new starts/small starts program apta annual meeting san diego, ca october 4, 2008
TRANSCRIPT
New Starts/Small Starts Program
APTA Annual MeetingAPTA Annual MeetingSan Diego, CASan Diego, CA
October 4, 2008October 4, 2008
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Purpose of Session
Increase your understanding of the New and Small Starts programs by:
• Describing key elements of the program (bureaucratic stuff)
• Providing the unbureaucratic program principles• Provide responses to comments we’ve heard
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Topics
• Overview of the Program • New/Small Starts Project Planning &
Development• New/Small Starts Evaluation and Funding• Outreach
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FTA Aspirations the Program
• Goal: Fund meritorious projects
• Management objectives:– Make decisions with
reliable information on project benefits and costs
– Treat all projects equitably across the US
– Facilitate communication between FTA, transit industry and Congress
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Long-standing Legislative Requirements for Funding
• Alternative analysis• Cost effectiveness• Local financial commitment
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Eligibility: New Starts
• New fixed guideway systems and extensions • New Starts funding > $75M or costs ≥ $250m• Fixed guideway is established by any of the
following characteristics:– Rail; – Separate right-of-way for the use of public
transportation or high occupancy vehicles; or – Catenary
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Eligibility: Small Starts
• Cost criteria– Total cost <$250 million– Small Starts share < $75 million
• Scope criteria– Project has a fixed guideway for 50 percent or more of its
length during peak periods, or– Non-fixed guideway project in a corridor including ALL of the
following:- Significant transit stations- Traffic signal priority or pre-emption- Low floor buses or level boarding- Premium service branding- 10 min peak/15 min off-peak headways at least 14 hours a
day
“Exempt” projects exist only until a new rule is published
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Eligibility: Very Small Starts
• Small Starts criteria for cost and scope• Plus additional eligibility criteria:
– Total cost under $50 million– Cost per mile < $3 million per mile, excluding rolling
stock– (Existing weekday riders over 3,000)
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Key Program Principles
• Information for evaluations must properly reflect costs and benefits of the project - THIS IS HARD!
• FTA evaluations are mode-neutral• Purpose of each project development phase
should be accomplished before progressing to the next
• Projects accepted into PE/PD are worthy of funding
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Principle: Proper Identification of Project Benefits and Costs
Identify benefits of project realized by its infrastructure, not benefits related to: – Land use– Parking costs– Transit service frequencies and coverage– Transit fare– Transit service levels outside study corridor– Highway networks
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Principle: Mode-neutral
• Credit ridership attractiveness to those attributes that riders value – performance matters, not mode per se
• Credit likelihood of economic development to those factors associated with it: developability of land, economic climate, plans and policies and accessibility.
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Principle: Accomplish Purpose of Development Phase Before Progressing
• Systems planning: corridor identification• Alternatives analysis: mode and alignment• PE: final scope/cost, completion of NEPA,
financial plan commitments• Final design: construction documents
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Principle: Projects Accepted into PE/PD Are Worthy of Funding
Alternatives analysis is sufficiently robust to minimize uncertainties that affect:
• Alignment or mode• Capital cost• Transportation benefits• Financial plan• Others that could significantly affect project
viability
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New Starts/Small Starts Funding: Supply and Demand
• Demand:– 18 New Starts projects in PE and Final Design– 16 Small Starts projects in PD– Total cost of pipeline: >$22.6 billion, $10.3 billion in
New Starts funding– FTA tracking >100 planning studies considering major
transit capital investments
• Annual funding– New Starts: $1.4+ billion – Small Starts: $200 million
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SAFETEA-LU Provisions Supporting Good Planning Estimates
• Before and After Study– Required for both New Starts and Small Starts project – compares
cost and ridership forecasts with actual numbers 2 years after revenue operations begins
• Before and After Study Report– Required annually to Congress documenting results of B&A studies
• Contractor Performance Assessment Report– Required annually to Congress citing contractor forecasts
• Incentives awards – Allows more federal funding if actual ridership is at least 90% and
cost no more than 110% of forecasts made during alternatives analysis
