Executive Summary

Purpose of Research

The Bipartisan Policy Center’s National Transportation Policy Project is one of many groups calling for new competitive programs with broad investment goals and eligibility, plus incentives for states and metropolitan areas to implement programs that support the nation’s transportation objectives. The New Starts program, administered by the Federal Transit Administration (FTA), is essentially the only discretionary transportation program of any size that o.ers a history of program design and implementation extending over many years. This paper analyzes the FTA’s discretionary New Starts program to identify the lessons learned and compo­nents that might be relevant to these new competitive programs, particularly with respect to federal funding decisions.

Findings

• The New Starts program has broad investment objectives but relatively narrow eligibility. It funds .xed guideway transit projects, such as urban rail and bus rapid transit, including both new lines and extensions. A subcategory of the program also funds a limited number of corridor bus projects.
• With $2 billion in funding for FY2010, the New Starts program is the largest federal discretionary transportation program with a multi-year history. The discretionary nature of the program responds to the high cost and “lumpy” nature of New Starts investments—transit agencies enter and exit the program over time as major capital investment projects advance to the point where sizable funding is required.
• Because of its competitive nature, the program features a prescribed planning and project development process combined with a rigorous and comprehensive federal review and rating of proposed projects, through which FTA seeks to minimize risk and evaluate projects in a fair and transparent manner. New Starts projects are subject to more scrutiny and accountability than other federally funded surface transportation projects.
• Decision-making is shared between the Executive and Legislative Branches.
• In the early years of the program, federal evaluators compared competing projects in relative terms, with the intent to group candidate projects into three categories: the best candidates for funding, less meritorious projects, and the least attractive projects. Over time, the evaluation has changed to emphasize an absolute comparison of each project’s costs and bene.ts, relying heavily on a cost e.ectiveness index and threshold.
• Federal funding commitments occur only after a project has entered the .nal design phase. This reduces project cost risk, but necessitates sizable local investment prior to a funding commitment.
• The program is criticized for being overly complicated and time consuming, with delays leading to increased costs.

Policy Implications

• Key considerations for the design of a competitive surface transportation funding program include: the local/state planning and project development process, project evaluation criteria and decision-making, risk management, and accountability. Each of these will create the need for federal sta.ng for oversight, guidance, and technical assistance.
• For a program with broad eligibility, developing and applying standard planning procedures, application/ review criteria, and performance measures could be more challenging than they have been for the more narrowly focused New Starts program. A broader program is likely to face analytical and political hurdles as it seeks to create a process and apply criteria that are considered to be fair and unbiased.
• Initially at least, a relative comparison of projects with multiple criteria may o.er a more suitable evaluation framework than a strict cost-bene.t analysis, given the broad investment goals and the diverse set of projects that the new programs would support.
• Given that the program is new and unfamiliar to applicants, it would be advantageous to keep the process as understandable and streamlined as possible at its inception.
• The burden and delays associated with project reviews at key milestones can lead to increased costs and delayed bene.ts. The evaluation process should strike an appropriate balance between (federal) risk management and application burden considerations.