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Status of the Nation's Highways, Bridges, and Transit:
2004 Conditions and Performance
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Chapter 7 (Continued)

Transit Investment Requirements

The FTA uses the Transit Economic Requirements Model (TERM), a model based on engineering and economic concepts, to estimate total capital investment needs for the US transit industry. TERM was developed to improve the quality of these FTA estimates. The 1997 C&P report was the first edition of the report providing investment requirements based on TERM.

This edition of the C&P report uses TERM to project the dollar amount of capital investment that will be required by the transit sector to meet various asset condition and operational performance goals by 2022. These capital investment requirement estimates are based on the asset condition estimation process and results provided in Chapter 3, ridership growth projections, and data from the National Transit Database (NTD) on the existing transit asset base (e.g., number of vehicles and stations) and operating statistics (e.g. operating speed). Since the last edition of the report, the accuracy of the asset inventory and asset deterioration in TERM has been improved through special data collection efforts and engineering surveys also discussed in Chapter 3. Ridership forecasts have been revised downward very slightly since the last report, by 0.1 percent per year, based on updated information collected from an expanded list of MPOs. All investments identified by TERM are subject to a benefit-cost test, which requires that all investments incorporated in the model have a benefit-cost ratio that is greater than 1. The benefit-cost component of TERM has been updated and refined since the 2002 report to be much more responsive to changes in infrastructure costs. The investment requirement estimates presented here have, therefore, been subjected to a much more rigorous benefit-cost test than projected investment requirements based on TERM provided in earlier editions of this report. (A technical description of TERM, including an explanation of changes made to the benefit-cost component of TERM since the last edition of this report, is provided in Appendix C.)

TERM projects capital investment requirements for transit for four combinations of the following investment scenarios:

Exhibit 7-8 provides estimates of the total annual capital investment that will be necessary to meet the four investment scenarios. These estimates combine those calculated by TERM with FTA staff estimates of rural and special service investment requirements. Annual investment requirements for transit are estimated to be $15.6 billion to maintain the conditions and performance of the Nation's transit system at its 2002 level (compared with $14.8 billion in 2000 dollars and $15.4 billion in 2002 dollars in the last report). To improve the average condition level of transit assets to "good" by 2022, as well as to improve performance by increasing vehicle speeds as experienced by passengers and reducing occupancy rates to threshold levels, would require an additional $8.4 billion per year for a total average annual capital investment of $24.0 billion (compared with $20.6 billion in 2000 dollars and $21.4 billion in 2002 dollars in the last report). These investment requirements assume a 1.5 percent average annual increase in ridership over the 20-year projection period compared with the 1.6 percent average annual increase in ridership assumed in the 2002 edition of this report. Investment requirements have increased principally as a result of upward revisions, on average, for rail capital costs. The impact of this cost increase has been most noticeable for the improve scenario, which shifts capital investment from bus to light rail. Since the last report, FTA has undertaken two major studies updating light and heavy rail capital cost information.

Exhibit 7-8 Summary of Average Annual Transit Investment Requirements, 2003-2022 (Billions of 2002 Dollars)
Conditions Performance Average Annual
Cost
MaintainMaintain$15.6
ImproveMaintain$17.1
MaintainImprove$22.5
ImproveImprove$24.0
Source: Transit Economic Requirements Model and FTA staff estimates.

As shown in Exhibit 7-9, replacement and rehabilitation costs are estimated to be $10.3 billion annually to maintain conditions and performance, and $11.7 billion annually to improve conditions and performance. The incremental $1.4 billion needed for asset rehabilitation and replacement under the "Improve Conditions" scenarios results from the extra investment required to rehabilitate and replace additional assets to attain an overall physical condition of "good". Asset expansion costs needed to meet the projected 1.5 percent average annual increase in ridership growth are estimated to range between $5.3 billion under the "Maintain Conditions and Performance" scenario to $5.7 under the "Improve Conditions and Performance" scenario. The amount needed to improve performance (by increasing passenger speeds and reducing crowding in systems not operating at "good" performance threshold levels) is estimated to be $6.6 billion annually.

Exhibit 7-9 Annual Transit Investment Requirements by Type of Improvement (Billions of 2002 Dollars)
Type of ImprovementMaintain Conditions & PerformanceImprove Conditions & Maintain PerformanceMaintain Conditions & Improve PerformanceImprove Conditions & Performance
Replacement and Rehabilitation$10.3$11.7$10.3$11.7
Asset Expansion$5.3$5.4$5.5$5.7
Performance Improvements  $6.6$6.6
Total$15.6$17.1$22.5$24.0
Source: Transit Economic Requirements Model and FTA staff estimates.

Average Annual Costs to Maintain and Improve Conditions and Performance

Requirements by Population Area Size

Exhibit 7-10 provides a summary of transit investment requirements by TERM scenario, area population size, and broad asset type (rail or nonrail). This information is provided in more detail in Exhibit 7-11. Eighty-seven percent of investment in transit will be required in urban areas with populations of over 1 million, reflecting the fact that, in 2002, 91.6 percent of the Nation's passenger miles were in these areas.

