, project sponsors are current sponsors of transit projects as
well as past or potential sponsors of such projects.

Results in Brief

For the fiscal year 2008 evaluation cycle, FTA evaluated and rated 18
projects--including 14 New Starts, 1 Small Starts, and 3 Very Small Starts
projects--and recommended to Congress 14 of these projects for funding. Of
the 14 New Starts projects rated, 2 were rated as "high," 12 were rated as
"medium," and none were rated as "low." FTA recommended 10 of the 14 New
Starts projects for funding. Specifically, FTA recommended 2 New Starts
projects for proposed FFGAs and 2 projects for pending FFGAs.7 In
addition, FTA identified 6 "other" New Starts projects that may be
eligible for funding outside of FFGAs in fiscal year 2008. FTA received 12
requests to enter project development for Small Starts and Very Small
Starts projects, and evaluated and rated 4 of them. FTA rated these 4
projects as "medium" and recommended them for funding. The
administration's fiscal year 2008 budget request for the New Starts
program is $1.40 billion. A majority of the requested funding is allocated
to New Starts projects with existing and pending FFGAs and to those
proposed for new FFGAs. SAFETEA-LU made several changes to the New Starts
evaluation and rating process, including adding economic development as an
evaluation criterion and changing the rating scale. FTA is in the process
of addressing these SAFETEA-LU changes and expects to have them
implemented by the completion of its upcoming rulemaking.

The New Starts pipeline has changed in size and composition since the
fiscal year 2001 evaluation and rating cycle, and a variety of factors
have contributed to these changes. Since the fiscal year 2001 evaluation
and rating cycle, the number of projects in the New Starts pipeline has
decreased by more than one-half (from 48 to 19). The level of funding per
project has grown since fiscal year 2001, from about $20 million to about
$103 million on average. In addition, the types of projects in the
pipeline have changed, as bus rapid transit projects are now more common
than commuter or light rail projects, although bus rapid transit projects
account for a small portion of the total cost (13 percent) for all
projects in the pipeline. FTA officials and project sponsors offered
different reasons for the decrease in the New Starts pipeline. FTA
officials said that they had increased their scrutiny of applications to
help ensure that only the strongest projects enter the pipeline. According
to these officials, they took steps to remove projects from the pipeline
that were not advancing or that did not adequately address identified
problems--although the officials noted that most project sponsors
voluntarily withdrew projects from the pipeline, rather than have FTA
remove them. Project sponsors we interviewed provided other reasons for
the decrease in the New Starts pipeline. In particular, they maintained
that the New Starts process is complex, time-consuming, and costly. In
addition, project sponsors said they found alternative sources of funding
or decided not to apply because the process is well-established and they
realize their projects are unlikely to receive funding. Our survey
identified similar reasons offered by project sponsors. For example, the
project sponsors we surveyed with completed transit projects most often
said they did not apply to the New Starts program because the process was
lengthy or they wanted to move the project along faster than could be done
in the New Starts process. About two-thirds of these project sponsors
reported that their most recent project was eligible for the New Starts
program, yet more than one-fourth of them did not apply to the program.8
The lengthiness of the New Starts process is due, at least in part, to the
rigorous and systematic evaluation and rating process established by
law--which we have previously noted could serve as a model for other
transportation programs. FTA has recognized that the process can be
lengthy and, in 2006, commissioned a study to examine, among other issues,
opportunities for accelerating and simplifying the process for
implementing the New Starts program. FTA is currently reviewing the
study's findings and recommendations.

6GAO, Preliminary Analysis of Changes to and Trends in FTA's New Starts
and Small Starts Programs, [22]GAO-07-812T (Washington, D.C.: May 10,
2007).

7Projects with pending FFGAs were previously recommended for FFGAs by FTA;
however, FFGAs have not been executed. FTA expects to execute both pending
FFGAs by the end of fiscal year 2007.

Despite these concerns, our survey of project sponsors indicated that
there is likely to be a future demand for New Starts funding. The project
sponsors we surveyed reported having 141 planned projects--that is,
projects currently undergoing an alternatives analysis or another type of
corridor-based planning study.9 According to the project sponsors, they
plan to seek New Starts funding for almost three-fourths (72 percent) of
these 141 New Starts, Small Starts, or Very Small Starts projects. The
project sponsors we surveyed also indicated that they were considering a
range of project alternative types in their planning. The most commonly
cited types were bus rapid transit and light rail. Our survey results
further indicated that, through its Small Starts and Very Small Starts
programs, FTA is attracting project sponsors that would not otherwise
apply for the New Starts program or that have not previously applied to
the New Starts program. For example, of 30 project sponsors that intend to
seek New Starts funding for their planned Small Starts or Very Small
Starts projects, 13 have not previously applied for New Starts funding.10
Although project sponsors we interviewed expressed appreciation for the
creation of the Small Starts program, noting that it fulfilled a funding
gap, they said the Small Starts application process is not tailored to the
Small Starts program and is time-consuming, costly, and duplicative. They
suggested, for example, that FTA further streamline the Small Starts
application process by eliminating requests for information already
requested in required worksheets. We also found that the application is
not always tailored for Small Starts applicants and, in several instances,
requests duplicative information. FTA officials acknowledged that the
Small Starts application process could be further streamlined, and they
are working to decrease the burden. The project sponsors we interviewed,
especially those that have never applied for New Starts funding, would
also like more assistance from FTA on how to complete the application
process. According to FTA, 8 of the 12 applications for fiscal year 2008
were incomplete or the proposed projects were ineligible. In some
instances, project sponsors did not understand what constitutes an
eligible project. We found that although FTA's Small Starts guidance
outlines the elements required for a project to receive funding, such as
traffic signal priority/preemption, level boarding, or branding of the
proposed service, it does not explicitly identify as ineligible those
projects that have already begun to incrementally incorporate certain
Small Starts elements.

8Of the 54 project sponsors with a completed transit project, 35 reported
that their most recently completed project was eligible for New Starts
funding. Of those 35 sponsors, 10 did not apply to the program.

9An alternatives analysis (also known as a major investment study or a
multimodal corridor analysis) is conducted to evaluate a range of
transportation alternatives (including the appropriate modal and alignment
options) developed to address transportation problems and mobility needs
in a given corridor. The alternatives analysis is intended to provide
information to local officials on the benefits, costs, and impacts of
alternative transportation investments developed to address the purpose
and need for an improvement in the corridor.

10Thirty project sponsors that responded to our survey intend to seek New
Starts funding for their planned Small Starts or Very Small Starts
projects. However, 2 of those sponsors did not answer whether they had
previously applied for any New Starts funding.

This report contains three recommendations to the Secretary of
Transportation to improve the Small Starts program. To facilitate
information sharing about the program, FTA should develop a Small Starts
working group and conduct training for applicants. To ensure that project
sponsors better understand what types of projects are eligible for funding
as Small Starts, FTA should clarify in its guidance that a project must
include all of the required elements listed in the program guidance and
must also be providing new service. Finally, to ensure that the Small
Starts program provides a streamlined application process for applicants,
FTA should continue to refine its Small Starts application process.

The Department of Transportation, including FTA, reviewed a draft of this
report. FTA generally agreed with the report's findings and conclusions,
and agreed to consider our recommendations. They also provided technical
clarifications, which we incorporated as appropriate.

Background

SAFETEA-LU authorized over $45 billion for federal transit programs,
including $8 billion for the New Starts program, from fiscal years 2005
through 2009. Under the New Starts program, FTA identifies and recommends
fixed-guideway transit projects for funding--including heavy, light, and
commuter rail; ferry; and certain bus projects (such as bus rapid
transit). SAFETEA-LU also made changes to the New Starts program,
including changes to its evaluation and rating process. FTA already has
implemented some of these changes and has undertaken efforts to address
the remaining changes.

FTA generally funds New Starts projects through FFGAs, which establish the
terms and conditions for federal participation in a New Starts project.
FFGAs also define a project's scope, including the length of the system
and the number of stations; its schedule, including the date when the
system is expected to open for service; and its cost. For a project to
obtain an FFGA, it must progress through a local or regional review of
alternatives and meet a number of federal requirements, including
requirements for information used in the New Starts evaluation and rating
process (see fig. 1). As required by federal statute, New Starts projects
must emerge from a regional, multimodal transportation planning process.
The first two phases of the New Starts process--systems planning and
alternatives analysis--address this requirement. The systems planning
phase identifies the transportation needs of a region, while the
alternatives analysis phase provides information on the benefits, costs,
and impacts of different options, such as rail lines or bus routes, in a
specific corridor versus in a region. The alternatives analysis phase
results in the selection of a locally preferred alternative, which is
intended to be the New Starts project that FTA evaluates for funding, as
required by statute. After a locally preferred alternative is selected,
the project sponsor submits an application to FTA for the project to enter
the preliminary engineering phase.11 When this phase is completed and
federal environmental requirements are satisfied, FTA may approve the
project's advancement into final design,12 after which FTA may approve the
project for an FFGA and proceed to construction, as provided for in
statute. FTA oversees grantees' management of projects from the
preliminary engineering phase through the construction phase and evaluates
the projects for advancement into each phase of the process. FTA also
evaluates the projects annually for the New Starts report to Congress.

11During the preliminary engineering phase, project sponsors refine the
design of the proposal, taking into consideration all reasonable design
alternatives and estimating their costs, benefits, and impacts (e.g.,
financial or environmental). According to FTA officials, to gain approval
for entry into preliminary engineering, a project must (1) be identified
through the alternatives analysis process, (2) be included in the region's
long-term transportation plan, (3) meet the statutorily defined project
justification and financial criteria, and (4) demonstrate that the
sponsors have the technical capability to manage the project during the
preliminary engineering phase. Some federal New Starts funding is
available to projects for preliminary engineering activities, if so
appropriated by Congress.

12Final design is the last phase of project development before
construction and may include right-of-way acquisition, utility relocation,
and the preparation of final construction plans and cost estimates.

