Big News on U.S. Federal Transit Funding

Federal funding for transit projects will now consider their impacts on overall urban livability and sustainability, not just the cost-per-unit of time savings.

In a dramatic change from existing policy, U.S. Transportation Secretary Ray LaHood today proposed that new funding guidelines for major transit projects be based on livability issues such as economic development opportunities and environmental benefits, in addition to cost and time saved, which are currently the primary criteria.

In remarks at the Transportation Research Board annual meeting, the Secretary announced the Obama Administration’s plans to change how projects are selected to receive federal financial assistance in the Federal Transit Administration’s (FTA) New Starts and Small Starts programs. As part of this initiative, the FTA will immediately rescind budget restrictions issued by the Bush Administration in March of 2005 that focused primarily on how much a project shortened commute times in comparison to its cost.

Great news, perhaps, but I look forward to seeing how FTA is going to turn something as subjective as livability into a quantifiable measure that can be used to score projects, particularly since the payoffs lie in development that a proposed transit line might be expected to trigger, but that usually isn’t a sure thing at the point when you’re deciding to fund the line.  And of course, travel time does still matter.

Read the complete statement from Secretary of Transportation Ray LaHood below.

FTA 01-10
Wednesday, January 13, 2010
Contact:  Paul Griffo
Tel.:  (202) 366-4064

Obama Administration Proposes Major Public Transportation Policy Shift
to Highlight Livability
Changes Include Economic Development and Environmental Benefits

a dramatic change from existing policy, U.S. Transportation Secretary
Ray LaHood today proposed that new funding guidelines for major transit
projects be based on livability issues such as economic development
opportunities and environmental benefits, in addition to cost and time
saved, which are currently the primary criteria.

In remarks at
the Transportation Research Board annual meeting, the Secretary
announced the Obama Administration’s plans to change how projects are
selected to receive federal financial assistance in the Federal Transit
Administration’s (FTA) New Starts and Small Starts programs. As part of
this initiative, the FTA will immediately rescind budget restrictions
issued by the Bush Administration in March of 2005 that focused
primarily on how much a project shortened commute times in comparison
to its cost.

“Our new policy for selecting major transit
projects will work to promote livability rather than hinder it,” said
Secretary LaHood. “We want to base our decisions on how much transit
helps the environment, how much it improves development opportunities
and how it makes our communities better places to live.”

change will apply to how the Federal Transit Administration evaluates
major transit projects going forward. In making funding decisions, the
FTA will now evaluate the environmental, community and economic
development benefits provided by transit projects, as well as the
congestion relief benefits from such projects.

“This new
approach will help us do a much better job of aligning our priorities
and values with our transit investments” said FTA Administrator Peter
Rogoff. “No longer will we ignore the many benefits that accrue to our
environment and our communities when we build or expand rail and bus
rapid transit systems.”

FTA will soon initiate a separate
rulemaking process, inviting public comment on ways to appropriately
measure all the benefits that result from such investments.