Exhibit 7-10, transit average annual investment requirements by area population size and mode, 2003 to 2002 (billions of dollars). Stacked bar charts comparing values for two categories. For cost to maintain conditions and performance, the value for nonrail, over 1 million population is 4.52, the value for rail, over 1 million population is 8.97, the value for nonrail, under 1 million population is 2.01, and the value for rail, under 1 million population is 0.04. For cost to improve conditions and performance, the value for nonrail, over 1 million population is 5.71, the value for rail, over 1 million population is 14.81, the value for nonrail, under 1 million population is 3.36, and the value for rail, under 1 million population is 0.11.

It is estimated that an average of $13.5 billion annually would be needed to maintain conditions and performance of the transit assets in these large urban areas, and $20.5 billion annually would be needed to improve the conditions and performance of the assets in these areas. The needs of less-populated areas (i.e., those with populations under 1 million) are estimated to be considerably lower than those of more populous areas because they have fewer transit assets. It is estimated that an average of $2.1 billion annually would be needed to maintain the conditions and performance of the transit infrastructure in these less-populated areas, and $3.5 billion would be needed annually to improve them.

Exhibit 7-11 Annual Average Cost to Maintain and Improve Transit Conditions and Performance, 2003-2022
(Millions of 2002 Dollars)
Mode, Purpose & Asset Type
Cost to Maintain
Conditions &
Performance
Incremental
Cost to Improve
Conditions
Incremental
Cost to Improve
Performance
Cost to Improve Conditions &
Performance
Areas Over 1 Million in Population
Nonrail (*)
Replacement & Rehabilitation (Vehicles)
(Nonvehicles) (**)
$2,275
1,049
$434
12
  $2,709
1,061
Asset Expansion (Vehicles)
(Nonvehicles)
639
525
14
0
  653
525
Improve Performance(Vehicles)
(Nonvehicles) (**)
    331
373
331
373
Special Service(***)(Vehicles) 38 21  59
Subtotal Nonrail  4,526 481 705 5,711
Rail
Replacement & Rehabilitation(Vehicles)
(Nonvehicles) (**)
1,468
3,787
253
358
  1,721
4,145
Asset Expansion (Vehicles)
(Nonvehicles) (**)
914
2,803
0
99

914
2,901
Improve Performance(Vehicles)
(Nonvehicles) (**)


652
4,480
652
4,480
Subtotal Rail  8,972 7105,131 14,813
Total Areas Over 1 Million 13,4981,1915,836 20,524
Areas Under 1 Million in Population
Nonrail (*)
Replacement & Rehabilitation (Vehicles)
(Nonvehicles) (**)
748
409
94
0

842
409
Fleet Expansion (Vehicles)
(Nonvehicles) (**)
238
123
5
0

243
122
Improve Performance (Vehicles)
(Nonvehicles) (**)
    178
538
178
538
Special Service (***)(Vehicles)215116  331
Rural(Vehicles)
(Nonvehicles) (**)
277
5
121
10
283
681
15
Subtotal Nonrail 2,0143461,000 3,360
Rail
Replacement & Rehabilitation (Vehicles)
(Nonvehicles) (**)
1
14
0
0

1
14
Fleet Expansion (Vehicles)
(Nonvehicles)(**)
6
19
0
1

6
20
Improve Performance(Vehicles)
(Nonvehicles) (**)


10
57
10
57
Subtotal Rail  40167 108
Total Areas Under 1 Million 2,054347 1,067 3,467
Total15,5521,5376,90323,992
(*) Buses, vans and other (including ferryboats.)
(**) Nonvehicles comprise guideway elements, facilities, systems, and stations.
(***) Vehicles to serve the elderly and disabled.
Source: Transit Economic Requirements Model and FTA staff estimates.
Q. Why has the amount required to rehabilitate and replace the nonrail infrastructure in both densely and less densely populated urbanized areas increased by more than 35 percent since the 2002 edition of this report?
A.

Estimated capital investment requirements for nonrail vehicles in these areas increased due to upward revisions in estimated replacement costs of these vehicles as reported to FTA. Estimated nonrail vehicle rehabilitation and replacement costs are on average 30 percent higher than they were in 2000 as presented in the 2002 report. The amount needed to rehabilitate and replace nonrail, nonvehicle assets also increased because data collected by the Asset Conditions Reporting Module (ACM) and from the New York Metropolitan Transportation Authority (MTA) revealed that the size as indicated by the value of this infrastructure, principally facilities, was considerably larger than previously estimated and, although in very marginally better condition, would require higher rehabilitation and replacement expenditures to support a more extensive infrastructure. Enhancements to the benefit-cost module and lower projected growth in passenger travel on transit exerted downward pressure on projected nonrail needs; however, these impacts were outweighed by the revisions to costs and the increase in estimated infrastructure size.