Figure 1: Planning and Development Process for New Starts Projects

Note: The National Environmental Policy Act of 1969, Pub. L. No. 91-190,
codified at 42 U.S.C. chapter 55, requires detailed statements assessing
the environmental impact of and alternatives to major federal actions
significantly affecting the environment, including grants funding
fixed-guideway projects.

To help inform administration and congressional decisions about which
projects should receive federal funds, FTA assigns ratings on the basis of
various statutorily defined evaluation criteria--including both local
financial commitment and project justification criteria--and then assigns
an overall rating (see fig. 2).13 These evaluation criteria reflect a
broad range of benefits and effects of the proposed project, such as
cost-effectiveness, as well as the ability of the project sponsor to fund
the project and finance the continued operation of its transit system. FTA
assigns the proposed project a rating for each criterion and then assigns
a summary rating for local financial commitment and project justification.
Lastly, FTA develops an overall project rating. Projects are rated at
several points during the New Starts process--as part of the evaluation
for entry into the preliminary engineering and the final design phases,
and yearly for inclusion in the New Starts annual report to Congress.

Figure 2: Project Evaluation Criteria for New Starts Projects

Note: This figure outlines the criteria FTA currently uses to evaluate New
Starts projects, but the criteria are subject to change as a result of
SAFETEA-LU changes that FTA has yet to make.

As required by statute, the administration uses the FTA evaluation and
rating process, along with the phase of development of New Starts
projects, to decide which projects to recommend to Congress for funding.14
Although many projects receive a summary rating that would make them
eligible for an FFGA, only a few are proposed for an FFGA in a given
fiscal year. FTA proposes a project for an FFGA when it believes that the
project will be able to meet the following conditions during the fiscal
year for which funding is proposed:

13The exceptions to the evaluation process are statutorily "exempt"
projects, which are those projects with requests for less than $25 million
in New Starts funding. Sponsors of these projects are not required to
submit project justification information (although FTA encourages the
sponsors to do so). FTA does not rate these projects. As a result, the
number of projects in the preliminary engineering or final design phases
may be greater than the number of projects evaluated and rated by FTA.

           o All nonfederal project funding must be committed and available
           for the project.

           o The project must be in the final design phase and have
           progressed far enough for uncertainties about costs, benefits, and
           impacts (i.e., environmental or financial) to be minimized.

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

           SAFETEA-LU introduced a number of changes to the New Starts
           program, including some that affect the evaluation and rating
           process that we have previously described in figure 1. For
           example, SAFETEA-LU added economic development to the list of
           evaluation criteria that FTA must use in evaluating and rating New
           Starts projects and required FTA to issue notice and guidance each
           time significant changes are made to the program. SAFETEA-LU also
           established the Small Starts program, a new capital investment
           grant program, simplifying the requirements imposed for those
           seeking funding for lower-cost projects, such as bus rapid
           transit, streetcar, and commuter rail projects. This program is
           intended to advance smaller-scale projects through an expedited
           and streamlined evaluation and rating process. Small Starts
           projects require less than $75 million in federal funding and have
           a total cost of less than $250 million. According to FTA's
           guidance, Small Starts projects must also (1) meet the definition
           of a fixed guideway for at least 50 percent of the project length
           in the peak period15 or (2) be a corridor-based bus project with
           the following minimum elements:

           o substantial transit stations;

           o traffic signal priority/preemption, to the extent, if any, that
           there are traffic signals on the corridor;

           o low-floor vehicles or level boarding;

           o branding of the proposed service; and

           o 10-minute peak/15-minute off-peak running times (i.e., headways)
           or better while operating at least 14 hours per weekday.
			  
14The administration's funding recommendations are made in the President's
budget and are included in FTA's annual New Starts report to Congress,
which is released each February in conjunction with the President's
budget.

15The fixed-guideway portion need not be contiguous, but it should be
located to result in faster and more reliable running times.			  

           FTA has also subsequently introduced a separate eligibility
           category within the Small Starts program for "Very Small Starts"
           projects. Small Starts projects that qualify as Very Small Starts
           are simple, low-cost projects that FTA has determined qualify for
           a simplified evaluation and rating process. These projects must
           meet the same eligibility requirements as Small Starts projects
           and be located in corridors with more than 3,000 existing riders
           per average weekday who will benefit from the proposed project. In
           addition, the projects must have a total capital cost of less than
           $50 million (for all project elements) and a per-mile cost of less
           than $3 million, excluding rolling stock (e.g., train cars).

           FTA evaluates Small Starts and Very Small Starts projects using
           various financial and project justification criteria, including
           cost-effectiveness and land use. For Small Starts and Very Small
           Starts, SAFETEA-LU condensed the New Starts processes used for
           large projects. Preliminary engineering and final design are
           combined into one phase, referred to as "project development." FTA
           may recommend proposed Small Starts and Very Small Starts for
           funding after such projects have been approved to enter into
           project development, are "ready" to implement their proposed
           project, and continue to be rated at least "medium" for both
           project justification and local financial commitment. FTA intends
           to provide funding for Small Starts and Very Small Starts projects
           through project construction grant agreements (PCGA), which are
           similar to FFGAs (see fig. 3).

           Figure 3: Planning and Development Process for Small Starts and
           Very Small Starts Projects

           Note: The National Environmental Policy Act of 1969, Pub. L. No.
           91-190, codified at 42 U.S.C. chapter 55, requires detailed
           statements assessing the environmental impact of and alternatives
           to major federal actions significantly affecting the environment,
           including grants funding fixed-guideway projects.
			  
			  FTA Recommended 14 Projects for Fiscal Year 2008 Funding;
			  SAFETEA-LU Changes to Evaluation and Rating Process Remain

           FTA evaluated and rated 18 New Starts, Small Starts, and Very
           Small Starts projects for funding during the fiscal year 2008
           evaluation cycle. Of the 14 New Starts projects that FTA evaluated
           and rated, FTA recommended to Congress funding for 10 projects,
           including 2 new projects, 2 pending projects, and 6 "other"
           projects. FTA also evaluated and rated 4 Small Starts and Very
           Small Starts applications, and recommended all of these projects
           for funding. The fiscal year 2008 President's budget requests
           $1.40 billion in New Starts funding, including $100 million for
           the Small Starts program. Although SAFETEA-LU authorized $200
           million each year for the Small Starts program, no funds have yet
           been allocated to the program, due, in part, to its newness.
			  
			  FTA Evaluated and Rated 14 New Starts Projects, and Recommended
			  Funding for 10 Projects

           FTA's Annual Report on New Starts: Proposed Allocations of Funds
           for Fiscal Year 2008 (annual report) identified 19 New Starts
           projects in preliminary engineering and final design. FTA
           evaluated and rated 14 of these projects, rating 2 as "high," 12
           as "medium," and none as "low."16 Five additional projects were
           statutorily exempt from being rated because their sponsors
           requested less than $25 million in federal funding.

           FTA recommended 10 New Starts projects for funding. Specifically,
           FTA recommended 2 New Starts projects for proposed FFGAs. The
           total capital cost of these 2 projects is estimated to be $6.30
           billion, with the total federal New Starts share expected to about
           one-third of this total. In addition, FTA recommended funding for
           2 projects with pending FFGAs. The total capital cost of these 2
           projects is estimated to be $1.13 billion, and the total federal
           New Starts share is expected to be about one-half of the total
           cost. FTA also recommended reserving $72.08 million in New Starts
           funding for 6 "other" projects. FTA selected these "other"
           projects using the decision rules that the projects have a
           "medium" or higher rating; have a "medium" or higher
           cost-effectiveness rating; and is expected to advance to final
           design as of June 2008. According to FTA, no other project in
           preliminary engineering or final design met these decision rules.
           Similar to last year, FTA did not specify how much would be set
           aside for the 6 "other" New Starts projects because it wanted to
           ensure that the projects were moving forward as anticipated before
           making specific funding recommendations to Congress. Reserving
           funds for these projects without specifying a particular amount
           for any given project will allow the administration to make "real
           time" funding recommendations when Congress is making
           appropriations decisions. FTA does not expect that all 6 "other"
           projects will be recommended for funding in fiscal year 2008 (see
           table 1).17

16In comparison, 20 projects were evaluated and rated in the fiscal year
2007 evaluation cycle, with 1 rated as "high," 17 as "medium," and 2 as
"low."

17In its annual report, FTA stated that 3 of these "other" projects are
expected to be in final design by spring 2007, assuming satisfactory
resolution of any outstanding issues. FTA also stated that the remaining 3
"other" projects are in final design, but because of uncertainties related
to their scopes, schedules, and/or budgets, FTA lacked confidence--at the
time the administration was preparing its fiscal year 2008 budget
proposal--that the projects would maintain their "medium" rating and/or
achieve the necessary cost-effectiveness rating to be recommended for an
FFGA.

Table 1: Projects Recommended for an FFGA and Other Funding, Fiscal Year
2008

Dollars in millions                                                        
                                                                   New Starts 
                                                 Total capital share of total 
Project name            Location                      costs  capital costs 
Proposed FFGA                                                              
Second Avenue Subway    New York, NY              $4,655.40            28% 
Phase I                                                                    
University Link LRT     Seattle, WA                1,645.90             46 
Extension                                                                  
Total                                             $6,301.30                
Pending FFGA                                                               
West Corridor LRT       Denver, CO                  $574.20            51% 
South Corridor I-205 /  Portland, OR                 557.40             60 
Portland Mall LRT                                                          
Total                                             $1,131.60                
Other project                                                              
New Britain - Hartford  Hartford, CT                $458.78            60% 
Busway                                                                     
Northstar Corridor Rail Minneapolis-Big Lake,        307.31             49 
                           MN                                                 
North Corridor BRT      Houston, TX                  275.30             50 
Southeast Corridor BRT  Houston, TX                  169.80             50 
Norfolk LRT             Norfolk, VA                  232.10             55 
Dulles Corridor         Northern Virginia, VA      2,065.00             44 
Metrorail Project -                                                        
Extension to Wiehle                                                        
Ave.                                                                       
Total                                             $3,508.29                

Legend

BRT = bus rapid transit LRT = light rail transit

Source: GAO analysis of FTA data.

