Chapter 7
IMPLEMENTATION

Overview and Key Issues

Implementing any major public transit strategy - especially one which involves multiplegovernments and a large commitment of public money, is a complicated process. So while the decision-making process outlined in this chapter reflects a logical process, the actual flow of decisions will probably consist of many pauses and restarts. The funding issue is difficult enough (Who is going to pay how much for what?), but even several of the operational decisions and institutional roles may need to be revisited after the funding issue is resolved.

The critical decisions that comprise the implementation strategy include:

• Government/Agency Roles
• Analysis of Alternatives
• Operations
• Phasing
• Funding
• Land-use Issues
• Public Involvement

This chapter discusses each of the key issues listed above, presents examples of financing scenarios, and lists various potential federal funding sources.

This chapter also examines three measures of effectiveness commonly used to determine the feasibility of major investments in new transit systems in the US. In all three of these comparisons, commuter rail for Dane County falls in the range of cost-effectiveness found to be feasible and thus eligible for Federal transit capital funds.

Given the many ways that the implementation process can unfold, and based on the experiences of numerous urban areas in the United States, the following analysis should be looked at less as a plan than as a collection of critical decisions. These many decisions will have to be made before a commuter rail system or any capital-intensive transit system can be implemented in Dane County. The timeline depicts a best-case scenario in which each decision is made in logical progression (and only once each). It assumes that an analysis of alternative major transportation improvements will begin in early 1999 and that planning elements and (preliminary) decisions from the commuter rail implementation strategy are fed into the planning process.

TIME LINE

7.1 Government and Agency Roles

The initial step should be to gauge possible or probable roles for governments at local, state, and federal levels. The respective Dane County and Madison policy positions and possible implementation responsibilities should be thoroughly discussed, as should those of other local units in the county. Madison Metro would have a critical role in this process and is here considered to be part of the City of Madison.

The Wisconsin Department of Transportation should also play an important part in rail implementation and should be brought into the process at its inception, both because of its expertise and interest in innovative transit strategies and because of the possibility of state funding for both capital, and operations and maintenance. As a major employer in Dane County, the State will also gain the benefits of a multi-modal transportation system. The State can also play a crucial role in preserving railroad rights-of-way, which may be threatened with abandonment or sale. Early discussion with key state legislators would also be helpful to garner additional state support.

Since it is almost certain that federal capital dollars will be sought, Federal Transit Administration (FTA) staff should be informed of the study's recommendations as well as the probability that a federal grant will be sought. Likewise, appropriate congressional staff should be contacted early in the process. Competition for Federal funds is intense, so an early start in this process is mandatory.

7.2 Feasibility Determination

7.2.1 Cost Effectiveness

Chapter 4 detailed the assessments of capital and "O&M" (operating and maintenance) costs for both the "full build" commuter rail program (with service on four lines radiating from downtown Madison to major centers in Dane County), and the initial "starter line" (or first phase of commuter rail development). The potential ridership for both options was discussed in Chapter 6. To assess the feasibility and cost effectiveness of commuter rail, common measures used are ratios of cost per new transit rider, and the operating cost per passenger mile.

The Cost-Effectiveness Index (CEI) is frequently used to compare projects around the country to assess their feasibility. The CEI includes the annualized cost of capital plus the annual O&M costs, divided by the number of new transit riders attracted by the improved transit system. Annualized capital costs are shown in Appendix B. In the case of the Starter Line, the CEI for Dane County commuter rail is calculated at $6.50 to $7 per new rider, while the full four-line plan has slightly higher costs per new rider ($8 to $9). The annual O&M costs per passenger mile are calculated at 32 cents for the starter line, and 31 cents for the full-four line plan.

Cost-Effectiveness Index (CEI)

= (Annualized Capital Cost + O&M) / new rider

- Starter System: $ 6.50 - $ 7.00
- Full System: $ 8.00 - $ 9.00

Annualized O&M Cost Per passenger mile

- Starter System: $ 0.32
- Full System: $ 0.31

To place the Dane County commuter rail plan in perspective with other "new start" rail projects around the US, the following two tables present a comparison of annual cost per new rider and operating cost per passenger mile. In these two comparisons of cost effectiveness, both the starter line and the full build plans show cost ratios in the same order-of-magnitude range with other new starts that have been successful in receiving Federal capital funds. These other "new starts" were selected for comparison since all involve use of existing railroad rights-of-way. Most (if not all) cities considering commuter rail are trying to take advantage of existing railroad right-of-way. Because the railroad right-of-way are available in these areas (similar to Dane County), the costs remain reasonable and make a good basis of comparison for Dane County.

