Subcommittee on Housing and Transportation


Hearing on "TEA-21: Investing in Our Economy and Environment."


Prepared Statement of Mr. Hank Dittmar
Member
Board of Directors
Surface Transportation Policy Project

10:00 a.m., Wednesday, June 26, 2002 - Dirksen 538

Mr. Chairman, I am Hank Dittmar, President of The Great American Station Foundation. I am pleased to appear here this morning to present testimony on behalf of the Surface Transportation Policy Project where I serve as a Member of the organization’s Board of Directors.

The Surface Transportation Policy Project or STPP is a nationwide network of hundreds of organizations, including planners, community development organizations, and advocacy groups, devoted to improving the nation’s transportation system. I would note also that I appear here today with a representative of the STPP coalition, Michael Replogle, where we share and support his comments for the record of this hearing.

I am pleased to have this opportunity to discuss TEA-21’s benefits for economic development, transit users and the business community and to offer our views on how the reauthorization of TEA-21 can increase these benefits for the nation.

Overview

Mr. Chairman, I want to commend you and your state for its innovative use of TEA-21 resources and describe briefly how one project – the Warwick Intermodal Project – exemplifies the vision of this law and its predecessor, ISTEA.

As President of The Great American Station Foundation, I support initiatives that promote investment in intermodal connections through train station rehabilitation and development. One example is your state’s effort to develop the commuter rail/Amtrak intermodal station in Warwick, connecting T.F. Green Airport to Amtrak’s Northeast Corridor and commuter rail service. Here you have an intermodal project, linking commuter rail transit and intercity passenger rail with the state’s major airport, while relieving congestion on I-95, one of the nation’s most significant Interstate corridors. This investment also provides benefits for freight and passengers traversing the I-95 corridor and positions the airport to deliver more efficient access and utilization of airport air capacity benefiting the entire Northeast. Mr. Chairman, I applaud your leadership in support of this important project forward.

Under TEA-21, the State of Rhode Island receives the lion’s share of the federal funds that flow to the state, those provided under the highway title of the Act and other resources under the transit title. It also owns and operates T.F. Green Airport and is the owner/operator of I-95 and a partner with MBTA on commuter rail service. It is also one of several states, with the leadership of the late Senator Claiborne Pell, that worked toward development of Amtrak’s Northeast Corridor. Armed with the Act’s flexibilities and motivated by its own ownership interests, the state pursued an intermodal investment that instructs all of us as to the possible.

Across the country, we only see a few other examples of such projects, which also have similar ownership characteristics. At the Newark airport, the state owned airport is connected by a new fixed guideway to the Amtrak Northeast Corridor, NJ Transit and other rail services. In Chairman Sarbanes’ state, the State of Maryland provides rail transit through its MARC trains and partners extensively with Baltimore’s LRT, systems that link to the airport and to Amtrak’s Northeast Corridor, all the while providing relief to the congested I-95 and BW Parkway corridors.

These airport connections deployed ISTEA/TEA-21 resources without the modal bias that generally characterizes so many other areas, where state ownership of transit systems and airports is the exception in that most transportation assets are owned and/or operated at the local and regional levels.

Part of the debate over TEA-21 renewal needs to be focused on strategies and incentives that help us better align resources and investment decisions with the agencies that are responsible for these systems. How transportation funds are now being flexed to transit makes this point. Five out of six Title I dollars flexed to transit are by local decision-makers using funds provided to their MPOs. When States flex dollars, it is generally to Section 18 for rural transit needs. While local agencies nationwide only have direct access to less than 10 percent of total Title I funding, they account for more than 80 percent of all funds flexed to transit. The State of California alone accounted for more than one-half of all flexed funding over the last four years, aided by that state’s suballocation law which directs more TEA-21 dollars to MPOs and local agencies than provisions of TEA-21.