FTA Evaluated and Rated 4 Small Starts and Very Small Starts Projects, and
Recommended Funding for All 4 Projects

In the fall of 2006, FTA received 12 Small Starts and Very Small Starts
requests to enter project development for the fiscal year 2008 evaluation
cycle.18 A majority of these Small Starts and Very Small Starts requests
to enter project development were from project sponsors in the western and
southern regions of the country and all but 2 were for bus rapid transit
projects. FTA determined that only 1 Small Starts project and 3 Very Small
Starts projects were complete, ready, and eligible to be approved into
project development. FTA subsequently proposed these projects for a PCGA.
We found that the reasons for ineligible projects and incomplete
applications ranged from unclear program guidance to inconsistent
information provided by FTA. (See table 2 for more information on the
Small Starts and Very Small Starts projects for fiscal year 2008.)

Table 2: Small Starts and Very Small Starts Projects, Fiscal Year 2008

Dollars in                                                                 
millions                                                                   
                                                    New                       
                                                 Starts  Project  Application 
Project name     City           SS/VSS   Cost  share  eligible complete    
Pioneer Parkway  Springfield,   SS     $36.99 $29.59  Yes      Yes         
BRT              OR                                                        
Pacific Hwy So   King County,   VSS     25.07  14.08  Yes      Yes         
BRT              WA                                                        
Troost Corridor  Kansas City,   VSS     30.73  24.58  Yes      Yes         
BRT              MO                                                        
Metro Rapid      Los Angeles,   VSS     25.66  16.68  Yes      Yes         
System Bus Gap   CA                                                        
Closure Project                                                            
Van Nuys         Los Angeles,   VSS      8.00   6.84  No       Yes         
Corridor Rapid   CA                                                        
Bus                                                                        
Mountlake        Seattle, WA    VSS     31.72   9.92  No       Yes         
Terrace BRT                                                                
Station                                                                    
Sepulveda        Los Angeles,   VSS     37.00  31.60  No       Yes         
Corridor Rapid   CA                                                        
Bus                                                                        
Mason            Fort Collins,  SS      68.28  54.62  Yes      No          
Transportation   CO                                                        
Corridor (BRT)                                                             
Mountain Links   Flagstaff, AZ  VSS     17.73  13.76  Maybe    No          
BRT                                                                        
Bus/Gondola      Breckenridge,  VSS     46.70  37.36  No       No          
Station          CO                                                        
North-South      Sarasota, FL   SS     140.15    N/A  Maybe    No          
T-Way BRT                                                                  
Las Colinas APT  Irving, TX     SS        N/A    N/A  No       No          
Connector                                                                  

Legend

APT = area personal transit BRT = bus rapid transit SS = Small Starts
project that does not qualify as a Very Small Starts project VSS = Very
Small Starts project

Source: GAO analysis of FTA data.

Note: The numbers included in this table are what was recommended by FTA
in the New Starts annual report but the actual total capital cost and
percent of New Starts share is subject to change at the time FTA executes
the FFGA.

18Portland, Oregon, submitted an application for a Small Starts project in
early 2007. The application was for a $151 million streetcar project.
However, the application was submitted after FTA's deadline for inclusion
in its fiscal year 2008 New Starts annual report. Therefore, we did not
include this project in our review.

FTA evaluated and rated the 4 Small Starts and Very Small Starts projects
that were eligible and had complete applications. All 4 of these projects
received a "medium" rating. FTA approved the 4 Small Starts and Very Small
Starts projects for advancement into the project development phase on the
basis of its review, evaluation, and rating of their applications. The
total capital cost of these projects is estimated to be $118.4 million,
and the total Small Starts, including Very Small Starts, share is expected
to be $84.9 million. FTA has also recommended that $48.2 million be
allocated for "other" Small Starts projects that were not ready for
advancement into project development at the time applications were due,
but that may be ready for advancement later in fiscal year 2008.

The Administration's Fiscal Year 2008 Budget Proposal Requests $1.40 Billion for
the New Starts Program

The administration's fiscal year 2008 budget proposal requests that $1.40
billion be made available for the New Starts program. This amount is $166
million less than the program's fiscal year 2007 appropriation. Figure 4
illustrates the planned uses of the administration's proposed fiscal year
2008 budget for New Starts, including the following:

           o $863.74 million would be shared among the 11 New Starts projects
           with existing FFGAs,

           o $120 million would be shared between the 2 New Starts projects
           with pending FFGAs,

           o $210 million would be shared between the 2 New Starts projects
           proposed for new FFGAs,

           o $72.08 million would be shared by as many as 6 "other" New
           Starts projects to continue their development, and

           o $100 million would be used for new Small Starts and Very Small
           Starts projects.

           Figure 4: Planned Uses of the Administration's Proposed Fiscal
           Year 2008 Funding for the Capital Investment Grants Program

           Notes:

           FTA is authorized to use up to 1 percent of amounts made available
           for the New Starts program for project management oversight
           activities.

           Federal statute requires that specified amounts of New Starts
           funds be set aside annually for projects in Alaska and Hawaii; new
           fixed-guideway systems; and extensions to existing systems that
           are ferryboats, ferryboat terminals, or approaches to ferryboat
           terminals.

           FTA is authorized to provide $5 million for each fiscal year from
           2006 through 2009 for the Denali Commission, which provides
           critical utilities, infrastructure, and economic support
           throughout Alaska, particularly in remote communities.

           Although SAFETEA-LU authorized $200 million for the Small Starts
           program each year from fiscal years 2006 through 2009, no funding
           for the program has been allocated to date. For fiscal year 2007,
           the administration's budget proposal requested $100 million for
           the Small Starts program. Of the $1.57 billion allocated to the
           New Starts program for fiscal year 2007, no funding was
           appropriated for Small Starts projects. The administration's
           budget proposal for fiscal year 2008 also requests $100 million
           for the Small Starts program. FTA officials told us that they
           requested less than the authorized amounts for the Small Starts
           program for both fiscal years 2007 and 2008 because it has taken
           time for them to establish the program, and because they did not
           receive as many Small Starts applications as expected.
			  
FTA Is Implementing Several Changes to the New Starts Evaluation and Rating
Process

           SAFETEA-LU requires FTA to make several changes to the New Starts
           evaluation and rating process, including adding economic
           development as an evaluation criterion and changing the rating
           scale. FTA is in the process of implementing these changes. For
           example, table 3 describes the act's changes to the evaluation and
           rating process and the status of their implementation, as of July
           2007.

Table 3: Implementation of SAFETEA-LU Changes to the New Starts Evaluation
and Rating Process, as of July 2007

SAFETEA-LU                              Status             of Remaining    
provision         Description           implementation        action(s)    
Revise New Starts The overall project   FTA used a 3-point    None.        
overall           rating is based on a  project- rating scale              
project-rating    5-point scale of      for the fiscal years               
scale             "high,"               2007 and 2008                      
                     "medium-high,"        evaluation and rating              
                     "medium,"             cycles, but changed                
                     "medium-low,"and      ratings to "high,"                 
                     "low." Projects are   "medium," and "low."               
                     required to receive   FTA's February 2007                
                     an overall rating of  policy guidance                    
                     "medium" or higher to proposed implementing              
                     be recommended for    the 5-point scale                  
                     funding.              starting in May 2007.              
Identify          The Secretary of      FTA's January 2006    Rulemaking   
reliability of    Transportation is     policy guidance for   needed to    
cost estimate and required to analyze,  New Starts and        establish    
ridership         evaluate, and         advanced notice of    requirement. 
forecast as       consider the          proposed rulemaking                
considerations in reliability of the    for Small Starts                   
evaluation        forecasting methods   proposed an approach               
process           used by New Starts    for incorporating                  
                     project sponsors and  reliability into                   
                     their contractors to  project evaluations.               
                     estimate costs and                                       
                     ridership.                                               
Add economic      Projects will be      FTA considers         Rulemaking   
development       evaluated on the      economic development  needed to    
criterion to      basis of a review of  as an unweighted      solicit      
evaluation        their effects on      "other factor"        comments on  
process           local economic        criterion in the      and finalize 
                     development.          evaluation process.   measures for 
                                           FTA has sought        economic     
                                           comments from various development. 
                                           parties on the                     
                                           appropriate measures               
                                           for economic                       
                                           development.                       
Identify land use Projects will be      FTA considers land    None.        
as a specific     evaluated on the      use as a weighted                  
evaluation        basis of a review of  criterion in the                   
criterion         their public          evaluation process.                
                     transportation                                           
                     supportive land-use                                      
                     policies and future                                      
                     patterns.                                                

Source: GAO analysis of FTA data.

Although FTA has taken steps to implement changes required by SAFETEA-LU,
the project sponsors we interviewed frequently expressed concern that FTA
has not yet fully incorporated economic development into its evaluation.
Specifically, FTA currently assigns a weight of 50 percent each to
cost-effectiveness and land use to calculate a project's overall rating.
The other four statutorily defined criteria, including economic
development, mobility improvements, operating efficiencies, and
environmental benefits, are not weighted. As described in table 3, to
reflect SAFETEA-LU's increased emphasis on economic development, FTA has
encouraged project sponsors to submit information that they believe
demonstrates the impact of their proposed transit investments on economic
development. According to FTA, this information is considered as an "other
factor" in the evaluation process, but is not weighted. However, FTA
officials told us that few project sponsors submit information on their
projects' economic development benefits for consideration as an "other
factor." We previously reported that FTA's reliance on two evaluation
criteria to calculate a project's overall rating is drifting away from the
multiple-measure evaluation and rating process outlined in statute and
current New Starts regulations.19 Thus, we recommended that FTA (1)
improve the measures used to evaluate New Starts projects so that all of
the statutorily defined criteria can be used in determining a project's
overall rating or (2) provide a crosswalk in the regulations showing clear
linkages between the criteria outlined in the statute and the criteria and
measures used in the evaluation and rating process in the upcoming
rulemaking process.

