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FTA Releases Its Priorities for CIG Grants

In a June 29 letter, FTA highlighted its priorities for administering the Capital Investment Grants (CIG) program. Under CIG, public transit projects go through a rigorous process (including an environmental review, securing non-federal funding, engineering and design, risk analysis, and other criteria, which are evaluated and rated) before qualifying for a full funding grant agreement. In addition, FTA has made changes to its risk assessment process.

The “Dear Colleague” letter states that FTA bases its funding allocation decisions on a “variety of factors including the extent of the local financial commitment, project readiness and geographic diversity.”

In evaluating a project’s local financial commitment, FTA views U.S. DOT loans (i.e., TIFIA and RRIF loans and loan guarantees) “in the context of all federal funding sources requested by the project sponsor and not separate from federal funding sources.” In addition, FTA will consider the extent to which the project exceeds the required non-government share of the project cost and uses “value capture, private contributions and other innovative approaches to project development and delivery such as public-private partnerships.”

The letter further states that, if FTA decides to proceed with a construction grant agreement, FTA does not sign the agreement committing CIG funding until after the project sponsor has demonstrated that its project is ready for such an agreement. This includes assurance that the project’s development and design have progressed to the point where its scope, costs, benefits and impacts are considered firm and final; the project sponsor has obtained all non-CIG funding commitments; and the sponsor has completed all critical third-party agreements.

FTA Acting Administrator K. Jane Williams said, “The Federal Transit Administration believes it is timely to share with our grantees information on our Capital Investment Grants Program to highlight certain elements of existing CIG policy along with the agency’s risk assessment process, so that we may better evaluate projected cost, scope and schedule of projects in the CIG pipeline.”

According to an FTA spokesperson, “this communication is intended to clarify existing requirements for the CIG program to grantees. FTA will continue to evaluate projects in the CIG program consistent with the existing statute and policy guidance. Since January 2017, FTA has signed 10 CIG grant agreements throughout the nation totaling approximately $1.9 billion in commitments.”

APTA President and CEO Paul P. Skoutelas said, “APTA appreciates FTA’s outreach regarding its priorities in considering [CIG] grants. These grants provide critical federal funding for New Start, Core Capacity and Small Start projects, and have received sustained bipartisan support from Congress.”

He continued, “As communities across the country work to advance forward-looking projects in an expedited manner, APTA will work with its members and the respective committees to review the ‘Dear Colleague’ letter to better understand its implications and impact. The letter raises some issues of concern to the industry that will require additional review and dialogue with the FTA, such as including Department of Transportation loans in the context of federal funding sources when evaluating CIG projects; including geographic diversity as a criterion for projects; and changes to the risk assessment process.”

With regard to the risk assessments, FTA will now conduct those for New Starts and Core Capacity projects prior to entry into the engineering phase. Also, it may perform updates to the risk assessment and scope, cost and schedule reviews prior to awarding a construction grant agreement. For Small Start projects, scope, cost and schedule reviews and a risk assessment may be conducted during the project development phase.

In addition, FTA has increased the probability thresholds it uses to undertake risk assessments. When evaluating a project’s cost and schedule, FTA considers the degree to which the estimates include reasonable assumptions or whether adjustments need to be made. FTA then examines risks related to the project to determine the appropriate level of contingency needed. FTA will now use a 65 percent probability threshold to determine the reasonableness of estimates of both a project’s cost and schedule, instead of the previous 50 percent threshold.

For more details, go to the FAQ on FTA’s website.

FTA also intends to publish revised CIG policy guidance later this year for notice and comment. Contact Elizabeth S. Riklin, acting associate administrator for planning and environment, at 202-366-4033.
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