Mr. Chairman, developing airport connections that work and supporting local efforts to flex transportation funds to priority transit needs explains why our coalition has placed such a high priority on making the intergovernmental partnership work together more cooperatively. We need to find new ways to "incentivize" state and local partners to deliver investments that better integrate our transportation assets and systems. And, to be successful in this regard, we must take stock of how the flow of funds (i.e. who controls TEA-21 resources and who own or operates the systems) affects outcomes. While we know that a substantial share of all Title I funding flows to the states regardless of their ownership profiles, it is noteworthy that FTA’s resources flow directly to the agencies that provide the service, be it a city or county agency, a regional agency, a state agency or multi-state provider.

Related to these partnership issues, I would emphasize that this Committee shares jurisdiction over the intergovernmental partnership for highways and transit, through the rules for state and metropolitan planning and project selection.

Mr. Chairman, we also see other opportunities to strengthen transportation policy connections to other areas. As one example, we are finally starting to reap the benefits of Tax Code changes aimed at equalizing benefits between parking and commute benefits, a provision that has been particularly powerful in boosting transit use in this region. Directly before this Committee is how we can forge stronger linkages between federal housing policy and transportation investment. Next month the Senate is expected to begin debate on the TANF reauthorization where transportation-related issues figure prominently in efforts to help many Americans make the transition for welfare to work.

TEA-21’s Benefits for Economic Development, Transit Users and the Business Community

With that overview, I would like to turn to a discussion of the economic and business community benefits of TEA-21 investments.

Transit Ridership Growth Reflects Its Value to the User

Transit ridership has increased each of the last four years, revealing a growing interest in transit in a range of city types and locales. A preponderance of this ridership growth is in New York City, as a preponderance of transit use is centered in New York. However, many other cities and urban areas around the country are experiencing increased ridership. In fact, the greatest percentage increase in the first four quarters of 2001 occurred in communities with 50,000-99,999 in population, where bus ridership grew 10.25% over 2000 – which also was a banner year for transit. And what is happening in big cities like New York (2.9%), Washington (5.85%), and Los Angeles (15.8%) cannot explain an 11.7% increase in Albuquerque, 6.7% in Providence, 7.7 % in Denver, 5% in Boise City, or 15.67% in Oklahoma City.

These ridership gains, while still leaving transit far behind auto use, tell us something important is happening in transportation: increasingly people are valuing the option that transit provides to leave the automobile at home. This choice factor is important, and it highlights an important American value: in increasingly congested locations, especially along clogged suburban arterials, the option of living in the city and utilizing mass transit is becoming more attractive to a growing number of people. Transit provides an option to driving, and creates redundancy in a transportation system increasingly characterized not by network conditions, but by channelization onto a limited set of freeways and multilane arterials.

There is Growing Market Demand for Transit

There is clear evidence of a rebound of commercial and residential vitality in many urban communities, and evidence also that traditional population centers have become more attractive to empty nesters and singles as a place to live; employers as a place to locate; and investors as a place to seek gains in real estate. This metropolitan core resurgence appears to be sparking a transit ridership surge, and in fact, the existence of public transit may be part of the explanation for the economic resurgence of downtowns and urban neighborhoods.

These newfound interests in the metropolitan core are being attributed to many conditions. Some see the increased attraction to urban places as the result of changes in our basic demographics. 2000 Census results clearly show that household size is shrinking, producing more households of empty nesters, singles, and non-family residents. The traditional nuclear family that made up 40 percent of households in 1970 is now less than 24%. According to former Census Bureau Director, Martha Farnsworth Riche, the new age distribution is more of a pillar than a pyramid, with a population by 2020 of "nearly an equal number of school aged kids, young professionals, parents, young retirees, and the elderly." (Farnsworth, March 2001.)

While the predominant population pattern is that suburbs grew faster than their central cities, most large cities saw population gains in the 1990s. In a recent article describing the boom in in-fill development in Austin Texas, John McIlwain, a senior resident fellow for housing issues at the Urban Land Institute, characterized the movement back to the nation's cities as being led by two groups -- young tech workers who favor urban living to life in the suburbs and the baby boomers. "Their dog has died, their kids have left home and they're free at last." (Austin American-Statesman, March 16, 2002)

Besides Austin, strengthening of the metropolitan core through in-fill development is also evident in the most unlikely places. Look at Houston, where downtown residential properties are being built for the first time in decades. And adjacent neighborhoods, such as the never-before fashionable Heights, are attracting 30-something, marrieds with children. Or Memphis, where city policies to preserve historic structures, improve transit, and rebuild blighted industrial areas increased downtown residents by 18 percent during the 1990's to almost 10,000, with an astonishing 1500 new housing units built by the end of 2001(Downtown Developer, Summer 2001). Not a prediction anyone would have made in 1977, when the city launched its redevelopment efforts.