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FTA
Senate AuthorizingMajority/Minority
Senate AppropriationsMajority/Minority
House AuthorizingMajority/Minority
House AppropriationsMajority/Minority
Office of the Secretary OMB
White House
The New/Small Starts Environment
Individual Senate and House Members
150Projects15 FFGAs, 34 FD/PE/PD, 100 AA
InspectorGeneral
Govt Accountability
Office
Press
New Starts Planning and Project Development
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New Starts Project Development Process
• Project Development: Typically 6-12 Years
Alternatives Analysis 1-2 years
Preliminary Engineering
2-3 years 3-7 years
Operation
FTA Approval Required for
Full Funding Grant Agreement (FFGA)
~ 100 AA Studies
12 PE Projects
6 FD Projects
FTA Approval Required
FTA Approval Required
15 FFGA Projects
ConstructionFinal Design
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Key Decisions for Each Phase of Project Development
• Systems planning: priority corridor• Alternatives analysis: mode and alignment• Preliminary engineering: final scope/cost,
completion of NEPA, financial plan• Final design: construction documents• Full Funding Grant Agreement
– FTA: funding– Project sponsor: delivery of the project
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Planning and Project Development
Alternatives Analysis
Preliminary Engineering
Select LPA
FTA Approval to Start PE
FTA Approval to Start Final Design
System Planning
Decisions
• Mode, general alignment• Financial plan
Decisions
• Needs• Policies• Priority corridor(s)
Decisions
• Refinements to LPA• Final scope and cost• Complete NEPA• Implement financial plan
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Alternatives Analysis:Guiding Principles
• Information on costs, benefits and impacts of alternatives results in better decisionmaking by local and federal officials
• Given its importance, information needs to be reliable with frank disclosure of uncertainties
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Alternatives Analysis: Key Elements
• Identification of corridor problems, project “purpose and need,” and goals and objectives
• Development of a range of alternatives that address causes of transportation problems
• Analysis of costs, benefits, and impacts of alternatives• Refinement of Alternatives• Evaluation of alternatives
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Useful FTA Reviews during AA
• Scope of work• Initiation package• Technical framework• Technical results• Final report (AA report or AA/DEIS)
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Preliminary Engineering: Key Elements
Work necessary to develop a firm scope and cost estimate with appropriate contingencies: Finalize station locations and configuration Yard and shop location Alignment Park and ride size and configuration Number of vehicles and peak capacity needs
Work necessary to complete the environmental requirements
Work necessary to firm up funding commitments
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What is a Full Funding Grant Agreement (FFGA)?
• Formal Agreement signed by FTA and Grantee that includes:– Project Scope, Budget, and Schedule– Terms and Conditions of Federal Participation– Multi-year Funding Commitment (subject to
Congressional Appropriations)– Cap on New Starts funds
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Significance of FFGA
Historically, 85% of New Starts Funds Appropriated for FFGAs and Projects with “Medium” or Higher Ratings
All Projects Eventually Receive 100% of Total New Starts Funding in FFGA
Majority of Projects Receive New Starts Funding according to Annual Schedule in FFGA
Practical Limits on Total New Starts Funding and Annual Schedule for Individual Projects
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Practical Limits for New Starts Funds
• Consider other projects in the region and their request for New Starts funds
• Assume no more than 50 percent in New Starts funding
• Historical maximum New Starts funds per project: $750M total, $100M per year (NYC region is exception)
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What is a Project Construction Grant Agreement (PCGA)? (Small Starts)
• Formal Agreement signed by FTA and Grantee that includes:– Project Scope, Budget, and Schedule– Terms and Conditions of Federal Participation– Multi-year Funding Commitment (subject to
Congressional Appropriations)– Cap on Small Starts funds
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Actual Capital Cost vs. Inflation-Adjusted AA Estimate for Projects Completed 2003-2007
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Actual Ridership versus AA Forecast for Projects Completed 2003-2007
Average = 74.5%
50th Percentile = 63.8%
New Starts Evaluation and Funding
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Documents Related to SAFETEA-LU Requirements
• FTA must publish policy guidance for the New/Small Starts review and evaluation process and criteria each time significant changes are made, and not less than every two years– Guidance issued in Spring of 2006 and 2007, and in 2008
• FTA must prepare new regulation for New and Small Starts– NPRM issued August 3, 2007– Current appropriation bill prohibits issuance of final rule