Many of the project sponsors and all of the industry groups we interviewed
also stated that they believe certain types of projects are penalized in
the evaluation and rating process because of the weights assigned to the
different evaluation criteria. Specifically, the project sponsors and
industry groups said that by not weighting economic development, the
evaluation and rating process does not consider an important benefit of
some transit projects. They also expressed concern that the measure FTA
uses to determine cost-effectiveness does not adequately capture the
benefits of certain types of fixed-guideway projects--such as
streetcars--that have shorter systems and provide enhanced access to a
dense urban core, rather than transport commuters from longer distances
(e.g., light or heavy rail). Project sponsors and an industry group we
interviewed further noted that FTA's cost-effectiveness measure has
influenced some project sponsors to change their project designs from more
traditional fixed-guideway systems (e.g., light rail or streetcars) to bus
rapid transit, expressly to receive a more favorable cost-effectiveness
rating from FTA.

19GAO, Public Transportation: Opportunities Exist to Improve the
Communication and Transparency of Changes Made to the New Starts Program,
[23]GAO-05-674  (Washington, D.C.: June 28, 2005).

According to FTA officials, they understand the importance of economic
development to the transit community and the concerns raised by project
sponsors, and said they are currently working to develop an appropriate
economic development measure. FTA is currently soliciting input from
industry groups on how to measure economic development, studying possible
options, and planning to describe how it will incorporate economic
development into the project justification criteria in its upcoming
rulemaking. FTA officials also stated that incorporating economic
development into the evaluation process before issuing a regulation could
potentially create significant uncertainty about the evaluation and rating
process for project sponsors. Furthermore, they agreed with our previous
recommendation that this issue should be addressed as part of their
upcoming rulemaking, which they expect to be completed in April 2008. As
part of its upcoming rulemaking, FTA will also conduct several outreach
efforts with project sponsors and industry groups.

FTA officials noted that they have had difficulty developing an economic
development measure that both accurately measures benefits and
distinguishes competing projects. For example, FTA officials said that
separating economic development benefits from land-use benefits--another
New Starts evaluation criterion--is difficult. In addition, these
officials noted that many economic development benefits result from direct
benefits (e.g., travel time savings). Therefore, including economic
development benefits in the evaluation could lead to double-counting the
benefits FTA already measures and uses to evaluate projects. Furthermore,
FTA officials noted that some economic development impacts may represent
transfers between regions, rather than a net benefit for the nation,
thereby raising questions about the usefulness of these benefits for a
national comparison of projects.20 We have also reported on many of the
same challenges of measuring and forecasting indirect benefits, such as
economic development and land-use impacts.21 For example, we noted that
certain benefits are often double-counted when transportation projects are
evaluated. We also noted that indirect benefits, such as economic
development, may be more correctly considered transfers of direct user
benefits or of economic activity from one area to another. Therefore,
estimating and adding such indirect benefits to direct benefits could
constitute double-counting and lead to overestimating a project's
benefits. Despite these challenges, we have previously reported that it is
important to consider economic development and land-use impacts, since
they often drive local transportation investment choices.22

Changes in the Size and Composition of the New Starts Pipeline Are Likely Due to
Different Factors

The number of projects in the New Starts pipeline has decreased since the
fiscal year 2001 evaluation and rating cycle, and the types of projects in
the pipeline have changed. FTA and project sponsors attributed these
changes to different factors, with FTA officials citing their increased
scrutiny of applications and projects, and the project sponsors pointing
to the complex, time-consuming, and costly nature of the New Starts
process. FTA is considering different ideas on how to improve the New
Starts process, some of which may address the concerns identified by
project sponsors.

The Number of Projects in the New Starts Pipeline Has Decreased, and the Types
of and Funding for Projects Have Changed

Since the fiscal year 2001 evaluation cycle, the number of projects in the
New Starts pipeline--which includes projects that are in the preliminary
engineering or final design phases--has decreased by more than one-half,
from 48 projects in the fiscal year 2001 evaluation cycle to 19 projects
in the fiscal year 2008 evaluation cycle. Similarly, the number of
projects FTA has evaluated, rated, and recommended for New Starts FFGAs
has decreased since the fiscal year 2001 evaluation and rating cycle.
Specifically, as shown in table 4, the number of projects that FTA
evaluated and rated decreased by about two-thirds, from 41 projects to 14
projects.

20Indirect benefits, such as economic development, may represent transfers
of economic activity from one area to another. While such a transfer may
represent real benefits for the jurisdiction making the transportation
investment, it is not a real economic benefit from a national perspective
because the economic activity is simply occurring in a different location.

21GAO, Highway and Transit Investments: Options for Improving Information
on Projects' Benefits and Costs and Increasing Accountability for Results,
[24]GAO-05-172  (Washington, D.C.: Jan. 24, 2005).

22GAO-05-172.

Table 4: Number of Projects in the Pipeline, and Evaluated and Rated, by
Fiscal Year

               Number of projects in the      Number of projectsevaluated and 
Fiscal year                 pipelinea                               ratedb 
2001                               48                                   41 
2002                               40                                   26 
2003                               43                                   25 
2004                               52                                   27 
2005                               37                                   23 
2006                               30                                   18 
2007                               22                                   18 
2008                               19                                   14 

Source: GAO analysis of FTA data.

aData include projects that were evaluated and rated for the fiscal year
evaluation cycle as well as "exempt" projects.

bData include projects in final design and preliminary engineering, both
recommended and not recommended, but do not include "exempt" projects and
those categorized by FTA as "not rated."

Although the number of projects in the New Starts pipeline has decreased,
the amount of funding FTA has requested for the program remained
relatively the same, while the average dollar amount per FFGA has
increased since fiscal year 2001. Adjusted to current dollars, FTA has
requested nearly the same funding amounts for the program during this time
frame, having requested $1.22 billion in fiscal year 2001 and $1.37
billion in fiscal year 2008. Twelve projects were recommended for FFGAs in
fiscal year 2001, while only 2 were recommended for fiscal year 2008.
However, in the fiscal years between 2001 and 2008, the number of projects
recommended for FFGAs varied from as many as 5 to as few as 2 for any
given fiscal year. Furthermore, we found that the average dollar amount
requested for proposed FFGAs has increased since fiscal year 2001. When
adjusted to current dollars, the average dollar amount of an FFGA proposed
in fiscal year 2001 was about $20 million, but for fiscal year 2008 it was
$103 million (see table 5).23

Table 5: Total Dollar Amounts and Numbers of New Starts FFGAs, by Fiscal
Year

Amounts in 2007 dollars                                                    
               Total number ofproposed    Average dollar amount requested per 
Fiscal year                   FFGAs                         proposed FFGAa 
2001                             12                            $20,338,288 
2002                              5                             19,052,155 
2003                              2                             30,568,123 
2004                              4                             63,658,035 
2005                              5                             62,039,958 
2006                              4                            150,450,331 
2007                              5                             60,520,000 
2008                              2                            103,042,198 

Source: GAO analysis of FTA data.

aThese dollar values are only for the year in which the project was
proposed for an FFGA. Dollar values were adjusted for inflation, using the
gross domestic product (chained) price index, with fiscal year 2007 as the
reference year. Dollar values through fiscal year 2006 were calculated
using averages of quarterly indexes from the U.S. Department of Commerce,
Bureau of Economic Analysis, Survey of Current Business, and National
Income and Product Accounts, table 1.1.4 as of January 31, 2007. Dollar
values for fiscal years 2007 and 2008 are from Congressional Budget Office
projections, The Budget and Economic Outlook (Washington, D.C.: January
2007), 136-137.

The composition of the pipeline--that is, the types of projects in the
pipeline--has also changed since the fiscal year 2001 evaluation cycle.
During fiscal years 2001 through 2007, light rail and commuter rail were
the more prevalent modes for projects in the pipeline. In fiscal year
2008, bus rapid transit became the most common transit mode for projects
in the New Starts pipeline (see fig. 5). The increase in bus rapid transit
projects is likely due to a number of factors, including foreign
countries' positive experiences with this type of transit system. To be
eligible, a corridor-based bus project must (1) operate in a separate
right-of-way dedicated for public transit use for a substantial portion of
the project or (2) represent a substantial investment in a defined
corridor. Furthermore, medium and smaller project sponsors may be
expressing more interest in the New Starts program, including Small
Starts, because bus rapid transit may serve as a more affordable and
cost-effective alternative to other fixed-guideway options.

23FTA officials told us that although the dollars per project have
increased over time, the share or percentage of New Starts funding per
project has decreased. We did not verify this information.

Figure 5: Types of Projects in the New Starts Pipeline, by Fiscal Year

Although bus rapid transit projects are now more common than commuter or
light rail projects, they represent a small amount of the total cost for
all projects in the pipeline. We found that bus rapid transit accounts for
about 12 percent of the total cost of all projects in the New Starts
pipeline, while commuter rail (36 percent), heavy rail (30 percent), and
light rail (22 percent) account for greater shares--which is not
surprising, given that bus rapid transit projects are often less expensive
than rail projects. However, although bus rapid transit projects account
for a smaller share of the total costs, we found that project sponsors
seek higher funding shares for these projects. In fiscal year 2008,
project sponsors sought, on average, New Starts funding to cover about 58
percent of the total cost of bus rapid transit projects, whereas they
sought about 49 percent for commuter rail projects, about 50 percent for
light rail projects, and about 38 percent for heavy rail projects.

