Here is VTA (outgoing) GM Peter Cipolla's response to
the FTA "Dear Collegue" letter posted here...

--eugene

========== FORWARDED LETTER ==========

SANTA CLARA VALLEY TRANSPORTATION AUTHORITY
3331 N. First Street
San Jose, CA 95134-1906
March 24,2005

DOT DMS Docket Number FTA - 2005-20585 - 9
Docket Management Facility
US Department of Transportation
400 7h Street, S.W.
Room PL-401, Washington, D.C. 20590-0001

Sent by FAX; 202-493-2251

RE: Dear Colleague Letter

To Whom It May Concern:

The Santa Clara Valley Transportation Authority (VTA) welcomes the
opportudty to provide comments on the proposed modification to the New
Starts rating proces$ as described in the Federal Transit Aclmnistration
(FTA) "Dear Colleague" letter dated March 9, 2005. We fully support the
efforts of the FTA making the project evaluation process more transparent
and to ensure that all projects supported through this ptocess are cost
effective.

VTA is very concerned with the decision included in the "Dear Colleague"
letter to modify the criteria to further constrain cost effectiveness by
requiring a "medium" or higher rating to achieve a recommended project.
This change further reduces projects that would be considered cost
effective (and therefore recommended for funding) from $25.00 to $19.99.
In addition, it eliminates any consideration of transit supportke land
use as an evaluation criterion for projects with a cost effectiveness
rating above $19.99. The result of this change is that the five project
justification criteria in the originla1 legislation, reduced to two
criteria (cost effectiveness and transit supportwe land use) in 2003,
are now reduced to one criterion - cost effectiveness. In addition, no
credit for inflation has been attributed to the cost effectiveness numbers
despite the fact that project proponents are required to inflate their
project costs in the calculation. This further constrains the viability
of projects to qualify for a recommended rating and resullts in projects
losing their rating over time; even though the user benefits and the base
project costs have not changed.

For the reasons outlined above VTA requests that FTA not implement the
change to require a "medium" project cost effectiveness rating. In
addition, VTA recodends that this and all future changes to the
evaluation criteria be required to complete the Notice of Proposed
Rulemaking (NPRM) process.

Relative to the five potential changes that were proposed for comment
in the letter we offer the following for your consideration:

* _Adjusting the cost effectiveness thresholds to reflect inflation,
potentially on a regional basis_
VTA fully supports this prodosed modification in concept, particularly if
implemented at the regional level. However, additional study needs to be
conducted to determine the appropriate index to be used to inflate the
cost effectivenes threshold. The index chose4 must fully address
construction related costs. In addition, the index must reflhct regional
factors such as workers compensation requirements, land acquisition costs
or other factors that will vary significant between regions and could
significantly skew the project ratings.

In addition to being used to adjust the cost effectiveness ratings
annually, the construction cost index must be used to inflate project
costs from year to year financial section of the New Stats Update.
Currently project proponents select the rate they propose to inflate
their costs. Some are using the Consumer Price (CPI), which does not
address construction cost inflation. At VTA we have 3.5% based on our
construction experience over the past 10 years. While we feel confident
that we are accurately representing the cost of our project, we are
penalized in the cost effectiveness ratings for using such a high rate
as compared with other projects. Consistent guidance for all projects
is needed.

* _Perrnitting the use of the 2030 planning horizon_
We fully support the implementation of this change. We further support
the change being included in the May 2005 guidance for the 2007 New
Starts Report as our MPO has already implemented this change. VTA has
also implemented this change in our long-range plan and transportation
model.

* _Adjusting the annualized costs to reflect standard cost categories
and revise assumptions, consistent with recently updated useful life
estimates_
VTA supports the use of standard cost categories. In addition, we are
conceptually supportive of the revision of the useful life assumptions.
However, we strongly recommend full review of the revised useful life
assumptions by the industry prior to their adoption. In addition, we
request clarification of the applicability of those useful life
assumptions to eligibility for Fixed Guideway Modernization funds and
rolling stock replacement capital funds.

* _Permitting the use of modal constants in travel demand forecasting
models represent demonstrated consumer preferences_
VTA has several concerns associated with this proposed modification. In
implementing this change it will be critical to identify a transparent
and equitable methodology to determine and apply consumer preference
constants. It should be recognized that this modification clearly
slants the New Starts process to support Bus Rapid Transit projects
in the process.

* _Excluding "Soft Costs. fiom the calculation of cost effectiveness_
VTA fully supports this proposal. The definition of "Soft Costs" should
be outlined to ensure consistent application between projects. In
addition, the definition of "Soft Costs" for this purpose should be the
same as "Soft Costs" as defined by the new FTA standard cost categories.
These costs should include all professional services.

VTA fully supports the FTA efforts to more accurately capture the
congestion benefits of New Starts projects. The current VTA
transportation model has such a measure. We would welcome the
opportunity to share that with you, and to review any proposals you my
have for such a measure. In addition, VTA fully supports retaining land
use and economic growth as measures used to evaluate projects. We would
welcome the opportunity to review the FTA proposed methodologies to
improve those measures.

Thank you for the opportunity to comment on these proposed changes. Please
contact Ann Jamison, Deputy Director, Planning and Congestion Management,
with any questions or clarifications relative to our comments.

Sincerely,


Peter M. Cipolla
General Manager

Cc: Jennifer L. Dom, FTA Administrator
Leslie T. Rogers, FTA Region 9
VTA Board of Directors
Carolyn Gonot, VTA
Kurt Evans, VTA
Ann Jamison, VTA
Kevin Connolly, VTA

========== END FORWARDED LETTER ==========