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New Starts Evaluation and Oversight
• Among most rigorous in government • Increasingly credible and important to Congress
and local communities
• Program Management Oversight recommended by GAO and OIG
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New Starts Evaluation and Oversight: Over 3 Decades of Disagreement Between FTA and Project Sponsors
Why??? • Two significantly different perspectives
– Local decisionmaking- Local values and priorities- Local questions and answers
– New Starts decisionmaking- Congressionally mandated evaluation criteria- Level playing field that treats proposals fairly and objectively
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FTA Ratings: New Starts
Summary Rating
Project Justification Rating
Financial Rating
Non-Section5309 Share
Capital Finances
Operating Finances
Other Factors
Low Income Households
User Benefits
Mobility Improvements
Environmental Benefits
Operating Efficiencies
Cost Effectiveness
Land Use
Minimum Project Development Requirements:
Employment
Capital Cost
O&MCost
User Benefits
Metropolitan Planning and Programming Requirements
Project Management Technical Capability
Other Considerations
NEPA Approvals
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What We’ve Heard….
Why doesn’t FTA use all the criteria for its ratings?
• Useful metrics for operating efficiencies and environmental benefits have not be developed
• Metrics for mobility, while useful, have been delayed until rulemaking
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FTA Ratings: New Starts
• Existing New Starts Criteria– Project Justification
- Land-use (transit friendliness of the setting)- Cost-effectiveness (costs in scale with benefits)- Other factors, including economic development, congestion
and pricing strategies, and the case for the project
– Local Financial Commitment
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Cost Effectiveness
• Dollars per hour of “user benefits” =
• Benefits and costs computed in relation to a “Baseline Alternative”
annualized capital cost + annual O&M cost
user benefits
Cost Effectiveness
Capital Cost
O&MCost
User Benefits
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Cost Effectiveness
• Potential sources of transportation benefits – Highway users: benefits from less congestion due to
travelers changing from driving to riding on the project– Current transit users: benefits from faster travel
times using project compared to their previous transit mode
– New transit users: benefits from faster travel times using project
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Cost Effectiveness
• Current measurement of transportation benefits– Highway users: not included because of serious
travel model difficulties in quantifying degree of congestion relief
– Transit users: benefits from faster travel times for New Starts project for all travelers in the region
- In-vehicle time
- Walk and wait time
- Number of transfers
- Capacity constraints
- Reliability, comfort, security, branding
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FTA values for Non-Travel Time Benefits
Maximum benefit“Other” attribute Guideway only Guideway + local
Guideway-like characteristics 8.0 3.0- reliability of vehicle arrival 4.0 2.0- branding/visibility/learnability 2.0 1.0- schedule-free service 2.0 0.0
Span of good service 3.0 0.0
Passenger amenities 4.0 3.0- stations/stops 3.0 2.0- dynamic schedule information 1.0 1.0
TOTAL constant 15.0 6.0
IVT coefficient 0.75*Civt 0.75*Civt
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User Benefits Example
TSM
BLD
Local bus
Train
On
On Off
OffWait time = 5 min; run time = 20 min
Wait time = 5 min; run time = 15 min
100 transit trips
110 transit trips
User benefits = 100 trips x 5 minutes/trip (existing trips)
+ 10 trips x 5/2 minutes/trip (new trips)
User benefits = 500 minutes + 25 minutes = 525 minutes
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Cost-Effectiveness
• Current breakpoints* for ratings:– Low >$30.49 per hour– Medium-low $24.50 - $30.49 per hour– Medium $16 - $24.49 per hour– Medium-high $12 - $15.99 per hour– High < $12 per hour
* Adjusted annually using the GDP deflator
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Determination of Cost Effectiveness Breakpoints
Based on the Value of Time• 50% of median income per DOT policy ($10.54
when breakpoints established) plus• 20% assumed for highway user benefits ($2.11)
plus• Indirect benefits such as economic development,
safety improvements, pollutant reductions ($12.65)
• Result ($25.30 rounded to $25.00)
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Breakpoints and Funding
• Projects with cost effectiveness over $25.00 should not be funded
• FTA established the breakpoint for “Low” rating at $25.00 “Low” rated projects cannot be funded
• April 2005 - FTA announced more stringent standards – Projects with “Medium-Low” rating would not be
recommended for funding
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What We’ve Heard……
Why not include other benefits beyond user benefits in the cost effectiveness measure, e.g. economic development benefits?
