Mr. Chairman, Members of the Subcommittee, thank you for the opportunity to testify before you today on the success of the Transportation Equity Act for the 21st Century (TEA-21) and to continue the discussions about reauthorization begun by Secretary Mineta and the full Committee last month.
Public transportation connects communities – and communities throughout America are recognizing and capitalizing on the benefits of more efficient, comfortable, and effective public transportation systems. This recognition has spurred unprecedented levels of investment in public transportation. In fact, the total capital investment in public transportation, including State, local and Federal funds, has increased by nearly 90 percent over the last ten years (1991 to 2000). The role of the Federal Government has been stable during this period, accounting for approximately 50 percent of capital investment in transit, and 25 percent of all public spending on transit.
As a result of the unprecedented levels of investment in recent years, transit has experienced the highest percentage of ridership growth among all modes of surface transportation, growing over 28 percent between 1993 and 2001. Over the last six years, transit use has grown faster than the population, and more than double the rate of domestic air and road travel, which grew approximately 12 percent. Last year, people rode our Nation’s public transportation systems 9.5 billion times -- traveling to and from work, medical appointments, school, and social events. Nearly two-thirds of these trips were on buses.
While most public transportation trips continue to occur in major metropolitan areas, public transportation is becoming increasingly important in smaller urban and rural areas, as well. Among transit agencies that receive Section 5311 funds, the number of passenger trips reached an estimated 154 million in 2000, an increase of 62 percent since 1994. During the same period, passenger miles traveled increased by an estimated 93 percent, meaning that people are not only taking public transportation more often, but also for longer distances.
Not coincidentally, these increases in ridership have occurred during a period when the condition of our Nation’s public transportation assets improved markedly and the availability of public transportation increased substantially.
Nevertheless, public transportation faces new challenges in 2002 and beyond. Secretary Mineta recently noted that public transportation must play an important role in achieving the President’s three important goals of winning the war against terrorism, protecting our homeland, and getting the American economy moving again.
The events of September 11 have created a new reality for Americans, one in which public transportation must be prepared to respond to extraordinary threats and to serve as a primary means for evacuation when that becomes necessary.
This is not an entirely new responsibility. Public transportation has long had an important role in helping communities cope with natural disasters. In 1989, San Francisco’s rapid transportation system was critical to the community as it coped with the collapse and reconstruction of major roads after the Loma Prieta earthquake. And, in 1999, public transportation systems in North Carolina evacuated residents and transported relief workers in response to Hurricane Floyd.
But the events of September 11 gave our communities an even better understanding of the role of public transportation during emergency situations. In New York and Washington, public transportation safely evacuated millions of people from the center cities, and, throughout the Nation, public transportation systems came to the aid of people who were stranded at unexpected destinations when air travel was halted. Transit agencies stepped in to assist stranded passengers, offering not only free transportation to nearby hotels, but even coordinating hotel room availability and reservations in some locations. In North Little Rock, for example, the Central Arkansas Transit Authority (CATA) teamed with the local Chamber of Commerce to determine hotel availability, make reservations, and transport over 2,000 stranded passengers to more than 20 hotels in less than four hours on September 11. CATA continued to serve as an information link for passengers over the next several days, faxing news of airline operations to all 20 hotels, and operating free shuttle service to the local airport, Amtrak and Greyhound terminals for the stranded passengers.
Soon after the September attacks, FTA began implementing a major security initiative, focused first on the nation’s high risk/high consequence transit assets. Generally, that means the subway tunnels and stations where the large numbers of people converge and where an attack would cause the greatest disruption to transportation services. Transit agencies across the country are voluntarily and enthusiastically partnering with FTA and continue to take steps on their own to improve the safety and security of our public transportation systems.
As part of this initiative, FTA has engaged teams of experts in security, anti-terrorism, and transit to conduct voluntary security assessments of 33 public transportation systems. Chosen because of their high ridership levels, the potential vulnerability of subway systems, and the potentially serious consequences of a successful terrorist attack, all 33 agencies are voluntarily participating in the assessment program. Two-thirds of the assessments have been completed and the remainder are scheduled over the next month or so.