FTA and Project Sponsors Attributed the Decrease in the New Starts Pipeline to
Different Factors

FTA and project sponsors identified different factors for the decrease in
the New Starts pipeline. FTA officials cited their increased scrutiny of
applications to help ensure that only the strongest projects enter the
pipeline, and said they had taken steps to remove projects from the
pipeline that were inactive, not advancing, or did not adequately address
identified problems. According to FTA officials, these projects consume
FTA oversight resources and congressional funding without demonstrating
evidence of progress. FTA officials said they believed projects had been
progressing slowly through the pipeline in recent years and, therefore,
needed encouragement to move forward or be removed from the pipeline.
Along these lines, since fiscal year 2004, FTA has issued warnings to
project sponsors that alert them to specific project deficiencies that
must be corrected by a specified date for the project to advance through
the pipeline. If the deficiency is not corrected, FTA removes the project
from the pipeline. To date, FTA has issued warnings for 13 projects. Three
projects have only recently received a warning and their status is to be
determined; 3 projects have adequately addressed the deficiency identified
by FTA; 1 project was removed by FTA for failing to address the identified
deficiency; and 6 projects were withdrawn from the pipeline by the project
sponsors. FTA officials told us that project sponsors are generally aware
of FTA's efforts to better manage projects in the pipeline.

Although FTA has taken steps to remove inactive or stalled projects from
the pipeline, FTA officials noted that most projects have been withdrawn
by their project sponsors, not FTA. According to FTA data, 23 projects
were withdrawn from the New Starts pipeline between calendar years 2001
and 2007. Of these, 16 projects were withdrawn from the pipeline at the
request of project sponsors; 6 were removed from the pipeline in response
to efforts initiated by FTA; and 1 was removed from the pipeline at
congressional direction.24 Of the 16 projects that were withdrawn by
project sponsors, the most common reasons were that the project was either
reconfigured (the project scope or design was significantly changed) or
reconsidered, or that the local financial commitment was not demonstrated.
Similarly, FTA initiated the removal of 4 of 6 projects for lack of local
financial commitments, often demonstrated by a failed referendum at the
local level. Of the 23 projects withdrawn from the New Starts pipeline, 3
were expected to reenter the pipeline at a later date.

24The 16 projects withdrawn by their sponsors and the 6 projects withdrawn
by FTA include the 7 projects that received a warning and were
subsequently withdrawn from the pipeline by the project sponsors or FTA.

The project sponsors we interviewed provided other reasons for the
decrease in the number of projects in the New Starts pipeline. The most
common reasons cited by project sponsors were that the New Starts process
is too complex, costly, and time-consuming:

           o Complexity and cost of the New Starts process: The majority of
           project sponsors we interviewed told us that the complexity of the
           requirements--including those for financial commitment projections
           and travel forecasts, which require extensive analysis and
           economic modeling--creates disincentives to entering the New
           Starts pipeline. Sponsors also told us that the expense involved
           in fulfilling the application requirements, including the costs of
           hiring additional staff and private grant consultants, discourages
           some project sponsors with fewer resources from applying for New
           Starts funding. Furthermore, concerns about the cost of applying
           to the New Starts program come at a time when project sponsors
           expect to receive less funding for their projects from the
           program. Specifically, for recently completed transit projects
           that received an FFGA, the project sponsors we surveyed reported
           that, on average, the federal government funded approximately 60
           percent of the total project costs via the New Starts program. For
           ongoing projects, sponsors reported that they expect to receive an
           average of about 50 percent of the total project costs from the
           New Starts program.

           o Time required to complete the New Starts process: More than
           one-half of the project sponsors we interviewed said that the
           application process is time-consuming or leads to project delays,
           although sponsors could not provide specifics on how long various
           components of the process contributed to a specific delay. One
           project sponsor told us that constructing a project with New
           Starts funding (as opposed to without such 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 materials increase with the delay. The lengthy
           nature of the New Starts process is due, at least in part, to the
           rigorous and systematic evaluation and rating process established
           by law--which, as we have previously noted, could serve as a model
           for other transportation programs. In addition, FTA officials
           noted that most project delays are caused by the project sponsor,
           not FTA. These delays are attributable to the sponsor's inability
           to obtain local funding commitments, local decisions to
           significantly modify the project's scope or alignment, or
           unanticipated environmental impacts.

           Other reasons for the decrease in the pipeline that were cited by
           the project sponsors we interviewed include that the project
           sponsors are finding alternative sources of funding, such as other
           federal funds or state, local, or private funding. One project
           sponsor remarked that sponsors try to avoid the New Starts process
           by obtaining a congressional designation, so that they can skip
           the New Starts application process and construct their project
           more quickly. In addition, three other project sponsors said that
           since the New Starts process is well-established and outcomes are
           predictable, potential project sponsors do not even apply to enter
           the pipeline because they realize their projects will not fare
           well against the New Starts criteria and, thus, are unlikely to
           receive New Starts funding.

           Our survey found similar reasons that project sponsors provided
           for the decline in the New Starts pipeline. Among the project
           sponsors we surveyed with completed transit projects, the most
           common reasons given for not applying to the New Starts program
           were that the process is lengthy or that the sponsor wanted to
           move the project along faster than could be done in the New Starts
           process. About two-thirds of these project sponsors reported that
           their most recent project was eligible for New Starts funding, yet
           more than one-fourth of them did not apply to the program.25
           Instead, these project sponsors reported using other federal
           funding and state, local, and private funding--with other federal
           and local funding the most commonly used and private funding the
           least commonly used--to fund their most recently completed
           project. In addition, we found that almost two-thirds of the large
           project sponsors we surveyed applied to the New Starts program for
           their most recently completed project, while only about one-third
           of medium and smaller project sponsors applied.26 Other reasons
           these project sponsors cited for not applying to the program
           include sufficient funding from other sources to complete the
           project, concern about jeopardizing other projects in the
           pipeline, time and resources needed to complete application each
           year are too great, and difficulty in understanding and completing
           the process and in understanding the program's eligibility
           requirements.

           FTA is considering and implementing different means of improving
           the New Starts process--many of which would address the concerns
           identified by project sponsors. For example, FTA has recognized
           that the process can be lengthy, and in 2006 FTA commissioned a
           study to examine, among other issues, opportunities for
           accelerating and simplifying its implementation of the New Starts
           program. According to FTA officials, one of the study's
           recommendations was to use project development agreements to
           solidify New Starts project schedules and improve FTA's timeline
           for reviews. FTA officials told us that they are pursuing this
           recommendation, and have already implemented project schedules for
           three New Starts projects in the pipeline. Other key
           recommendations for FTA contained in the study include developing
           a simple "road map" that concisely identifies requirements for
           navigating through preliminary engineering and final design, more
           clearly defining entry criteria for each phase of the process,
           simplifying the travel forecasting modeling, and clarifying and
           consistently implementing the New Starts technical guidance and
           policies. The FTA Administrator has publicly stated that FTA will
           continue to look for ways to further improve the program.
			  
25Of the 54 project sponsors with a completed transit project, 35 reported
that their most recently completed project was eligible for New Starts
funding. Of those 35 sponsors, 10 did not apply to the program.

26For the purposes of our survey, we defined "small project sponsors" as
those with an annual ridership of less than 10 million trips; "medium
project sponsors" as those with an annual ridership of between 10 and 50
million trips, inclusive; and "large project sponsors" as those with an
annual ridership of more than 50 million trips.

           In June 2007, FTA issued in the Federal Register a number of
           changes to the New Starts and Small Starts processes, including
           streamlining through the elimination of a number of reporting
           requirements. For example, FTA will no longer require project
           sponsors to submit information on operating efficiencies and
           environmental benefits, nor will they be required to submit
           information for evaluation for FTA's annual report if their
           project is not likely to be ready for a funding recommendation. In
           addition, the resubmission of information on land-use patterns for
           the annual report will now be optional for project sponsors. Other
           changes to the processes include expanding the evaluation criteria
           to a five-tiered rating scale, and considering a project's
           innovative contractual agreements in the evaluation and rating of
           the operating finance plan for projects. The guidance also states
           that under the evaluation of "other factors," if a project is a
           principal element of a congestion management strategy, this could
           increase a project's overall rating. Projects could also increase
           their overall rating by reporting economic development; therefore,
           FTA encourages project sponsors to submit such information.
			  
			  Future Demand for New Starts Program Expected; Project Sponsors Seek
			  Small Starts Program Improvements

           Our survey and interviews of project sponsors indicated that there
           will likely be a future demand for New Starts funding. Survey
           respondents told us that they plan to seek New Starts funding for
           101 of 141 future planned New Starts, Small Starts, and Very Small
           Starts transit projects. While FTA has taken steps to streamline
           the Small Starts program as envisioned by SAFETEA-LU, project
           sponsors find the application process to be time-consuming and too
           costly to complete. In addition, project sponsors we interviewed,
           especially those that have never applied for New Starts funding,
           find the Small Starts interim guidance difficult to understand and
           would like more assistance from FTA on how to complete the
           application process.
			  
			  Project Sponsors Indicated That Future Demand for New Starts Funding
			  Is Likely

           Our survey of project sponsors indicated that there is likely to
           be a future demand for New Starts funding. About 46 percent (77 of
           168) of the project sponsors we surveyed reported that they had a
           total of 141 planned transit projects, which we defined as
           projects currently undergoing an alternatives analysis or other
           corridor-based planning study. According to the project sponsors,
           they will likely seek New Starts funding for almost three-fourths
           (72 percent, or 101) of these 141 planned New Starts, Small
           Starts, and Very Small Starts projects. More specifically, they
           will likely seek New Starts funding for 57 of the planned New
           Starts projects, 30 of the planned Small Starts projects, and 14
           of the planned Very Small Starts projects (see fig. 6).27 Although
           the project sponsors we surveyed indicated that they were
           considering a range of alternative project types in their
           planning, the most commonly cited alternatives were bus rapid
           transit and light rail.
			  
27For the remaining 40 planned transit projects, respondents said either
that they were not planning to apply for New Starts funding, or that they
did not know whether they planned to apply.

           Figure 6: Project Sponsors' Expected Use of New Starts Funding for
           Planned New Starts, Small Starts, and Very Small Starts Projects

           Note: "Other" refers to the project sponsors we surveyed that
           selected "None of the above" in response to the type of federal
           funding, if any, they are likely to request for their planned
           project(s).