23 Responses to Big News on U.S. Federal Transit Funding

  1. CroMagnon January 13, 2010 at 10:49 pm #

    I’m admittedly a bit concerned. While there were issues with the old cost-effectiveness system, the travel time savings was by far the best and most valid mechanism the Feds had.
    Now it sounds like the FTA coud be in the business of paying for vanity trolley systems or urban beautfication projects that might be all well and good, but not have a transportation benefit. And that doesn’t make sense for the transporation dept. of the Feds to be paying projects are really about urban development.
    The main problems with TEA-3 and SAFETEA-LU cost-effectiveness standards:
    -low defacto match from Congress, something like $700 M in recent years. This limited a full match on projects less than about $1.2 B which was detrimental to high cost (grade-seperated projects
    -limit of 60% match. Law limted to 80%, but policy was basically limited to 60%
    -thresholds too strict. It was nearly impossible to get a good rating without cutting corners on most projects
    -too sensitive to input changes. Small changes in costs or benefits could move the rating wildly. This had the effect of making the CE value prone to fudgery in whatever why the transit agencies could get away with.
    -too project oriented. The system required every project, even those in proposed complex systems to be CE. Unfortunately, the early segments of systems are often the most expensive and aren’t CE, but are amoritized over time as the system is built out. Even minimum operaable segments (MOS) had to meet the same guidelines
    -problem with definition of Baseline (Transportation Systems Management) alternative. Agencies and FTA had trouble defining “the best that could be done” without a new guideway. Unfortunately, very expensive TSM’s could would skewer the low-cost alternatives as the most CE, which in some cases were the only way any alternative could be become CE, even if their benefits were weak and the impacts high.
    -bias against grade-seperation. The negative impacts of not counting loss of travel times of auto, peds, and other transit were apparently not necessarily counted against alternatives with some form of street operation.
    -bias against long-lived, usually expensive projects. The seemingly non-scientifically justified economic practice of discounting the value of money at around 7% was and is a severe bias against expensive heavy rail projects, that would be MORE cost-effective, were this discount not applied. The tide may be changing as the economic impact of global warming has lead some economist to apply a 0% discount rate.
    My hope is that these new stardards allow high-quality, though more expensive grade-seperated transit projects to compete. But I get an inkling that it might just make the easy, cosmetic, but low value streetcar and light rail projects proliferate at a faster rate (because, ya know, politicians prefer rail over bus…..)

  2. Pantheon January 14, 2010 at 2:41 am #

    Jarrett, I’m not so sure this is such great news. I am reserving judgment. If I’m not mistaken, the Portland Streetcar did not qualify for federal funding because it didn’t meet the conventional criteria, which caused great indignation amongst the Portland politicians.
    Allow me to provide what I think is an accurate translation from bureacracy-speak to a language we can all understand.
    Bureacracy-speak: “New funding guidelines for major transit projects [will] be based on livability issues such as economic development opportunities and environmental benefits”.
    Translation: “We’re going to build a bunch of pointless downtown streetcar loops, no matter how slow and useless they may be!”
    God help us, Obama is drinking the streetcar Kool-Aid too.

  3. Danny January 14, 2010 at 5:46 am #

    So instead of objective criteria, which at the very least can insure a small level of fairness, we are now going by subjective and undefinable criteria like “Livability”, which are subject to change with every new urbanist fad that comes along. Sure, Jane Jacobs is alot closer to our current views than Robert Moses…but she is still pretty far away from the current thinking. And heaven forbid the idea of livability from a suburban 1950’s mindset, where you just couldn’t live if you didn’t have a front yard AND a back yard.
    This isn’t good news. This is one more reason why I think public transportation funding should come from the states and cities themselves. A tax is a tax they say, but not when I have to pay for California’s boondoggles as well as everybody else’s boondoggles.

  4. John January 14, 2010 at 7:19 am #

    If development impact is considered, does this mean that the fastest growing cities will receive funding more easily? Older Midwest and Northeast cities with roughly 0% population growth might have trouble scoring any points in this category.

  5. Ed O January 14, 2010 at 8:26 am #

    The term “livability” is a bit vague, but livability issues like noise and pollution are not. I think this policy change is a step in the right direction – but it doesn’t quite go far enough. Any new transit infrastructure proposal seeking federal funding must come as a package with associated commitments to implement landuse planning changes, parking control measures and travel demand initiatives that will drive the success of the transit line/s – to ensure that the project will deliver sustainability outcomes – in whatever objective ways you want to measure that (vmt, mode share, urban containment, pollution, social equality, environmental footprint etc).
    The previous postings on Portland highlighted this issue to a certain extent. How many billions have been spent on MAX and what have been the outcomes over the years?
    I’m also starting to get a sense that if a city or state goes through the pain of funding and building a rail system all by itself (because it really really needs one) then there’s likely to be a greater motivation to drive value out of the investment. If a city has risked a lot to build a rail line, then it’s going to take those steps (eg forcing population and employment growth around stations and restricting car parking) to make sure the line is well used, costs are recovered, and promised benefits are delivered. It’s perfectly natural for the Feds to start thinking along the same lines.
    It’s incredible to think that currently so much money can be given to cities to build transit systems (using “objective criteria”), where there seems to be no real intention of altering the car-dependent status quo. Is that a fair and effective allocation of taxpayers’ money set aside for this purpose?