Another key finding of the 2000 Census was the unequivocal diversity added to our nation as a result of immigration from other countries, principally Hispanic and Asian households. Historically, most immigrants and most minorities live in cities, and while there is a significant trend toward minority migration to the suburb, demographer William Frey projects that most immigrants will continue to be concentrated in more dense urban locations.

This urban concentration along with the lower income levels of most immigrant households has historically meant that these households own fewer automobiles and drive less. According to Catherine Ross and Anne Dunning’s analysis of the 1995 National Personal Transportation Survey, African-Americans, Asians and Hispanics are all more likely to use public transit or walk. For immigrants, this may be due not only to income and poverty level, but also to cultural factors, including the fact that they have lived in places where transit use was the norm rather than the exception. As immigrants assimilate into the population, therefore, we can expect to see higher levels of driving as incomes rise, but also a continued willingness to use public transit, particularly if its availability, quality and convenience continue to increase.

Access to Transit Has Become a Factor in Corporate Location Decisions

The 1990s also revealed unique challenges for the exurban areas. Whether you are in the distant suburbs of St. Louis or of Atlanta you are likely to need the same things: more infrastructure and available workers. As places to work, most major cities offer employers both in-place infrastructure and an available workforce with established transit systems that make businesses accessible to all workers, including sought after entry level employees. By the mid-90’s, these assets became increasingly evident to small and large employers particularly in the growing service sector.

A recent survey by Jones Lang LaSalle in its Property Futures publication found that 77 percent of New Economy companies rated access to mass transit as an extremely important factor in selecting corporate locations. According to the 2001 survey of 350 New Economy companies: "Employers concerned with staff retention regard the public transportation issue as critical. Young and cyber-savvy staff increasingly reject the traditional commuter lifestyle . . .Urban locations, though not always CBDs, will continue to be desirable. This is reinforced by the importance of public transportation to companies and workers." An example in Atlanta was the decision by BellSouth to relocate its entire Atlanta metropolitan workforce – some 20,000 workers – into three locations within walking distance of Metro stations.

Moreover, overwhelmingly, replacement jobs continue to be located in established urban areas near transit. While some researchers have made much hay arguing that most "new jobs" are located in exurban locations, the fact remains that most job openings are for replacement jobs. As Qing Shen of the University of Maryland demonstrated in a recent study of the Boston metropolitan area, "pre-existing employment is still highly concentrated in the central city." (Qing Shen, Winter 2001)

Development Near Transit is seen as a Sound Investment Choice

By the late 1990s, real estate analysts began to see accessible urban locations in a new light as well. The 2001 issue of Price Waterhouse Coopers’ Emerging Trends in Real Estate continued to advise investors to seek out opportunities in what they dub 24-hour cities, with mixed-use development and mass transit access. According to the report, which is compiled from dozens of interviews with real estate investors and professionals:

"Major 24-hour metro markets maintain their pre-eminence while some suburban areas struggle with sprawl and congestion issues. ‘Subcities’—our new term for suburban locations that are urbanizing and taking on 24-hour market characteristics—show particular promise for investors." (Price Waterhouse Cooper and Lendlease, Emerging Trends in Real Estate 2001,) Recent brownfields legislation should improve the interest in existing urbanized locations even more.

Increasingly, real estate investors are looking for value in established communities. Price Waterhouse Coopers’ Emerging Trends report for 2002 - prepared post 9/11 - warns investors away from apartments, retail, and auto dependent suburban locations, while advising investors to buy and hold in 24 cities.

