Prioritization of Public Transportation Investments: A Guide for Decision-Makers (2021)

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10 C H A P T E R 2 2.1 The Inuence of Funding, Policy, and Regulations Federal, state, and local funding arrangements, policies, and regulations structure transit investment decision-making, including the roles and prioritization processes of transit agen- cies, MPOs, and state DOTs. Taking stock of this context, while also recognizing what may be unique to individual regions and states, is an important rst step to establishing and improving transit prioritization processes. Transit Prioritization Is Inuenced by Different Funding Sources for Operations and Capital Projects In 2018, funding to public transit from all sources totaled over $74 billion, with about 70% ($52.3 billion) for operating expenses and 30% ($22.0 billion) for capital expenses (APTA 2020). Figure 6 presents the breakdown of public transit funding by source in 2018. • Non-federal and non-state revenues. Passenger fares and other income (e.g., concessions, advertising, etc.) and local government assistance (i.e., non-state and non-federal revenues) accounted for over 60% of total transit funding and nearly 70% of funding for oper- ating expenses. Decisions regarding these funding sources are gener- ally considered within the purview of transit agencies themselves, even when their ability to generate these revenues may require state- level enabling legislation. • Federal and state revenues. Federal revenues constituted 16.5% of total public transit funding but almost 40% of funding for capital expenses, with another 15.1% of capital funding coming from state assistance. States typically mandate how state funding can be used, with specic apportionments for operating and capital expendi- tures. As with local funds, the specic activities and projects that are implemented with state funds are generally determined by the transit agency with minimal input from MPOs and state DOTs. All transit projects for which FTA funds (e.g., Sections 5307, 5337, and 5339, etc.) are expected to be used and that are within metropolitan planning boundaries must be included in a scally constrained transportation improvement program (TIP) developed and approved by the MPO and the governor of a state. e TIP must be included in a statewide transportation improve- ment plan (STIP) that has been approved by FTA and FHWA. Projects listed in the TIP must be consistent with the MPO’s long-range transportation plan (or metropolitan transportation plan) addressing no less than a 20-year planning horizon. e same federal requirements apply Understanding Your Situation While passenger fares are a major source of transit agency operating funds, they are not typically applied to capital budgets. Conversely, federal assistance comprises a large share of transit capital spending but supports a relatively small amount of operating budgets.

Understanding Your Situation 11   to FHWA funds that are used to advance transit investments such as the Surface Transporta- tion Block Grant Program (STBGP) and Congestion Mitigation and Air Quality Improvement Program (CMAQ). Given the level of involvement of MPOs and state DOTs in project evalu- ation and selection (including when FHWA funds are programmed for public transportation projects and programs), public transit agencies can feel that they are “operating in a highway world” (FTA and APTA 2018). In general, there is some stratication in how dierent funding types are used for dierent types of public transit investments. Transit agencies tend to emphasize the SGR in their ongoing investments, typically use federal funds primarily for capital expenditures, and may go directly to the public via ballot initiatives or referendums for system expansion. at said, the actual practice of public transportation decision-making varies considerably, with prioritization processes happening both within public transit “silos” in some regions or states and in a more multimodal, integrated fashion in others. Policy and Regulations Support Interagency Cooperation and an Increasing Performance Orientation, but Practices Vary Federal regulations governing planning processes for federal funding require some form of cooperation between public transit agencies and MPOs and state DOTs. e Code of Federal Regulations Title 23 Part 450.314 requires the development of written agreements between MPOs, states, and providers of public transportation that determine their mutual responsibilities in carrying out the metropolitan trans- portation planning process. ere is additional coordination required of state DOTs in non-metropolitan areas per Code of Federal Regula- tions Title 23 Part 450.208. Even in cases where transit agencies receive federal funds directly (rather than through a state DOT), they still must adhere to all requirements for working with MPOs and state DOTs. Regardless of these requirements, the way in which MPOs, state DOTs, and transit agencies coordinate the planning and programming of federal funds is unique to each metropolitan area and state. Source: (APTA 2020). 36.0% 25.4% 32.6% 48.7% 37.4% 22.7% 15.1% 20.5% 8.6% 36.2% 16.8% O perating Capital Total Passenger Fares and O ther Local Plus Directly G enerated Assistance State Assistance Federal Assistance Figure 6. Transit funding by source, 2018. Local funds cover the bulk of transit operating funds. Decisions about how to spend these funds are generally considered the purview of transit agencies to continue delivering service. Capital funds, on the other hand, have a large federal share governed by Long Range Transportation Plans (LRTPs) and TIPs/STIPs. These funds are more likely to be evaluated and prioritized by MPOs and DOTs in a multimodal context, including through the use of formal scoring and ranking processes.