Cost Effectiveness Index - Annualized Cost per New Rider

• San Diego LRT (Escondido Line) $ 3.70
• Dallas Phase 2 (Trinity Express) $ 4.50
• Miami-W. Palm Beach $ 7.00
• Dane Co. "Starter" $ 7.00
• Dane Co. Full Build $ 9.00
• Durham-Raleigh CR $11.60

Operating Cost per Passenger Mile

• Dallas Phase 2 (Trinity Express) $ 0.05
• San Diego LRT (Escondido Line) $ 0.17
• Miami-W. Palm Beach $ 0.29
• Dane Co. Full Build $ 0.31
• Dane Co. "Starter" $ 0.32
• VA Beach LRT $ 0.38
• Durham-Raleigh CR $ 0.44

7.2.2 Wisconsin DOT Farebox Criterion

One additional cost-effectiveness criterion, frequently referred to as the "farebox recovery ratio," evaluates the percentage of operating costs that are covered by passenger revenues. WisDOT policy for participation in further commuter rail studies requires a ratio at least 85 percent of the average farebox recovery of current commuter rail operations in the US. In 1996, the national average was 40 percent; therefore the Wisconsin farebox recovery should equal or exceed 34 percent. The following table shows the annual fare revenue forecasts and the estimated recovery ratio (annual fare revenue/annual operating and maintenance costs) based on both the starter and full commuter rail systems. In both cases, the ratio is well above the 34 percent threshold established by WisDOT policy.

7.3 Further Detailed Study

This report contains an analysis of the feasibility of implementing commuter rail service in Dane County. It does not, nor was it intended to, compare the desirability of such service with other transit options, such as light rail or enhanced bus service. Before decisions are made it will be necessary to complete a regional study that considers commuter rail as part of an overall public transportation strategy and that weighs this mode's costs and benefits against other alternatives.

Currently, federal regulations require the completion of a comparison of alternatives which would result in a locally preferred transportation strategy. TEA 21 has directed the US Department of Transportation to issue new regulations for the kind of detailed alternatives analysis required. Although DOT agencies have begun deliberations on new requirements, it is unclear when they will be issued. Still it appears likely that, although the term "MIS" will disappear, the new regulation will require substantially the same kind and level of analysis as in a MIS. This includes a detailed evaluation of a broad range of transportation alternatives in a corridor or sub-area and an extensive public involvement program. Consequently, if there is continued interest in implementing major transit improvements, Dane County and other governmental units should proceed with a MIS-type study.

Implementation planning should continue during the rail planning activities that may be completed as part of the detailed study of alternatives. Delaying the planning of appropriate operational roles and funding options until the end of the MIS-type study could delay implementation of the commuter rail elements of a (possible) multi-modal preferred alternative.

7.4 Operations

A series of operational issues should be considered early in implementation planning. These include further considerations of station locations and maintenance facilities, along with schedules and types of passenger equipment. Although such decisions seem quite obvious, collectively they will determine the degree to which the system will ultimately succeed. Details matter to prospective passengers. Land development planning for station areas is also an early-action issue and is discussed further in Section 7.6.

In addition, the institutional issue of identifying a potential owner/operator of a system operator should be considered at an early stage. Possibilities include Madison Metro's management of the system, as well as using Wisconsin & Southern as a private operator for contract services. Regardless of the potential rail operator, the integration of rail operations with the existing, or expanded, bus system should be analyzed in greater detail, including the potential for reducing overlapping or parallel services.

7.5 Phasing

Although a possible commuter rail starter line is found to be feasible in this report, further options for phasing in a complete system should be considered in the context of other required decisions, especially the financial issues that are discussed below. Indeed, the very desirability of phasing should be debated. Starting with a low-cost "demonstration" line that fails to convey a sense of commitment or permanence could reduce chances for success. A limited-service starter line could likewise fail to attract sufficient riders and could lead to failure. The Washington Metro, for example, has taken decades to complete. Yet there has always been a commitment to complete the system. The lessons learned in Washington, San Diego, Dallas, Denver and other successful "new start" rail systems should not be overlooked. They all built the costly but heavily-used central segments first, then added extensions to areas where ridership forecasts were lower.