Interviewees have come to realize that properties in better planned, growth-constrained markets hold value in down markets and appreciate more in upcycles. Areas with sensible zoning (integrating commercial, retail and residential), parks and street grids with sidewalks will age better than places connected to disconnected cul-de-sac subdivisions and shopping strips, navigable only by car. Booming populations and wide-open spaces in the Sunbelt’s expanding suburban agglomerations can provide developers and investors with short-term opportunities to cash in on growth waves – but the returns, on average have not been competitive . . . Markets served with mass-transportation alternatives and attractive close-in neighborhoods should be positioned to sustain better long term prospects as people strive top make their lives more convenient. (Jones Lang LaSalle, 2001)

In addition, suburban areas are actively trying to add density, mixed use and transit. In Dallas, the expansion of the DART transit system in the suburbs is prompting the development of 24-hour dense town centers, such as Addison Circle, which is expected to accommodate 10,000 people in a few years. Even further out, the development of Legacy Town Center in Plano and the redevelopment of Plano town center are mixed use examples. Closer in, the Uptown area near Dallas’s downtown has added 10,000 residents in mixed use multi-family developments within the past five years and the Emerging Trends report rates it as the strongest residential market in the metropolitan area. Similar trends can be seen in Montgomery County and Arlington County in the Washington area.

Transit Provides a Substantial Economic Benefit to the User

The consumption of transportation has a major impact on household budgets for all Americans. The American Automobile Association estimates the annual cost of owning and operating an automobile at $7,363 in 1999. About 75% of that cost is fixed costs such as car payments and insurance, and this means that there is little financial incentive for drivers to drive less once they made the investment in a car. Nationally, transportation expenditures account for 17.5% of the average household’s budget, according to an analysis of Bureau of Labor Statistics data by the Surface Transportation Policy Project and the Center for Neighborhood Technology (STPP & CNT, Driven to Spend, 2000). The proportion of household expenditures that is devoted to transportation has grown as our use of the automobile has grown, from under 1 dollar out of 10 in 1935 to 1 dollar out of seven in 1960, to almost 1 dollar out of five from 1972 through today.

The transportation burden borne by American households falls most heavily upon the poor and lower middle class, as the less a family makes, the more of its budget goes to transportation. The poorest quintile of American households spend 36 percent of their budgets on transportation, while the richest fifth spend only 14 percent. This means that the poorer a family is, the less money it has available for other expenses such as housing, medical care or savings. In fact, transportation takes up the second largest percentage of the household budget, ahead of food, education, medical care and clothing, only behind expenses for housing.

The cost of transportation varies widely from region to region, and within metropolitan areas. Scott Bernstein and Ryan Mooney of the Center for Neighborhood Technology recently analyzed data from the Consumer Expenditure Survey from 1998-9 and revealed that transportation costs can vary from 14 percent of a household’s total expenditures in the New York Metropolitan area to as much as 22 percent in Houston.

Research at the metropolitan level done by John Holtzclaw, Robert Clear and myself shows that these variations in driving and vehicle ownership and hence transportation costs can be explained by a combination of factors, including neighborhood design and transit availability and frequency, when income and household size were controlled for. This study which analyzed odometer readings collected as part of air quality inspection and maintenance programs, found that residents of denser, transit rich neighborhoods drove far less and spent far less on transportation than people who lived in areas not served by transit. (Holtzclaw, Clear, Dittmar, et. al., Transportation Planning and Technology, 2002)

Transit’s Impact on Wealth Creation

The growing proportion of consumer expenditures that is devoted to transportation inhibits families from devoting their income to saving or investing, and indeed may be part of the reason why so many families have to send two people to work. For the fact is that spending on transportation by poor families, unlike spending on home ownership or investing in education, has a very poor return on investment because autos, unlike houses, are depreciating assets. Ten thousand dollars invested in a car declines to a value of about four thousand dollars in ten years time, while investment in home ownership builds equity and often appreciates. Similarly, investment in college education for one’s children increases their earning power over their lifetime. The fact that the poorest families must spend over a third of their income on transportation means that they are least able to invest in activities that offer them the opportunity to build wealth. It is indeed ironic that many progressive social scientists believe that the best way to help former welfare recipients secure jobs is to give them automobile purchase assistance, thereby trapping them into the poverty cycle even more profoundly, as the poor typically end up with less reliable cars which are more expensive to operate and maintain.

