[House Hearing, 110 Congress] [From the U.S. Government Publishing Office] THE FEDERAL TRANSIT ADMINISTRATION'S IMPLEMENTATION OF THE NEW STARTS AND SMALL STARTS PROGRAMS ======================================================================= (110-41) HEARING BEFORE THE SUBCOMMITTEE ON HIGHWAYS AND TRANSIT OF THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS FIRST SESSION __________ MAY 10, 2007 __________ Printed for the use of the Committee on Transportation and Infrastructure U.S. GOVERNMENT PRINTING OFFICE 35-923 WASHINGTON : 2007 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE JAMES L. OBERSTAR, Minnesota, Chairman NICK J. RAHALL, II, West Virginia JOHN L. MICA, Florida PETER A. DeFAZIO, Oregon DON YOUNG, Alaska JERRY F. COSTELLO, Illinois THOMAS E. PETRI, Wisconsin ELEANOR HOLMES NORTON, District of HOWARD COBLE, North Carolina Columbia JOHN J. DUNCAN, Jr., Tennessee JERROLD NADLER, New York WAYNE T. GILCHREST, Maryland CORRINE BROWN, Florida VERNON J. EHLERS, Michigan BOB FILNER, California STEVEN C. LaTOURETTE, Ohio EDDIE BERNICE JOHNSON, Texas RICHARD H. BAKER, Louisiana GENE TAYLOR, Mississippi FRANK A. LoBIONDO, New Jersey ELIJAH E. CUMMINGS, Maryland JERRY MORAN, Kansas ELLEN O. TAUSCHER, California GARY G. MILLER, California LEONARD L. BOSWELL, Iowa ROBIN HAYES, North Carolina TIM HOLDEN, Pennsylvania HENRY E. BROWN, Jr., South BRIAN BAIRD, Washington Carolina RICK LARSEN, Washington TIMOTHY V. JOHNSON, Illinois MICHAEL E. CAPUANO, Massachusetts TODD RUSSELL PLATTS, Pennsylvania JULIA CARSON, Indiana SAM GRAVES, Missouri TIMOTHY H. BISHOP, New York BILL SHUSTER, Pennsylvania MICHAEL H. MICHAUD, Maine JOHN BOOZMAN, Arkansas BRIAN HIGGINS, New York SHELLEY MOORE CAPITO, West RUSS CARNAHAN, Missouri Virginia JOHN T. SALAZAR, Colorado JIM GERLACH, Pennsylvania GRACE F. NAPOLITANO, California MARIO DIAZ-BALART, Florida DANIEL LIPINSKI, Illinois CHARLES W. DENT, Pennsylvania DORIS O. MATSUI, California TED POE, Texas NICK LAMPSON, Texas DAVID G. REICHERT, Washington ZACHARY T. SPACE, Ohio CONNIE MACK, Florida MAZIE K. HIRONO, Hawaii JOHN R. `RANDY' KUHL, Jr., New BRUCE L. BRALEY, Iowa York JASON ALTMIRE, Pennsylvania LYNN A WESTMORELAND, Georgia TIMOTHY J. WALZ, Minnesota CHARLES W. BOUSTANY, Jr., HEATH SHULER, North Carolina Louisiana MICHAEL A. ACURI, New York JEAN SCHMIDT, Ohio HARRY E. MITCHELL, Arizona CANDICE S. MILLER, Michigan CHRISTOPHER P. CARNEY, Pennsylvania THELMA D. DRAKE, Virginia JOHN J. HALL, New York MARY FALLIN, Oklahoma STEVE KAGEN, Wisconsin VERN BUCHANAN, Florida STEVE COHEN, Tennessee JERRY McNERNEY, California VACANCY (ii) ? SUBCOMMITTEE ON HIGHWAYS AND TRANSIT PETER A. DeFAZIO, Oregon NICK J. RAHALL II, West Virginia JOHN J. DUNCAN, Jr., Tennessee JERROLD NADLER, New York DON YOUNG, Alaska ELLEN O. TAUSCHER, California THOMAS E. PETRI, Wisconsin TIM HOLDEN, Pennsylvania HOWARD COBLE, North Carolina MICHAEL E. CAPUANO, Massachusetts RICHARD H. BAKER, Louisiana JULIA CARSON, Indiana GARY G. MILLER, California TIMOTHY H. BISHOP, New York ROBIN HAYES, North Carolina MICHAEL H. MICHAUD, Maine HENRY E. BROWN, Jr., South BRIAN HIGGINS, New York Carolina GRACE F. NAPOLITANO, California TIMOTHY V. JOHNSON, Illinois MAZIE K. HIRONO, Hawaii TODD RUSSELL PLATTS, Pennsylvania JASON ALTMIRE, Pennsylvania JOHN BOOZMAN, Arkansas TIMOTHY J. WALZ, Minnesota SHELLEY MOORE CAPITO, West HEATH SHULER, North Carolina Virginia MICHAEL A ARCURI, New York JIM GERLACH, Pennsylvania CHRISTOPHER P. CARNEY, Pennsylvania MARIO DIAZ-BALART, Florida JERRY MCNERNEY, California CHARLES W. DENT, Pennsylvania BOB FILNER, California TED POE, Texas ELIJAH E. CUMMINGS, Maryland DAVID G. REICHERT, Washington BRIAN BAIRD, Washington CHARLES W. BOUSTANY, Jr., DANIEL LIPINSKI, Illinois Louisiana DORIS O. MATSUI, California JEAN SCHMIDT, Ohio STEVE COHEN, Tennessee CANDICE S. MILLER, Michigan ZACHARY T. SPACE, Ohio THELMA D. DRAKE, Virginia BRUCE L. BRALEY, Iowa MARY FALLIN, Oklahoma HARRY E. MITCHELL, Arizona VERN BUCHANAN, Florida VACANCY JOHN L. MICA, Florida JAMES L. OBERSTAR, Minnesota (Ex Officio) (Ex Officio) (iii) CONTENTS Page Summary of Subject Matter........................................ vi TESTIMONY Gustafson, Rick, Executive Director/Chief Operating Officer, Portland Streetcar, Inc., Portland, Oregon..................... 24 Lewis, David L., Ph.D., Senior Vice President, HDR/HLB Decision Economics, Inc., Silver Spring, Maryland....................... 24 Siggerud, Katherine, Director of Physical Infrastructure, U.S. Government Accountability Office............................... 2 Simpson, James S., Administrator, Federal Transit Administration, U.S. Department of Transportation.............................. 2 Snoble, Roger, Chief Executive Officer, Metropolitan Transportation Authority, Los Angeles, California.............. 24 Thomas, Gary C., President/Executive Director, Dallas Area Rapid Transit (DART), Dallas, Texas.................................. 24 Varga, Peter, Executive Director, Chief Executive Officer, Interurban Transit Partnership (The Rapid), Grand Rapids, Michigan....................................................... 24 PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS Altmire, Hon. Jason, of Pennsylvania............................. 43 Bishop, Hon. Timothy H., of New York............................. 44 Cummings, Hon. Elijah E., of Maryland............................ 45 Ehlers, Hon. Vernon J., of Michigan.............................. 50 Hirono, Hon. Mazie K., of Hawaii................................. 51 Holden, Hon. Tim, of Pennsylvania................................ 53 Matsui, Hon. Doris O., of California............................. 54 Mitchell, Hon. Harry E., of Arizona.............................. 58 PREPARED STATEMENTS SUBMITTED BY WITNESSES Gustafson, Rick.................................................. 63 Lewis, David L., Ph.D............................................ 75 Siggerud, Katherine.............................................. 82 Simpson, James S................................................. 112 Snoble, Roger.................................................... 126 Thomas, Gary C................................................... 141 Varga, Peter..................................................... 148 SUBMISSIONS FOR THE RECORD Gustafson, Rick, Executive Director/Chief Operating Officer, Portland Streetcar, Inc., Portland, Oregon, presentation: ``The Portland Experience: Development Oriented Streetcars''......... 66 Simpson, James S., Administrator, Federal Transit Administration, U.S. Department of Transportation, responses to questions from Rep. DeFazio and Rep. Hirono................................... 118 ADDITION TO THE RECORD Franklin B. Conaway & Associates, Franklin B. Conaway, written statement submitted by Rep. Space.............................. 151 [GRAPHIC] [TIFF OMITTED] T5925.001 [GRAPHIC] [TIFF OMITTED] T5925.002 [GRAPHIC] [TIFF OMITTED] T5925.003 [GRAPHIC] [TIFF OMITTED] T5925.004 [GRAPHIC] [TIFF OMITTED] T5925.005 [GRAPHIC] [TIFF OMITTED] T5925.006 [GRAPHIC] [TIFF OMITTED] T5925.007 [GRAPHIC] [TIFF OMITTED] T5925.008 HEARING ON FTA IMPLEMENTATION OF THE NEW STARTS AND SMALL STARTS PROGRAM ---------- Thursday, May 10, 2007 House of Representatives, Committee on Transportation and Infrastructure, Subcommittee on Highways and Transit, Washington, DC. The subcommittee met, pursuant to call, at 10:05 a.m., in Room 2167, Rayburn House Office Building, Hon. Peter A. DeFazio [chairman of the subcommittee] Presiding. Mr. DeFazio. The Subcommittee on Highways and Transit will come to order. We will proceed with brief opening statements. When this committee authored SAFETEA-LU, I think there was bipartisan consensus at the time--boy, this microphone seems very loud today, it is very unusual--that in addressing Small Starts and New Starts that we wanted to see different criteria implemented by the administration and we wanted to expedite these sorts of projects. In particular, the idea of Small Starts was that, you know, we wanted to foster sort of a short form and move those projects expeditiously in partnership with local jurisdictions. From my reading of where we are at today, I have a lot of concerns that hopefully will be addressed here today about the lack of progress on implementing of the very specific statutory direction from Congress on New Starts and Small Starts. In fact, it seems that the only new provisions that FTA is considering are provisions to implement a pet program of the administration regarding basically congestion pricing, and giving that bonus points while ignoring the statutory criteria that have been set by Congress. So I hope that these concerns will be alleviated, dispelled or addressed today as we move forward through the hearing. With that, I turn to the ranking member, Mr. Duncan. Mr. Duncan. Well, thank you, Mr. Chairman. First, I want to ask unanimous consent that our colleague, Congressman Ehlers, be authorized to participate in this morning's subcommittee hearing. One of his constituents is testifying on the second panel and he wanted to be here for that. Mr. DeFazio. Without objection. Mr. Duncan. This program is one that many members really do not know about, and I was just told that this is the first time in over 5 years that we have held a hearing on what really is a very important program. This New Starts program is one of the largest and at least at the local level one of the highest profile discretionary grant programs in the Federal Government. The program has grown from an annual funding level of about $400 million in the mid-1980s to $1.8 billion in fiscal year 2009. Under the New Starts program, local transit agencies partner with the FTA to develop and construct subway, light rail, commuter rail, ferry and bus rapid transit projects to solve very specific local transportation programs in a corridor or area of their communities. These projects can be brand-new starter lines or extensions to existing transit systems. New Start projects vary widely in cost and complexity, ranging from less than $25 million for upgrading the regular bus line to high and express bus rapid transit to more than $7 billion for an incredibly complex new subway line tunneling through a major city's downtown. The FTA project evaluation and rating process is established and transit law by this committee and the process is quite demanding. The Office of Management and Budget, GAO and the Department of Transportation Inspector General have all recognized the FTA's management of the New Starts program as fair and rigorous. The prize these local project sponsors are seeking by participating in such a demanding program is to secure a full funding grant agreement, a contract with the Federal Transit Administration for a certain amount of Federal funding provided on an annual payment schedule. New Starts projects improve the mobility of millions of Americans, help reduce congestion and improve air quality and contribute to the economic development and vitality of our communities. These benefits are not conferred only on major cities like New York and Los Angeles. Smaller cities can and do reap these same benefits with projects that are appropriately scaled to their transportation and community needs. SAFETEA-LU authorized a new Small Starts program within New Starts for projects that are less than $250 million in total cost and less than $75 million in New Starts funding. This program is designed for smaller projects and the evaluation and rating process is also simpler and we hope will allow for faster project development and construction. I am looking forward to the hearing and hearing the testimony of the FTA Administrator, Mr. Simpson, about how his agency is managing the New Starts program and in particular how the Small Starts program is being implemented and hopefully expanded. Thank you, Mr. Chairman. Mr. DeFazio. Thank you, Mr. Duncan. With that, we would--no one else having arrived, we would move forward to the testimony of the Honorable James Simpson, Administrator, Federal Transit Administration. Mr. Simpson. TESTIMONY OF JAMES S. SIMPSON, ADMINISTRATOR, FEDERAL TRANSIT ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION; AND KATHERINE SIGGERUD, DIRECTOR OF PHYSICAL INFRASTRUCTURE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE Mr. Simpson. Good morning, Chairman DeFazio, Ranking Member Duncan, and members of the subcommittee. Thank you for the opportunity to testify today on the FTA's New Starts and Small Starts programs, which are among the Federal Government's largest and most highly regarded discretionary programs. I would also like to thank the GAO for its hard work and dedication reviewing the New Starts program. Over the years FTA has made good choices for Federal New Starts dollars due in part to our increased commitment to sound management practices. FTA's portfolio; that is, the number of projects in the construction phase, totals $21.5 billion and we are managing the costs to within a half a percent of the full funding grant agreement. Based on my experience in both the public and private sectors, that level of cost control is impressive. In our quest for continuous improvement, FTA engaged Deloitte Consulting to provide an independent review of the New Starts program, focusing on streamlining the process while maintaining program integrity and objectives. Deloitte's recommendations, which confirmed our own findings, focused on four general areas: Streamlining project development and evaluations processes, New Starts process management, FTA's organizational structure, and improved communications. With regard to streamlining project development and evaluation processes, we are committed to reducing reporting requirements, moving projects faster and shortening review times. First, we have already proposed to eliminate a number of New Starts reporting requirements. Second, we are now offering grantees an opportunity to enter into a project development agreement which outlines the respective responsibilities of the grantee and FTA in the project delivery schedule. Third, FTA will soon unveil new guidance and training for managing project development risks such as the potential for cost overruns and schedule delays. For New Starts process management we are focusing on improvements to our industry guidance documents. We intend to clarify and simplify procedural requirements for advancing projects through the New Starts development process and are exploring a more efficient and transparent tracking and data collection system to facilitate project development. With respect to FTA's organizational structure, FTA is implementing New Starts teams consisting of regional and headquarter staff who will deliver program and technical assistance and will bring a can-do approach to each project. In the area of improved communications we believe the New Starts process must be as transparent as possible and we strive to have a close working relationship with all of our stakeholders. I echoed that very sentiment last year during my confirmation hearing when I pledged to make FTA more transparent and to keep Congress informed. To that end, FTA now provides House and Senate committee staffs with individual project updates on a monthly basis. We also communicate with Congress before each New Starts project proceeds to the next stage of development and again before signing the full funding grant agreement. FTA continues its efforts to better serve individual project sponsors, which includes offering more outreach to the public transportation industry. Turning now to Small Starts, SAFETEA-LU established a Small Starts program to advance smaller fixed guideway and nonfixed guideway projects, including bus rapid transit, street cars and commuter rail projects and established a streamlined review process. We further recognize that simple low cost bus and rail improvements in corridors with strong existing ridership typically have sufficient benefits to rate well and require only minimal assessments. For those projects FTA introduced the Very Small Starts concept, which provides for an even more simplified project evaluation and rating process. When we were preparing the 2008 budget last November, FTA found that 4 of the 12 protects projects that applied were ready to advance, and we recommended them for funding in 2008. We continued to work with several of the applicants as well as additional sponsors who have more recently expressed interest in applying for entry into project development, and we expect to approve more for funding in the future. FTA issued an advanced notice of proposed rulemaking on the Small Starts program and draft policy guidance on the New Starts program in early 2006. Both these programs involve extremely involved complex issues, and the comments we received on our proposals were extensive. We reviewed and reconciled these comments and hope to issue an MPRM for both programs soon. In the meantime FTA issued New Starts policy guidance