When Congress created the transit capital improvement grants or New Starts fund in 1991, it required that each proposed project be “justified based on a comprehensive review of its mobility improvements, environmental benefits, cost effectiveness, and operating efficiencies.” Initially, the Federal Transit Administration measured “cost effectiveness” in dollars per new rider: the annual operating cost of the project plus the amortized capital cost divided by the projected number of annual new riders.
While a useful measure, the FTA made no effort to enforce it. While transit agencies calculated that bus projects (such as bus-rapid transit) typically cost about $5 per new rider and rail projects typically cost $20 to $100 per new rider, the agencies routinely selected the rail projects even though they clearly weren’t cost effective.
In 2003, U.S. representative from Oregon, Earl Blumenauer, convinced Congress to carve out a portion of New Starts for what he called Small Starts: smaller transit projects that would only cost a couple of hundred million dollars. He specifically expected that the money would be used for streetcars. Continue reading