Each assessment includes a threat and vulnerability analysis, an evaluation of the security and emergency response plans, and a focused review of the community’s unified emergency command structure. Based on the findings of the assessment, FTA is offering direct technical assistance to enhance security, modify emergency response plans, conduct practice drills, and train employees.
The assessments are proving to be an effective tool for both the FTA and the participating agencies. We have identified important concerns at even the most well-prepared agencies, and have recommended solutions to manage these risks. At the same time, we are identifying best practices for training and response protocols, and are sharing these with the industry. Recently, for example, guidance on responding to a chemical attack in a subway environment was distributed to transit agencies with underground stations; similar guidance with regard to biological attacks will be issued soon. We are also working to make standard operating procedures applicable to bus, light rail and other transit environments, and will make that available as soon as possible. We will continue to look for new opportunities to enhance transit security, while maintaining the open and accessible nature of our public transportation systems.
One important lesson of September 11 has been that the safety and security of our communities is significantly enhanced when public transportation systems are linked to police, fire, medical and other emergency response agencies through community-wide planning, emergency response drills, and centralized emergency command centers. I am proud to report that FTA is taking the lead to bring these important community leaders together at emergency response planning forums around the county. We are also sending out technical teams to refine the emergency response plans to reflect the assessment findings, and have made $50,000 grants available to communities who need assistance to conduct emergency drills.
Yet, even as we take new steps to ensure that our transportation systems are as safe and secure as possible, we must also protect the mobility of our people and the economic vitality of our communities. Balancing this three-legged stool of security, freedom of movement, and economic vitality is an important challenge to transportation providers throughout the Nation.
The TEA-21 Success Story
In his testimony before the full Senate Banking Committee last month, Secretary Mineta identified several core concepts that the Department of Transportation will be using as the basis for its reauthorization proposals. Today, I would like to highlight several of those concepts, and talk more specifically with you about their importance with regard to public transportation. These concepts are: stable funding, innovative finance, transportation-oriented economic development, technology investments, and streamlining.
Stability. One of the most visible and important elements of TEA-21 has been the tremendously positive impact of stable and dependable funding streams on transit development. Dependable levels of funding – for both formula funds and full funding grant agreements – have improved the ability of transit agencies to finance, plan, and execute projects, and produced real results for the transit-riding public.
For large transit agencies, dependable Federal funding is often essential to the creation of similarly stable local funding mechanisms. Take, for example, New Jersey’s Hudson-Bergen Light Rail Project, which includes almost 15 miles of rail line, 59 light rail vehicles and represents a total investment of $2.2 billion. Phase II of the Hudson-Bergen full funding grant agreement provides $500 million in Federal New Starts funding over five years. New Jersey Transit was able to issue $450 million in grant anticipation bonds based largely on this New Starts commitment. The bonds are structured for repayment through 2011. However, the availability of capital now allows construction to be completed by 2005, even though the first FFGA funds will not be received until 2004. The bottom line: a secure Federal funding source will permit the project to be completed three years early and will reduce costs by more than $300 million.
The benefits of stable and predictable funding are not limited to large agencies with rail or with large FFGA’s. Phoenix Transit is an agency with a fleet of 350 buses, making 33 million passenger trips each year. Because of its limited funding stream, it cannot access capital markets on its own. However, this agency has effectively leveraged its FTA formula funding to speed up the procurement of Clean Natural Gas (CNG) vehicles and fueling infrastructure by utilizing bonds. The City of Phoenix issued $18 million in grant anticipation bonds to Phoenix Transit based solely on the stream of formula funds guaranteed through TEA-21. Phoenix Transit was able to upgrade its fleet of vehicles and install the fueling infrastructure to keep the buses rolling, all within a single year. Without the ability to leverage the stability of its formula funds, Phoenix Transit would have needed three or more years to purchase the same number of vehicles and install the required infrastructure. Further, Phoenix Transit estimates that it saved an average of $30,000 per bus – a total of $1.65 million – because it was able to purchase a larger quantity of vehicles at one time.