and interim guidance on the Small Starts program to aid the continued development and advancement of projects. We will issue additional policy guidance in the near future followed by a final rule on New Starts and Small Starts in 2008. Chairman DeFazio, Ranking Member Duncan, and members of the subcommittee, FTA is committed to the timely delivery of New Starts and Small Starts projects, we realize time is money. In the last 9 months we have implemented an FTA-wide quality improvement program that implements the Malcolm Baldrige National Quality Model, which focuses on leadership, strategic planning, customer and market focus, measurement, workforce development, process management, and most importantly results. We are streamlining New Starts project delivery, providing strong project management oversight and bringing good projects in on time and within budget. We are enhancing customers that are stakeholders' service through improved communications, clear guidance and streamline requirements for these programs. We look forward to working with the subcommittee on the New Starts and Small Starts programs. I am happy to take any of your questions. Thank you. Mr. DeFazio. Thank you, Mr. Administrator, and now we would turn to our second witness, Katherine Siggerud, Director of Physical Infrastructure, United States Government Accountability Office. Ms. Siggerud. Chairman DeFazio, Ranking Member Duncan, members of the subcommittee, I appreciate the opportunity to provide testimony on the Federal Transit Administration's New Starts and Small Starts programs. As you know, GAO has been required in TEA-21 and SAFETEA-LU to report annually on the New Starts program. We will be issuing our full report for this year in July, but I can provide some preliminary information today on our results of work to date. My testimony today examines first, FTA's implementation of SAFETEA-LU changes to the New Starts programs, second, the extent and nature of changes in the New Starts pipeline since the fiscal year 2001 evaluation and rating cycle, and third, projected trends for the New Starts and Small Starts programs. In doing this work, we surveyed all potential project sponsors that are located in urbanized areas with populations over 200,000 and that have an annual ridership on the transit systems of 1 million. In total, we surveyed 215 potential project sponsors, asked them about their past experiences with the New Starts program and plans to apply in the future. With regard to implementation of SAFETEA-LU changes, FTA has issued guidance for the New Starts program and interim guidance for the Small Starts program and is working toward a comprehensive notice of proposed rulemaking, as Administrator Simpson explained. I wanted to mention two areas where project sponsors that we have contacted have high expectation of these regulations, further streamlining of the Small Starts program and fully incorporating economic development into the New Starts and Small Starts evaluation and rating process. With regard to the Small Starts application process, the current interim guidance has fewer requirements for Small Starts than for New Starts projects. Project sponsors would like to see additional streamlining by, for example, eliminating unneeded information requested in the required worksheets. FTA told us it is considering changes in this area using the upcoming rulemaking guidance. In addition, project sponsors would like to see more explicit incorporation of the economic development criteria as required by SAFETEA-LU. This is a technical challenge in that the potential benefits of economic development resulting from new transit service are difficult to separate from the benefits of improved mobility and land use. FTA officials told us that they understand the importance of the economic development in the transit community and the concerns raised by project sponsors and said they are working to develop an appropriate economic development measure through the upcoming rulemaking process. With regard to changes in the New Starts pipeline, as I mentioned, we review the New Starts program every year. And it became apparent to us the pipeline has changed in size and composition since the fiscal year 2001 evaluation and rating cycle. Since then the number of projects in the New Starts pipeline has decreased by more than half. In addition, the types of projects have changed, as bus rapid transit projects are now more common than commuter or light rail projects, though this still represents a small amount of projects in the pipeline. FTA officials told us the major reason for the decrease in the number of projects in the pipeline is that FTA increased its scrutiny of applications to help ensure that only the strongest projects enter the pipeline. FTA also took steps to remove projects that were not advancing or that did not adequately address identified problems, although in most cases project sponsors voluntarily withdrew projects once FTA brought these projects to their attention. Project sponsors we interviewed provided other reasons for the decrease in the New Starts pipeline; in particular, they maintained the New Starts process is complex, time consuming and costly. Our surveyed results confirmed some of the reasons offered by project sponsors. Among the potential project sponsors we surveyed with completed transit projects, the most common reasons given for not applying to the New Starts program were that the process was too lengthy or that the process wanted to move the project along quickly. The lengthy nature of the New Starts process is due in part to the rigorous and systematic evaluation and rating process established by law which we have previously noted could serve as a model for other transportation programs. As Administrator Simpson explained, FTA has recognized the process can be lengthy and in 2006 commissioned a study that he spoke about in his statement to examine opportunities for accelerating and simplifying the process. FTA is currently reviewing the studies and findings and recommendations, and we heard Mr. Simpson give an update on that today. Despite the decrease in the pipeline, our survey of potential project sponsors indicated that there would be future demand for New Starts Small Starts and Very Small Starts funding. The potential project sponsors we surveyed reported having 137 planned projects; that is, projects that are undergoing an alternative analysis or some kind of corridor-based planning study. According to the project sponsors, they are considering seeking New Starts, Small Starts or Very Small Starts funding for about three-fourths of these projects. Project sponsors we surveyed also indicated they were considering range of project types. The most commonly cited alternatives were bus, rapid transit, and light rail. Our survey results also indicate that through the Small Starts and Very Small Starts program FTA is attracting project sponsors that either would not otherwise apply for a New Starts program or have not previously applied. For example, of 28 project sponsors that intend to seek Small Starts or Very Small Starts funding for their projects, 13 have not previously applied for New Starts Small Starts or Very Small Starts funding. Mr. Chairman, that concludes my statement. I am happy to answer any questions. Mr. DeFazio. Thank you. At this point we would proceed to questions. Administrator Simpson, first I want to congratulate you on your work to attempt to make more transparent and streamline the processes of the agency and we appreciate that work. However, I have concerns regarding the criteria that are being applied in evaluating the viability of new projects, and it seems that this problem precedes your position in the job, but the former Administrator issued something that was referred to as a "Dear Colleague" directive regarding criteria that would be used and she did that on March 9, 2005. And she talked about targeting funding recommendations 2006 that proposed New Starts able to achieve a medium or higher rating for cost effectiveness. She went on to note that people had raised concerns about that with the pending legislation but she said, you know, essentially it was neither necessary or advisable. The same project has not received at least a medium rating on the single cost effectiveness evaluation and it will face serious barriers. Now, I don't believe even at the time that she wrote that that it was consistent with the law. And in fact the Federal Register back in December 7, 2000 stated, it is important to note the measure for cost effectiveness is not intended to be a single standalone indicator of the merits proposed in the New Starts project. It is but one part of the multiple method that FTA uses to evaluate project justification under statutory criteria. While cost effectiveness is an important consideration, so are mobility, environment and other factors. And of course since that time we have added economic development and other factors. So I am concerned. It seems that FTA is following the "Dear Colleague" exposition of the former Administrator, which even then seemed to contradict your own existing regulations. Could you address that issue, please? Mr. Simpson. Sure. Mr. Chairman, I am going to use an analogy. The cost effectiveness measure is one of multiple assessments that we look at. However, having said that, cost effectiveness--let's look at the program. The program is a discretionary competitive program, not dissimilar to applying to a--let's call it an Ivy League school. And you need a multitude of criteria. But when you are trying to have an objective criteria that cross cuts through the whole country and to have different communities sort of have a similar footing and a similar kind of a rating, the cost effectiveness measure stands out like the SAT score, and a SAT score, it does give you the aptitude toward math and all of that. But when we look at cost effectiveness, on the surface it looks like we are just looking at like perhaps the cheapest ride to get somebody from point A to point B. But cost effectiveness, the measure has gotten pretty sophisticated and it actually takes into account mobility improvements and also operating efficiencies. And when we look at cost effectiveness, we are looking at--it is the closest thing that we have to a cost/benefit analysis that takes a look at the cost of the project relative to the amount of riders and the benefits of the project. And it even gets more complicated. But just to keep it on the surface, the state of the art of the model now for cost effectiveness even takes into benefit, it takes into benefits that would normally not be associated with the project, and we call it transit system user benefits. So this cost effective measure looks at mobility and even in an odd sort of a way, even has a little bit of an economic development measure to it. So it is a very heavy criteria, it is an objective criteria. And it is the only thing that we have that can measure--that can cross cut projects and quantifiably take a look at all the projects and measure it effectively. Mr. DeFazio. But the particular measures used for operating in efficiency and mobility improvements really seem fairly antiquated and prejudice toward--basically toward bus, and I mean and so we couldn't anticipate the revival of streetcars since they have been gone for 70 years. You know, can you address that? If we are really talking about the--you know, things that really would favor, you know, suburb or urban center, moving people quickly in a bus transit lane or something like that as opposed to movement within, and again I don't quite see where the mandated, statutorily mandated emphasis on a factor of economic development is being really quantified here. I don't see that. Maybe tangentially. Mr. Simpson. Are we talking particularly streetcars right now? Mr. DeFazio. Well, streetcars are a particular problem and I think we have discouraged many people from applying because of what they perceive as a bias in the program. Mr. Simpson. Well, if we take a look at the lesser alternative or the baseline measure, which would be a bus as opposed to a streetcar, obviously the extra--the additional cost of the streetcar if there are no time saving benefits, you could say under the cost effectiveness measure, yeah, maybe it is not as competitive. But that is only one part of the cost effectiveness measure. The other part is, we know--and this cost effectiveness forecasting model, we know that people like reliability, they like to know where they are going, they like permanency, the basic attributes of a rail system. So what we do is we have these--it is very complicated. But I will try to keep it simple and I apologize. We take all these attributes and we associate time with them so that we are not just looking at time savings. We are taking a look at the other attributes like the additional amenities that a streetcar would have that a bus would not have. And we formulate it into the equation, and we call it time savings and transit system user benefits. The other thing that we have now that is---- Mr. DeFazio. If you have a relatively short ride, you are not going to find much time saving. Mr. Simpson. But then that would be the same with a bus as well. Not everybody is having a short--if you were going to get on a bus and go a couple of blocks, you could also go on a streetcar. Mr. DeFazio. Generally the bus--we don't develop many bus systems that cover such a short distance. You may have, you know, a streetcar that covers a relatively short distance in a very dense area. It enhances densification, utilization of, you know, much higher utilization of the adjoining properties, whereas the bus just sort of goes through there on a longer route. Mr. Simpson. Understood. But the point I guess, Mr. Chairman, that I would like to get across is that we understand that and we have attributes in the cost effectiveness measure that can take into account those measures. The problem with some streetcar projects--and I only say a problem like this because it is not your typical streetcar in some cases. There is a project now that we are working with that we have accepted into the program, for example, that has to cross a bridge. And 8 percent of the cost of the project is for structure, additional structure to the bridge. Now I don't know at this point if it is because of weight of trucks or the extra weight of the streetcars. In addition to that, the project that we have accepted into the program has a flyover, a major highway and a flyover for railroad. Typically streetcars don't have elevated flyovers. So this, you know, makes the project that you know if you think about--when we were in Portland together, it is not the typical streetcar that I rode on. This has got a lot more to it. So by working with the grant recipient, by taking into account this thing called a modal constant that takes together all the attributes, to look at if there are ways to move this along and look at the bridge in another fashion, we are working with the grant recipient, but the cost effectiveness measure really is not that biased, if it is biased at all, towards or against the streetcar. Mr. DeFazio. Mm-hmm. So you don't anticipate significant revisions of the criteria pursuant to the directives of SAFETEA-LU? Mr. Simpson. Absolutely not. If you are referring to economic development, we absolutely positively are working towards economic development. But what we want to do is the way economic development is now, we have got land use and we have got economic development. They are interlocked, they are interconnected. You cannot have economic development unless you have supportive land use. So if we have supportive land use, we are measuring the land use. And we are weighing that equal with cost effectiveness, it is 50 percent of the two equations. So we are measuring land use. So now we are trying to follow the statute, which is economic development, which is not necessarily land use. But when we reach out to the industry--and it depends who you talk to. We have talked to five or six different people. Everybody has a different definition of what economic development is. We have gone out and last year we went out, we just got back a study that looks at measuring economic development. But what we really want to do is if we are talking about economic development we want to measure it and we want to make it quantifiable because, believe me, this administration and this department is for knowledge-based management and looking at all the benefits, including economic development and all the costs. But when we are looking at a project and we have got a four- page qualitative report that says, yeah, maybe we are going to do all these things in the future and it is qualitative and we have this other measure cost effectiveness that truly looks at mobility and for a transit project to be--for a transit project--the transit project needs to have