Nonrail Needs in Urban Areas with Populations over 1 Million—The cost of maintaining the conditions of the nonrail infrastructure (buses, vans, and ferryboats) in urban areas with populations over 1 million is considerably less than the cost of maintaining the rail infrastructure in these areas. Thirty-four percent of the total investment requirement in these larger urban areas, or about $4.5 billion annually, would be needed to maintain the conditions and performance of this nonrail infrastructure. Seventy-four percent of the $4.5 billion, or $3.3 billion annually, would be used to rehabilitate and replace assets to maintain conditions, and 26 percent, or $1.2 billion, would be needed to purchase new assets to maintain performance. It is estimated that 68 percent of rehabilitation and replacement expenditures and 55 percent of asset expansion expenditures would be for vehicles. The incremental costs to improve nonrail conditions are estimated to be $481 million annually, of which $455 million would be needed for vehicle rehabilitation and replacement. The incremental costs to improve performance are estimated to be $705 million annually, of which 47 percent ($331 million) would be spent on new vehicles (principally buses) and 53 percent ($373 million) on new nonvehicle assets. Expenditures on nonvehicle assets include investments for the purchase or construction of dedicated highway lanes for bus rapid transit (BRT). A total of $5.7 billion annually is estimated to be needed to improve both conditions and performance of the nonrail assets in these more heavily populated areas.

Q. Why has the amount required under the "Maintain Conditions" scenario to rehabilitate and replace rail vehicles in urbanized areas with populations greater than 1 million to maintain conditions declined by 28 percent since the 2002 edition of this report?
A.

The estimated amount needed to rehabilitate and replace rail vehicles in large urbanized areas has decreased since the last edition of this report, in part, due to the revision in the deterioration schedule for commuter rail vehicles. The conditions of commuter rail vehicles were found to decline more gradually after the age of 22 years, the average age of commuter rail vehicles in 2002, than previously estimated. (See Exhibit 3-45 in Chapter 3.) The amount estimated to be needed to rehabilitate and replace rail vehicles also declined due to the revisions in the benefit-cost analysis, which set a more rigorous benefit standard. These revisions more than offset the 6 percent increase in rail vehicle rehabilitation and replacement costs that occurred between 2000 and 2002.

Rail Needs in Urban Areas with Populations over 1 Million—Sixty-six percent of the total transit investment requirements of large urban areas, or about $9.0 billion annually, is estimated to be needed to maintain conditions and performance of the transit rail infrastructure, 27 percent less than the $9.6 billion reported in the 2002 report. [See Q & A on bottom left of page.] Fifty-eight percent, or $5.2 billion annually, would be required to rehabilitate and replace rail assets to maintain conditions, and 42 percent, or $3.7 billion, would be required for rail asset expansion to maintain performance as ridership increases. The incremental cost to improve rail asset conditions so that they achieve an average condition rating of "good" by 2022 is estimated to be $710 million annually, $253 million for vehicle and $457 million for nonvehicle asset rehabilitation and replacement. The incremental costs to improve performance of these rail systems are estimated to be $5.1 billion annually, including the cost of purchasing rights-of-way. Eighty-seven percent of this amount, or $4.5 billion, would be needed for the expansion of the nonvehicle rail infrastructure. This split between vehicle and nonvehicle investment for performance improvement is within the range of what is typical for new heavy and light rail infrastructure development projects. A total of $14.8 billion annually is estimated to be needed to improve both conditions and performance of rail in these more heavily populated, urbanized areas.

Nonrail Needs in Areas with Populations of Under 1 Million—Ninety-eight percent of the transit investment requirements in areas with populations under 1 million is projected to be for nonrail transit. The annual cost to maintain conditions and performance of the nonrail transit infrastructure in these less-populated areas is estimated to be $2.0 billion annually. The total amount needed to improve both conditions and performance of nonrail transit in these areas is estimated to be $3.4 billion annually. The incremental investment required to improve nonrail conditions in these areas is estimated to be $346 million annually and the investment needed to improve performance is estimated to be $1 billion. Of the $1 billion incremental annual investment to improve performance, 46 percent, or $461 million, would be needed to acquire new vehicles and 54 percent, or $538 million, would need to be invested in the new nonvehicle infrastructure. The estimated investment needed for nonrail performance enhancements has increased considerably since the last report for methodological reasons. The current report assumes that investment required to improve speed will be in the form of BRT rather than light rail, except in systems where light rail already exists. The last edition of this report assumed that all investment to increase speeds in these less populous areas would be in light rail. Twenty-eight percent of the expansion in investment needed to improve performance, or $283 million annually, is assumed to be necessary to improve service to rural areas, that now have limited or no service.

Rail Needs in Areas with Populations of Under 1 Million—Rail needs in areas with populations of less than 1 million are minimal. Currently, only three light rail systems operate in these less-populated areas. Maintaining conditions and performance of the rail assets in these areas would require an estimated $40 million annually, of which $33 million, or 83 percent, would be needed for investment in nonvehicle rail infrastructure. The amount needed to improve performance is estimated to be $67 million annually. This amount declined from $112 million in 2000 because of the revision in TERM to increase speed with investment in BRT instead of light rail. The 2002 $67 million amount is for improvements in the three existing light rail systems only.

Q. What would the investment requirements be if performance improvements in areas with populations of less than 1 million were made by shifting bus investment to light rail instead of to BRT as was done in earlier reports?
A.

