Skip to Content
Streetsblog USA home
Log In
Federal Transit Administration

U.S. DOT to Stop Rewarding Transit Projects That Use Private Contracts

1:45 PM EDT on September 2, 2009

The Obama administration will reverse a Bush-era policy that gave proposed transit projects a leg up in the chase for federal money if their operations and maintenance were to be contracted out privately, according to a regulation finalized today.

NA_AY921_TRANSI_G_20090712150850.jpgRiders in New Orleans, where streetcars are soon to be operated by a private contractor. (Photo: WSJ)

The change is one of three that the Federal Transit Administration (FTA) plans to make to its oft-criticized "New Starts" program for funding major new investments.

As the FTA explained in its regulatory filing, since 2007 the agency had been rewarding transit proposals that used "innovative contractual agreements" to bolster their local financing commitment (emphasis is mine):

Specifically, FTA increased theoperating financial plan rating (from 'medium' to 'medium-high' orfrom 'medium-high' to 'high') when project sponsors providedevidence that the operations and maintenance of the project will becontracted out ...

FTA has determined that the type ofcontracting arrangement used or considered by a project sponsor is notuseful or appropriate in determining the strength of the overallproject.

Contracting out for transit operations and maintenance has become something of a trend this year, with New Orleans, Phoenix, and Savannah all eyeing deals with private businesses.

It's unclear how many "New Starts" projects were affected by the old rating system, but the practice of rewarding transit contractor use jibes with the Bush administration's overall affinity for privatizing government functions in defense and emergency management.

In addition, the FTA's new regulations speak to the need for a broader reform of the transit-funding process as part of the next long-term congressional transport bill. Using "New Starts" as a model for high-speed rail funding agreements, as Yonah Freemark has suggested, would seem to be a premature move until the program is retooled.

Stay in touch

Sign up for our free newsletter

More from Streetsblog USA

The Price Is Right for Tuesday’s Headlines

If congestion pricing works in New York City, City Lab predicts that other U.S. cities will quickly follow suit.

November 28, 2023

Top NJ Lawmaker Proposes Major Reforms to Fight Temporary License Plate Fraud

The new legislation follows a seven-month Streetsblog investigation that found widespread fraud involving temp tags, with car dealers abusing weak state regulations and selling paper plates illegally to drivers using them to evade accountability on the road.

November 28, 2023

DOT’s New Emissions Rule is a Big Deal, Even if It Doesn’t Punish States for Polluting

No states will face penalties for building needless toxic road projects — but they also won't be able to hide those impacts from the public.

November 27, 2023

Monday’s Headlines Need Less Oil

E-bikes are a great alternative for short trips, and they're actually saving more fossil fuels that electric cars.

November 27, 2023

Highway Boondoggles 2023: This Bridge is a Bridge Too Far

Presented by local transportation authorities as a simple bridge replacement, an expensive, oversized highway expansion threatens to worsen congestion in Vancouver and Portland

November 27, 2023
See all posts