12 Prioritization of Public Transportation Investments: A Guide for Decision-Makers Beyond the eligibility requirements associated with transit funding programs, the MAP-21 and FAST Acts also include major transportation performance management requirements. The final Transit Asset Management (TAM) rule came into effect in 2016 and established minimum requirements for transit asset management for all recipients of federal transit funding. This rule requires public transportation providers to develop and implement TAM plans. These plans must include an asset inventory, condition assessments of inventoried assets, and a prioritized list of investments to improve SGR for capital assets. The rule stipulates four SGR performance measures for grant recipients and requires agen- cies to set performance targets based on these measures (FTA 2021). These measures reflect the percent of assets below SGR in four categories: rolling stock, equipment, facilities, and infrastructure. In 2018, FTA also published the Public Transportation Agency Safety Plan (PTASP) Final Rule, which requires certain transit agencies to develop safety plans that include the processes and procedures to implement Safety Management Systems (SMS). ese safety plans must include safety performance targets based on safety performance measures set by the National Public Transportation Safety Plan. ese measures include fatalities, injuries, safety events, and system reliability. e rule applies to all transit agencies that are recipients and sub-recipients of federal nancial assistance under the Urbanized Area Formula Program. Both of these federal requirements speak to the increased orientation toward performance measurement and manage- ment in transit planning and operations nationally. 2.2 The Importance of Program Denition Transportation agencies, including transit agencies, MPOs, and state DOTs, oen dene program categories (where a program is a collection of projects grouped by type) that serve as the organizing structure for the allocation of funds to specic uses. Program de- nitions may reect sources of funding, high-level investment goals, historic patterns of investment across the transportation system, or geographic dierentiation. ese denitions, by determining how projects are compared to one another, are as important to the priori- tization of funding as the selection of decision criteria within a given program category. Like investment prioritization practices more broadly, program denitions dier across agencies. ere is wide variability in the level of discretion enjoyed by individual agencies in establishing and dening programs. Some are subject to legislatively set program areas and evaluation criteria, while other agencies have more exibility to develop their approaches in consultation with their governing boards and stakeholders. Furthermore, prioritization may be executed with or without preset funding levels or funding allocation percentage targets across program areas. In the case of transit investment prioritization relative to other modes, both siloed and cross-modal approaches can be applied. Separating transit projects from highway projects, for example, can enable the denition of specic objectives and measures, factor weights, and other parameters that can all be tailored to best address transit projects. In some cases, a prioritization process may separate transit projects from non-transit projects entirely to ensure a minimum level of investment is made in transit (or in some subcategory such as SGR). Whether or not this approach enhances or inhibits the prioritization of transit projects depends on the allocation of funds to that transit-specic program. ere is the risk for such an approach to reproduce historical patterns of investment, including those weighted more Program definitions determine how projects are compared to one another and are as important to the prioritization of funding as the selection of decision criteria within a given program category.

Understanding Your Situation 13   toward highways. Increasingly, agencies look to dene objectives and measures that facilitate direct comparisons between projects with dierent modes, within a single program. is latter type of approach seeks not to presuppose a modal mix, but rather evaluate projects based on their performance, regardless of mode. Table 2 summarizes examples of funding program categorization schemes identied during the practitioner interview process, each of which inuences the structure of prioritization processes. By Transit Asset Type Description: Division of funding according to asset classes like track, stations, facilities, vehicles, and signals, or by asset age or class. Chicago Transit Authority (CTA) Example: To make decisions about SGR funds, CTA considers their total asset base and relative investment needs based on their mix of assets by age, condition, and type. The transit agency distributes funding across asset classes to avoid allocating the entire program to a single large purchase. By Mode and Funding Description: Division of capital funds by mode, with specific targets or other processes to ensure funds are allocated to each mode. North Carolina DOT (NCDOT) Example: NCDOT’s Strategic Prioritization Office of Transportation (SPOT) is required by law to prioritize funding across six modes of transportation. North Carolina has three funding tiers (statewide, regional impact, and division needs); transit is not eligible to compete in the statewide tier, which receives the largest share of funding among the three tiers. For the regional impact and division needs tiers, NCDOT sets minimum funding levels for highway (90%) and non-highway (4%) projects. These percentages are based on historic spending and leave room for some limited flexing of funding between modes. Genesee County Metropolitan Planning Commission (GCMPC) Example: GCMPC, the MPO for the Flint-Genesee County Area in Michigan, noted that specific modal percentages help agencies like theirs begin to identify how much money to spend on various modes. By setting clear funding expectations to set budgets against, this approach helps agencies form partnerships rather than adversarial relationships. By Type of Transit Capital Project Description: Program definition by transit project type to support balanced prioritization and recognition of different goals. NCDOT Example: NCDOT’s SPOT office has divided transit projects into three categories: mobility (i.e., investment in vehicles and transit service), demand response projects, and facility projects (e.g., passenger stations, bundled bus stops, admin/maintenance buildings, and park-and-ride lots). Atlanta-Region Transit Link Authority (ATL) Example: The ATL uses a multicriteria framework with measures weighted differently according to project category: expansion, enhancement, or SGR. Massachusetts Bay Transportation Authority (MBTA) Example: The MBTA prioritizes capital expenditures by category: reliability (top priority), modernization (second priority), and expansion (third priority). Virginia Department of Rail and Public Transportation (DRPT) Example: Virginia DRPT’s MERIT (Making Efficient and Responsible Investments in Transit) prioritization process organizes project applications into three categories: SGR, minor enhancements (≤$2M or ≤5 vehicles or ≤5% of fleet size), and major expansions (>$2M or >5 vehicles or >5% of fleet size). A maximum of 20% of the funds for a given year goes to major expansions. On average, approximately 75% of the funds cover SGR, and major and minor expansions split the remaining 25%. Table 2. Funding program denitions identied through practitioner interviews. Funding programs can be dened in several ways, including: • Transit asset type • Mode and Funding source • Type of transit capital project The choice of funding catego- rization scheme can greatly influence the structure of prioritization processes.