           All of the Small Starts and Very Small Starts project sponsors we
           interviewed viewed the new Small Starts program favorably. These
           project sponsors told us that they appreciated the emphasis FTA
           has placed on smaller transit projects through its new programs
           and the steps FTA has taken to streamline the application process
           for the programs. The project sponsors also told us that the Small
           Starts program, including the Very Small Starts eligibility
           category, address a critical and unmet funding need, and that they
           believe their projects will be more competitive under these
           programs because they are vying for funding with projects and
           agencies of similar size. FTA officials told us that they have
           been responsive in providing assistance on the program when
           contacted.

           Our survey results also indicated that, through its Small Starts
           program, FTA is attracting more project sponsors than before,
           including those that have not previously applied for the New
           Starts program and also those that would not otherwise be applying
           for New Starts funds. For example, of the 30 project sponsors that
           intend to seek New Starts funding for their planned Small Starts
           and Very Small Starts projects,28 13 have not previously applied
           for New Starts funding.29 Project sponsors also indicated that the
           Small Starts program, including the eligibility category for Very
           Small Starts projects, has influenced how they plan for their
           ongoing projects, which are projects that have completed the
           alternatives analysis phase and have moved forward into the later
           stages of development, such as preliminary engineering or final
           design. Of the ongoing Small Starts and Very Small Starts projects
           for which respondents indicated they would be requesting New
           Starts funding, project sponsors definitively reported that they
           would have sought New Starts funding for only about one-quarter of
           those ongoing projects if the Small Starts program, including the
           eligibility category for Very Small Starts projects, had not been
           established.
			  
			  Project Sponsors Would Like FTA to Further Streamline the Small
			  Starts Program

           In implementing the Small Starts program, FTA has taken steps to
           streamline the application and evaluation and rating processes for
           smaller-scale transit projects, as envisioned by SAFETEA-LU.
           According to our analysis of the numbers and types of requirements
           for the New Starts and Small Starts application processes, the
           Small Starts process has fewer requirements. For example, in the
           categories of travel forecasting, project justification, and local
           financial commitment, the number of requirements was reduced. FTA
           also established a simplified financial evaluation process for
           Small Starts, which reduced the reporting burden for qualified
           projects. In addition, FTA allows simplified methods for travel
           forecasts that predict transportation benefits, and it reduced the
           number of requirements for the Small Starts application process.
           For example, the Small Starts application process is about
           one-quarter fewer requirements than those for the New Starts
           program. FTA also established the Very Small Starts process, which
           has even fewer application requirements than the Small Starts
           program. This process expedites the reporting, evaluation, and
           advancement of simple and inexpensive projects. FTA's steps have
           greatly reduced the amount of information to be submitted for each
           of the specific requirements (see table 6).
			  
28Planned projects are in the earliest stages of development (i.e.,
alternatives analysis or a similar corridor-based planning study). The 30
project sponsors that responded to our survey intend to seek New Starts
funding for their planned Small Starts or Very Small Starts projects.
However, 2 of those sponsors did not answer whether they had previously
applied for New Starts funding.

29These projects may or may not currently be in FTA's pipeline of New
Starts or Small Starts projects.

           Table 6: New Starts, Small Starts, and Very Small Starts
           Application Requirements
			  
                                         Number of reporting requirements, by
                                                     project type
                                                                   Very Small 
Category of reporting requirements     New Starts  Small Starts     Starts 
Project background and maps                     3             3          4 
Travel forecasts                                7            7a          0 
Costs (operations, maintenance, and                                        
capital)                                        7             5          5 
Project justification criteria                 12            6a         1a 
Local financial commitment                      4            3a          3 
Certification of technical methods                                         
and planning assumptions                        1             1          0 
Make-the-case document                          1             1          1 
Total                                          35            26         14 
	
           Source: GAO analysis of the New Starts, Small Starts, and Very
           Small Starts application requirements.

           aData indicate that in this category, whether the number of
           requirements has remained the same or decreased, FTA has greatly
           reduced the amount of information to be submitted for each
           specific requirement. For example, in the travel forecast
           category, both the New Starts and Small Starts programs have seven
           application requirements, but the Small Starts program requires
           substantially less information for each requirement.

           Despite these efforts, many of the project sponsors we interviewed
           find the Small Starts application process time-consuming and too
           costly to complete, and would like to see FTA further streamline
           the process. Frequently, project sponsors said that the current
           Small Starts application process takes as long and costs as much
           to complete as the New Starts application process, even though the
           planned projects cost less. For example, a project sponsor that
           applied to the Small Starts program told us that FTA asks
           applicants to submit templates used in the New Starts application
           process that call for information not relevant for a Small Starts
           project, such as travel forecasts beyond the opening year, which
           are not required for the Small Starts program. The project sponsor
           suggested that FTA develop a separate set of templates for the
           Small Starts program that would ask only for Small Starts-related
           information. FTA officials told us that in these cases, they would
           not expect project sponsors to provide the additional information
           that is not required. Another project sponsor we interviewed told
           us that although FTA tried to streamline the process by requiring
           ridership projections only for the opening year of Small Starts
           projects, the environmental impact statement still mandates the
           development of multiyear ridership projections. Such extensive
           ridership projections take a considerable amount of work, staff
           time, and funding to produce. FTA officials explained to us that
           the level of ridership projections required is dependent on the
           nature of the project. Several other project sponsors that applied
           to the Small Starts program, including sponsors that used the Very
           Small Starts process, expressed additional concerns about having
           to provide duplicate information, such as project finance and
           capital cost data that can be found in other required worksheets.
           FTA officials do not believe that such duplicate information is
           burdensome for project sponsors to submit. Nonetheless,
           smaller-sized entities that lack New Starts experience, in-house
           expertise, and resources may find the process burdensome.

           In reviewing the Small Starts application process requirements, we
           also found that the application is not always tailored for Small
           Starts applicants and, in several instances, requests duplicate
           information. FTA officials acknowledged that the Small Starts
           application process could be further streamlined and said that
           they are working to decrease the burden by, for example, reducing
           land-use reporting requirements, simplifying the rating process,
           and developing specific Small Starts templates. However, FTA
           officials noted that some requirements are statutorily defined or
           reflect industry-established planning principles. For example,
           federal statute requires that projects, even Small Starts
           projects, emerge from an alternatives analysis that considers
           various options to address the transportation problem at hand.
           Therefore, only certain aspects of the process can be streamlined.
			  
			  Project Sponsors Seek Additional Application Assistance and Consistent
           Information from FTA on Small Starts

           The project sponsors we interviewed, especially those that have
           never applied for New Starts funding, would like more assistance
           from FTA in completing the application process because some find
           the interim guidance difficult to understand. Before the Small
           Starts and Very Small Starts application deadline, FTA provided
           initial outreach to applicants. Despite this outreach, 8 of the 12
           applications were incomplete or sought funding for ineligible
           projects. In some cases, the project sponsors that submitted these
           applications had no past experience with the New Starts process,
           limiting their familiarity with the information required for the
           application. To help address this issue, FTA officials told us
           that, in one instance, they provided a Very Small Starts project
           sponsor with a copy of a submitted application from another
           project sponsor (with New Starts program experience) to use as a
           guide. The Very Small Starts project sponsor found the application
           to be helpful in preparing its own application. FTA officials told
           us that they plan to host an informal meeting of potential Small
           Starts project sponsors later this calendar year. In addition,
           some project sponsors did not understand what constitutes an
           eligible project. For example, one project sponsor we interviewed
           submitted an application for the construction of a new station.
           However, FTA officials told us that the construction of a station
           did not meet the definition of a corridor-based project, as
           required. Another project sponsor we interviewed told us that it
           believed FTA deemed its two Small Starts and Very Small Starts
           projects ineligible because service was already being provided on
           the proposed route (and, therefore, the proposed service would not
           be new). In response, FTA officials told us that these projects
           were in fact ineligible because they already had incremental
           developments, including some of the elements FTA requires for
           Small Starts and Very Small Starts projects, such as traffic
           signal priority or preemption and branding of the proposed
           service. Yet, these project sponsors were unaware that the
           incorporation of some of these elements into their existing
           service rendered their project ineligible.30 We found that
           although FTA's Small Starts guidance outlines the elements
           required for a project to receive funding, it does not explicitly
           state that projects that have already begun to incrementally
           incorporate these elements are ineligible. When we discussed this
           concern with FTA officials, they told us that they might consider
           asking project sponsors to demonstrate the cost-effectiveness of
           the preexisting elements to allow for such projects to be eligible
           for Small Starts funding.

           The project sponsors we interviewed said they need more
           consistent, reliable information from FTA. We found that on
           several occasions, FTA headquarters and regional offices provided
           project sponsors with inconsistent information, which contributed
           to the sponsors' submitting applications for ineligible projects
           and submitting incomplete applications. For example, two project
           sponsors said they thought their projects were eligible after
           talking with FTA regional officials. However, after submitting
           their applications, these project sponsors learned from FTA
           headquarters officials that their projects were ineligible.
           Furthermore, one project sponsor stated that officials from a
           regional FTA office said there was no need to submit a separate
           application for the Small Starts program, since the sponsor had
           previously applied to the New Starts program. Rather, FTA regional
           officials said the project sponsor needed to submit only a few
           additional pieces of information. However, after the project
           sponsor sent this information, along with a letter to FTA
           requesting that the application be transferred from the New Starts
           program to the Small Starts program, FTA headquarters officials
           responded that the application was incomplete. The study of the
           New Starts process that FTA recently commissioned found similar
           inconsistencies in the information provided by officials in its
           regional offices and headquarters. Therefore, the study
           recommended that FTA develop internal standard operating
           procedures for New Starts staff that formalize the duties and
           responsibilities for each position. In addition, the study
           recommended implementing Web-based technology to standardize the
           communication and enforcement of policies across the program, and
           having FTA establish a formal policy for responding to every
           project sponsor's correspondence with a formal response or written
           notification. FTA officials told us that they understand the need
           to ensure consistent information, and that they are already
           working on developing standard operating procedures for New Starts
           staff, as recommended in the study.
			  