mobility or else you are not going to have economic development. People are not going to travel from point A to point B if there is no time savings. So you need to have a certain amount of time in that. I guess in closing, we are working towards economic development. I am with you. I understand there are attributes. Mr. DeFazio. For instance, on measuring economic development or land use, which I do think are measurable together, and for instance, if you could build up to 10 stories or have a certain density on a particular property, without the streetcar you may well not go there, with the streetcar you may. And as I understand the current criteria, those people who might locate and live there and travel a relatively short distance, not drive a longer distance with an automobile causing congestion, we are not really capturing those measures. And apparently they also--I was told, this seems particularly odd to me, they don't even count because they didn't get to the starting point by another mode of transportation. They just live there. And so they wouldn't figure into the current criteria either. So I mean, it seems like there is a lot of ground that needs to be covered here that isn't being--it is, you know, the world is changing here, and you know we want to encourage energy efficiency, the environmental benefits, the economic development and some of these other measures just don't seem to be capturing that because there is a project that may not have been built there absent the streetcar. In fact, we can pretty well prove that in certain instances. Mr. Simpson. I understand that. Mr. DeFazio. And I think your new criteria are going to capture that. Mr. Simpson. Our new criteria is working towards capturing all that, and that is why we have the NPRM for additional comment. Mr. DeFazio. Okay. One other and then I will defer to the ranking member. But this other thing that I find as a strain through all of the testimony we are receiving from the administration, the various parts of the Department of Transportation keeps popping up, and I find this a bit odd. It says that FTA is proposing a ratings bonus to a project sponsor who can demonstrate and is provided the opportunity for operation and maintenance of the project to be contracted out. That is number one. And then, increase the project justification rating of a new or Small Start project that is a, quote, principal element of a congestion management strategy in general and a pricing strategy in particular, end quote. Now I don't know that you were at the hearing where I was asking another administration witness about the inherent conflict here. I think--or maybe you were--between if we are trying to--and I don't agree with it, but if the administration wants to, you know, drive Americans out of their cars by pricing them off the public roadways, which apparently is what--you know, what we are looking at here, then you are going to get them into a transit system where you are going to implement punitive pricing at peak times also? I mean, it seems to me, you know, you are either trying to get the people out of their cars and get them on transit, which means, you know, you don't need to penalize them to get them--if you penalize them to get them out of their cars, which I don't agree with, but then you are going to force them on a transit where you are going to penalize them again. How do they escape? Do they have to move to the suburbs and change jobs? I mean what is the deal? So this, you know, congestion management strategy in general, pricing strategy in particular. Mr. Simpson. Yeah. You asked--I think you were touching on two separate subjects. And actually when I read that testimony, those sentences, I apologize. When you read it six or seven times, sometimes you are not as careful. Those sentences don't gel well. Let me try to clarify. In SAFETEA-LU, one of the things that we were granted in SAFETEA- LU was the Penta-P program, the Public-Private Partnership Pilot Program. We were allowed to choose three projects and to see how we can inject the private sector into not only the delivery of operations in a cost effective manner but also thinking out of the box, as the Secretary likes to say, 21st century solutions to 21st century problems. But when we talked about--well, when we talk about the--I think the first sentence, you talked about contracting out. I think what we are talking about, there are alternative delivery methods for projects like design, build, operate, maintain. And that is a-- we already have a New Starts project that has it. We have the Bergen light rail in New Jersey, which is a light rail line in New Jersey into Bayonne. That project came in years ahead of schedule and millions of dollars ahead of budget, and it is operating fairly. We wanted to take a look at that more, and SAFETEA-LU directed us to do that. Mr. DeFazio. As a pilot project; not as a programmatic change but as a pilot project? Mr. Simpson. Right. As a pilot project. We are not talking about the congestion, just the contracting out. That is what we are referring to there. The other part of the Penta-P program was--and I will use New York as an example. Well, let me not do that. Let me just make up an example. We have situations where for the first time ever, I think, we are at a tipping point with transit in this country, where the private sector has finally realized the value of transit, not to necessarily come in and buy up the infrastructure, but the value of transit is keeping people mobile to compete globally. We had a grant recipient come into my office with the private developer who said, listen, we can't make this cost effectiveness. We have this project and we want to build this light rail project. You know, the developer owns the property on all sides of the proposed rail line. Well, the developer was willing to pay for the track and the station but there is no ridership there. And who knows when there is going to be ridership there. But the developer believes that if you build this, that the property value goes up, people will--you know the rest of the equation. So as a potential Penta-P program, we would look at that project, and the costs that were born by the private sector, those benefits that are accruing to the taxpayer at no taxpayer expense, we would deduct from the cost effectiveness ratio as part of the Penta-P and to have the private sector inject themselves more into public sector projects that really truly capture all the value of transportation projects. Mr. DeFazio. Okay. All right. We have got that one. What about---- Mr. Simpson. Congestion. Mr. DeFazio. Yeah. I don't--I am trying to understand the objective here. I mean, what are we talking about when we talk about a pricing strategy when you are talking about transit? Mr. Simpson. Okay. The congestion strategy--the congestion strategy is a department-wide program. Every mode of transportation, as you know, is plagued with congestion, whether it be the airlines or the freight rails or the highways. Transit is a solution--is part of the solution for reducing dependence on oil and all those other components that you know about. SAFETEA-LU, as one of its subcomponents, lists clearly at the beginning of SAFETEA-LU, is we are trying to have congestion mitigation. Where transit fits in in that area, if you have got this congestion pricing, this highway pricing, you will have more transit ridership and that will support-- that will support--we are always trying to get riders to offset our overheads and to have full capacity and all that. So the degree that you could get people out of the cars and have them ride on transit that increases transit. The other part of that, which is where we are trying to get to for mobility, if there is a measure, if we can get people out of the cars and get them on transit those who stay in the cars now have travel time savings because you don't have--if you can get 8 percent of the cars off the road, you typically can get free flow. I have seen it in New York. Mr. DeFazio. Mr. Administrator, I understand that but I am finding an inherent--I just don't understand where--so the pricing strategy doesn't apply even though it appears to in talking about a Small Start to the Small Start having congestion pricing on the transit. But you are talking about there is congestion pricing elsewhere in the system, and therefore, you would favor a Small Start in a system where the objective was to drive people off the roads and onto that Small Start; therefore, that Small Start would get some additional scoring because it is part of an integrated program. Is that what you are saying here? I am trying to understand. Mr. Simpson. Not necessarily. It could be a situation where we have a city---- Mr. DeFazio. What is a principal element of a congestion management strategy in general and a pricing strategy in particular? As it pertains to Small Starts, what does that mean? Mr. Simpson. It would be for--either for Small Start or New Start, if a city can demonstrate a congestion reduction strategy, which can include telecommuting, it can include technology with ITS, pricing hot lanes, that the community or the transit authority would get a bonus under the mobility factor for a project as a result of that because it is achieving--you know, it is reducing congestion, reducing pollution. Mr. DeFazio. It is contained within--that is what I thought I just said, a greater strategy by---- Mr. Simpson. Yes. Mr. DeFazio. But we aren't talking about inherently contradictory ideas, which it seemed at the last hearing had been surfaced, which is we were both going to price--we were going to have congestion pricing on transit, that is the pricing---- Mr. Simpson. No. Mr. DeFazio. And we are going to have congestion pricing on the roads, which leaves people little alternative. Mr. Simpson. I mean, the transit would be congestion prices as well? Mr. DeFazio. Yes. Mr. Simpson. No, not at all. That is not what we are talking about at all. Mr. DeFazio. I think the wording is---- Mr. Simpson. I apologize. Mr. DeFazio. Thank you. The ranking member. Mr. Duncan. Thank you, Mr. Chairman. I think the environmental groups are going to price us out of our automobiles by not letting us drill for any oil. But Ms. Siggerud, the GAO and you and your associates found that in the 2008 budget submission there are less than half the number of New Starts projects in the pipeline than in 2001. Why is that? And also I understand that you surveyed 250 transit systems and there is a great interest or a tremendous interest in the Small Starts program. Ms. Siggerud. Yes, Mr. Duncan. We did do that survey. Let me address the first part of your question first. There is a decrease by half both in the number of projects that are in the pipeline and the number of projects that are rated each year. If you look at the 2008 budget submission, we identified a number of reasons for that. One is very clearly action by the Federal Transit Administration to try to encourage projects that were not getting a local financial commitment or making progress in designing and making final decisions about their projects out of that pipeline, and that is a part of the issue as well. We are seeing some concerns from project sponsors about, as well, the length and costliness and time issues associated with moving through the New Starts process. I am not sure that is necessarily a bad thing. If there are projects out there that can obtain State, local and private money and build projects on their own, I think that that is probably fine. On the other hand, the purpose of the program is of course to provide capital assistance to communities that would like to build new or extend their existing transit systems. And to the extent the program itself is deterring that, I think that is an issue for the FTA and for the committee to be concerned about. With regard to our survey, we did identify many of the large--we did survey many of the larger transit agencies and what they told us is they have got somewhere in the neighborhood of about 130 projects that are in alternative analysis or a corridor-based planning study, meaning that they are taking a pretty serious look at building this transit project. About three-fourths of those are thinking about using the New Starts, Small Starts or Very Small Starts program to fund a portion of that project. Mr. Duncan. Let me see if I understand. You found in this 250-transit system survey, you found 130 projects that they are considering bringing forward to the FTA? Administrator Simpson, how many Small Start projects are in your pipeline now, as far as you know? Mr. Simpson. In the pipeline I think we have got five. We had 13 people apply. Let me just double check. That is correct. Mr. Duncan. Five in the pipeline? Mr. Simpson. Five in the pipeline. Four have been approved and they are approved, into project development. Five--excuse me, five in project development. Mr. Duncan. Five are in project development? Mr. Simpson. Yes. Mr. Duncan. And what did you say, 13? Mr. Simpson. There were 13 that applied. The other ones we are working on for additional application. Mr. Duncan. Yes, Ms. Siggerud. Ms. Siggerud. Mr. Duncan, what I do want to clarify is of those projects that are out there that are potential applicants for the New Starts program the majority of them are in fact traditional New Starts projects in terms of what these transit agencies told us. However, there were about 43 projects that were interested in either the Small Starts or the Very Small Starts programs some time in the future. Mr. Duncan. And in your work that you did on this--on the New Starts program, what is your opinion of this program? Is it an effective work--is the program working now in the way you feel it should? Ms. Siggerud. Mr. Duncan, I do believe for the most part the program results in the selection of projects that are effective and especially recently on time and on budget. We have seen an improvement in this program in terms of those two issues of timeliness and costliness, and these projects are in fact often meeting or exceeding their ridership estimates today. There are some concerns we have raised over the years with regard to this project, with regard to transparency, with regard to changes in the program and the extent to which there is the opportunity to provide notice and comment, for example, as the application process changes from year to year. And we made some recommendations in that area and SAFETEA-LU did in fact adopt those changes. And FTA is now using an annual notice and comment process to notify potential project sponsors and applicants about these changes to get comment and to work those in before making final decisions about whether or how to change the New Starts process. Mr. Duncan. All right. Thank you. Administrator Simpson, you recently had--or there recently was completed, the Deloitte Consulting study. How much did that study cost? And what did you get from it? What action items are you doing or are you contemplating doing based on that study? What good did it do? Mr. Simpson. The study cost $350,000. Mr. Duncan. And what did you learn from it? Mr. Simpson. We learned that process improvement really needed to happen at the FTA, that the folks--it is sort of like a--you know, you have got really hard working people really dedicated to the process, and I call it fully functioning people in somewhat of a dysfunctional environment when the politicals come and go and all that, and it would be very hard for a private sector company to operate like that, but that is the way it is. So you have got this process that gets interrupted periodically, and it is sort of like a manufacturing line when you want to build a car and everybody is dedicated to get that car out the door but for a whole bunch of reasons you are looking at the same toolbox, and if you only have one screwdriver, two people are trying to get the screw driver at one time, so it is kind of like who's on first? So we take a look at that. We have 10 regional offices, plus we have headquarters, and we said, you know, we are going to need to blow the whistle here and we need to streamline the process and we need to establish roles and responsibilities and goals. It is just really good business practices. So we have a report of about 300 pages. Our staff went through the report. It focuses on four different areas, and we are implementing a whole bunch of common-sense kinds of things from who is the point person for the New Starts program, let's look at teams, let's quantify everything. I will give you an example. We have one project in the pipeline, which is the East Side Access Project, $7.5 billion. If you assume that that project increases the cost at 5 percent a year and there are 260 workdays in the year, that is a $1.3 million that is lost if that file is sitting on somebody's desk. So we are taking that kind of pragmatic business approach saying, where are the projects in the