Some lending institutions are also changing loan criteria to reflect the hundreds of dollars in savings per month that can be experienced in denser, transit rich neighborhoods. The Location Efficient Mortgage (SM) a product of Fannie Mae and a consortium of groups called the Institute of Location Efficiency, allows prospective homebuyers in denser transit-rich neighborhoods to use their transportation savings to help them afford a home in these neighborhoods. The program, which has been introduced in Chicago and Seattle and San Francisco, is under study in Atlanta, Portland and Philadelphia, and Fannie Mae has announced plans to introduce a less comprehensive product with smaller savings in Minneapolis-St. Paul and Baltimore. In essence, financial institutions are now sending a message – if you save money by driving less, we’ll take that into account and offer you more funds to purchase a home. This kind of market adjustment is a positive response to the economic benefits of transit investment upon households.

Transit Spurs Development

As indicated earlier, real estate investors are recognizing that development near transit has locational advantages, and a new style of development is emerging in response to this fact. Transit oriented development is the new term used to characterize mixed use, walkable development located within one-half mile of a transit stop, and evidence indicates that as new transit systems – whether light or commuter rail or rapid bus – are introduced, development follows. A recent study by the University of North Texas found that the new DART system in the Dallas region has already generated over $800 million in development, and that the full system is projected to generate $3.7 billion in economic activity upon build out. (University of North Texas, 2000). Typical of these projects is Mockingbird Station, which features a multi-screen cinema, upscale retail, office space and 211 loft apartments within walking distance of the light rail stop. The project was built without public subsidy.

The potential for transit oriented development to build economic value and staying power in a region is evidenced in the National Capital region by both Montgomery County, Maryland and Arlington County, Virginia. My organization is completing a case study of Arlington County, which has pursued a policy of concentrating its development activity along the Rosslyn-Ballston Corridor since the construction of the Washington Metro. Our forthcoming study found that development along transit allowed the County to capture over 13 million square feet of office space and 2 million square feet of retail since 1980. The corridor has increased in population from 19,838 in 1980 to 34,485 in 2000, reversing a steep population decline in the Seventies. Land value within the corridor near the four stations increased by 81 percent from 1992-20002, an average annual increase of 6.1 percent, generating over $109 million in property taxes in 2002 alone. The corridor generates approximately 33% of the County’s real estate tax on 7.7% of the County’s land. According to the study, "Even with the economic downturn and the residual affects of the 9/11 incident (which affected Arlington directly through the bombing of the Pentagon and the subsequent shut down of National Airport and several major arterials), February 2002 vacancy rates were at 10%. This is half of the vacancy rate of suburban office concentrations in outlying Virginia such as Tyson’s Corner and Reston. Office rents in the Rosslyn-Ballston Corridor also command a rent premium over other office locations in the Northern Virginia marketplace." (TransManagement, Inc. for Great American Station Foundation, forthcoming)

Transit oriented development clearly commands an advantage in the emerging marketplace, and this offers an opportunity for transit systems to recapture value, both from underutilized land around their stations, and potentially from development occurring near stations through benefit assessment districts. Such schemes could help to finance transit system expansion by providing a revenue stream to repay debt.

Transit-oriented development clearly has a role to place in making housing more affordable, as the data on housing and transportation expenditures clearly indicate. In addition to the measures discussed above, many transit-oriented developments include affordable housing. We have studied two such projects in detail, The first is Ohlone-Chenoweth in Santa Clara County, California, where a underutilized park and ride lot and private land have been developed with 135 very low income units, 194 units affordable to households at 50-60 percent of median income, and a third project with market rate housing. The second project is Barrio Logan apartments in San Diego along the San Diego trolley, which includes 144 low-income units financed through CRA commitments and the Low Income Housing Tax Credit. Both projects have been successful in meeting both housing and transit goals.

Indeed the states of California and Maryland, recognizing the value of access to transit to low-income families have acted to give priority to projects near transit in allocating their share of Low Income Housing Tax Credits. Perhaps a similar priority action could be made for other housing programs under the jurisdiction of the Committee. At the least, the clear connection emerging between transit, housing and wealth creation underscores the wisdom of the Senate in placing both housing and transit under the jurisdiction of the same Committee.