• Other benefits, particularly for economic development cannot be easily quantified
• Even if additional economic development could be determined, adding these benefits to user benefits is problematic
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What’s a Baseline Alternative?
• Low capital cost relative to fixed guideway• Includes service frequencies, coverage, p&r lots
comparable to the build alternatives• “Best you can do to improve transit without
building a new guideway”
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Why Use a Baseline Alternative?
• Illuminates project’s benefits and costs– Allows for identification of the additional project
benefits due to significantly larger additional capital costs
– Addresses concerns of critics that lower cost options are just as effective
• Ensures consistent evaluations nationally– Enables FTA to fairly assess project benefits in areas
with good current transit service and areas with poor service
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Land Use
Based on strength of:– Transit supportive
existing land use– Transit supportive
plans and policies– Demonstrated local
performance of transit supportive policies
Land Use
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Mobility Improvements
• User benefits per project passenger mile for all users and for transit dependents
• Number of all users of project and transit dependent riders
• Share of user benefits for transit dependents compared to the share of transit dependents in the Region
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Environmental Benefits
EPA air quality designation for region
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Other Factors
Considerations not captured in other criteria:• Project part of a pricing strategy in congestion
management plan• “Case” for the project • Economic development• Other
Other factors
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Case for the Project
• Make-the-Case document– Guide to project benefits and “justification”
- For FTA staff- For FTA briefing papers, talking points- For the Annual Report on New Starts
– Element of project “justification” rating
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Case for the Project - Outline
• No more than “five pages”– Project identification– Setting– Purpose– Current conditions in the corridor– Anticipated conditions in 2030– The case for the proposed project– Risk– Summary
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What We’ve Heard….
Why does FTA relegate something as important as the economic development benefits of transit projects to an “other factor”?
• Difficulty of both defining economic development and assessing its likelihood
• Reliability of economic benefit assessments compared to that of user benefits
• Data collection implications to project sponsors • Reluctance to make significant evaluation
changes prior to rulemaking
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What We’ve Heard….
FTA’s evaluations do not give credit to the economic development benefits of transit.
• 50% of project justification rating determined by land use rating which includes economic development considerations.