This change would increase the annual amount to improve performance by $49 million annually. The amount of rail investment in these areas would increase by $518 million and the amount of bus investment in these areas would decrease by $469 million.

Requirements by Asset Type

Exhibit 7-12 provides disaggregated annual investment requirements to maintain conditions and performance and to improve conditions and performance for rail and nonrail transportation modes by asset type for the following:

Assets are disaggregated into five categories—facilities, guideway elements, stations, systems, and vehicles. The annual funding requirements for services to support investment in new transit capacity are provided under "Other Project Costs." These costs include expenditures for project design, project management and oversight, right-of-way acquisition and site preparation. In the 2002 report, some costs for vehicles, stations, facilities and other "hard assets" were improperly reported as system design or right-of-way acquisition. These costs are now correctly allocated to the asset category to which they correspond. Under the "Improve" scenario, this revision has contributed to the larger investment requirements for each asset than reported in the last edition of the report.

Exhibit 7-12  Transit Infrastructure Average Annual Investment Requirements by Asset Type, 2003-2022
Maintain Conditions and Performance
(Millions of 2002 Dollars)
Asset Type
Rehabilitation and Replacement Asset Expansion Improve Performance Total
Rail
Guideway Elements $1,395 $1,069  $2,464
Facilities 206 102  307
Systems 922 237  1,159
Stations 1,278 461  1,738
Vehicles 1,469 920  2,389
Other Project Costs  954  954
Subtotal Rail 5,270 3,742 0 9,012
Nonrail
Guideway Elements 29 182  212
Facilities 1,255 330  1,584
Systems 132 48   180
Stations 46 54   100
Vehicles 3,553 876  4,429
Other Project Costs  35  35
Subtotal Nonrail 5,016 1,524 0 6,540
Total Maintain Conditions 10,285 5,266 0 15,551
Improve Conditions and Performance
Asset Type Rehabilitation and Replacement Asset Expansion Improve Performance Total
Rail
Guideway Elements 1,395 1,069 1,382 3,845
Facilities 205 102 117 424
Systems 924 237 330 1,491
Stations 1,635 560 968 3,163
Vehicles 1,722 920 662 3,304
Other Project Costs   954 1,740 2,693
System Design and Right-of-Way Acquisition      0
Subtotal Rail 5,881 3,842 5,198 14,921
Nonrail
Guideway Elements 29 182 244 456
Facilities 1,246 329 305 1,880
Systems 128 48 9 185
Stations 66 54 230 350
Vehicles 4,354 1,178 510 6,042
Other Project Costs   35 124 158
Subtotal Nonrail 5,824 1,826 1,421 9,071
Total Improve Conditions 11,705 5,667 6,620 23,992
Source: Transit Economic Requirements Model and FTA staff estimates.
Rail Infrastructure

Fifty-eight percent of the total amount needed to maintain conditions and performance ($9.0 billion dollars annually) and 62 percent of the total amount needed to improve conditions and performance ($14.9 billion annually) are estimated to be for rail infrastructure. As shown in Exhibit 7-13, vehicles and guideway elements are estimated to require the largest amount of the total capital investment of all rail assets between 2003 and 2022, followed in descending order of investment requirements by stations, power systems, and facilities.

Guideways are estimated to account for 49 percent of the total value of the Nation's rail infrastructure. (The estimated value of transit infrastructure in 2002 by type of asset is provided in Exhibit 3-51.) Slightly more than one-quarter of the total amount estimated to be required to maintain and to improve the conditions and performance of the Nation's transit rail assets will be needed for investment in guideway elements. Guideway elements are composed of elevated structures, systems structures, and track. The annual amount needed to maintain the conditions and performance of rail guideway is estimated to be $2.5 billion, and the annual amount needed to improve the conditions and performance of rail guideways is estimated to be $3.8 billion. Annual rehabilitation and replacement costs are estimated to be $1.4 billion to maintain conditions; annual asset expansions are estimated to cost $1.1 billion to maintain performance and $1.4 billion to improve performance. The estimated average condition of guideway improved slightly, from 3.21 in 2000 to 3.56 in 2002, principally based on data from the ACM and the New York MTA. The estimated value of the Nation's rail guideway asset base increased by 14 percent in current dollar values between 2000 and 2002, largely as a result of the substantial increases in the estimated unit costs of at-grade ballast and elevated structures, with upward revisions ranging from 100 to 300 percent. However, the estimated amount needed for investment in guideway elements has declined since the 2002 report due to the a higher estimated guideway condition and the increased rigor of the benefit-cost test, coupled with higher replacement costs and lower projected passenger miles traveled (PMT) growth. (The 2002 report estimated that $3.7 billion annually was needed to maintain guideway conditions and performance and $4.8 billion annually to improve guideway conditions and performance.)