pipeline, what kind of technology can we bring to bear, looking for something off the shelf that is cost effective, and let's start to benchmark and measure all those things, including communication with the stakeholders, a lot of which has been happening. So I would be more than happy to share the report with you. We can give you the full report plus the condensed version. This is a part of a continuous improvement program. You can't put everything into effect immediately, but it is really just good housekeeping and utilizing a consultant rather than people in the house prevents what I call functional fixedness. Where you are doing the job all the time, you never can really see the forest for the trees. So it was a fresh approach and believe me, it was money well spent. Mr. Duncan. Well, let me ask you this just so I can learn a little bit more about this and understand it a little bit better. In this New Starts program, your agency has provided many billions over the past several years. It is your largest discretionary program, so you have a lot of power over it. It is rising to, I think, $1.8 billion roughly. Give me an example, and I assume you don't stay in the office all the time, that you have gone out there to see some of these projects. Give me an example of a--tell me a specific city and a specific program that you are proud of and what you think it has accomplished. Just give me an example. Mr. Simpson. This all precedes me. Fist of all, I want to say that I am proud of the entire workforce at FTA because I have been in the private sector and I have also been involved in the public sector for 10 years at the New York State Metropolitan Transportation Authority. It is almost unheard of to have over $22 billion in projects that you can manage within a half a percent. I mean it really doesn't happen in capital major infrastructure projects. But projects that I am particularly proud of was the T-REX project, which was the Denver project, which was the joint Federal highway. And a Federal transit project with the joint highway, joint FTA, one NEPA document that saved a ton of time, and the project, because of the way it was handled and the teamwork between Federal highway and FTA and the entire process and the good technical capacity of the folks out in Denver, the project was brought in on time and on budget. I am also proud of the fact that all the projects in Lower Manhattan that are $4.5 billion worth of work on in Lower Manhattan as a result of 9/11 are way underway with great FTA staff and great oversight from the IG's office, and everybody is looking at that model of risk assessment, where you have projects like Lower Manhattan, where you are actually across from the FTA's office in Lower Manhattan. They actually have to blow dynamite up while the city that never sleeps--they are actually using dynamite and they blew windows out on the new ferry terminal that we paid for. You don't project that kind of thing to happen. These the are the kinds of things that we are faced with. To be able to do these real major capital infrastructure projects, to bring them in on time, on budget, on schedule is a tremendous feat for the Federal Government and all the recipients. Mr. Duncan. Give me an example of one of the Small Starts projects that you have approved and how much you have provided and how much you are going to provide for it and what you think it is going to accomplish. Mr. Simpson. Fine. We have four---- Mr. Duncan. Just give me one example. Mr. Simpson. Well, they are BRTs. Actually we have one in Chairman DeFazio's area. It is going to be the second phase of a project from Springfield and Eugene. And the first phase has been up and running--this was not a Small Start project but it was a BRT and the second phase is going to be just like it. The first phase of the project, they spoke to the general manager last week. Ridership is up 60 percent over the local bus service that was there before because of this new BRT, which is catching on like wildfire. The second phase is in our New Starts pipeline and we expect--and it is 98.5 percent on time. It started at 96 percent on time. It is 98.5 percent scheduled on time and we expect the second phase of that project to be the same way. That is one of the four projects that are coming online. The second one is this gap closure in Los Angeles which is going to do so much for the area of Los Angeles to improve their existing transit system. So we have got four projects that are already in the 2008 budget and more in the pipeline. Mr. Duncan. All right, last question, because we need to get to Chairman Oberstar. Ms. Siggerud, in all your investigative work you have done into this program over the years, have you found any problems? I mean, for instance, over the years we have read many negative stories about the Big Dig project in Boston and so forth. Are there any--have you found any scandals, any problems? Ms. Siggerud. I would not say we have found scandals, Mr. Duncan. There have been projects up to say around 2000 and earlier that had been over cost and over budget. And we have reported on some of those and IG has also done some excellent work on those. I would say we have seen---- Mr. Duncan. All those are just up to 2000? Ms. Siggerud. Well, early 21st century, shall we say. I don't want to say that all the problems were solved at that time. Mr. Duncan. Mr. DeFazio's--Clinton Administration. Ms. Siggerud. That wasn't what I meant to say. But in general what we have seen is an improvement in timeliness and cost and in staying within cost estimates in this project. We have made a number of recommendations over the years. They have focused more on transparency, accountability, performance orientation than---- Mr. Duncan. Most of those recommendations have been accepted? Ms. Siggerud. Most of those recommendations have been accepted, yes. Mr. Duncan. Thank you very much. Mr. DeFazio. I recognize the chairman of the full committee. We are going to have one hour of votes so after the chairman finishes his questions, depending on time, we may have time for one other person. Other than that, if people--can the Administrator, can you be available? Mr. Simpson. Absolutely, positively. Mr. DeFazio. Ms. Siggerud? I apologize, but we don't control the floor. Mr. Chairman? Mr. Oberstar. Thank you very much. I really appreciate your holding this hearing, and the work of Mr. Duncan as well and the very thoughtful questions that he asked. And the reports that GAO has provided for us in your testimony, Mr. Simpson. When are we going to get a rulemaking on the New Starts and the Small Starts program? Mr. Simpson. Mr. Chairman, I hope that that rule is out within the month. Mr. Oberstar. By the end of May? Mr. Simpson. By the end of May. That is my hope. Mr. Oberstar. And meanwhile what troubles me is--I mean this--it is not all on your call, on your account, but it is 2 years since we got the bill enacted. It has taken a frustratingly long time to do this. But in the meanwhile FTA is administering this program on the cost effectiveness index, and what I have heard directly from various community transit agencies, and what our committee staff has gathered from a wider inquiry than I have been able to make, just my individual visits to various spots, is that FTA is giving undue weight to the cost effectiveness part of the index, and not to the broader benefits of transit. Why is that? Mr. Simpson. Mr. Chairman, you know even when I came to FTA and I started looking at cost effectiveness I had one view towards it until I got deeper involved into the whole composition of this cost effectiveness factor. It is akin to--I use this--I apologize because I used this example earlier. But this cost effectiveness factor--this is a competitive program and we obviously want to advance the best of the best, and we know that that changes from time to time. But it is very similar--if I could use the cost effectiveness measure as really, really the SAT score, one were to go to an Ivy League college, all the other measures, the qualitative stuff. So when we are trying to advance the national program and we are trying to have a level playing field for everybody, we need one objective, measurable criteria and this objective criteria is cross-cutting because it talks about operating efficiencies, it talks about mobility, it talks about accessibility. The other thing because the state of this cost effectiveness model, it brings into a whole host of benefits that would accrue. I will give you an example. If you had a bus service and we know people like rail as opposed to bus because you know where the tracks go and the stations are really nice and you have amenities like maybe you can buy coffee. Those things are now picked up as benefits and equated to time. The function of a transit project is to save people time first and relative to the cost that you are spending for it. The second part is all the benefits, those extra benefits that go along with it---- Mr. Oberstar. Are you calculating those? Mr. Simpson. Yes, we are absolutely. We are calculating that into the cost effectiveness model. But where I think that you are hearing some of these issues is that we are wrestling with and we are going to get there. I promise you we are going to get there with the economic development index. It is so closely aligned with land use that you can't have economic development without good land use, so we are measuring the land use. Mr. Oberstar. And that is the point I wanted to bring out. And I am glad you raised it. Where in the case of the Dallas Area Rapid Transit East, which is now underway, and West, which is completed, the West portion had 20 miles, now has a billion dollars in private sector capital investment clustered around the stops. Before they even put a shovel in the ground on DART East they had over $120 million in private sector capital investments announced and ready to go. Would that count in your cost effectiveness index? Going forward. Mr. Simpson. I don't want to be cute about this by saying yes and no. The way you expect it to be counted in the cost effectiveness, no. But when you look at the--but there is a deeper answer to that. In order for a transit project to have value, there has to be some mobile benefit to it. You have to get people from point A to point B, I don't think we could argue that more effectively by taking a bus or car or something like that. That mobility factor is measured in cost effectiveness. But I know what you are speaking of because we have spoken prior about this, is the economic development-land use factor. Yes, we capture it in land use and what the issue that is really on the table that we are wrestling with, that we know we are going to accomplish but it will take time, is the measure of economic development, which is more than land use because there are other macro issues that you really need to be involved with. What is the interest rate? What is the mortgage? What is the job force role? We can get there. It is just that we are not there yet, and we have asked them, the AMPRM for the industry, to come out and tell us what you would feel economic is relative to land use and all that. But for now they are inextricably linked. The goal is to have them detached so we can measure one and measure the other one. We are working towards that. We had one report that went out. We commissioned one study. We got the results back and we are looking towards a second phase, but we need to get this right. It is really complicated. We don't want to put something out on the street that it is so burdensome that it becomes like another forecasting model for cost effectiveness. Because that is what we are looking at and if you think we have problems now, it is really that way, and we are trying to streamline it. Mr. Oberstar. I appreciate it and you are in the midst and you are working toward it. We want to follow up on this and stay closely engaged in the future development. I want to close--maybe get one more member in. Regrettably Ms. Matsui went off to vote. Sacramento, which she represents, is one of the great examples of mobility on the South line, which is creating 2,210 new transit trips weekly. It provides transportation for people who didn't have transportation before to get them to jobs in the Hispanic, Asian, African American section of Sacramento. Enormous success. And now they are building on that success, moving to the next extension. Isn't that a mobility factor? Mr. Simpson. Absolutely positively. I met with the general manager from Sacramento about 2 weeks ago and they were very innovative. They took older light rail cars and had them refurbished and saved them a lot of money and they are looking for the next phase and they have a great hybrid bus program as well in Sacramento. Mr. Oberstar. Thank you. To be continued. Mr. DeFazio. We have 7 minutes left until the vote. Ms. Hirono will be next in order, if you would like to take a few minutes now and if we don't complete, you can come back. Ms. Hirono. Thank you, Mr. Chairman. In the interest of time, I would like your permission to submit a statement for the record and I would also like to submit three questions in writing to Mr. Simpson relating to the streamlining of the FTA approval process, and whether there are any caps on how much a New Start program can obtain. Thank you. Mr. DeFazio. Okay. That was very efficient. Mr. Simpson. Thank you. Mr. DeFazio. Okay. Without objection. We are now down to 6 minutes. So I think at this point--but I think we are going to reconsider the strategy since last night we fell into the parliamentary black hole during a motion to recommit. It took quite a while. We will go through the two 5-minute votes and then Mr. Duncan and I will come back and any one else who wishes to rush back. Then we will be able to proceed during the debate on the motion to recommit and through most of that vote. So that should give us a 20-minute block about in there. So we will at this point recess for approximately 15 minutes or so, or 20 minutes and then come back. And I thank you for your indulgence. Mr. Simpson. Thank you. [Recess.]RPTS BINGHAMDCMN MAGMER Mr. DeFazio. Hearing will come back to order. I will ask questions in the absence of other members at this point, out of turn. Again, further, Mr. Simpson, I am just pursuing you seemed a bit puzzled when I raised a question last time about user benefits. This is in a memo directed to you from the New Starts Working Group, and I am reading--this is a little long, but I will read it to you because maybe it perhaps makes the point a little more cogent than I do. In developing ridership calculations for projects, which is very important in determining the number of riders that would realize user benefits, FTA has chosen not to allow project sponsors--not to allow--project sponsors to include non- motorized trips while providing the highest time value of 4 minutes to auto trips to Park and Ride lots. Thus, FTA is promoting automobile travel while providing half the value to all other trips to the proposed project. This has the effect of discouraging the use of transit or the establishment of good land use and encouraging or discouraging development adjacent to transit that will result in automobile trips never being taken, the trip not taken. In the case of non-motorized trips, they receive no value from FTA, while the use of transit to connect to transit receives half the value of a Park and Ride trip. Question: Per the memo, shouldn't FTA be in the business of encouraging transit use for the person's entire trip? That is the point I was trying to make last time, which is if we get building adjacent to, say, streetcar, those people walk to the streetcar, that is of no value--no calculable value under the current scheme; and, in fact, it has a negative value. Because if all those people instead chose to live in the suburbs and drive to a Park and Ride, there would be more credit. Mr. Simpson. Mr. Chairman, you got me on that one. But that is a highly technical question. The short technical answer is that we want to make sure there is no double counting, but I would love to get back to you on the record on that because---- Mr. DeFazio. The problem with the TSUB calculation is, as I understand it, this is--you know, it is--I think it is a particular problem. It does go back to the issue of the criteria we want to encourage; and, hopefully, this would be an issue that would be substantially addressed in the new rulemaking that is upcoming. Absent other members, I am going to think of other questions to ask. I got back here very quickly. Look, we have questions for the GAO. I have been neglecting---- Ms. Siggerud. I will try to answer them. Mr. DeFazio. You thought you were going to get off easy. Over the years, GAO has made a number of recommendations to FTA on ways to improve the New Starts program. What types of improvements have you most recently recommended to FTA and how responsive