  6. EngineerScotty January 14, 2010 at 10:42 am #

    What is needed, first and foremost, is similar standards applied to highways. The Feds practically assume that a highway project (one that doesn’t contain bright red flags in its EIS) is a public good; road projects don’t need to pass through a similar hurdle at all.
    Some of the standards that seem to be proposed–no funding for rail unless you simultaneously make it more difficult for motorists–are good in principle, but in practice may well result in no transit being built at all–were construction of light rail to go hand-in-hand with restrictions on driving, in many places that would simply result in a backlash against light rail.
    The debates in this thread, along with the good-old bus-vs-rail, all stem from the same problem: The pie is too small, and many different transit advocates with different goals wind up fighting for the crumbs, while the auto folks get to dine on four-layer wedding cake. I’d rather see more energy spent on increasing the funds available to transit, rather than engaging in continuing arguments about streetcar vs commuter rail vs LRT vs subway vs local bus vs BRT vs whatever–many of which get wrapped up in social issues irrelevant to mobility.
    I guess one change I WOULD like to see, if it isn’t there already, is a limitation on the guesses of new ridership due to redevelopment. While I’m not categorically opposed to TOD, especially when it doesn’t involve gentrification of existing neighborhoods, I do question the practice of building lines to nowhere in the hopes that said line will turn such places into somewhere. The best examples of TOD seem to occur when nowhere is on the way to somewhere else, so a vibrant transit service is possible even if planned development does not occur.
    Regarding MAX–what would have been the outcomes had MAX not been built at all? Or if something else had been built in its stead? It’s an interesting question, of course–but given that MAX has 100k+ boardings per day, it’s not unreasonable to suspect that Portland’s transit share would be significantly lower without it.

  7. CroMagnon January 14, 2010 at 9:03 pm #

    Some of the scoop: Cost-effectiveness will go from 50% of Project Justification to 20%. Other criteria will increase in importance. Also a below par rating will not necessarily disqualify a project.
    So this could be good for the higher performing, grade-separated projects. We’ll see.

  8. Alon Levy January 15, 2010 at 2:55 am #

    the travel time savings was by far the best and most valid mechanism the Feds had.
    No, cost per rider would be a far better mechanism.
    I’m going to say here what I said on TTP: travel time per day is essentially constant. Longer commutes trade off with shorter shopping trips. The exceptions are a couple of very long-commute areas in the nether region between city and suburb, such as Staten Island and chunks of LA: bedroom communities underserved by transit but too dense for free-flowing driving. Those areas deserve special consideration for transit’s role in reducing commute time. Anywhere else doesn’t – faster commutes would just lead people to move further out.

  9. CroMagnon January 15, 2010 at 8:01 am #

    ^Don’t agree. Decreasing time spent traveling increases productivity and economic output, because one can do more than one did before the new transit.
    As far as spreading people out, that would tend not to happen if the project was designed to serve existing highly developed areas, and avoided stations on the urban fringe. Zoning can prevent that, too, although it can be hard to implement effectively.
    If it’s not about time savings than what really is the point? The most that could be done would be operating efficiencies of rail over bus at high loads. To build simply to reduce traffic congestion leads to your earlier assumption that people will simply move farther out, b/c, of course, it takes less time to move more distance.
    When you say cost per rider, do you mean new rider or all riders? Cost per new rider bias strongly against existing high patronage regions. Cost per all riders doesn’t really mean anything, b/c it doesn’t quantify work performed. It also doesn’t take into account an agency fudging things so that many people ride, but are forced to make their trips inconveniently longer and more indirect than it would other wise take.

  10. Danny January 15, 2010 at 9:37 am #

    ^Disagree. Decreasing time spent traveling is much more likely to increase leisure time than increase productive time.
    If its not about time savings, it is about cost effectiveness. We have to consider the reality that transit funds are limited. If we funnel resources to the places that reduce travel time the most, we ultimately are limiting resources spent on systems which can help the most amount of people.