Exhibit 7-13, annual rail investment requirements, 2003 to 2020 (millions of 2002 dollars). Stacked bar chart showing values for six components of investment. For maintaining conditions and performance, guideway elements account for $2.5 billion; facilities account for $3 billion; systems account for $1.2 billion; stations account for $1.7 billion; vehicles account for $2.4 billion; and other accounts for $1 billion in investment requirements. For improving conditions and performance, guideway elements account for $3.8 billion; facilities account for $0.4 billion; systems account for $1.5 billion; stations account for $3.2 billion; vehicles account for $3.3 billion; and other accounts for $2.7 billion in investment requirements. Source: Transit Economic Requirements Model and FTA staff estimates.

Vehicles are estimated to account for 19 percent of the total value of the Nation' rail infrastructure. Twenty-seven percent of the amount needed to maintain rail assets conditions and performance, or $2.4 billion annually, and 22 percent of the amount needed to improve rail assets conditions and performance, or $3.3 billion annually, are estimated to be for vehicles. Annual vehicle rehabilitation and replacement costs are estimated to be $1.5 billion to maintain conditions and $1.7 billion to improve conditions. Annual asset expansion costs are estimated to be $920 million to maintain performance and $662 million to improve performance. Actual conditions of rail vehicles are estimated to have declined very minimally from 3.55 in 2000 to 3.48 in 2002. However, the estimated amount of capital investment required for rail vehicles has decreased substantially since the 2002 report. Although the estimated total value of the rail vehicle fleet increased by 24 percent in current dollar terms between 2000 and 2002, this was largely a result of revisions in unit costs. Any increases in investment needs from this increased valuation were more than offset by the increased rigor of the benefit-cost analysis, revisions to the commuter rail decay curves, and reduction in projected passenger growth. (The 2002 report estimated that $3.1 billion annually was needed to maintain rail vehicle conditions and performance and $3.3 billion annually to improve rail vehicle conditions and performance.)

Stations are estimated to account for 16 percent of the total value of the Nation's rail infrastructure. Nineteen percent of the amount required to maintain the conditions and performance of rail assets, or $1.7 billion annually, and 21 percent of the annual amount required to improve the conditions and performance of rail assets, or $3.2 billion annually, are estimated to be for stations. The amount needed for rehabilitation and replacement to maintain conditions is estimated to be $1.3 billion annually, and the amount needed to improve conditions is estimated to be $1.6 billion annually. The annual amount needed for asset expansion to maintain performance is estimated to be $461 million, and the annual amount needed to improve performance is estimated to be $1.5 billion. The amount of estimated capital investment for stations has increased substantially since the 2002 edition of this report. The data collected by the ACM and from the New York MTA indicated that the value or size of rail station assets was larger than previously estimated and their conditions worse. Estimated conditions of rail stations fell from 3.52 in 2000 to 2.87 in 2002, principally as a result of new information. However, the estimated value of the Nation's rail station infrastructure for 2002 is 81 percent higher than for 2000. This higher asset valuation of stations, combined with a decrease in their estimated condition level and lower replacement costs, has led to considerably higher estimates of future capital investment requirements, and outweighed any decreases in investment requirements resulting from the strengthened benefit-cost test and lower projected growth in passenger travel. (The 2002 report estimated that $692 million annually was needed to maintain station conditions and performance and $981 million annually to improve station conditions and performance.)

Rail power systems, comprising substations, overhead wire, and third rail, are estimated to account for 13 percent of the total value of the Nation's rail asset base. Thirteen percent of the amount needed to maintain the conditions and performance of rail assets or $1.2 billion annually, and 10 percent of the amount needed to improve the conditions and performance of rail assets, or $1.5 billion annually, are estimated to be for rail power systems. Annual rehabilitation and replacement costs are estimated to be $922 million to maintain conditions and $924 million to improve conditions. Annual asset expansion costs are estimated to be $237 million to maintain rail power system performance and an additional $330 million to improve performance. The estimated condition of rail power systems increased slightly from 3.96 in 2000 to 4.08 in 2002. Although the value of the rail power systems infrastructure is estimated to be 27 percent higher in 2002 than in 2000, estimated investment requirements for rail power systems have not changed significantly. This is because any increase in investment requirements stemming from a higher asset valuation was more than offset by decreases in investment requirements resulting from the strengthened benefit-cost test, lower projected growth in passenger travel, and lower estimated replacement costs. (The 2002 report estimated that $1.2 billion annually was needed to maintain rail power systems conditions and performance and $1.4 billion annually to improve rail power systems conditions and performance.)

Facilities for rail vehicles (maintenance facilities and yards) are estimated to account for 2 percent of the total value of the Nation's rail transit asset base. Three percent of the amount needed to maintain conditions ($307 million annually) and 3 percent of the amount needed to improve conditions and performance ($424 million annually) are estimated to be for facilities. Annual rehabilitation and replacement costs are estimated to be $206 million to maintain conditions and $205 million to improve conditions. Asset expansion costs are estimated to be $102 million annually to maintain performance and $117 million annually to improve performance. The estimated value of facilities in current dollars is 155 percent higher in 2002 than in 2000, as a result of new data collected by the ACM and from the New York MTA as well as updated information from the NTD. Estimated replacement costs for commuter rail and heavy facilities increased and those for light rail decreased. Data collected by the ACM revealed the average age of rail maintenance facilities was lower, and the average condition higher, than previously estimated. The estimated average condition of facilities increased from 3.21 in 2000 to 3.56 in 2002. In summary, the substantially higher asset valuation of maintenance facilities has led to higher estimates of future capital investment requirements, which have outweighed any decreases in investment requirements resulting from the strengthened benefit-cost test, increase in estimated condition, and slight decrease in the growth of projected use. (The 2002 report estimated that $235 million annually was needed to maintain rail facilities conditions and performance and $294 million annually to improve rail facilities conditions and performance.)