has FTA been? Ms. Siggerud. Mr. DeFazio, in answering that, I am going to go back just a couple of years. I think those are the most relevant ones we have made under the later part of the TEA-21 authorization period. In 2004, we made a recommendation to FTA to be clear on what is the intent and the method for funding other projects outside of full funding grant agreements. FTA did respond to that and added an explanation and some criteria for that in the following year's report. In 2005, we recommended a couple of things. We did bring attention to the issue of the rating of the various criteria and the fact that some were not considered in the--rating annually of these projects; and SAFETEA-LU, of course, did respond to that. We also recommended that FTA look into a better way of communicating with its stakeholders as it made changes to the application process. We have gotten a lot of feedback from project sponsors that there was sort of a churn in the program in terms of every year new or different requirements without perhaps some consultation with the stakeholders that might have identified issues that resulted in different kinds of outcomes. SAFETEA-LU adopted notice and comment and FTA has gone through this notice and comment process every year when it wants to make changes to the application process. My sense from talking with both FTA and from project sponsors is that they see this as a significant improvement over past practice. So, in general, FTA has been quite responsive to the recommendations we have made. Mr. DeFazio. I now turn to the ranking member. Mr. Duncan. Well, just one more question. Administrator Simpson, do you have any New Starts funds for fiscal 2007, any New Starts programs that are going to be allocated to receive money? Mr. Simpson. Yes, the projects that are in the 2007 budget---- Mr. Duncan. I am sorry--for the Small Starts program. Mr. Simpson. No, not at this time. Not at this time. If we could maybe get an '08 project in sooner we will look at that. Mr. Duncan. Okay, well, thank you very much. Thank you, Mr. Chairman. Mr. DeFazio. There is one last question, unless other members show up, and I would direct this to both. But, first, Ms. Siggerud, you recommended that all--I would agree with this being a lawmaker--that the statutorily defined criteria be used to evaluate New Starts; and, obviously, currently, they are not. We have already had that discussion, and they are working out a rulemaking to achieve that. But focusing on an interim action that was taken in I think it was February where FTA announced they will no longer request information on either operating efficiencies or environmental benefits criteria, would you like to comment on that? Ms. Siggerud. Yes, Mr. DeFazio. My understanding of those two criteria is that, in fact, they have not historically been used---- Mr. DeFazio. They are statutorily required, is that correct? Ms. Siggerud. Yes, statutorily required and that this is, in fact, part of the rulemaking process. Of course, we haven't seen the proposed rules, so at this point I can't comment on how those are handled. What our recommendation was in the past is that either these criteria should be used or if they are in fact subsumed or related to a different criterion then there should be a crosswalk that makes transparent, for example, what the relationship of operating efficiency might be to, say, cost effectiveness or the other criteria. So that it becomes clear that all of them are addressed in some way, even if there are several criteria that are closely related to each other. Of course, until we see the new rulemaking, I am not sure how that will come out with regard to bringing in both operating efficiency and the economic development one that we have been talking about as well as the environmental benefits. Mr. DeFazio. And, again, just talking about statutorily defined criteria, you just mentioned economic development. I guess what would--have you looked at the issue of the bonus points for being partnered? Ms. Siggerud. We haven't looked at that. Mr. DeFazio. Sure. I was going to address this to both of them. Then we will go back. So I would address the same question--I mean, again, I congratulate you in streamlining, but I am not sure that eliminating consideration of statutorily required criteria constitutes what at least on my side I would think of as streamlining. I find it puzzling that we have been able to establish, you know, bonus points for a high priority of the administration, which is congestion management through a pricing program, but we haven't been able to either evaluate these criteria or get economic development on track. Mr. Simpson. Mr. Chairman, I understand your concern; and I will address them. You know, no good deed goes unpunished. The environmental benefits, we do capture the data; and if there is an unattainment area, one project would be rated a little higher than the other. But if you look at all the projects along the spectrum when you are competing, we have not been able to measure the differences from one transit project--the benefits from one transit project to another transit project. So they are all pretty much rated the same. So what we are saying is we still want the data you give us, but basically we are going to streamline it. Don't go through the calculation. We are going to call up the EPA, and we will take care of that for you. Then that annual report that you fill out every year, don't give it to us again. That is with respect to environmental benefits. Because we are looking in the context of a competitive program; and all of these transit projects have environmental benefits, obviously. With respect to operating efficiencies, once again, we are getting that data in cost effectiveness. We are getting the data that we need in cost effectiveness. So we are telling the folks that you need not report that data in that format, but that cost effectiveness measure does roll up operating efficiencies, so we are not getting anything extra from it. It is being measured, but if you just read the text it looks like it is really not being measured, but it is being measured in the cost-effectiveness equation. Mr. DeFazio. But because of some of the other problems in calculating pieces or your other cost-effectiveness measures, you might miss an operating--it seems like what you are weighting--you know, where does the operating efficiency weight in there versus some of these other more arbitrary measures in this kind of black box that we are getting into here? It is a bit troubling. I am hoping that the new proposal to meet the statutory criteria, particularly economic development, that can be expedited as much as is possible within the rulemaking context and that we have a much more transparent calculation that we can fully understand how things are weighted and what went into it. So that is just---- I turn to the ranking member. Mr. Duncan. I know we need to get to the next panel very quickly, and hopefully these will be two very brief questions. But, one, have you ever met with or discussed with the Army Corps all the process that they do go through in analyzing their projects, the cost-benefit analysis, the economic development? You know, they have been doing this type of work for years. Mr. Simpson. Actually, to my knowledge, the Army Corps of Engineers just recently reached out to us because they heard about our program and how effective it was with keeping projects on time and on budget. So thank you for that question. Is that allowed? Mr. Duncan. Secondly--I guess I think a little bit more highly of the Army Corps than the chairman does, but, at any rate, let me ask you this. The way I understand this, if a city wants to get into one of the programs, the New Starts or the Small Starts--and sometimes I say one when I mean the other I think--but, anyway, they have to file an application to get into the preliminary engineering phase. Now how long, on average, does that take? And then how long, on average, does the project take to go from preliminary engineering to the full fund and grant agreement, on average? Mr. Simpson. On average, once you are in preliminary engineering, it is 2 to 3 years in preliminary engineering and then final design and both--obviously, these numbers, depending on the complexity of the project, final design into construction is 3 to 7 years. Mr. Duncan. So 2 to 3 years in preliminary engineering stage. Mr. Simpson. Yeah. We are averaging for the whole process-- if you want to look at full funding grant agreements from PE to the agreement up to the time of construction, we are looking at about, on average, 4.9 years. Mr. Duncan. And it could take as long as 10 years then when you said that 3 to 6? Mr. Simpson. Yes, it could. It could take longer than that, and there is a whole host--Second Avenue subway is so complex, eastside access, also. Mr. Duncan. And it takes some time those for these cities to come up with the applications to again even get approval for the preliminary engineering phase. Mr. Simpson. That is the other side of the equation. A lot of time it is not FTA it is local communities that want to change scope midstream after they selected the locally preferred alternative. So we go back up. Mr. Duncan. On average, how long does that process usually take? Two or three years? Mr. Simpson. I can't tell you. But if you want to use an example--I hate to use examples, but it depends on how long the local grant recipient decides on what it is they want to do once they are in PE and also where they are going to get the commitment of funds. Mr. Duncan. The thing that gets me, I have gone into a lot of other countries and have led a lot of codels. I do go into these other countries, especially the Chinese and Japanese, and some of them, boy, I will tell you they can do these mega projects and, man, they move them in 2 or 3 years. It is just unbelievable. And then we take--I remember they said it took 14 years from conception to completion for the main runway at the Atlanta Airport, but it took only 99 days of actual construction, and they did those 99 days in 33 days because they were so happy to get the approval that they worked full 24-hour days with full staffs. But, my goodness, it seems to me we have to try to speed up these things or we are going to lose out in a lot of different ways to these other countries. Thank you, Mr. Chairman. Mr. DeFazio. I agree with the ranking member; and, in fact, in subsequent testimony we are going to hear from Roger Snoble points--and I guess I would ask the Administrator this. He talks about once the Record of Decision is issued, you know, normally an underlying Federal action can proceed. But he says, however, under the FTA New Starts process, there are additional new time-consuming post-Record of Decision steps and approvals that must occur before a grantee may actually commence design and construction--specifically, the often lengthy process of obtaining FTA's approval to enter final design and the detailed and time-consuming development of the FFGA package and the accompanying reports. Can you address this. Mr. Simpson. We are about all that streamlining. That is in the weeds once again. But once the Record of Decision is achieved to get to final design it is really about other things, plans for preliminary engineering, more scoping on where the costs are. The goal of the FTA is to--once the projects get into preliminary engineering, from that point we believe that we want them to succeed and to reach full funding grant agreement. And we are trying to do--I like to say the five Ps: Prior planning prevents poor performance. So, way before me, we realized let's not utilize taxpayers dollar and bring a lot of projects into PE if they have no chance of going anywhere. So we want to do a lot of that up-front work early from alternative analysis. Once they are in PE, they are on their way and let's get them so the--believe me, FTA wants to get them to the finish line as quickly as we can. And it is sort of like this balance, Mr. Chairman. On the one side, we are keeping projects on time and within a half percent on budget. I would rather be looking at you today talking to you about why is it taking somewhat longer. We want to improve what we can, rather than hear, why are we over by 50 percent? Why do we have big digs? So it is a constant struggle. We realize that. We truly do. And we are trying to maintain a good balance, and that is what good process management is all about. Mr. DeFazio. You definitely would hear about overruns to the tune of the big dig, any fraction thereof. I want to thank both of you for your testimony and time and appreciate it. Mr. Simpson. Thank you, Mr. Chairman. It was an honor to be here today. Look forward to the next hearing, sir. Ms. Siggerud. Thank you. STATEMENTS OF ROGER SNOBLE, CHIEF EXECUTIVE OFFICER, METROPOLITAN TRANSPORTATION AUTHORITY, LOS ANGELES, CALIFORNIA; GARY C. THOMAS, PRESIDENT/EXECUTIVE DIRECTOR, DALLAS AREA RAPID TRANSIT (DART), DALLAS, TEXAS; PETER VARGA, EXECUTIVE DIRECTOR, CHIEF EXECUTIVE OFFICER, INTERURBAN TRANSIT PARTNERSHIP (THE RAPID), GRAND RAPIDS, MICHIGAN; RICK GUSTAFSON, EXECUTIVE DIRECTOR/CHIEF OPERATING OFFICER, PORTLAND STREETCAR, INC., PORTLAND, OREGON; AND DAVID L. LEWIS, PH.D., SENIOR VICE PRESIDENT, HDR/HLB DECISION ECONOMICS, INC., SILVER SPRING, MARYLAND Mr. DeFazio. We can probably squeeze in two, if we move very quickly, at least one of the next witnesses. We have someone who needs to catch a plane who would like to go first, which would be Peter Varga. Peter, quickly assume a microphone; and we will move ahead. Don't worry about your name tag. We will figure out who you are. Mr. Varga, do you want to proceed? Go right ahead. Mr. Varga. Thank you, Chairman DeFazio, Ranking Member Duncan. I appreciate you taking me out. I didn't realize--I should allow myself more time in Washington if I am asked to come and provide testimony. I am Peter Varga. I am the CEO of the Interurban Transit Partnership, also known as The Rapid. We are a small system, not like these big guys here next to me. We operate 19 fixed bus routes and carry 7.4 million riders each year. Ridership has grown 43 percent since 2000. We were the AFTA Best Transit System recipient in 2004, and I know Mr. Snoble was in 2006. The Grand Rapids region began a study of MIS options early in 2003, so you can see how far back we started. We really were trying to get into the New Starts process, and we created a program called Great Transit, Grand Tomorrows which is community leaders to identify what the locally preferred alternative would be. We quickly shifted our focus to this new Small Starts program, since it provided the best opportunity for us to develop a transit project that was consistent with the scale of project most appropriate for a city like Grand Rapids. Two separate projects emerged out of that MIS: first, a 10 mile Bus Rapid Transit project from downtown Grand Rapids along Division Street south into two other cities and two townships. Then a second one is a downtown streetcar circulator of approximately 2.2 miles in length that will connect major destinations and trip generators downtown. And these two would feed into each other. However, only the BRT will be submitted under the very Small Starts program, while local and private sector funds are being sought for the downtown street circulator program. We have to take that program out of the whole Federal process because we are not going to be able to move it into any Very Small Starts process. You are very familiar with the Very Small Starts process. It is in my testimony. We meet all the criteria of that. Projects containing these characteristics, after preparing basic information on the project, would receive a medium rating on each of the principal criteria: cost effectiveness, land use, and effect on local economic development. In contrast, a streetcar project would be required to prepare information pursuant to a reduce New Starts process and would be subject to the current measure for cost effectiveness. Moreover, the effect of the project on economic development would be relegated to being considered an "other factor" and not given the same weight as the other criteria. The Grand Rapids region quickly concluded that under the FTA criteria for the Small Starts and Very Small Starts program that the greatest prospect for securing Federal funding would be realized by pursuing funding for the BRT project through the Very Small Starts program. Therefore, we have worked very closely with the FTA over the past several months as we developed the supporting documentation to seek FTA approval to advance the BRT project into the next phase--project development. I must say FTA has given us invaluable technical assistance through this process. The board of The Rapid approved the BRT project as its locally preferred alternative on January 24, 2007; and, 2 weeks ago, our NPO, the Grand Valley Metropolitan