According to new research being conducted by the American Public Transportation Association, several recent TIFIA loans in New Jersey and California received high credit evaluations from Fitch and Moody’s based largely on confidence in the Federal commitments under TEA-21. The study also notes that the benefits of stable funding go far beyond improving the ability of transit agencies to secure long-term loans for major investments. Confidence that formula funding levels under TEA-21 would be honored have helped communities develop and follow multi-year fleet replacement schedules to minimize costs. Previously, some communities had to "save up" grant resources for several years in order to have enough cash to enter into contractual arrangements. Under TEA-21, contractors and financial institutions are willing to work with transit agencies to significantly accelerate acquisitions, saving the agency time and money.
In sum, stable formula funds help agencies do more with limited resources because they give financial markets the confidence to support transit investments; give communities an incentive to commit long-term resources; and give private industry the confidence that the transit promises necessary to support new development will be honored.
Innovative Finance. Dependability and stability offer even more opportunities to leverage resources when coupled with innovative financing techniques. Under TEA-21, Congress established the Transportation Infrastructure Finance and Innovation Act (TIFIA) financing mechanism, a loan and loan guarantee program for surface transportation projects. Recently, Staten Island Ferry signed a TIFIA loan agreement for $159 million to purchase three additional ferryboats and complete the reconstruction of its ferry terminal. In the wake of September 11, when ferries carried over 60,000 people safely out of Manhattan, reliable ferry service has become even more important to mobility in the New York metropolitan region. Staten Island Ferry was able to leverage $57 million in FTA and Federal Highway funds, along with an additional $264 million of State and local monies, to secure the TIFIA loan. In the absence of TIFIA, the purchase of ferryboats and terminal modernization would have been delayed until additional funds could be accumulated to complete the project.
TEA-21 made a total of $10.6 billion in lending authority available for surface transportation projects. To date, approximately $3.6 billion has been committed to projects and leveraged to support over $15 billion in surface transportation projects. This investment requires only about $190 million of Federal budget authority. Although TIFIA is by no means the only innovative financing mechanism available to the industry, it illustrates how such techniques can reduce the total cost of projects, speed up implementation, and leverage Federal investments. The Department looks forward to working with Congress to identify additional ways in which reauthorization can promote and support innovative financing.
Economic Development. With the funding made available under TEA-21, FTA has helped many communities realize better, safer, more efficient public transportation systems. Real success, however, comes when people not only embrace transit, but use it to enhance the economic vitality of their community. One such city is Dallas, Texas. Although many equate this city with large cars and wide boulevards, the city’s light rail transit (LRT) starter system has been an unqualified success. Under TEA-21, Congress authorized a $333 million full funding grant agreement for this project. Not only has ridership exceeded expectations, the 12.5-mile North Central light rail extension has helped attract more than $100 million in transit-oriented development. Dallas Area Rapid Transit (DART) has joined a major development company, a major high-tech employer, and the City of Richardson in developing a new urban center in a high-tech business corridor adjacent to the LRT line. In downtown Dallas, retail sales jumped dramatically, and the in-town apartment market more than doubled from 1997 to 2000. Prominent national companies, including Blockbuster Entertainment and the Adam’s Mark Hotel cite proximity to DART as the key factor in locating downtown. The unqualified success of transit in Dallas has generated overwhelming public support for plans to accelerate future rail lines with bonds backed by a local one-cent sales tax.
The joint development provisions of TEA-21 have led to success in other parts of the country, as well. In California, the Valley Transit Authority of Santa Clara (VTA) has utilized joint development to create a new revenue stream for the transit authority, while promoting economic development in the community. VTA operates light rail and bus services in the Silicon Valley region, an area synonymous with innovation. They have partnered in a major mixed-use development at the Ohlone-Chynoweth light rail station. Joint development provisions under TEA-21 permitted the agency to use FTA funds to purchase a parking lot adjacent to the station. VTA now receives $300,000 in annual revenue under a 75-year lease arrangement with an adjacent residential and retail development, and uses those funds to meet additional transit-related needs.