Nonrail Assets

Forty-two percent of the total amount needed to maintain conditions and performance, or $6.5 billion dollars annually, and 39 percent of the total amount needed to improve conditions and performance, or $9.1 billion annually, are estimated to be for nonrail infrastructure. Vehicles are estimated to require the largest amount of the total capital investment in nonrail assets between 2003 and 2022, as shown in Exhibit 7-14, followed in descending order of investment requirements by facilities, guideway elements (dedicated lanes for buses), power systems, and stations.

Exhibit 7-14, nonrail annual investment requirements, 2003 to 2020 (millions of 2002 dollars). Stacked bar chart showing values for six components of investment. For maintaining conditions and performance, guideway elements account for $0.2 million; facilities account for $1.6 million; systems account for $0.2 million; stations account for $0.2 million; vehicles account for $4.4 million; and other accounts for $0 billion in investment requirements. For improving conditions and performance, guideway elements account for $0.6 million; facilities account for $1.9 million; systems account for $0.2 million; stations account for $0.4 million; vehicles account for $6.0 million; and other accounts for $0.2 million in investment requirements. Source: Transit Economic Requirements Model and FTA staff estimates.

Vehicles are estimated to account for 36 percent of the total value of the Nation's nonrail assets in 2002, excluding vehicles in rural areas. However, they account for substantially more of projected nonrail investment requirements because they depreciate much more quickly than nonvehicle assets. The estimated investment in nonrail vehicles required to maintain conditions and performance is $4.4 billion annually, and the estimated investment required to improve conditions and performance is $6.0 billion annually. The bulk (70 to 75 percent) of estimated nonrail rehabilitation and replacement expenditures is for vehicles. Vehicles are also estimated to account for the largest proportion, about 60 percent, of nonrail asset expansion investments to maintain performance and 36 percent of the amount required to improve performance. The investment requirements for nonrail vehicles increased since the 2002 report as a result of the expansion in the number of nonrail vehicles, slightly lower condition levels, and an increase in unit costs. (The 2002 report estimated that $3.1 billion annually was needed to maintain the conditions and performance of nonrail vehicles and $4.8 billion annually to improve the conditions and performance of nonrail vehicles.)

Facilities are estimated to account for 57 percent of the total value of the Nation's nonrail assets, excluding facilities in rural areas. [Note that asset value is estimated by TERM, which does not include rural operators.] In total, the most recent data collected revealed that the valuation of nonrail facilities was underestimated in the 2000 report and has, therefore, increased by about 100 percent between 2000 and 2002. Although facilities account for more than half of the nonrail assets, they represent only about a quarter of future nonrail investment requirements because external structures and many of the facility components depreciate slowly. Facilities are estimated to need $1.6 billion annually to maintain the conditions and performance and $1.9 billion annually to improve nonrail conditions and performance. While the conditions of bus maintenance facilities increased from 3.29 in 2000 to 3.34 in 2002, the substantially higher asset valuation of maintenance facilities has led to higher estimates of future capital investment requirements and has outweighed any decreases in investment requirements resulting from the strengthening of the benefit-cost test and reduction in passenger growth. (The 2002 report estimated that $1.1 billion annually was needed to maintain the conditions and performance of nonrail facilities and $1.4 billion annually was needed to improve the conditions and performance of nonrail facilities.)

Guideway elements account for 4 percent of the Nation's nonrail assets, stations account for 2 percent, and power systems account for 1 percent. Limited revisions were made to the valuation of these nonrail assets. Nonrail guideway elements are estimated to require an annual investment of $212 million to maintain conditions and performance and $456 million annually to improve conditions and performance (compared with $353 million annually and $460 million annually in the 2002 report). Nonrail stations are estimated to require an annual investment of $100 million to maintain conditions and performance and $350 million annually to improve conditions and performance (compared with $162 million annually and $199 million annually in the 2002 report). Nonrail power systems are estimated to require $180 million annually to maintain conditions and performance and $185 million annually to improve conditions and performance (compared with $207 million annually and $209 million annually in the 2002 report).