7.6 Land-Use Issues

In a medium-sized metropolitan area, land-use and development decisions can be critical to the success of a transit strategy. As Dane County's land-use planning continues, the rail planning team should provide transit-related recommendations for that process. In addition, local and county planners, as well as individual developers, should continue discussion on station-area planning and possibilities for joint development along potential routes. The level of interest, and possibly financial commitments and/or dedication of land for stations, parking and access, could be important factors in making decisions on phasing in of rail lines.

Dane County's current 2020 land-use plan recommends relatively dense development, especially near the center of Madison, the heart of any rail transit system. In a sense, then, the County is already planning "transit-oriented development" in that the planned density is both sufficient to support transit, and may not have the required accessibility without transit.

A variety of land use and transportation policies have been used throughout the US to impact development patterns. The list below illustrates the range of policies available to local jurisdictions:

• rezoning
• transit-friendly design guidelines
• density bonuses for development adjacent to stations
• tax increment financing (TIF) districts
• development of new public offices within walking distance to transit stations
• urban growth boundaries
• zoning changes outside of the transit corridor to discourage development of agricultural land
• processes for regional cooperation
• increasing parking rates
• limit construction of new parking.

7.7 Public Involvement

The need for continued dialogue with the public concerning education on transit and transportation issues and options is clear. Allocation of future government funds to transportation programs will occur only if the project achieves broad-based public support. It is also critically important to continue to have the support of the business community, the university, and others. The business community's understanding of the need for a multi-modal transportation system for Dane County has been instrumental in moving the planning process to its current stage. This support needs to continue, and finding a business "champion" may be key to making rail happen in Dane County.

7.8 Interim Bus Service Improvements

The likely implementation schedule for any major transit capital improvement for Dane County, be it commuter rail, light rail or busway, will require a four-to-five-year period for planning, preliminary engineering and environmental documentation, final design, construction, and acquisition of rolling stock. During this period, it may be possible to provide interim bus improvements by expanding Madison Metro services which could partially replicate the future rail lines.

Integrating rail and bus service was considered at a conceptual level in this study, and was assumed to be necessary from the outset. Detailed analysis and recommendations will be coordinated with Madison Metro in subsequent phases of the overall planning process. Future bus service improvements, coordinated with the commuter rail service plan, will be necessary to gain the full benefits of the County's investment in a new rail system.

While all these elements add up to an ambitious agenda, it is important that initial discussions begin soon. Issues include government and agency roles, and potential funding strategies. The discussions should produce the broad outlines of an overall strategy to move from plan to project.

7.9 Reducing Needed Future Highway Expansion

Expanded transit has been included in the Vision 2020 Dane County Land Use and Transportation Plan as a measure to reduce future traffic congestion on some of the County's main roadways. The continued growth in population and employment forecast for the year 2020 will result in greater traffic congestion levels in the future, particularly in central Madison and in the narrow Isthmus on roadways such as University Avenue and East Washington Avenue. The computer simulations performed by the Regional Planning Commission (RPC) to evaluate future traffic conditions found that an enhanced and expanded transit system would result in approximately a 50 percent increase in transit ridership in the County. The ridership forecasts developed in this study confirmed that addition of a commuter rail network by itself with no added bus service would result in a 25 to 30 percent increase in transit riders in the year 2020.

The RPC's study showed that introduction of an enhanced rail transit system, such as a commuter rail, could achieve reductions in future levels of traffic congestion, particularly in Central Madison and in the Isthmus area.

A commuter rail system using the existing railroad rights-of-way, much of which is State-owned, has the potential for serving travel needs in this restricted corridor. The rail corridor between the lakes is located in close proximity to major activity centers, including the government complex and the University. These under-utilized rail corridors also connect many of the outlying cities and villages, and parallel some of the highways which are forecast to see major increases in future traffic congestion.

In many areas, traffic growth will require either widening of existing arterial routes, or accepting a lower level of traffic service with slower speeds and serious congestion. In some areas, the cost and the impacts of such street widening will clearly be unacceptable.

The RPC has developed an example for expansion of Williamson Street, an east-west arterial in the Isthmus area, to determine the order-of-magnitude cost of adding one lane of traffic in each direction. Their study showed that for one mile, the cost in 1998 dollars would be in the range of $19 million, including $9 million to acquire the added land and nearly $8 million for relocation of families and businesses. This is not to imply that, if commuter rail is not implemented, that this type of improvement would be constructed.

