Yesterday President Obama, Vice President Biden and Secretary LaHood released
the strategic plan for allocating the $8 billion in passenger rail
funding provided in the American Recovery and Reinvestment Act. The plan
also gives insight into the process for project funding going forward
(with a planned $1 billion investment per year over five years).
Three key aspects of the report
1) Funding Approach (beginning on page 12). The document outlines a tiered approach for 1. projects that can receive full ARRA funding – key aspects of this tier are highlighted below); 2. corridor programs that will involve a series of projects to develop over time, some of which may be funded by ARRA; and 3. longer-term planning (which will not qualify for ARRA funding, at least in the first rounds);
2) Prerequisites (page 14). Prerequisites for applicants include demonstrating planning and project development; securing stakeholder agreements; and having a solid financial plan, including ridership forecasts and commitment to operating expenses); and
3) Selection Criteria (beginning on page 15). General criteria for selection are explained, mainly in keeping with overall ARRA funding requirements, and notes that further guidance will be provided in the upcoming guidance, due to be issued by mid-June).
The due date for the first round of applications is tentatively scheduled for August.
1) Give priority to state passenger rail projects based on longevity of plan development;
2) Assist in developing corridors that have regional/multistate significance and benefits; and
3) Provide funding for both states that are initiating corridor development for faster/new service and those that are further along in corridor improvement.
The MIPRC also asked that multiple states receive ARRA funding, to both jump-start passenger rail development and stimulate the economy.
A copy of the response letter we received can be viewed here.
Below are the three sections from the report highlighted above. Additional information can also be found at http://www.fra.dot.gov/us/content/31.
From Vision for High-Speed Rail in America:
1) Funding Approach
DOT’s implementation of the $8 billion HSR/IPR program must recognize these realities [that states have had little time to prepare for a federal matching program for intercity passenger rail] while meeting the goals of ARRA, and at the same time, the strategy must help advance the longer-term goal of developing a national HSR/IPR network of corridors. In order to meet these diverse constraints, our strategy establishes three approaches, or “tracks,” for funding under ARRA and annual appropriations:
1. Projects. Grants to complete individual projects eligible under Sections 301 (IPR projects) and Sections 302 (congestion projects) described above, for the benefit of existing services 25. Eligible projects include infrastructure, facilities and equipment. In order to qualify, these projects must: (a) be “ready to go” (i.e., environmental work required by law (National Environmental Policy Act, or NEPA) and preliminary engineering (PE) are complete)26and (b) demonstrate “independent utility.”27 For projects that meet the independent utility test but have not yet completed NEPA and PE, funding is available to conduct NEPA and PE work to make projects ready to go and, therefore, eligible under a subsequent grant solicitation. For rolling stock proposals, DOT will encourage acquisition of new, standardized, interoperable equipment that incorporates modern safety features.28 Under this track, funds would be obligated for successful applications under standard grant agreement terms and conditions, including ARRA oversight and reporting procedures.
2. Corridor programs. Cooperative agreements to develop entire segments or phases of corridor programs eligible under Section 501 (HSR) and Section 301 (IPR), benefiting existing or new services. In order to qualify, these corridor programs must: (a) be based on a corridor plan that establishes service objectives and includes a prioritized list of projects to achieve those objectives;29 and (b) have completed sufficient corridor/section/phase programmatic or project environmental (NEPA) documentation and sufficient planning to provide reasonable project cost and benefit estimates. For corridor programs that do not qualify under (a) and (b) above, funding is available to complete this work and make corridor programs eligible for subsequent solicitations. Under this track, funds for selected applications of a corridor program phase and/or geographic section would be set aside at the outset, and provided at pre-specified milestone approval points. This approach would involve a higher level of Federal oversight and support than under even the heightened scrutiny inherent in standard ARRA grant agreements.
3. Planning. Cooperative agreements for planning activities (including development of corridor plans and State Rail Plans) eligible for funding under Section 301 of PRIIA, using non-ARRA funds. This third track provides States an opportunity to prepare themselves for any funding remaining in subsequent rounds of ARRA, and/or future year appropriations. It is intended to help create the pipeline for future corridor development needed to build out a national HSR/IPR network.