30According to FTA's guidance, Small Starts projects must (1) meet the
definition of a fixed guideway for at least 50 percent of the project
length in the peak period, (2) be a fixed-guideway project, or (3) be a
corridor-based bus project with the following minimum elements:
substantial transit stations; traffic signal priority or preemption, to
the extent, if any, that there are traffic signals on the corridor;
low-floor vehicles or level boarding; branding of the proposed service;
and 10-minute peak and 15-minute off-peak running times (i.e., headways)
or better while operating at least 14 hours per weekday.

           Conclusions

           The recent decrease in the New Starts pipeline does not appear to
           be a reflection of diminishing interest in the program. In fact,
           our survey showed that there will likely be substantial demand for
           New Starts funding in the future if most potential project
           sponsors follow through on their plans for new transit projects.
           Rather, the decrease is likely due to a combination of factors,
           including FTA's increased scrutiny of projects, project sponsors'
           perceptions of the process as lengthy and too complex, and project
           sponsors' uncertainty given the recent changes made to the New
           Starts program. As FTA moves forward with the rulemaking process
           for New Starts and Small Starts, it will have to balance both the
           need to make the programs accessible to a range of project
           sponsors--both large and small agencies--and the need to maintain
           the rigor of the evaluation and rating process.

           Although project sponsors expressed substantial interest in both
           the New Starts and the Small Starts programs, they also identified
           a number of ways to improve the programs. In particular, project
           sponsors raised specific concerns about the Small Starts program.
           Because the Small Starts program is in its first few years of
           implementation, it is not surprising that it may experience
           growing pains. Some of the project sponsors may find their
           concerns about the program addressed as they become more familiar
           and comfortable with it and as a number of implementation details
           are finalized through the upcoming rulemaking process. However, we
           believe that the relatively low number of Small Starts
           applications received to date and the number of project sponsors
           submitting ineligible applications due to unclear guidance suggest
           that additional FTA action is warranted, including further
           streamlining the Small Starts program, providing additional
           information about the program through training and a working
           group, and clarifying eligibility guidance. Although FTA has taken
           some steps to further streamline the Small Starts program,
           continued refinement is needed to ensure a simplified and
           expedited evaluation process. FTA's upcoming rulemaking, including
           the associated outreach efforts, will provide an opportunity for
           FTA to continue to streamline the Small Starts program, provide
           additional training, and clarify guidance.
			  
			  Recommendations for Executive Action

           To improve the Small Starts program, we are recommending that the
           Secretary of Transportation direct the FTA Administrator to take
           the following three actions:

           o To increase awareness and information sharing about the Small
           Starts, including Very Small Starts, application process, FTA
           should conduct training (in-person, Web-based, or both) for
           potential applicants and facilitate the development of a working
           group or community of practice.

           o To ensure that project sponsors better understand the types of
           corridor bus projects that are eligible for Small Starts funding,
           FTA should clarify in its Small Starts program guidance that bus
           rapid transit projects cannot already include any of the required
           elements for eligibility, or if they do, must demonstrate the
           cost-effectiveness of the preexisting elements.

           o To ensure that the Small Starts program provides a streamlined
           application process as envisioned by SAFETEA-LU, FTA should
           continue to refine this process as outlined in the Small Starts
           program guidance. Examples of refinements include collapsing the
           project finance or cost worksheets to minimize the duplication of
           data to be submitted and providing specific guidance on how, when
           applicable, Small Starts applicants can conduct a simplified
           alternatives analysis.
			  
			  Agency Comments

           We provided DOT, including FTA, with a draft copy of this report
           for review and comment. DOT generally agreed with the report's
           findings and conclusions, and agreed to consider our
           recommendations. DOT also provided technical clarifications, which
           we incorporated as appropriate.

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

           If you or your staff have any questions on matters discussed in
           this report, please contact me on (202) 512-2834 or at
           [email protected]. Contact points for our Offices of Congressional
           Relations and Public Affairs may be found on the last page of this
           report. Individuals making key contributions to this report are
           listed in appendix II.

           Katherine Siggerud
			  Director, Physical Infrastructure Issues
			  
			  Appendix I: Scope and Methodology

           To address our objectives, we reviewed the Federal Transit
           Administration's (FTA) guidance on the New Starts and Small Starts
           programs; the Advanced Notice of Proposed Rule Making for Small
           Starts; and the provisions of the Safe, Accountable, Flexible,
           Efficient Transportation Equity Act: A Legacy for Users and prior
           law that address the New Starts program. We reviewed this
           legislation to identify changes that have occurred in the New
           Starts program and to gather information on FTA's new Small Starts
           program, which we used, in part, to analyze the quantitative
           differences in application requirements between this program and
           the New Starts program. Furthermore, we reviewed the FTA's Annual
           Reports on New Starts for fiscal years 2001 through 2008 to
           determine trends in the New Starts pipeline (those projects in
           preliminary engineering and final design) for each year, including
           the number of projects evaluated, rated, and recommended for
           funding; the modes of projects in the pipeline; and the amount of
           New Starts funding requested for projects, and the total costs of
           proposed projects.

           We also interviewed FTA officials and industry associations to
           gain their insights on past, current, and future aspects of the
           programs. We interviewed FTA officials who work extensively with
           the New Starts and Small Starts programs to gain a better
           understanding of the programs. In addition, we interviewed three
           industry associations that represent project sponsors that
           participate closely in these programs: the American Public
           Transportation Association, the New Starts Working Group, and
           Reconnecting America. Furthermore, we attended an American Public
           Transportation Association legislative workshop to learn about the
           New Starts and Small Starts programs, including New Starts project
           planning and evaluation process, and Small Starts interim guidance
           and rulemaking.

           We also interviewed 15 project sponsors, including all 10 sponsors
           that applied for the Small Starts program (including Very Small
           Starts applicants) for the fiscal year 2008 evaluation cycle. We
           interviewed the project sponsors to gather information on their
           past experiences with the New Starts and Small Starts programs,
           and their potential future use of these programs. The 10 project
           sponsors we interviewed that applied for the fiscal year 2008
           Small Starts program (including Very Small Starts applicants)
           included the City of Breckenridge Public Works Department
           (Breckenridge, Colorado); Dallas County Utility and Reclamation
           District (Irving, Texas); Fort Collins Transportation Department
           (Fort Collins, Colorado); Kansas City Area Transportation
           Authority (Kansas City, Missouri); King County Metro (King County,
           Washington); Lane Transit District (Springfield, Oregon); Los
           Angeles County Metropolitan Transit Authority (Los Angeles,
           California); Northern Arizona Intergovernmental Public
           Transportation Authority (Flagstaff, Arizona); Sarasota County
           Area Transit (Sarasota County, Florida); and Sound Transit
           (Seattle, Washington). In addition, we interviewed 5 other project
           sponsors that varied in their levels of experience with the New
           Starts program, size, and regional location. These 5 sponsors were
           the Metropolitan Transit Authority of Harris County (Houston,
           Texas); New Jersey Transit Corporation (Newark, New Jersey);
           Orange County Transit Authority (Orange County, California); St.
           Louis Regional Transit (St. Louis, Missouri); and TriMet
           (Portland, Oregon).

           To further address our objectives, we used a Web-based
           questionnaire to survey all of the project sponsors that are
           located in an urbanized area with a population of over 200,000 and
           have an annual ridership of over 1 million. These project sponsors
           may or may not have previously applied to the New Starts or Small
           Starts programs, but because of their size and ridership, they
           would be more likely to plan the types of transit projects that
           would potentially qualify for New Starts funding. Project sponsors
           were defined typically as transit agencies, but they may also have
           included city transportation offices and metropolitan planning
           organizations, among other entities.

           The questionnaire to project sponsors asked questions that allowed
           for a combination of open-ended and closed-ended responses. The
           questionnaire included questions about project sponsors' (1)
           current transit situation, (2) most recently completed transit
           projects, (3) current ongoing transit projects, and (4) future
           planned transit projects. For each question, we asked the project
           sponsors about the types of transit project they sponsored, how
           they funded or intended to fund transit projects in the future,
           and their experiences with and perceptions of the various
           programs.

           The questionnaire was designed by a GAO survey specialist in
           conjunction with other GAO staff knowledgeable about the grant
           program. We pretested the questionnaire with 5 project sponsors
           that had varying levels of experience in working with the New
           Starts program. Three project sponsors had previously applied to
           either the New Starts program or the Small Starts program, while 1
           project sponsor had not applied to either program. In addition,
           the 5 project sponsors represented both larger and smaller project
           sponsors included in our list of the 215 largest transit agencies.
           The 5 project sponsors were the Fort Collins Transportation
           Department (Fort Collins, Colorado); Maryland Transit
           Administration (Baltimore, Maryland); Rockford Mass Transit
           District (Rockford, Illinois); TriMet (Portland, Oregon); and
           Washington Metropolitan Area Transit Authority (Washington, D.C.).
           Furthermore, we asked two industry groups (the American Public
           Transportation Association and the New Starts Working Group) and
           FTA to review the project sponsor questionnaire and provide
           comments. During the pretests and reviews of the questionnaire, we
           asked the project sponsors and industry groups whether the
           questions were understandable and if the information was feasible
           to collect. We refined each of the questions as appropriate in
           response to the feedback we received.

           To conduct the questionnaire, we posted self-administered
           electronic questionnaires to the World Wide Web and sent e-mail
           notifications to project sponsor contacts provided to us by FTA in
           early February 2007. We found after our first e-mail that some
           addresses were no longer valid, so we contacted each agency by
           telephone to find the appropriate contact to send the e-mail
           notification. We also responded to inquiries from project
           sponsors. Many project sponsor contacts believed they were not the
           right person to answer the questions. In these instances, we
           resent the e-mail notification to the correct contact at the
           project sponsor. Our goal was to find the staff member at each
           project sponsor who was the most knowledgeable about the New
           Starts program and the Small Starts program.