Other transportation system management (TSM) measures could be applied, including banning parking on streets such as East Washington Avenue. Such steps however would have impacts on adjacent businesses. Added turn lanes at key intersections could still further impact properties and increase costs. Such TSM type improvements would likely have a cost per mile in the $2 to $3 million range.

By implementing an enhanced transit system such as commuter rail, RPC in the Vision 2020 plan has estimated that approximately 25 percent fewer miles of congested roadways would result compared to the base plan without enhanced transit. This potential reduction in the need for roadway expansion would thus reduce future capital needed for these highway and street projects, and would also reduce the accompanying impacts on Dane County neighborhoods. While no detailed studies of the scope of such widenings have been performed, this saving in future highway needs could be from $20 million to $100 million.

7.10 Funding

It is never too early to think - and talk - about money. A menu of options, federal, state, local and private, should be on the table for discussion from the start. It can be fatal for major transit projects to delay financial considerations until the answers to the other questions are known. For example, it is a given that without major federal support for capital, the project will be unlikely to proceed. Likewise, there will in all likelihood be a requirement for significant local support from some source(s). Section 7.11 contains examples of federal/state/local funding packages for both capital and operating and maintenance costs.

On the federal side, efforts should begin now to identify both sources of potential funds, including of course the many programs in TEA 21 and - equally important but more difficult - to begin the sometimes complex process for securing them. As was discussed above, this underscores the importance of early contacts with FTA and congressional staffs well before a locally preferred alternative is firmly fixed. A fuller discussion of federal funding options is contained in Section 7.12.

While certainly not impossible, securing significant federal capital support could be very difficult. The competition for new starts is intense, with the political support for a project often being more important than its technical merit. The challenge is heightened by the fact that Dane County did not get (or seek) an earmark in TEA 21 for a rail project. In effect, this means that the 190 projects that did receive authorization in the bill are already in line ahead of the County.

On the local side, early discussions with decision-makers will give an indication of both possible sources and funding packages as well as the degree of commitment to implementation. For example, all of the stations and parking facilities for Metra's new North Central commuter rail service on the Wisconsin Central were constructed and financed by the local Illinois municipalities.

After tentative conclusions are drawn from discussions on funding, it may be necessary to return to preliminary decisions reached regarding government/agency roles, operations and phasing.

7.11 Examples of Financing Packages

Ultimately, the critical financial issue at the local level is the annual requirement for local funds to meet capital, and operating and maintenance costs. It is unlikely that this project would proceed without significant federal support for capital costs. The remainder would be covered by state and/or local sources. Presumably the share borne at the local level would be covered by bonds.

The actual annual local share for capital costs, of course, depends on several important assumptions, none of which can be assumed at this stage of the implementation process. However, it is important for decision makers to have an estimate of potential costs in order to develop implementation plans. Consequently, the following examples were developed to provide those estimates and to explicitly list critical assumptions that drive the bottom-line results.

To arrive at annual capital cost requirements three examples were developed using three assumptions for the federal share: 60, 70, and 80 percent. (See Table 7-1)

Current state policy assumes an 80-percent federal share, with WisDOT covering 10 percent and local governments providing the remaining 10 percent. Although state policy assumes an 80-percent federal share, this is the maximum allowed by the FTA. It is very unlikely that Dane County would get this level of support. It is common for the federal share of other new starts to be in the 50 or 60 percent range. For purposes of this analysis it was assumed that the state covered 50 percent of any level of non-federal requirements. The remaining half was then covered through local sources. It was further assumed that the source of the local share was 20-year bonds with a six-percent interest rate. This is a conservative approach because recently Dane County has issued bonds with less than a five percent interest rate.

Using those arbitrary assumptions the annual local share for capital ranged from $0.8 million (80 percent federal share of starter system) to $4.9 million (60 percent federal share of full system).

Similarly, annual operating and maintenance costs depend on a number of key assumptions. For the example developed here (Table 7-2), assumptions on ridership and fares are critical. The midpoint of weekday ridership estimates developed in Chapter 6 were used, with Saturday and Sunday ridership assumed to be the comparable percentages for Madison Metro (Saturday ridership being about 31 percent of weekday and Sunday 19 percent). The average fare was estimated at 80 cents per trip, again comparable to Madison Metro. (The average is less that the nominal single-ride fare of $1 because many riders buy discounted tickets or passes.) In this example, the fares of all rail trips are included, although the changes to bus fare revenue have not been analyzed.