24As described in the Legislative Foundation section above, State rail planning is not eligible for funding under ARRA. 25Project eligibility for Section 301 funding provided under ARRA is limited by the statute to include only construction and rehabilitation projects as defined in 49 U.S.C. § 24401(2)(A) and (B), thus excluding both state rail planning projects (under 49 U.S.C. § 24401(2)(C)) and liability costs (under 49 U.S.C. § 24401(2)(D)).26 Environmental documentation to comply with the National Environmental Policy Act and related laws require completion of preliminary engineering design sufficient to evaluate environmental effects.27Independent utility” means the project is usable and provides benefits even if no additional transportation improvements in the area are made. 28DOT plans to work with stakeholders to develop a process for facilitating this rolling stock approach. 29Corridor plans are an integrated set of studies that address: travel demand forecasts, existing rail line conditions, conceptual engineering, forecasts of future rail operations and simulation modeling, rail service plans, capital and operating financial plans, and a funding plan.
Applications for project or program funding (i.e., tracks (1) and (2), respectively) will need to address several elements critical to the success of high-speed rail and intercity passenger rail programs and projects. The scope and specificity of each depends on stage of development (e.g., final design/engineering, construction) and the application track (i.e., corridor program vs. project), but all applications will need to address these prerequisites in some fashion. Prerequisites include:
· Planning and Project Development. Although the State rail planning requirements of PRIIA are waived, applicants must demonstrate that their project or corridor program: (a) is consistent with any overall plan for developing the corridor, segment of the corridor or terminal area; (b) has “independent utility” – that is, can achieve benefits regardless of whether other complimentary projects are implemented; and (c) addresses all safety and other regulatory requirements. Projects will need to have PE and environmental work completed before construction can be approved.30
· Stakeholder Agreements. Applicants will need to have in place, or describe clearly how they will reach, written agreements to clarify roles and responsibilities and to ensure project success with: (a) other States involved in the corridor; (b) the infrastructure owners/host railroads; (c) the operator of the proposed service; and (d) any other stakeholders critical to project success. For corridor program applications, DOT strongly recommends reaching “master agreements” to cover the delivery of projects (in phases if relevant) over the course of the corridor development process.
· Financial Plan. Applicants will need to provide operating financial forecasts, based upon a rigorous approach to estimating ridership/revenue and operating and maintenance costs, and identify how they will cover operating losses, if any. The operating expenses funding proposal should identify any existing legislative commitments and/or a previous record of covering operating costs of intercity passenger rail services, recognizing that the role of the Federal Government under ARRA and PRIIA is to provide capital funding. The plan should also detail project capital costs, how they were estimated, and whether any non-Federal sources of funding will be included.
30 PE and NEPA are eligible expenses under ARRA HSR/IPR grants; planning is not eligible under ARRA, but is eligible under FY 2009 appropriations IPR grants.
As the President’s March 20 memo [Ensuring Responsible Spending of Recovery Act Funds] specified, project selection criteria are intended to advance projects that deliver programmatic results, achieve economic stimulus, achieve long-term public benefits, and satisfy transparency and accountability objectives. In order to ensure these objectives are met, HSR/IPR grant applications will be evaluated based on the following criteria, which will be detailed further in the upcoming guidance:
Achieving Public Benefits. The extent to which the project or corridor program provides specific, measurable, achievable benefits in a timely and cost-effective manner in relation to public sector and Federal investment costs. Applications will be evaluated on how well their project or corridor program:
• Contributes to economic recovery efforts by creating and/or saving jobs.
• Advances the President’s strategic transportation goals to ensure safe and efficient transportation choices, build a foundation for economic competitiveness, promote energy efficiency and environmental quality, and support interconnected livable communities.
• Furthers other high-speed and intercity passenger rail goals outlined above and in PRIIA.
Mitigating Risks. Applications will be evaluated on the extent to which their project or corridor program addresses critical success factors (i.e., mitigates risk factors), including the approaches and procedures used to meet the prerequisites (listed above):
• Fiscal and institutional capacity to carry out and manage the project.
• Financial projections and plans to cover cost.
• Commitments from key stakeholders, including, notably, other States involved in the corridor, and the host railroads that own any existing required rail infrastructure.
• Experience and procedures for managing project financial, management, and construction risks.
Other Criteria. Other key considerations include:
• Timeliness of achieving benefits.
• Sufficiency of the reporting and management approach.
• Completeness and quality of the application.