Council, approved unanimously the inclusion of the BRT project on the regional Transportation Improvement Program and the long range plan. We will be submitting our project information to FTA probably at the end of this month or in June and seeking approval to enter project development later this year. There continues to be considerable interest in a downtown streetcar project. However, a decision was made not to seek Small Starts funding because the project would not meet the eligibility criteria for the Very Small Starts program, based on the $60 million cost of the project and the fact that the Small Starts program, as implemented to date by FTA, does not establish a project approval framework that is favorable to streetcar projects. Thus, we will seek to build the project without Federal funding. You might ask why we believe the project would not fare well under the Small Starts program criteria. First, we understand the Small Start program to offer a simplified process, but the process established by FTA is essentially the existing New Starts project approval process which is very data and time intensive. Secondly, I understand it was the intent of Congress to place a greater emphasis on land use and the effect of a project on economic development, but FTA has opted to relegate economic development to an "other factor" and maintain the project approval process used for the New Starts program. It is our understanding that FTA has taken a position that Congress was not clear that cost effectiveness, land use and the effect of the project on economic development are to receive equal weight in the project review and evaluation process. Any legislative language or other directive to FTA to clarify your intent would be very helpful in reinforcing the change in the law made by Congress. Third, FTA continues to rely on a cost-effectiveness measure that places an emphasis on long distance trips and comparing options based on travel time which is not the transportation role for a streetcar project. Fourth, review of the fiscal year 2008 and proposed fiscal year 2009 guidance would indicate that FTA does not embrace streetcars based on the fact that project sponsors can't count pedestrian trips generated as a result of availability of the streetcar, the reluctance to develop and implement a measure for the effect of a project on economic development even as the statute requires the agency to do, and the lack of recognition of ability of a streetcar operating in a denser urban environment to eliminate auto trips due to its accessibility and availability. Thus, while we will proceed with the BRT project through the Very Small Starts program and we are very grateful that it now exists, we remain interested in a streetcar project and would seek Federal funding if the project review criteria were revised by FTA. We are going to have to do it through a public- private method locally, but, meanwhile, the BRT project, since it fits the Very Small Start criteria, will move that forward. I thank you for the opportunity to testify before the subcommittee today and to present our perspectives on the Small Starts or Very Small Starts program. Thank you. Mr. DeFazio. Okay. Thank you, Mr. Varga. I think you have really underlined some of the concerns that were raised in the earlier questioning; and, hopefully, the concerns you are raising here which underline those will be addressed in the forthcoming rulemaking. Because I believe the intent of Congress was quite clear that we wanted the pre-existing criteria to be equally rated, which they weren't; and we certainly wanted to include the new criteria, including economic development. You said it would be a $60 million cost. Did you have any calculation of the economic benefit that would accrue to that? Mr. Varga. Well, you know, we went around to look at different communities; and we believe that there is enough data to indicate that it could be almost 10 times the amount of the investment, at least in our area, in terms of development. The issue for us has to be with how much of the streetcar would be in existing development that has just grown in the downtown area and how much we can generate new development right at the fringe of the downtown area. But 10 times the value I think is what we were thinking. Mr. DeFazio. That seems like a fairly extraordinary cost- benefit ratio. But I guess under the TSUB process you come out on the inverse side, which would be, you know, a cost benefit that was rated rather low. Again, thank you. I understand you have to catch a plane, and I have to catch a vote, so we will recess this. I think there is one subsequent, probably 15 minutes, hopefully less. Thank you. [Recess.] Mr. DeFazio. Okay, committee will come back to order; and we will continue with the testimony. And you want to go from right to left, you like that? Okay, for a change, we will go from right to left. Mr. Snoble, you will be next. Mr. Snoble. Thank you, Mr. Chairman. It is a pleasure to be back in front of the committee this afternoon now to be able to testify on something that is really a very important topic to us, and I appreciate the opportunity. This is really an important issue. I have been working in transportation for more than 40 years now and have been involved in the construction and implementation of several major new fixed guideway projects in Los Angeles County as well as teaching Gary how to do it in DART before I left DART; and, before that, I was general manager of San Diego Transit Corporation. The LA Metro is largest agency of its kind in the United States, and that includes the operation of the third-largest public transit system in the country. We are responsible for transportation planning, coordination, design, construction operation of bus, subway, light rail, Bus Rapid Transit. We get involved with Caltrans and highway improvements. We build carpool lanes. We are involved in goods movements and all the different kinds of things that get into transportation issues. Metro serves a population base larger than 43 States in this country, with approximately 200 bus routes, 73 miles of rail lines, and over 400 miles of carpool lanes. First, let me start out by saying we are one of the approved Small Start projects for this year we have been talking about. We do see an improvement in that process. We worked very closely with FTA to try to make that an easier process, and so we do see some improvement there, and I want to make that clear. But mostly what I want to talk about is the New Starts. Over the past 25 years, Los Angeles has had one of the most ambitious and aggressive programs of new fixed guideway construction in the United States. During that time period, we have spent over $8.6 billion building nine new fixed guideway projects in Los Angeles County. Over 60 percent of that funding came from State and local sources. Metro has extensive experience with the FTA New Starts project development process. Four of our projects were built or are being built under the New Starts project, and five have been designed and constructed without Federal New Starts funding. The goals of the Federal New Starts process and the objectives of the congressional and the Department of Transportation efforts to develop evaluation criteria and a rating system for New Starts project are well intended as a matter of public policy. The FTA staff we deal with at both the Federal and regional level are very well qualified, very dedicated, very hard-working people; and we do appreciate their efforts. But the fundamental problem we see in the New Starts process is the unreasonably onerous process for grantees. In its efforts to exercise due diligence over Federal funds, FTA has developed a system so complex, so replete with reports and analyses and so fraught with delays and schedule uncertainties that it now obstructs one of the agency's fundamental goals to assist urban areas in building critically needed transit systems in a cost-effective manner. We have experienced firsthand significant differences between advancing a project under the Federal New Starts process and developing a project without that process. The most significant differences are in schedule and cost. We estimate that the Federal New Starts process can add 1 to 2 years to the project schedule. For example, on the Federally funded eastside project, Metro received a Record of Decision in June of 2002 and executed our full funding grant agreement 2 years later in June of 2004, which finally allowed us to start construction. By contrast, on the non-Federally funded exposition project, we received a Record of Decision in February of 2006 and actually started design and construction a month later, in March. Second, we estimate that the Federal process adds 10 to 15 percent overall costs to the project. This added cost has two elements. One is the significant soft costs, primarily the staff consultant time required to prepare and revise the extensive documents and reports required by FTA, consult and meet regularly with FTA staff and its consultants, submit New Starts reports, and the list goes on. In addition, there are escalated costs incurred simply because the engineering, design and construction takes longer under the Federal process. Even if escalation is relatively modest, at 5 percent per year, for example, the cost of a 1- year delay in a billion dollar project would be about $50 million in taxpayers' expense. One critical aspect of this comparison bears some emphasis here. We have found that the current level of Federal oversight has--we have not found it has any actual demonstrable yield in terms of project success or performance. Our Federal New Starts projects do not have a better record of being completed on time and within budget than our non-Federal projects. Nor am I aware of any empirical evidence on a nationwide basis that the ever- increasing levels and layers of Federal review have actually resulted in better-performing projects. The unfortunate fact is that, in the implementation of a New Starts project, one of the biggest risk factors has in fact become the Federal Government's well-intentioned but ineffective rule governing the New Starts process. However, I do have some suggestions for steps that can be taken to improve this; and I know that there is some efforts going on at FTA. In my written testimony, I go into a lot more detail, but let me just really quickly summarize them for you. First, we would like to see the New Starts program be improved by reducing the Federal due diligence role and making the local project sponsor responsible for its own risk assessment and related risk. The local sponsor really is the one that has the risk. The Federal Government caps their risk. Number two, the program can be improved by simplifying and streamlining the FTA evaluation and rating process. We talked about that a lot today, and we have some views on that as well. Number three, the New Starts program can be improved by FTA committing to a milestone schedule for its actions and approvals. Everybody else in the process has time frames. FTA does not. Four, we could improve the program by reducing the time between the issuance of the environmental Record of Decision and the start of design and construction. And, five, and one that I have preached forever, the program really needs more money. The intense competition really drives a lot of this, and if we had more money there would be-- the competition would be better to handle. That concludes my testimony. I will be happy to answer questions. Mr. DeFazio. Thank you, Mr. Snoble. Mr. DeFazio. Mr. Thomas. Mr. Thomas. Thank you, Chairman DeFazio. I appreciate the opportunity to appear before you today. My name is Gary Thomas. I am the President and Executive Director of Dallas Area Rapid Transit. I did have the good fortune to follow Mr. Snoble in Dallas, and I appreciate the groundwork that he laid. Also, on behalf of the board and the staff, I would like to take this opportunity to thank the north Texas delegation, especially Congressman Johnson, who was here earlier. Because of their exemplary leadership, their vision and unwavering support, we have been able to do a lot of things in north Texas relative to public transportation that no one, quite frankly, thought we would be able to do. DART started 24 years ago, in 1983. Thirteen cities voted to tax themselves an additional 1 percent sales tax, and that really is what started us down this path. In 1996, we opened our first light rail system; and today we run a system of buses, light rail, commuter rail, HOV lanes, carpool, Paratransit. Literally, at the end of the day, we have carried 330 to 350,000 people from point A to point B safely, efficiently and effectively. One of the more exciting things that is happening in Dallas is we have 45 miles of light rail currently on the ground and we are in the process of doubling that system. So by 2013 we will have 93 miles. In July--July 3rd, to be specific--this past summer--I think the only day that it rained in north Texas this past summer--we actually received our full funding grant agreement of $700 million. At the time, it was the second largest full- funded grant agreement the FTA had issued. It was a process. It was a team effort. We actually worked through that FTA process with the FTA as they were going through a lot of transitions, a lot of changes. So I guess you could kind of say we were the beta test case, and we all learned a lot from that process. As I said, we got that full-funded grant agreement in July. In August, we actually issued our first notice to proceed to our contractor; and just this past Tuesday our board approved the second construction contract for $467 million for the second phase of that project. Approaching it just a little bit differently than the design, bid, bill approach, we are actually using a modified construction manager at risk, a CM at risk. We call it our CMGC, construction manager general contract, approach, where we actually bring the contractor on early in the process. They work with us through the design process, and then we actually negotiate a guaranteed maximum price which helps us through that risk assessment process which, quite frankly, has helped us to circumnavigate the incredible increases in construction prices over the last 2 to 3 years. But most importantly what I would like to talk about is the transit-oriented development that has occurred around our stations. When we first opened our light rail starter system in 1996, we weren't thinking about transit-oriented development. Fortunately, there were some developers that were; and today we have some of the best examples of TOD around light rail stations in the entire country. As people saw what could happen around the station, as people saw what could develop and how you could take advantage of it--it is not just about moving people from point A to point B. Although that is our critical mission. It is also about congestion relief, it is also about air quality, which are certainly important, but people realize there is an economic value. There is an economic opportunity here. So as we started our next expansion to the other parts of Dallas and suburbs, we are interested in Plano and Garland. Those cities were working concurrently on their transit- oriented development as we were working on design and construction. Now as we are doubling the system, those cities are--the cities that we are going to now, Carrollton, Farmers Branch, Irving and other parts of Dallas, are way ahead of us. They already have stationary plans in place. They already have their designs, in some cases, in place. Today, actually, 2005, we commissioned a study and completed $3.3 billion worth of economic development around our stations at that point in time. Irving, which we are not even scheduled to open our light rail system until 2011 in phases 12 and 13, has already got $3.5 billion worth of economic development scheduled around our stations that we are planning to build in Irving. So economic development, transit area development becomes a key part of this whole process. As we have heard earlier, the TSUB number was what it was all about as we went through the process. That was the competitive deciding factor. We have talked at length with the FTA to work with experts, to work with agencies to quantify the land use and economic development benefits, with a focus on the undervalued property and the prospects of increasing the value of those properties as a surrogate for development potential. Actual commitments and adoption of land use actions to increase densities around stations should obviously be recognized as real measures of change that will benefit transit and reduce vehicle trips on our thoroughfares. With that, I conclude. I appreciate the opportunity and would be happy to answer any questions. Mr. DeFazio. Thank you. Mr. DeFazio. Mr. Gustafson. Mr. Gustafson. Thank you. Thank you, Chairman DeFazio and members of the committee. My name is Rick Gustafson. I am Executive Director of Portland Streetcar, Inc. It is a nonprofit corporation that contracts with the City of Portland to design, build, operate and maintain the Portland Streetcar system. The system was opened in 2001 without Federal funds, totally funded locally. It is 4 miles in length and handles over 3 million riders a year and has been a phenomenal success in the economic development of the central city. Over $2.8 billion of new development has occurred within 3 blocks of the streetcar line since it was announced in 1997. Next. Before we talk about Small Starts, I want to congratulate the committee on including language to establish a special grant for a prototype manufacturer by a U.S.