           After determining the correct contact, we e-mailed each potential
           respondent a unique username and password to ensure that the
           project sponsor would have access to the questionnaire. We asked
           the project sponsor contact to complete the questionnaire within 2
           weeks. To encourage respondents to complete the questionnaire, we
           sent an e-mail message to prompt each nonrespondent every 2 weeks
           after the initial e-mail message for approximately 6 weeks. After
           6 weeks, we called all nonrespondents at least once to encourage
           their participation in the questionnaire and to increase our
           response rate. We closed the questionnaire on May 11, 2007. In
           total, we surveyed 215 project sponsors and received responses
           from 168 of them, for a response rate of 78 percent. To view our
           questionnaire and the aggregated project sponsor responses, go to
           [25]www.gao.gov/cgi-bin/getrpt?GAO-07-927SP .

           Because the questionnaire was not a sample survey, it has no
           sampling errors. However, the practical difficulties of conducting
           any survey may introduce errors, commonly referred to as
           "nonsampling" errors. For example, difficulties in how a
           particular question is interpreted, in the sources of information
           available to the respondents, or in how the data are entered into
           a database or were analyzed can introduce unwanted variability
           into the questionnaire results. We took steps in developing the
           questionnaire, collecting the data, and analyzing the data to
           minimize these nonsampling errors. For example, as we have
           previously noted, our survey specialists designed the
           questionnaire in collaboration with GAO subject matter experts,
           and we pretested the draft questionnaire with the appropriate
           officials to ensure that the questions were relevant, clearly
           stated, and easy to comprehend. After the data were analyzed, a
           second, independent analyst checked all computer programs. Since
           this was a Web-based questionnaire, the respondents entered their
           answers directly into the electronic questionnaire, eliminating
           the need to have the data keyed into a database, thereby removing
           an additional potential source of error.

           We performed our work from November 2006 through July 2007 in
           accordance with generally accepted government auditing standards.
			  
			  Appendix II: GAO Contact and Staff Acknowledgments
			  
			  GAO Contact

           Katherine Siggerud, (202) 512-2834, [26][email protected]
			  
			  Staff Acknowledgments

           In addition to the individual named above, other key contributors
           to this report were Nikki Clowers, Assistant Director; Elizabeth
           Eisenstadt; Carol Henn; Bert Japikse; Amanda Miller; SaraAnn
           Moessbauer; Nitin Rao; Tina Won Sherman; Bethany Claus Widick; and
           Elizabeth Wood.
			  
			  Related GAO Products

           Public Transportation: Preliminary Analysis of Changes to and
           Trends in FTA's New Starts and Small Starts Programs.
           [27]GAO-07-812T . Washington, D.C.: May 10, 2007.

           Public Transportation: New Starts Program Is in a Period of
           Transition. [28]GAO-06-819 . Washington, D.C.: August 30, 2006.

           Public Transportation: Preliminary Information on FTA's
           Implementation of SAFETEA-LU Changes. [29]GAO-06-910T .
           Washington, D.C.: June 27, 2006.

           Public Transportation: Opportunities Exist to Improve the
           Communication and Transparency of Changes Made to the New Starts
           Program. [30]GAO-05-674 . Washington, D.C.: June 28, 2005.

           Mass Transit: FTA Needs to Better Define and Assess Impact of
           Certain Policies on New Starts Program. [31]GAO-04-748 .
           Washington, D.C.: June 25, 2004.

           Mass Transit: FTA Needs to Provide Clear Information and
           Additional Guidance on the New Starts Ratings Process.
           [32]GAO-03-701 . Washington, D.C.: June 23, 2003.

           Mass Transit: Status of New Starts Program and Potential for Bus
           Rapid Transit Projects. [33]GAO-02-840T . Washington, D.C.: June
           20, 2002.

           Mass Transit: FTA's New Starts Commitments for Fiscal Year 2003.
           [34]GAO-02-603 . Washington, D.C.: April 30, 2002.

           Mass Transit: FTA Could Relieve New Starts Program Funding
           Constraints. [35]GAO-01-987 . Washington, D.C.: August 15, 2001.

           Mass Transit: Implementation of FTA's New Starts Evaluation
           Process and FY 2001 Funding Proposals. [36]GAO/RCED-00-149 .
           Washington, D.C.: April 28, 2000.

           Mass Transit: Status of New Starts Transit Projects With Full
           Funding Grant Agreements. [37]GAO/RCED-99-240 . Washington, D.C.:
           August 19, 1999.

           Mass Transit: FTA's Progress in Developing and Implementing a New
           Starts Evaluation Process. [38]GAO/RCED-99-113 . Washington, D.C.:
           April 26, 1999.
			  
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(542105)

[45]www.gao.gov/cgi-bin/getrpt?GAO-07-917 .

To view the full product, including the scope
and methodology, click on the link above. To view the e-supplement online,
click on www.gao.gov/cgi-bin/getrpt? [46]GAO-07-927SP . For more
information, contact Katherine Siggerud at (202) 512-2834 or
[email protected].

Highlights of [47]GAO-07-917 , a report to congressional committees

July 2007

PUBLIC TRANSPORTATION

Future Demand Is Likely for New Starts and Small Starts Programs, but
Improvements Needed to the Small Starts Application Process

Through the New Starts program, the Federal Transit Administration (FTA)
identifies and recommends new fixed-guideway transit projects for funding.
The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A
Legacy for Users (SAFETEA-LU) created a separate program, commonly called
Small Starts, which is intended to offer a streamlined evaluation and
rating process for smaller-scale transit projects. FTA subsequently
introduced a separate eligibility category within the Small Starts program
for "Very Small Starts" projects. These are simple, low-risk projects that
qualify for a simplified evaluation and rating process.

SAFETEA-LU requires GAO to annually review FTA's New Starts process. This
report presents information on (1) FTA's fiscal year 2008 funding
recommendations,

(2) the extent to which the New Starts pipeline has changed over time, and
(3) future projected trends for the New Starts and Small Starts pipelines.
To address these objectives, GAO surveyed 215 project sponsors--78 percent
of which responded--and interviewed FTA officials, 15 project sponsors,
and 3 industry groups.

[48]What GAO Recommends

GAO recommends that FTA make several program improvements, including
further streamlining the Small Starts application process. FTA officials
agreed to consider GAO's recommendations.

For the fiscal year 2008 evaluation cycle, FTA recommended to Congress 10
New Starts and 4 Small Starts projects for funding. The administration's
budget request of $1.40 billion is primarily allocated to New Starts
projects with existing and pending full funding grant agreements.
SAFETEA-LU made several changes to the New Starts evaluation and rating
process, which FTA is implementing.

Since the fiscal year 2001 evaluation and rating cycle, the New Starts
pipeline--that is, projects in the preliminary engineering and final
design phases--has changed in size and composition, responding to a
variety of factors. The number of projects in the New Starts pipeline has
decreased by more than one-half, and the types of projects in the pipeline
have changed, with bus rapid transit replacing commuter or light rail as
the most common type of project. FTA officials attributed the decrease in
the number of projects to FTA's increased scrutiny of applications to help
ensure that only the strongest projects enter the pipeline, and to FTA's
efforts to remove projects from the pipeline that were not advancing or
did not adequately address identified problems. Project sponsors that GAO
interviewed cited other reasons for the pipeline's decrease, including the
complexity, lengthiness, and cost of the New Starts process. The lengthy
nature of the New Starts process is due, in part, to the rigorous and
systematic evaluation and rating process established by law--which GAO has
previously noted could serve as a model for other programs. Other reasons
cited by project sponsors for the decrease in the pipeline include finding
alternative sources of funding or opting not to apply because they realize
their projects are unlikely to receive funding. FTA is considering
different ideas on how to improve the New Starts process, some of which
may address the concerns identified by project sponsors.

Despite these concerns, GAO's survey of project sponsors indicated future
demand for New Starts funding. Project sponsors reported having 141
planned New Starts, Small Starts, and Very Small Starts projects and will
likely seek New Starts funding for almost three-fourths of these projects.
Of these planned projects, project sponsors indicated that they intend to
seek New Starts funding for 57 New Starts projects, 30 Small Starts
projects, and 14 Very Small Starts projects. Project sponsors GAO surveyed
also reported considering a range of alternative project types in their
planning. Although project sponsors expressed appreciation for the
creation of the Small Starts program, noting it filled a funding gap, they
said the Small Starts application process is not tailored to the Small
Starts program and is time-consuming, costly, and duplicative. GAO also
found that the application is not always tailored for Small Starts
applicants and, in several instances, requests duplicative information.
FTA officials acknowledged that the Small Starts application process could
be further streamlined, and they are working to decrease the burden.

References

Visible links
  21. http://www.gao.gov/cgi-bin/getrpt?GAO-07-927SP
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-07-812T
  23. http://www.gao.gov/cgi-bin/getrpt?GAO-05-674
  24. http://www.gao.gov/cgi-bin/getrpt?GAO-05-172
  25. http://www.gao.gov/cgi-bin/getrpt?www.gao.gov/cgi-bin/getrpt?GAO-07-927SP
  26. mailto:[email protected]
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-07-812T
  28. http://www.gao.gov/cgi-bin/getrpt?GAO-06-819
  29. http://www.gao.gov/cgi-bin/getrpt?GAO-06-910T
  30. http://www.gao.gov/cgi-bin/getrpt?GAO-05-674
  31. http://www.gao.gov/cgi-bin/getrpt?GAO-04-748
  32. http://www.gao.gov/cgi-bin/getrpt?GAO-03-701
  33. http://www.gao.gov/cgi-bin/getrpt?GAO-02-840T
  34. http://www.gao.gov/cgi-bin/getrpt?GAO-02-603
  35. http://www.gao.gov/cgi-bin/getrpt?GAO-01-987
  36. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-00-149
  37. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-99-240
  38. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-99-113
  39. http://www.gao.gov/
  40. http://www.gao.gov/
  41. http://www.gao.gov/fraudnet/fraudnet.htm
  42. mailto:[email protected]
  43. mailto:[email protected]
  44. mailto:[email protected]
  45. http://www.gao.gov/cgi-bin/getrpt?GAO-07-917
  46. http://www.gao.gov/cgi-bin/getrpt?GAO-07-927SP
  47. http://www.gao.gov/cgi-bin/getrpt?GAO-07-917
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