Technology. TEA-21 has also helped our Nation’s transportation systems take advantage of technological developments. On a pre-Olympics trip to Salt Lake City and the Utah Transit Authority (UTA), I saw how innovative technology was helping to bring real-time improvements in transportation for the Winter Olympic games. Thanks to TEA-21, the Utah Transit Authority received $3 million to support Intelligent Transportation Systems (ITS) projects, including a state-of-the-art voice-activated "511" system that provided information on public transportation, Olympic travel information, road conditions and other information that was vital to moving hundreds of thousands of people in and around Salt Lake City.
Bus Rapid Transit (BRT) has also benefited from technological advances made possible, in part, through TEA-21. Combining exclusive transit-ways, modern stations, high-tech vehicles, and frequent service, Bus Rapid Transit provides – at a fraction of the cost – the high level of service that people want and expect from more expensive transit systems. And investments in Intelligent Transportation System projects have made Bus Rapid Transit even more convenient, fast, reliable and safe. For example, Automated Vehicle Location technologies such as satellites or roadside sensors can now track the location of BRT vehicles, providing information for electronic "next vehicle" displays at stations and on-board automated stop announcements. Signal priority systems also use vehicle location information to control traffic signals cycles to give priority to BRT vehicles, while transit operators use it to achieve more consistent passenger wait times. The signal priority system of the Los Angeles Metro Rapid BRT system along the Ventura, Willshire and Whittier corridors has reduced transit travel times by 20 to 25 percent, and total ridership is up by almost 30 percent. In Miami, ridership along the eight-mile South Busway has doubled to over 15,000 trips per day since it opened in 1996. And in Seattle, a regional Bus Rapid Transit system provides no-transfer, high-speed rides for commuters going from home to work in Seattle’s downtown district.
FTA strongly believes that continued Federal investment in the development of new transportation technology will have enormous benefits for America – reducing congestion, improving air quality, and making public transportation an attractive travel alternative.
Building on TEA-21
From major urban centers to small communities, TEA-21 has created a revolution of sorts in public transportation, through predictable funding, innovative financing and investments in new technology. This, in turn, has resulted in increased mobility, more transportation choices, and more economically vital communities for millions of Americans. The principles of TEA-21 have been tried and proven, and should continue as part of our guide for the future of public transportation.
Transit has experienced the highest percentage of ridership growth among all surface transportation modes, and the demand far exceeds currently available resources. Today, with 27 active and pending full funding grant agreements already in place, and eight more projects recommended for FY 2003 funding, there are still 50 additional transit projects in the New Starts pipeline in preliminary engineering or final design -- and many more in early planning stages throughout the Nation. In communities of all sizes, from over 5 million in population to less than 500,000, these projects span all types of public transportation service, from ferry boats to commuter rail to light rail to bus rapid transit. It is, therefore, more important than ever that we provide stable resources, encourage cost-effective public transportation solutions, support opportunities to partner with the private sector, and offer innovative financing tools that will permit communities to leverage the Federal investment in public transportation and respond to local needs for public transportation service.
There is much more that we can do, however, to improve grant and oversight operations. Improving our business practices, including streamlining the grant process, is an important part of reducing costs and improving our transportation programs, particularly for smaller grantees. Indeed, FTA is pursuing a number of opportunities to streamline and improve our business processes, even while we strengthen our oversight programs. As we consider changes in the law, an important question is how we can ease the statutory and regulatory burden, particularly on smaller agencies, which typically have less capacity and fewer resources, while continuing to ensure good stewardship of Federal funds. As Congress and the Administration work towards a comprehensive and successful reauthorization of TEA-21, I want to assure you that the Department of Transportation and the Federal Transit Administration will work with you to build on the successes of TEA-21 and meet the future public transportation needs of America.
Mr. Chairman, thank you for the opportunity to testify before you today. I look forward to working with you and the Subcommittee to connect communities through improved public transportation.
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