14 Prioritization of Public Transportation Investments: A Guide for Decision-Makers 2.3 Impacts of the Decision-Making Context e decision-making context also inuences the relative emphasis of dierent goals and the resources involved in setting investment priorities. For any transportation agency with inuence over transit prioritization, it is important to consider factors such as the decisions the priori- tization process should inform, the time frame of the analysis, and the communities and other government agencies involved. ese factors drive investment objectives, impact what data are available, and determine many other aspects of the process. Impacts of Geographic Context and Historic Investment Patterns When it comes to transit investment prioritization, geography matters. Factors like population density and the historic presence of rail assets aect public expectations and project feasibility. For example, levels of concern regarding crowding of public transit vehicles versus transit utilization or coverage vary by the level of urbanization in the community served. Denser urban areas are more likely to be concerned with congestion and reliability eects—a consideration that may mani- fest in a diering selection of criteria. Similarly, legacy rail cities, such as Chicago and Boston, have dierent dynamics for deciding between investing in highway and transit proj- ects compared to newer cities like Salt Lake City or Omaha that grew at a time when the personal automobile was more dominant. In legacy rail cities, maintaining existing public transportation assets is more likely to be a top priority, while other metropolitan areas may place greater emphasis on public transit service expansion. is dichotomy may also shi over time; in its rst regional plan (in 2019), the ATL (the newly established regional coordinating entity for transit in the Atlanta region) evaluated $18.9 billion of transit expansion projects and only $4.1 billion in SGR, but ATL representatives expect that this mix will shi over time as new projects come online. Multi-Level Prioritization and Jurisdictional Complexity Transit investments may be prioritized through comparisons across projects conducted at multiple levels of governance. ese may include: • Within a transit agency. • Within an MPO for metropolitan regions or other local or regional entities such as a regional transportation planning organization (RTPO) outside of metropolitan areas. • Within a statewide process implemented by a state DOT. In the case of competitive grants, transit projects are also subject to evaluation and prioritiza- tion by FTA. States and regions approach multi-level prioritization processes in a range of ways. In some places, transit agencies, MPOs, and state DOTs may each have their own criteria-based invest- ment prioritization frameworks. In others, MPOs may largely accept the recommendations of transit agencies regarding the allocation of transit funds, and then state DOTs may do the same with MPO-designated priorities. State-level practices and policies can drive dierences in processes and programming between MPOs from dierent states. In practice, there are many types of prioritization processes for coordinating between levels of governance and varying levels of formality. Contextual factors inuencing transit decision-making include: • Community size • Level of urbanization • Agency resources • Funding sources • Historic legacy of investment patterns • Interagency relationships

Understanding Your Situation 15   e NCDOT SPOT process, for example, includes specic mechanisms for scoring local input across many local jurisdictions, including MPOs and regional planning organizations. In regional multimodal frameworks, transit agencies work with MPOs, municipalities, and other transit agencies to coordinate priorities and the programming of projects. In the Chicago area, multiple transit agencies and the MPO coordinate to provide sucient local match for federally funded projects. In less populous metropolitan areas, MPOs are oen tasked with prioritizing smaller budgets representing fewer transit agencies and/or municipal governments. is can translate into processes that emphasize ongoing collaboration with less formalization. e state DOT may also have a greater role in MPO decision-making in less populous metros. In designing an investment prioritization approach, decision- makers should consider not only their own internal goals, funding, and purview, but also how their prioritization process interacts with partners at other levels of the funding allocation process. In addition to the structure of multi-level prioritization processes, available agency sta and analytical resources can also dictate the intri- cacy of feasible prioritization approaches. While these factors can pose constraints for any transit agency, MPO, or state DOT, they tend to be particularly salient for smaller agencies. In addition, regional or state- wide agencies may face another limitation to analytical complexity regardless of their sta size and analytical resources if they are respon- sible for aggregating information from many transit agencies and jurisdictional project sponsors. For example, the ATL scores projects from transit agencies and localities that have signicant diversity in their internal analytical capacity and size. To accommodate this diversity, in some categories (such as reliability and safety), the ATL’s rst regional transit plan scores projects based on the presence of specic project elements rather than on quantitative forecasts of perfor- mance impacts. In designing an investment prioritization approach, decision-makers should consider not only their own internal agency goals, funding, and purview, but also how this interacts with partners at other levels of the funding allocation process.