  11. CroMagnon January 15, 2010 at 9:52 am #

    Danny, I don’t understand what you are saying. Cost-effectiveness is quotient or the ratio of costs to benefits. Benefit is time savings. Leisure time is productive time to somebody somewhere. What other advantages are there to building a new transit line beyond agency operating efficiencies, aesthetics, and pollution reduction? The first doesn’t benefit riders directly. Aesthetics are often worsened with things like cat wires and such. And using hybrid or CNG buses might reduce pollution more than rail if loads aren’t that high.
    If transit funds are limited, build less of high-benefit system than build an entire system immediately that doesn’t do much.

  12. JJ January 15, 2010 at 10:45 am #

    Correct me if I’m wrong, but previously New Starts and Small Starts projects had a high weight toward congestion relief. Because congestion often happens at peak periods and along freeway corridors into and out of cities, essentially transit projects were seen as adding capacity or making a band-aid for commuters who still wanted to live in suburbia. This created many projects that were commuter focused rather than improving actual mobility and livability within cities. Lets hope the new criteria help work better with land use patterns to create better transit networks before congestion problems arise, as opposed to after.

  13. CroMagnon January 15, 2010 at 11:43 am #

    JJ, this was not the case. In fact, the opposite tended to be the case, b/c the formula didn’t always appear to take into account delays as a result of mixed-traffic type operations, or those that reduced heavily utilized road capacity.
    I basically recounted what I believe the problems to be in the first response at the top. But, essentially, the formula was very agnostic: incremental unit cost per incremental unit or user benefit. The definition of the Baseline alternative created problems b/c the Baseline values were required to be subtracted from the Build values, not the No Build. More often than not, this had a side effect of making the cheapest Build alternative the most CE.
    But what is livability? Again, beyond being able to stay alive, I’m not sure of an appropriate term. It’s becoming like a buzz word, like “sustainable” (or worse, “more sustainable”, either somethings sustainable or it’s not!)
    Where access remains unchaged between a Build and a No Build, mobility is the same thing as time savings.

  14. jarbury January 17, 2010 at 1:11 am #

    I think this is a step in the right direction too. Time-savings benefits are not the “objective panacea” that some seem to be claiming. A recent study in Melbourne showed that the massive amount of money spent on freeway building over the past decade or so hadn’t actually achieved any of its supposed benefits.
    Prominent UK academic David Metz also takes issue with them:
    It seems to me as though the biggest problem with time-savings benefits is that they often ignore induced demand. If you widen a motorway, you’ll probably reduce congestion for a while, but the induced demand that widening creates is likely to mean that any benefits will disappear fairly quickly. I mean heck, most cities in the world are just as congested now as they were a few decades ago. Where did all those time-savings benefits go?????

  15. Jarrett at January 17, 2010 at 2:24 am #

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    @ Joshua.  I completely agree with the induced demand hypothesis, and it explains why building radial roadways accomplishes little.  But if a public transport project achieves time savings, and induces more patronage, how is that a problem?

  16. Alon Levy January 17, 2010 at 3:29 am #

    Jarrett, it’s not a problem that a public transportation project achieves time savings; it’s a problem that it’s considered the main goal. By the same Smeed-type law that prevents freeway widening from reducing commute time, improving transit speed (which is really the CEI is about) doesn’t reduce travel time.
    CroMagnon, the reduced commute time doesn’t show in increased productivity or increased leisure time – it shows in increased travel time elsewhere. There are benefits to riders from this, but it’s hard to quantify them based on commute time saved. For example, the effect of being more productive in transit is real, but it depends on which mode of transportation the passenger was attracted from. Ultimately, the extent of service, i.e. benefits, boils down to how many people choose to use it, not to how long they used to drive to work.

  17. Jarrett at January 17, 2010 at 3:55 am #

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    Alon, when I was first involved in transit issues in the 80s, the cost-effectiveness index was about "cost per new rider".  In other words, it was all about ridership projections.  The travel time factor was added to capture the fact that new projects also improved the lives of existing riders, which should be worth something.
    I'm not sure I follow how saving travel time is not a good thing, regardless of what I do with the time saved.  Do you just mean that it's making it easy for me to move further out of the city, and thus consume more of the PT resource?