When fare revenues of $5.9 million per year for the full system and $3.6 for the starter line, are subtracted from the annual O&M costs developed in Chapter 4 the resulting requirements for state and/or local support are $4.8 million and $1.6 million respectively.

The state of Wisconsin's current policy is to fund two-thirds of the deficit remaining after fares and federal operating assistance are deducted for costs, leaving one-third for local support. The state currently provides 42 percent of O&M costs for transit systems. (It is not clear whether or how the elimination of federal support for O&M costs will affect state policy.)

7.12 Federal Funding Options

As was stated above, it is unlikely that this project or any major transit project in Dane County will proceed without significant federal funds. Table 7-3 at the end of this section lists potential federal funding sources for a new commuter rail line, and for the roadway upgrades, which are likely to accompany it (grade separations, grade crossing protection, and station access roadways).

In June 1998 the Transportation Equity Act for the 21st Century (TEA 21) was passed by Congress, setting the federal transportation funding available over a six-year period beginning in federal fiscal year 1998. Funds include both formula and grant funding to be used at the discretion of states and MPOs, and earmarked funds for particular projects. TEA 21 does not include any specific earmarks for commuter rail in Dane County.

Beyond earmarked funds, there are the formula funds for highways, transit, and "flexible funds" which can be spent on a variety of transportation-related projects, including public roads and sidewalks, transit capital projects, and transportation enhancements, which encompass a broad range of environmentally related activities. Much of the funds available through the programs listed in the table were anticipated by state and local transportation departments, and are likely to be committed to other projects. However, a number of states received more funding than was expected in their Transportation Improvement Plans (TIPs) and Long-Range Transportation Plans (LRTPs), so that uncommitted funds may be available from the TEA 21 allocations.

Since the passage of ISTEA in 1991, the US Department of Transportation has permitted wide state discretion in assigning portions of "conventional" highway funds to the flexible funding pool, thus widening the funds potentially available for transit projects. Commuter rail should therefore be considered eligible for Federal Interstate Maintenance, National Highway System, Bridge Rehabilitation & Replacement Program, and the Minimum Guarantee programs. However, Wisconsin has not used these programs for new transit service in the past.

For transit operations there is no longer any federal assistance.

The TEA 21 legislation also included a number of new programs and provisions, which may affect financing decisions for the project. These include:

• "Job Access and Reverse Commute Grants" - A new Federal funding source was created to increase access to jobs for low-income workers. This program is authorized to receive up to $150 million per year in FY 1999-2003, with 20 percent of the grant going to urbanized areas with less than one million population. Up to $10 million per year can go to reverse commute projects, defined as transportation to suburban job opportunities. Funds from non-DOT Federal programs can be used to pay for the local match, which is 50 percent.
  The program offers discretionary grants for transportation to qualified low-income individuals. Funds can be provided for capital, operating and maintenance expenses, for promoting transit use by workers with non-traditional work hours, for promoting the use of transit vouchers by appropriate agencies, and for promoting the use of employer-provided transportation and transit pass benefits.
  
  
• Title IX of TEA 21, the tax title, may influence farebox revenues by increasing the tax benefit of employer-provided transit passes from the current $65 per month to $100 (beginning in calendar year 2002). This section clarifies that the value of any transportation fringe benefit - including free parking, transit passes or vouchers, and vanpool benefits - is not counted as taxable income if an employee is offered a choice between taxable cash benefits and any combination of transportation fringe benefits.
  
  
• Section 3011: For FY 1999-2003, the local share of transit funding can include proceeds from the issuance of revenue bonds, provided that the total amount of state and local support for transit in the urbanized areas in the next three fiscal years is not less than the total amount over the previous three years.
  
  
• The Transportation Infrastructure Finance and Innovation Act (TIFIA), allows US DOT to provide credit assistance on flexible terms directly to public-private sponsors of major surface transportation projects to assist them in gaining access to capital markets. TIFIA provides $530 million in contract authority over FY 1999-2003, and authorizes US DOT to collect fees from borrowers, to fund up to $10.6 billion of direct loans, loan guarantees, and lines of credit to support up to 33 percent of project costs.

7.13 Other Funding Options

The construction costs of any major investment in commuter rail is likely to include contributions from a variety of sources. The listing below indicates potential funding sources by project element. In addition to federal sources, it lists non-federal sources that could be utilized to "match" or to leverage Federal dollars.