Rural Transit Vehicles and Facilities

Investment requirements in rural areas have been estimated using the same information and methodology as in the 2002 edition of the report [see Appendix C]. The most recent information on rural systems was published by the Community Transportation Association of America (CTAA) in 2000 and was also used to project investment requirements for the 2002 edition of this report. The changes in estimated requirements since the last report result from revisions in estimated vehicle and facility replacement costs. The amount needed to maintain conditions and performance increased by 19.1 percent in current dollars, from $237 million in 2000 to $277 in 2002. The amount needed to improve conditions and performance decreased by 5.2 percent, from $758 million in 2000 to $681 million in 2002. The amount needed to maintain conditions and performance increased as a result of increases in the estimated replacement costs ranging between 13 and 26 percent for buses and nonaccessible vans. Combined, these vehicles are estimated to account for 84 percent of the rural fleet. The replacement cost of maintenance facilities was also estimated to be 18 percent higher than in the 2002 report. The amount needed to improve conditions and performance decreased because the costs of accessible small vehicles and vans used to calculate investment requirements in the last edition of the report were too high. The "Improve Conditions and Performance" scenario assumes that all small vehicles and vans are replaced with models that are ADA accessible. As in the last edition of the report, the number of rural vehicles is assumed to increase at an average annual rate of 3.5 percent to improve performance.

Special Service Vehicles

Estimated investment requirements for special service vehicles are 48 percent higher than they were in the 2002 edition of this report as a result of the increase in fleet size and higher vehicle replacement costs. The number of special service vehicles, as reported in the FTA Trends Report FY2002 on the use of Section 5310 Elderly and Persons with Disabilities Program funds, increased from 28,664 in 2000 to 37,720 in 2002, an increase of 30 percent. Based on information reported to FTA by grantees, the average replacement price of a special service vehicle was assumed to have increased from $43,498 in 2000 to $46,985 in 2002. Note that the investment needed to maintain and improve the conditions of vehicles funded by FTA accounts for 43 percent of the amount needed to maintain and improve the conditions of the entire 37,720 special service vehicle fleet.

Existing Needs in the Transit Infrastructure

TERM estimates the amount of investment that would be required to correct existing needs in the Nation's transit infrastructure. The "backlog" is the level of investment needed to replace all assets with conditions below the condition replacement thresholds specified by TERM and is similar to the backlog requirement calculated by the HERS for highways. TERM assumes that the backlog is eliminated over a 20-year period, meaning that the average annual investment requirements calculated by TERM include one-twentieth of the backlog [see Appendix C]. TERM estimates that the Nation's transit infrastructure has an existing backlog of $27.0 billion if assets are replaced at the threshold levels specified by TERM to maintain conditions (compared with $16.4 billion in the 2002 report) and a $41.8 billion backlog if assets are replaced at the threshold level specified by TERM to improve conditions (compared with $30.7 billion in the 2002 report). The increase in backlog to maintain conditions comes principally from an $8.2 billion increase in the replacement backlog for vehicles. Because the conditions of vehicles have increased since the last report, a higher level of investment is needed to maintain these conditions. The increase in the backlog to improve conditions principally resulted from a $12.3 billion increase in the backlog for stations. Between 2000 and 2002, the estimate for station conditions dropped from 3.44 to 2.99, primarily as a result of new information. These numbers do not include the costs of upgrading assets or eliminating the backlog for deficiencies in rural or special service transit services.

Exhibit 7-15 shows the backlog according to asset type. Forty-five percent of the backlog under the replacement thresholds set by the "Maintain" scenario, or $12.2 billion, is estimated to be needed to replace vehicles; 18 percent, or $4.7 billion each, is estimated to be needed to replace stations and facilities; 15 percent, or $3.9 billion, is estimated to be needed to replace systems; and 5 percent, or $1.4 billion, is estimated to be needed to replace guideway. Under the thresholds set by the "Improve" scenario, 40 percent of the backlog, or $16.7 billion, is for stations and 36 percent, or $15.1 billion, is for vehicles.

Exhibit 7-15, estimated backlog transit asset type (billions of dollars). Bar chart giving values to maintain and to improve condition for five types of asset. For vehicles, the values for maintaining and improving are $12.2 billion versus $15.1 billion. For stations, the values for maintaining and improving are $4.7 billion versus $16.7 billion. For systems, the values for maintaining and improving are $3.9 billion versus $4.0 billion. For facilities, the values for maintaining and improving are $4.7 billion versus $4.7 billion. For guideways, the values for maintaining and improving are $1.4 billion versus $1.4 billion. Source: Transit Economic Requirements Model.

The backlog by mode is provided in Exhibit 7-16. Eighty-five percent of the backlog is estimated to be for heavy rail and bus assets, which is consistent with the strong backlog identified for both vehicles and stations. The backlog for heavy rail is estimated to be $12.9 billion using replacement thresholds set by the "Maintain" scenario, and $25.6 billion using replacement thresholds set by the "Improve" scenario. The backlog for buses is estimated to be $10.7 billion using maintain thresholds and $12.4 billion using improve thresholds.

Exhibit 7-16, estimated backlog in 2002 by transit mode (billions of dollars). Bar chart giving values to maintain and to improve condition for five types of asset. For heavy rail mode, the values for maintaining and improving are $12.9 billion versus $25.6 billion. For bus mode, the values for maintaining and improving are $10.7 billion versus $12.4 billion. For commuter rail mode, the values for maintaining and improving are $1.9 billion versus $2.5 billion. For light rail mode, the values for maintaining and improving are $0.4 billion versus $0.4 billion. For other transit mode, the values for maintaining and improving are $1.0 billion versus $1.0 billion. Source: Transit Economic Requirements Model.