TEA-21 Reauthorization Issues

Mr. Chairman, while the STPP is still in the process of developing its full reauthorization package, there are several areas that I address on behalf of our coalition.

Treat Transit the Same as Highways: I lead with this policy recommendation given its very high priority within our coalition. In earlier debates on ISTEA and TEA-21, STPP and its coalition partners were strong proponents of the 80/20 matching share for transit projects to ensure that options for future transportation investments were not biased toward one modal investment over another. There are now efforts, both in the Administration and in the Congress, to control demand for FTA’s "new starts" program by rationing money through reductions in the federal matching share. We strongly oppose this approach.

Rather than focusing on ways to grow the resources to support the accelerating pipeline of demand for new rail and busway projects, which is where we believe efforts should be directed, some are seeking to manage demand by spreading available funds and requiring significantly higher overmatchs.

Mr. Chairman, it is clear that ISTEA fundamentally shifted our thinking about what future investments are needed in support of local and regional economic development. Since local decision-makers were invited into the dialogue on transportation investment, through the planning process and other means, we have seen an explosion of interest in rail transit investment. In fact, a disproportionate share of recent ridership gains have been driven by the new starts programs and rail transit overall.

To illustrate the strong demand for rail transit, I would note that of the nation’s top 50 metropolitan areas, all but two were planning a new start project, adding to an existing system or have a new system under construction. These are obviously our largest economic regions, but the interest in and support for rail transit and other fixed guideway projects such as Bus Rapid Transit (BRT) goes well beyond these areas.

Rationing the demand for new start dollars by shifting the federal match is evidence of a larger problem. There are now examples where new start project sponsors won’t receive their full federal funding commitments pursuant to existing FFGAs until after the project has been completed and is operating. These developments suggest that there is an urgent need to find additional resources to meet this growing demand under the program.

Mr. Chairman, the key message of our coalition is that the federal shares on rail and highway projects should be the same. If there is decision to reduce the federal share for new start projects, it should be coupled with a change in the federal match for new highway capacity projects. This core principle of parity between transit and highways is one we would urge this Committee to adhere to as you develop legislation renewing TEA-21.

Transit Innovations Initiative: Mr. Chairman, I would urge this Committee to look for additional incentives to prompt transit providers to embark on the next generation of system improvements, like innovative ways to promote institutional cooperation as I discussed earlier, deploy new technologies, or coordinate investments with local land use plans, as examples of target areas of inquiry. As we look to grow transit use and the knowledge that supports these efforts, we must make the relatively modest investments here to prompt further transit innovations, just as the earlier Service and Methods Demonstrations Program laid the foundation for services and transit improvements that are growing transit service today.

We would urge that such a program, investing funds with transit providers and others, should be required to ensure that the results are transferable, including strong information and technical assistance features, and that there is a strong evaluation element. We recognize that earmarking would be a threat to such an initiative, as it has with other existing programs, but we would urge you to move forward with such a program anyway, given the need for modest funding in this area.

Shift Focus of JARC Program to Existing Areas: A key policy initiative in TEA-21 was the enactment of the Jobs Access and Reverse Commute (JARC) program which was one of STPP’s top priorities. We commend this Committee for your leadership in successfully garnering support for the enactment of this program. Since 1998, we have developed a substantial record showing how this relatively modest commitment of resources made a difference in taking on the very large task of helping the many people transitioning from welfare to work. Much of the early debate and program emphasis was on transit and other transportation services aimed at connecting workers, often in cities, to job centers, which were generally further away in suburban locations. We are now more knowledgeable about some of the real challenges that exist and the opportunities that are available. One recommendation is to refocus some of the resources on improving transit services within core built-up areas, which are not always well-served. The research shows that there are more jobs available to workers in their existing core areas through attrition and replacement jobs in much closer proximity. JARC resources should be redirected to these core areas as well to help improve transit services where such services now exist or can be readily expanded, avoiding car purchase assistance that places these individuals and their families at considerable financial risk. Mr. Chairman, we would be pleased to work with the Committee and provide suggestions on this redirection of the program.

