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To emphasize the importance of a sound operating financial plan, as well as to provide incentive for greater overmatch by project sponsors, FTA is proposing that the stability and reliability of the operating finance plan and the stability and reliability of the capital finance plan be given equal weighting to arrive at the overall local financial commitment rating.  The Small Starts share would be considered only as a bonus measure.  If a project sponsor proposes a Small Starts share less than 50% of the total project cost and the overall local financial commitment rating is “medium” or “medium-high”, then the overall local financial commitment rating will be raised one level.  If a project sponsor proposes a Small Starts share of 50% or above (up to the statutory maximum of 80%), the local financial commitment rating will not be changed.  This proposed change responds to direction in SAFETEA-LU that FTA evaluate the percent of Small Starts share, as required by Section 5309(d)(4)(B)(v), while ensuring that no project is required to provide more than the required 20 percent match as provided in Section 5309(h)(5).  

The following decision rules with regards to the local financial commitment rating also apply:

If either of a proposed project’s operating or capital finance plans receives a MediumLow or Low rating, the summary finance rating for the project cannot be higher than a Medium-Low.

To receive a summary financial rating of Medium-High, both the capital and operating finance plans must be rated at least Medium-High.

FTA will use three sub-factors to develop the ratings for the stability and reliability of the capital and operating finance plans when evaluating local financial commitment of Small Starts projects: 1) Condition, 2) Commitment and 3) Capacity / Estimates/Assumptions.  

FTA will weight the three sub-factors as follows:

25% for condition,

25% for commitment, and

50% for capacity/estimates/assumptions.

The degree to which a project employs innovative contractual agreements will be considered in the evaluation and rating of the operating finance plan.  

To encourage project sponsors to examine innovative operating arrangements that might result in cost savings, FTA is proposing to provide a bonus that will increase the operating finance plan rating one level from “medium” to “medium-high” or from “medium-high” to “high”, if the project sponsor can demonstrate it has provided the opportunity for the operation and maintenance of the project to be contracted out.  FTA will not apply the bonus if the operating finance plan is rated below “medium”. 

Federal Transit AdministrationPage 17

Guidance on New Starts Policies and ProceduresJuly, 2007

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