Summary of Revisions Since the Last Edition (2002) of this Report

In some cases, the amounts of capital investment requirements by asset type provided in Exhibits 7-10 and 7-11 have been considerably revised from the amounts presented in the 2002 edition of this report. As discussed earlier, these revisions are based on new data collected since the last edition of this report, including new asset inventory data provided by the NTD ACM and New York MTA. They also reflect updated information on rail asset costs, revisions to the benefit-cost analysis component of TERM, and revisions to projected PMT growth.

Data—As previously discussed, data collected by the ACM and from the New York MTA have led to more comprehensive transit asset coverage and improved asset condition estimates. Substantial revisions were also made to replacement cost estimates for rail assets based on information collected by two recent FTA studies, Light Rail Transit Capital Cost Survey, October 2003, and Heavy Rail Transit Capital Cost Survey, June 2004, which updated earlier studies undertaken in 1991 and 1994, respectively. Capital investment requirements are now based on asset replacement costs that are unique to each rail mode. Projected capital investment requirements in earlier editions of this report used the same asset replacement costs for commuter rail, light rail, and heavy rail assets because insufficient information was available on the costs for each mode.

The new FTA capital cost studies also found that rail construction costs have increased more rapidly than general construction costs since the 1991 and 1994 surveys, as a result of the increasing sophistication of rail systems. Prior editions of the C&P report relied heavily on the cost estimates for rail infrastructure gathered in the 1991 and 1994 studies, inflated to current dollars based on the Means Construction Index, a price index for general construction.

Bus Decay Curve—Engineering surveys of bus physical conditions, performed in 2001 and 2002, found that bus conditions decline slightly more rapidly during the first three years of life than previously estimated, and slightly less after age 15. This finding had virtually no impact on bus condition estimates.

Q. Could U.S. Federal Lands benefit from additional investment in transit?
A.

Growth in public recreational use of Federal Lands has created a need for additional investment in alternative Transportation Systems (ATS), i.e., transit and transit enhancements, on Federal Lands. Transit investment requirements on Federal Lands been estimated outside the scope of the TERM framework and are discussed in more detail in Chapter 20. In 2004, a joint FTA and FHWA study was completed, which estimated ATS on U.S. Forest Service (USFS) lands. The USFS is part of the U.S. Department of Agriculture. This study identified 30 USFS sites that would benefit from new or supplemental ATS investments and estimated that approximately $698 million ($687 million or $34.4 million in 2002 dollars per year) would be needed in these areas between 2003 and 2022. An earlier joint FTA/FHWA study, undertaken in 2001, estimated ATS investment needs on National Park Service (NPS), Bureau of Land Management (BLM), and U.S. Fish and Wildlife Service (USFWS) lands, which are all part of the U.S. Department of the Interior (DOI). Total DOI needs for the period 2002 to 2020 were estimated to be $1.71 billion in 1999 dollars ($1.82 billion in 2002 dollars). Ninety-one percent of these needs were estimated to be required by the NPS, 7 percent by the USFWS, and 2 percent by BLM.

Commuter Rail Decay Curve—Engineering surveys of commuter rail vehicle physical conditions were performed in 2002. These surveys found that the conditions of commuter rail vehicles deteriorate considerably more rapidly in the first 5 years of their life, plateau between the ages of 5 and 22 years, and then decline again although very gradually. The fact that commuter rail vehicles are estimated to deteriorate more gradually in later years than previously estimated contributed to a decrease in rail vehicle investment requirements.

Projected PMT—Projected annual PMT growth has been reduced from an average annual rate of 1.6 percent to 1.5 percent, based on a survey of 76 agencies, compared with 33 agencies surveyed for the 2002 edition of this report. Projected PMT growth rates have decreased for most FTA regions since the last survey of PMT forecasts was made for the 2002 edition of this report, including those with the largest share of national PMT. This slight decrease in the projected demand for transit services exerted downward pressure on the amounts needed for asset expansion to maintain and improve performance. Projected PMT growth rates varied according to region, ranging from 0.95 to 3.15 percent.

Speed Improvements—The performance enhancement module of TERM was revised to shift investment in areas with populations of less than 1 million from regular bus modes to BRT in order to improve the speed of passenger travel. TERM previously increased speed in these areas by shifting investment from bus to light rail.

Benefit-Cost Analysis—The benefit-cost analysis component of TERM was revised by removing the imputation of fare box revenues as a benefit. Fare box revenues represent a transfer to transit agencies from another part of the economy and not a benefit. This revision exerted downward pressure on capital investment requirements for all rail and nonrail modes.

Reclassification of System Design and Right-of-Way Acquisition Costs—In the 2002 report, some costs for vehicles, stations, facilities and other "hard assets" were improperly reported as system design or right-of-way acquisition. These costs are now correctly allocated to the asset category to which they correspond. This revision has contributed to the larger investment requirements for each asset under the "Improve Performance" scenario than what was reported in the 2002 edition.

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