-owned manufacturing company. This grant was made to the TriMET in Portland, and we participated--Portland Streetcar, Inc. has participated with them in selecting a manufacturer that is now under contract, Oregon Iron Works, expecting delivery of a car in 2008. This is a visionary in that the streetcar is a growing interest in the country, with over 80 cities studying streetcars; and potential for additional orders in this country are enormous. But penetrating that market--we had a similar situation in the middle '80s with no light rail systems, and now there are over 23 in the United States and over 2,500 cars delivered, not one by a U.S.-owned manufacturing company. We are hoping we can prevent that and return the U.S. to its dominance that it had in the early 1900s when the PCC car was the dominant manufactured car in the world, and with this effort and your leadership we have been able to start that process. Next. Portland has applied for a Small Starts grant under a project called the Portland Streetcar loop. The total cost is $152 million. It is an extension of our existing line connecting the entire central city and crossing a bridge and connecting the east side of our downtown. The Federal share would be limited to $75 million. We applied it on February 9th. We received approval from FTA on March 20th, and they notified Congress on April 16th. They have handled that very expeditiously, very efficiently, as you can see, in carrying our project through the initial application process. On April 26th, though, we did receive a letter from FTA indicating that, instead, we have an overall rating of medium but that we would be required to meet the cost-effectiveness criteria. Next. The current FTA cost-effectiveness criteria that is used for New Starts has been calculated both for our existing line and for the new proposed extension. The one we submitted to FTA, our Portland Streetcar loop, rated at $35.00 under the FTA criteria; and to reach a medium you have to get down to 22.99 not 22.49. Now there are new rules that are being issued, and we are working on those and waiting for those, and there seems to be some belief that we will be able to qualify. But it still leased the TSUB as, in essence, a trumping criteria so that no matter how high your rating is on land use or economic development you are still forced to reach a medium rating on the cost-effectiveness and TSUB rating. That is a major contention in our discussion. Because, in the case of the streetcar project, it has benefits that are far--that are not necessarily reflected in the current cost-effectiveness criteria outlined by FTA. Next. This is just a selected photo from Portland. It gives you an idea of what happens in economic development. The first in the foreground are townhouses and row houses which were the preference of developers in in-town development prior to experiencing a higher quality of transit access. You notice in--you can barely see, but the tracks are in the street. But some 10 years after that row house and townhouse project came, the streetcar was extended down to that end. The result was the new construction of the Strand, which is right behind it, the high-rise condominiums. Next. What we did was an economic study, before and after study in Portland. Before 1997, no streetcar on our corridor. The average density--the city is zoned for density, high density in central city--the average density was 30 percent that developer would build. Since 1997, the average that the developers have built along the streetcar line within 1 block has been 90 percent of the allowed density. We are experiencing the development that was actually planned. The reason for that is developer's confidence that with all of the amenities--and the streetcar is not the only one--but with the streetcar and higher quality of access they have the confidence they can build and sell a higher density product. Next. Probably the item that is missing the most in the criteria for cost effectiveness is really, as you change the land use type--we have done detailed analysis of travel behavior in the Portland area. Families that live in good transit/mixed use neighborhoods travel about 58 percent of their trips by automobile and walk to most of their destinations for 27 percent of their trips. You can see the difference between the Portland suburbs and the good transit/ mixed use environment. The net result is that families that live in a good transit/mixed use environment would travel 9.8 miles a day in vehicles, where the similar family--the same family--would travel 21.79 miles in the suburbs. The result for our existing current streetcar line is we have submitted 59 million fewer vehicle miles traveled in our roads than if those houses were located in the suburbs. The proposed streetcar loop that we have submitted has 28 million annual vehicle miles saved. These factors, easily calculable, part of a regional development, are part of what we are talking about in terms of combining that economic and land use as an important criteria in measuring effectiveness. Next. Last point that I would make is, in the reauthorization, the exempt projects were removed from eligibility, and two streetcar projects notably are very successful projects which would fall within that exempt category. The Seattle project, which opens in December, should be a very strong success, modeled very much after Portland; and Little Rock, which is already a very successful operation with one additional extension, also operated under the exempt project category. Next. The streetcar potential is high. There are 80 cities in the United States that are studying it. Portland is the first project to receive project development approval from the FTA. We believe there are many more that ought to be encouraged to apply. What I would urge you to do is to support establishing a U.S. manufacturer for streetcars, to require that change and continue the testimony you have had today on the cost- effectiveness criteria to reflect all of the transit benefits associated with these developments, to balance it with land use and economic development and restore the exempt projects. Thank you for the opportunity. Mr. DeFazio. Thank you. Mr. DeFazio. Dr. Lewis. Mr. Lewis. Good morning, Mr. Chairman. My name is David Lewis. I am the Senior Vice President and Chief Economist at HDR Decision Economics, a division of HDR Engineering. I would like to thank the subcommittee for inviting me to be here today. It is my purpose to try and place questions about the New Starts process in the broader context of economic value. The principal message I wish to leave with you is that, in not recognizing the full economic value of transit projects, the Federal response process creates a risk of underinvestment in transit and, hence, a risk of the marginalization of public transportation in American urban development. Whereas the New Starts process quantifies ridership as the principal source of benefit of New Starts projects, the economic benefits of transit actually fall into three categories: congestion management, mobility for transit users and community economic development. While all three are measurable, albeit with uncertainty, the New Starts program focuses on ridership alone, which is actually a sub-set of one of the three categories, that being the mobility category. Regarding congestion management, increased use of transit in lieu of automobiles can obviously lead to improved highway traffic flow, shorter highway travel times, reduced unpredictability, fewer total trips. Such benefits accrue to both automobile users and, I would add, to shippers of freight, to trucks. Whereas the benefits of highway capacity expansion and congested corridors can erode as new demand is induced to use the facility, my studies for FTA demonstrate that rail systems in congested highway corridors serve to stabilize roadway congestion in the face of population growth and land development. Regarding mobility, increased use of transit creates mobility benefits for all riders. For low-income individuals-- something we don't talk about enough I think--transit is often used in lieu of taxis and other higher-cost modes today, and it thereby liberates scarce household financial resources for more high-value uses such as shelter, nutrition and child care. Now, regarding economic development, transit does create statistically measurable economic value for communities, with benefits that extend to both transit users and non-users. This value is manifest in the increased land values and rents that is created by the demand for residential and commercial space in transit-oriented environments. Studies indicate that rail transit stations can yield in the range of $16 to $20 per square foot greater residential equity value for each foot closer a property is to the station. For San Francisco, for example, this means that the average home carries between 15 and $20,000 more equity value for each 1,000 feet it is closer to a BART station. For here in Washington, D.C., for the average-sized commercial property, we find that each 1,000 foot reduction in walking distance to a Metro rail station increases the value of a commercial property of that size by more than $70,000. For proposed New Starts and extensions, such as rail investments our proposals have recently evaluated in Minneapolis, Austin and Toronto, the cumulative projected effect of development of such projects in downtown and suburban economic development value is in the hundreds of millions of dollars. In fact, it is in the billions of dollars. I am only counting the part that is actually additive to the congestion benefit and the mobility benefit. That is to say, a portion of the increased development value associated with transit- oriented development actually represents the capitalization of time savings in the value of land, and that is already reflected in the measurement of congestion benefits. But transit also gives rise to urbanization and amenity effects that are valued by people who do not use transit, and that is what gives rise to the additivity of that urban economic development value and congestion and time-saving values. In short, the New Starts framework does not seek to determine whether projects are economically worthwhile but rather to rank them against one another as a basis for distributing a predetermined allocation of congressionally appropriated funds. Yet, without economic yardsticks, decisionmakers cannot ask how much transit investment is actually worthwhile, nor how transit projects stack up in relation to highway alternatives. Broadening the New Starts process to recognize the full economic value of transit proposals would help create a level playing field for urban transportation investment and elevate transit's status in resource allocation decisions accordingly. But this should not, in my view, be executed in such a way as to complicate the already long and involved New Starts procedure. I make the following recommendations: In addition to the benefits directly associated with ridership which FTA measures today, FTA should encourage localities to examine the congestion, mobility and economic development value of transit; and, furthermore, that FTA should recognize such values in Federal investment decisionmaking. Thank you, sir. Mr. DeFazio. Thank you, Doctor. I guess, sir, a general question to the entire panel. What do you think TSUB is really measuring? I mean, it seems to me it is kind of like a black box here. I still don't understand it. I have been trying. Can anyone explain it to me simply? Mr. Snoble. Mr. Chairman, if I might, the original intent was to try to come up with a score, and we have tried and worked with this many times, and it gets into the whole modeling exercise. And the modeling exercise works up to the point where you start to have to start to make assumptions, and then that is where it kind of falls apart, because you have to make these assumptions, and then different things happen based on those assumptions, plus the model has gotten very, very complicated. And when I started, and I started on a transportation study actually doing the field work, the transportation study in northern Ohio. The simple premise was so much land generates so many trips, and then you can go from there and divide them up. The model today is so complicated. It is kind of mind- boggling. We have a special Ph.D. on staff that just works on the model, works very closely with FTA staff. They have spent the last year and a half trying to get the model to the point where they all agree, and we think they finally did that just last week. So it is very complicated, but it just ends up being a score. And I think what you are hearing here is it really doesn't measure true ridership. For example, when we build a line in Los Angeles, we would like to very much extend the subway. If we went through this process, we would only count new riders to the subway even though that corridor today carries 80,000 boardings on the bus system today, and none of those would be counted because they are bus riders already in the system. You are not attracting that many more new ones, but you are sure accommodating our existing bus riders in a better way than they would in the bus that highly moves along Wilshire Boulevard. So it really doesn't recognize all your ridership, it just recognizes the new kinds of riders. And I think it is very important what you are hearing about the land use development, because when I started in transportation, it was a highway that created land development. The interstate system was just great at that time, and that was the only land-shaping tool we knew really worked. Well, now for the last 20 years, you have started to see where light rail and heavy rail can be a very big land-shaping tool. And Gary has talked about Dallas, which was one of my favorite examples because nobody thought it could happen in Dallas. It happens hugely in Los Angeles. We already have large densities we are fielding much more. We have $8 billion of economic development going on right now on our existing rail lines, and that is just a huge part. And as you have been hearing, there is so many benefits from that, by cutting down the lengths of trips, from eliminating the need for cars altogether, in many cases from accommodating work trips much better, from being able to encourage more pedestrian types of trips, and that kind of gets lost in the process, too. I think Congress was on the right track when it came up with different kinds of things, and we should go into the process, and we were part of that process, and we all agree that those are the kinds of things you should be looking at. And it has been hard to pull them all together into some kind of real consensus type of model. So what happens is some of those other things get looked at, but they aren't really part of the problem, because you are coming right back to the one-- the one number that really is the determining factor. So if we could come up with a simplified process that really is more comprehensive, I think that would be far more desirable. And I do have to say that working with the FTA and Small Starts, they have started to recognize that and started to look at these things much differently and much more effectively, because in the Rapid bus system it is much simpler; you know, you have lots of examples. In our case we will have 28 Rapid bus routes. Well, many of them have exactly the same profile. So it really isn't a huge question or a huge risk problem to go through that process. And it is pretty well self-described. So I think there is some efforts to make this a lot simpler. Mr. DeFazio. Okay. Anybody else want to address---- Mr. Thomas. Just very quickly. The TSUB number, generally there is a value associated with congestion, and I think the TSUB number, in my mind, tries to determine the value saved or the value of the time saving associated with the folks using the transit system. I think as we look back in history, though, when we first-- we had actually our first full-funding grant agreement on the last expansion in roughly 1997. There was a $333 million full- funding grant improvement, and by the way, we did