  18. jarbury January 17, 2010 at 11:14 pm #

    Jarrett, I think the important point about public transport projects is that just because a project doesn’t necessarily lead to time-savings benefits, that doesn’t mean it’s not a worthwhile project. There are other important factors to consider – the wider issues that are mentioned here.
    One of the largest “benefits” accrued to public transport projects here in New Zealand are time savings benefits to those driving, because a new public transport project will supposedly shift people away from driving, freeing up more room on the road for everyone else. Because of induced demand I don’t really know whether this “benefit” is real or not.
    I think that often the biggest benefits of transportation projects are really really difficult to measure – like secondary economic benefits (often called agglomeration benefits).
    At the moment here in Auckland we’re desperately trying to get a CBD Rail Tunnel built to turn our main station into a through-station increasing its capacity, while also having additional stations in the CBD. The benefits of this project are pretty hard to measure, even though it seems pretty obvious. Allowing an increase in services will allow for future expansion of the rail network and future improvements in frequencies – but how do you measure the benefit of “this allows us to develop the network further in the future?” as a dollar benefit? Furthermore, it is likely that the rail tunnel will spur a lot of development within parts of the CBD that currently have very poor rail access – but how do you accurately measure that benefit?
    Clearly transportation projects benefit cities. But I think we have a long way to go in accurately measuring those benefits. Time-savings seems incredibly crude. Perhaps if we want to measure what time-savings supposedly does, we should be looking at ways of measuring “improved accessibility”. In the article I posted above by Metz, he says that commute times have remained constant for decades (some have said for centuries), we just travel further as transport technologies improve. That’s an obvious benefit, but it’s not a time-savings benefit.

  19. Jarrett at January 17, 2010 at 11:42 pm #

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    Joshua.  I agree.  But that suggests that what we should be measuring is "percentage of the city brought within a fixed travel distance" by transit imporovement.  That's what the walkscore graphic that I discussed here is measuring:
    You could potentially bring redevelopment benefits of transit under the same metric, although the problem with those remains how you measure things that aren't yet built, particularly when so much of the analysis around any future development is essentially a game of poker between the developer and the planning authority.

  20. jarbury January 18, 2010 at 12:38 am #

    I certainly agree that “percentage of the city brought within a fixed travel distance” is a better measure than time-savings benefits. I guess that really they’re two sides of the same coin, but improved accessibility seems real – whereas time savings benefits doesn’t.
    Of course, induced demand would still affect that for measuring roading projects, as the mobility would reduce as congestion increases. This is where public transport shows its true advantages, as generally induced demand is a good thing and means more commercial viable services as patronage is higher – rather than hugely congested roads as usage increases.
    I really do think that the ignorance of induced demand has a huge role to play in roading getting such a big chunk of the transport budget. This is particularly the case in NZ where our government’s transportation policy is stuck in the 1960s.

  21. Alon Levy January 18, 2010 at 5:57 pm #

    Alon, when I was first involved in transit issues in the 80s, the cost-effectiveness index was about “cost per new rider”. In other words, it was all about ridership projections.

    If I’m not mistaken, this metric measures cost per rider diverted from driving, and ignores the rider diverted from taking a slow, unreliable bus. Overall, regular-bus riders are likelier than rail riders or BRT riders to switch to cars in the future, when their income increases, so “We now made sure that the 10% of our metro area that takes transit will still take transit 20 years from now” is a good metric.

    I’m not sure I follow how saving travel time is not a good thing, regardless of what I do with the time saved. Do you just mean that it’s making it easy for me to move further out of the city, and thus consume more of the PT resource?

    Yes, pretty much.

  22. Jarrett at January 19, 2010 at 2:28 pm #

    @ Alon. The “cost per new rider” was per new rider attracted to transit. Passengers switching from buses didn’t count, but people who formerly walked or drove or cycled all did.

  23. Placemaking Institute January 20, 2010 at 12:05 pm #

    According to the theory proposed by Samuel Bass Warner in “Streetcar Suburbs: The Process of Growth in Boston, 1870-1900”, it wasn’t the time savings that led to people moving farther from city centers but the fact that, over time, the cost of transit declines with more overall usage.