Commute Benefit and Transit Assistance: One of the most powerful actions taken by the Congress in support of public transportation over the last decade were changes in the Tax Code in 1993 that made commute benefits more viable and expansive. With TEA-21, this benefit now provides $100 per month in pre-tax income and narrowed the disparity with parking which is set at $185 per month. Unfortunately, this benefit has not been aggressively marketed, described or made easy for the private sector to administer and provide to their employees. We believe that transit providers haven’t done all they can do to make this benefit more readily available to employers and employees. We would urge you to look at ways to prompt providers, including conditioning future FTA formula funds, to put programs in place that assist employers in delivering the benefit more efficiently.

Consistency of Highway Reviews and Transit Project Oversight: I want to commend this Committee for your oversight of the forecasting, planning and project delivery of FTA’s programs where such progress has been made that now transit proponents are in the position to cite the "new starts" process as a model for other federal capital programs. Congressional scrutiny directed at transit capital efforts in previous years has resulted in numerous reforms that make project sponsors meet rigorous standards for new investments, which ensures strict cost controls and other outcomes during the construction cycle and subsequent operation of the project.

In your joint review of the legislation renewing TEA-21, we would urge you to work with the Senate Environment and Public Works Committee to share some of these innovations such as FFGAs with the highway program. We need to ensure some balance so that the rigors, including strict cost controls, that now apply to transit capital projects are extended in similar ways to larger highway projects, ensuring some level of consistency between these modes. Importantly, there are examples of runaway highway capital projects where unchecked project costs have adverse impacts on state transportation plans, displacing resources destined for other transportation investments. Mr. Chairman, you and this Committee should be proud of the safeguards that you have put in place for major transit capital projects and the record you have built in delivering increased accountability in the use of federal funds.

Further Enable TOD: Transit and more broadly Transportation-Oriented Development is an area that we are now reviewing to determine how existing law can be further developed to support these efforts. Initially, we are recommending that broader eligibility be accorded to TOD initiatives in station projects, so that the shell for key services such as customer serving retail, day care and social services can be constructed as part of FTA funded projects. One example we have found is the Maplewood, New Jersey Transit Concierge, in which local businesses have banded together to offer all of their services and products through a concierge located in the station building. In addition, we have discovered that certain provisions of the current Joint Development regulations regarding leasing are serving as a barrier to the financing of affordable housing at transit station locations. A legislative solution may be required. Finally, we recommend that the Innovative Finance provisions of TEA-21 be amended to allow value capture from transit-oriented development to be counted as a revenue stream to finance New Starts.

Planning and Corridor Studies:

The Committee has joint jurisdiction with the Environment and Public Works Committee over the planning and project selections provisions of TEA-21. These provisions, which govern both state and metropolitan planning for highways and transit, are far reaching and comprehensive. The 2000 Census will require adjustment to most metropolitan areas, and this may offer an opportunity to enhance the metropolitan planning process by reaffirming the status of the Metropolitan Planning Organizations, their representativeness and their planning processes. We are particularly interested in ensuring that the planning process becomes more of a strategic planning process geared toward economic and environmental outcomes. One way to do this is to use new decision support tools to integrate alternative land use scenarios into transportation corridor studies. Such scenario based planning can help to break the logjam that exists between local zoning and the market demand for transit-oriented development and walkable communities by demonstrating the public support for these kinds of projects.

Closing Comments

In this testimony, I have outlined some initial recommendations on ways to improve the transit program as you move forward with legislation renewing TEA-21. STPP is now crafting a much broader agenda that will offer further detail on these and other program areas such as ADA and paratransit, clean air-related improvements and program flexibility. We will share these and other proposals with you and the Committee once we finalize our agenda.

Mr. Chairman, I want to close my comments by recognizing the considerable progress that has been made in increasing the use of public transit, which continues to outpace the growth of both vehicle and air travel. This is a result of the commitment of resources under TEA-21. It is also due to other factors and trends underway in America. And, Mr. Chairman, transit’s success is also the result of the leadership that this Committee has provided on these issues. Thank you for the opportunity to appear before you today.



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