come in under budget and ahead of schedule on that program. But the competition wasn't nearly as severe as it is now. And the process was just catching on. Of course, Portland was one of the leaders in the country, and we had had a few other examples where people were just starting to realize that we had to do something. We weren't going to be able to build enough roads to build our way out of this problem as we look forward. So then as we came into the next round of the process, all of a sudden the competition was much, much more severe. There were a lot more people throughout the country that were trying to figure it out. And my understanding was that the FTA was trying to figure out some objective measure that could look at that. You know, as you said, if you put everything into this black box and grind it up, it spits out that number, and as I said earlier, we were kind of part of that process, being ground up in that box as we went through. And Mr. Snoble said, the modeling became a challenge. Our Council of Governments was very, very progressive in their modeling efforts and looking at the modal splits on the different corridors that we were analyzing through our alternatives analysis. The challenge that we ran into is a lot of the other properties throughout the country weren't as aggressive and weren't as advanced in their modeling, so we actually had to slow down so a lot of folks could get caught up and everybody would be on the same footing, on the same page as we went through that process. And I will turn it over. Mr. Gustafson. Our criticism of the TSUB is simply that is too dependent on travel time savings. So it places too high a priority on the travel time savings issue. There are a lot of other benefits to transit besides that. So the model can--if it can be modified to reflect what we think are the broader base of benefits, and the streetcar project is part of that demonstration where we experienced 30 to 40 percent more ridership than a comparable bus line in the same corridor because it attracts riders for different reasons. And it isn't because of travel time savings, because the street car operates in the street with the same speed as a bus. Mr. DeFazio. Mr. Lewis? Mr. Lewis. I will give the economist answer. Mr. DeFazio. All right. Mr. Lewis. Just to say two points. One, I think it is fair to say that the process that--the cost, the FTA scoring process is a cost-effectiveness measure and as such does not pretend or set out, rightly or wrongly--and I think many would disagree, would say wrongly--but it does not set out to measure the economic value of the transit project. It sets out to compare an incoming set of proposals to one another in terms of what started out to be a convenient cost per unit of ridership index. That ridership has since been translated into time savings and a number of other--to try to reflect the metrics. But it is fundamentally not the kind of technique that the planning or economics community would--including FTA--would seek to adopt. It was trying to measure the net economic value and net benefits of the projects that were coming in. It is an attempt, rather, to score a fixed set of projects so as to allocate a fixed set of funds in the least bad way. It is not the only approach available. There is cost- benefit analysis that has been around for--well, since the Corps of Engineers started to make good use of it in the 1930s. In many ways it is a more transparent, more auditable framework, and a framework that is more amenable to local engagement, citizen engagement, in seeking to understand the values that one might wish to place on the effects of capital investment in public transportation. And within the cost-benefit analysis framework, the kind of things that we are worrying about today, economic development, congestion, and environmental benefits and so on, are all not without the risk of error, but they are all quite measurable. There is nothing avant-garde about it. It is--and we see in other countries, in Great Britain, in Canada, they don't call it the New Starts process, but the same investment problem is not done as a top-down, methodological, cost-effectiveness sorting problem, but as a bottom-up framework wherein cities that can bring the best value proposition to the table do two things. Collectively they identify how much public transportation appears to be worthwhile in total. And secondly, it helps national decisionmakers make decisions about Federal and national government grants. So we do see cost-benefit analysis in application in the U.K. and Canada. Mr. DeFazio. Yeah. I was puzzled earlier when the Administrator said that the Corps was consulting with FTA, because I am somewhat familiar with the Corps process, and I think it is a little bit more, I don't know--I understand it better than I understand--I don't understand T. Mr. Lewis. My understanding what the Administrator said was that the Corps comes to FTA to understand how they are doing risk management and assessing probability cost overruns. Mr. DeFazio. Okay. All right. Mr. Lewis. And FTA is doing a superb job. I have been involved in it, though I don't take credit for their superb job of bringing statistical probability into the means by which capital costs and schedule overruns are avoided, and the Corps is looking to learn from that. That is something that I, too, am aware of about the Corps, looking to those methods. I don't think the Corps was coming to FTA--well, I don't know, I wasn't privy to it. But from the answer, as I understood it---- Mr. DeFazio. Yeah. So we could either look at the British model, the Canadian model, or indigenously the Corps model, the cost-benefit, take the criteria which Congress has laid out statutorily, and you think we could construct a usable way to measure a cost-benefit? Mr. Gustafson. I do. I think it behooves--I think the process would be a bottom-up process; that that analysis would best be done, as it is in other countries, locally and audited and informed by the Federal Government. I think I would add insult to injury if I said let's just add another layer of complexity to the process, but, yes, I do believe that to be true, yes. Mr. DeFazio. Okay. All right. Well, that is helpful. Mrs. Napolitano, do you have some questions? Mrs. Napolitano. You bet. Thank you. Being fairly new to this subcommittee, there is a lot I am learning about in regard to the different programs that the FTA has, and this is one of them that really is going to be one that I can sink my teeth into, if you know what I mean, simply because my area--it is outside the city of Los Angeles, it is in the County of Los Angeles, and while, Mr. Snoble, MTA has great transportation, my area--I call it something of the L.A. County, which is not very nice to say in public, because I don't have the bus lines, I don't have the ability to move the masses that are within my jurisdiction. So programs like this would be great to be able to expand that service into the area. The green light stops at Norwalk, which is a far cry from the rest of my area. We have very, very little other kind of transit. I have congestion of 18 miles on the freeway that is polluting my whole area, and when there is an accident, people get off and go through the cities and congest the normal population there. It is a matter of environment, I mean, all these things that you talk about. We are recipients, unfortunately, of that bottleneck. And to be able to hear that some areas are benefiting, I need to maybe pick a little bit more brain onto how we are able then to move into an era where the smaller communities who don't have the ability to have the expertise to apply; and we have the Council of Governments, which you know about that, can go in and tell the Federal Government we are ready to do these things. But the funding then goes into other areas so that we are not the recipients of the ability to determine on our own our area, our own necessities, answers or our own solutions, if you will. So I am wondering whether those of you who have dealt with this--and I am reading some of the testimony that I received yesterday, but didn't have a chance to read today's because I got it here on committee--is the fact that it is perceived that utilizing the Federal money on this Small Starts program delays projects. How can we suggest to them what they need to do, how they need to do it, and how they need to expand this to those communities that can really benefit to move to protect, to provide safety, because it is a safety issue, too. One of my cities, Pico Rivera, not too long ago was the number one polluted city in the whole State of California in terms of exhaust. Well, that is not good news to the people who live there. So I am telling you because you may need to use that as an ability to say to the Federal Government, this is an added fact that we need to look at; there is a protection of the health of the people that we are going to try to help move this traffic along. What do you see, number one, that we need to tell the FTA on this program to be able to expedite the process in the funding, in looking at projects that really have merit based on many of the factors you are talking about, not just factors that are perceived necessary by the Federal Government? Mr. Snoble. If I may go first, Congresswoman Napolitano, probably Gary can talk a little bit because he has similar problems within the DART area because it has smaller cities as well. The last transportation bill actually started to make a very major step in coming up with these projects, Small Starts and now the Very Small Start projects, in recognition of the fact that there are other needs other than the big cities have. Like in Los Angeles we use New Starts moneys, those are really big, big projects. The Small Start actually gives us an opportunity to have smaller projects. We did apply, and we were approved in Los Angeles to be able to better improve our Rapid bus system. As you know, we are building a big Rapid bus system that--the buses move much faster going through the area. Mr. Napolitano. Excuse me, Mr. Snoble. That is in downtown L.A. And many other areas, not necessarily the area that I represent. Mr. Snoble. The Rapid bus program is of a lot of the county. It is more than just the city of Los Angeles. Mr. Napolitano. It goes to Pamona. I was at the opening, the grand opening, yes. Mr. Snoble. And we are about halfway through with the expansion. In another couple of years we will have 28 routes, and some of those will be in your area as well. But this money will then enable us to make those buses go through even faster by going to an intelligent transportation system and doing the kinds of things that will give us the priority for the bus on the streets. So that can make a big difference. And that was a first start. The other really big point that is important here that we are trying to make is that when we go through the Federal process, it costs us more for the project because there is so much red tape to it. If we didn't have that additional cost, or it was a much smaller amount---- Mrs. Napolitano. What is the recommendation, sir? Mr. Snoble. --the money would go much further. If we could simplify some of the process and the recommendations we have made and other people have made to make this process simpler to run and make it less onerous for the sponsors of the program so they can move much more quickly to actually get something built, because the longer you spread out the construction, the more costly it gets, and if we could accomplish some of those things, then we would have more money available to be able to go to other projects. Mrs. Napolitano. Understood. Mr. Snoble. Unfortunately the focus of MT has been mostly bus. I am looking at light rail, the expansion of the green line, other areas that are going to move the masses. And beyond that, doing a subway, a Metro, being able to move people from--and get them out of their cars to reduce the pollution we all talk about. To my freeways, we have 50,000 cars and trucks, or another 25,000 trucks a day. So pollution is one of the major factors that we are trying to ameliorate by allowing people options. Right now there are no options. I used to take a bus. I go to Alameda, which is about 7 minutes away. Somebody would drop me off. I would take a bus. It would take me 45 minutes to go 11 miles. I could get in my car and be there in 15 minutes. So that is not helpful for people who need to get to their jobs, to get to their offices, et cetera. And somehow we need to tell Small Start the way to address it is work with the Council of Governments besides the big cities to be able to assist them in making decisions that affect those smaller areas. And that is what I was trying to get to. What is the recommendation? What can we tell---- Mr. DeFazio. If the gentleman would briefly address this. She is well over her time. You can briefly address the question, and then we can turn to Mr. Poe. Mr. Snoble. Collectively we made a lot of different proposals to help FTA come up with a more streamlined model. Mr. DeFazio. I think a lot of this was the subject of the first panel, if I may, and the Administrator and the criteria and why people aren't applying for a subway, why they aren't applying for a streetcar, which go to the failures of the criteria more than--I think it may well be local jurisdictions need--are not applying because they just don't think they can match the criteria is what we--some of what we have heard. Mr. Poe had some questions. Mr. Poe. Thank you, Mr. Chairman. I will be brief. I would like to center my questions on--regarding DART, Mr. Thomas. I am very impressed with DART. I wish DART could encompass the Houston area. Much to the chagrin of Metro, DART seems to be doing everything right. And you are selling the project DART to the Dallas community very well. You know, we had resistance of Metro down there in Houston. The rail we have is 4 miles long. But my question is, according to your testimony, when you build it, they build around it, and it increases their property value. And the question I have is, you say you get private involvement in DART. What does that mean? Mr. Thomas. Thank you, Congressman. We do have a lot of economic development around our stations, and it is a combination. First of all, developers have realized that there is an opportunity to make money, and we want to help them make their money, but we also--what we are really looking for is that increased sales tax, increased property values, and increased ridership that benefits us. The other part of it is--is getting the city to understand that and making sure that they are removing any impediments from those development opportunities around the station. And then the third part is--and we have people on staff that actually facilitate that. In many cases we don't own the property, but we can help the developer and the city get together, and then we can help identify development types that really lend themselves to what works around the transit station and what does not work around the transit station. Now the third component of that, though, is that we do own a lot of property around some of our stations in the former parking lots, and initially when you build those stations, those parking lots may be 10, 12, 15, maybe even 20 acres of surface parking. At some point there is a higher and better use for that parking lot, and we have got to be able to recognize that. And at the same time that we are serving our customers' needs, we are also looking at how we can redevelop that property into a more useful development that, again, adds property taxes. As I mentioned earlier, we had $3.3 billion in transit- oriented development around our stations. That has produced-- through 2005 that has produced $78 million in annual property tax revenues, $40.6 million in retail sales tax income for the State, and then $6.5 million for our local municipalities in just those sales taxes. So it really does make a huge difference, and in our case, because we are so new in the transit world, a lot of our time is spent educating folks. Now, people are catching on pretty quick, certainly, but it is educating folks, making them understand, and then making sure that we have a development that serves our customers as well as the entire community. Mr. Poe. Well, you are to be congratulated, Mr. Thomas. Thank you, Mr. Chairman. I yield back my time. Mr. DeFazio. Thank you, Mr. Poe. I want to thank the panel. Thanks for your patience while we had the series of votes and interruptions. I hope we didn't delay your schedules too much, and you know we will be looking forward to you to helping us help the FTA move to a more transparent formula that better measures the benefits of transit, that promotes, you know, not just one sector because of a prejudice within the way they measure things. So thanks very much. Appreciate it. 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