• 5 to 20% of total project benefits derived from economic development according to FTA-assembled panel of experts
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Local Financial Commitment
Based on:– Current capital and
operating financing condition
– Commitment of capital and operating funds
– Cost estimates/planning assumptions/capacity
Local Financial Commitment Rating
Non-Section5309 Share
(20%)
Capital Finances
(50%)
Operating Finances
(30%)
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Acceptable Financial Ratings In Project Development
• PE Approval – Reasonable financial plan; Funding sources identified; Good non-federal funding history
• FD Approval – At least 50 percent of non-5309 New Starts funding committed; Firm cost estimates; Ability to address funding shortfalls
• FFGA – 100% non-New Starts funding committed; Funding shortfalls covered
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FTA Ratings: Small Starts
Summary Rating
Project Justification Rating
Financial Rating
Non-Section5309 Share
Capital Finances
Operating Finances
Other Factors
Cost Effectiveness
Land Use
Minimum Project Development Requirements:
Capital Cost
O&MCost
User Benefits
Metropolitan Planning and Programming Requirements
Project Management Technical Capability
Other Considerations
NEPA Approvals
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FTA Ratings: Small Starts
• Existing New Starts framework• Simplifications
– Fewer criteria– Simpler evaluation measures for land use criterion– Opening year forecasts only– Simpler travel forecasting procedures possible– Simpler financial documentation possible
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FTA Ratings: Small Starts (continued)
• Simpler financial documentation possible– Rating of “medium” for local financial commitment if:
- Reasonable plan to secure local share (all non-New Starts funding committed for PCGA)
- Project O&M under 5 percent of agency operating budget- Agency in solid financial condition
– Projects that cannot meet these conditions submit a financial plan- According to FTA guidance- Covering period up to and including opening year- Evaluated based on criteria used for New Starts
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FTA Ratings: Very Small Starts
Summary Rating
Project Justification Rating
Financial Rating
Non-Section5309 Share
Capital Finances
Operating Finances
Other Factors
Cost Effectiveness
Land Use
Minimum Project Development Requirements:
Capital Cost
Benefiting Riders
Metropolitan Planning and Programming Requirements
Project Management Technical Capability
Other Considerations
NEPA Approvals
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FTA Ratings: Very Small Starts
• Existing New Starts framework• Simplifications
– Fewer criteria– “Warrants” approach for project justification
- Benefiting riders > 3,000/day- Capital cost (excl. vehicles) < $3M/mi.- Total capital cost < $50M
– Simpler financial documentation possible (as with Small Starts)
Demonstrate consistency with characteristics of “justified” projects
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What We’ve Heard….
The eligibility characteristics for Very Small Starts (VSS) unfairly exclude rail projects
• VSS characteristics determined to ensure project’s cost effectiveness meaning limited capital and O&M costs compared to user benefits from existing riders
• Higher costs & more complex service plans of fixed guideways (bus and rail) usually exclude use of a simplified estimate of cost effectiveness
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Summary Ratings
• Rating categories:– High– Medium-high– Medium– Medium-low– Low
• Decision Rule:– Must have at least “Medium” on both
justification and finance to receive “Medium” overall
Summary Rating
Project Justification Rating (50%)
Local Financial Commitment Rating
(50%)
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Project Ratings and Decisionmaking
• Ratings guide FTA approvals of PE/PD, Final Design, and FFGA/PCGAs
• “Medium” or better overall rating required to advance
• Once in PE/PD, rating reported each year in Annual Report on Funding Recommendations
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What We’ve Heard….
FTA’s evaluations are becoming more stringent making it difficult for many worthwhile projects to qualify for funding
• FTA continues to award all the funding authorized for New and Small Starts
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What We’ve Heard….
Increasing FTA requirements mean projects are taking longer to build
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Length of Project Development – LPA to Opening
R2 = 0.0002
0
2
4
6
8
10
12
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1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Year of Opening
Pro
ject
Dev
elo
pm
ent
Per
iod
(Y
ears
)
Planned Outreach Activities
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Workshops and Training Courses
• October 28-30, Alternative Analysis Course, Washington, DC• TBD in 2009, Alternatives Analysis Courses• March, 2009, Workshop at APTA Legislative Conf,
Washington, DC • March 3-5, 2009, Travel Forecasting Workshop for
New/Small Starts, Phoenix, AZ• March 23-25, Travel Forecasting Workshop for New/Small
Starts, Tampa, FL • Spring 2009, New/Small Starts Roundtables (by invitation)• June 2009, New/Small Starts Workshop at APTA Rail Conf,
Chicago, IL