Section 3011(c) of SAFETEA-LU is notably silent on what benefits, if any, participation in the Pilot Program would confer on a project, and no special funding was provided. However, FTA notes that the statute affords the Secretary of Transportation broad discretion to devise criteria or approve arrangements that would demonstrate the advantages or disadvantages of PPPs as applied to transit projects. Under the Pilot Program, New Starts demonstration projects will be eligible for consideration, on a case by case basis, with the following incentives designed to reduce the cost and time of FTA reviews and to increase funding assurance:
• New Starts Rating Adjustments. Adjustments will be made in the project's "cost-effectiveness'' rating to exclude any costs that will be paid for by equity capital, and in the project's "project justification'' rating, determined by assigning a weighting of 20% to the status of the project as a Pilot Project; [6]
• Accelerated Design Approvals. FTA will issue concurrent approvals for Preliminary Engineering and Final Design to commence, thus allowing the project to proceed with Final Design immediately upon completion of Preliminary Engineering without requiring additional approval;
• Modified Review Process. Modified processes will be implemented with regard to certain risk assessments included in the rating process as well as to the scope and content of the Project Management and Financial Management Oversight reviews to confirm that the allocation of risks safeguard the Federal interest;
• Reduced User Benefit Reviews. FTA will accept, without further review, certain projections of transportation user benefits subject to the private partner's assuming levels of risk with respect to such benefits on terms satisfactory to FTA, and will also implement other modifications to its process for reviewing user benefits;
• FTA Funding Assurances. FTA will issue a Letter of Intent setting forth its intention to obligate a specified amount of New Starts funds for the Pilot Project from future available budget authority specified in law, subject to the availability of appropriations;
• Letters of No Prejudice. FTA will issue Letters of No Prejudice (or other assurances) to accelerate commencement of pre-construction services and planning;
• Uses of Program Income. FTA will consider allowing flexible uses of program income, through agreement pursuant to 49 CFR 18.25(g); and
• Early Contract Incentives. The program will encourage transit agencies and contractors to enter into public-private agreements prior to the award of a Full Funding Grant Agreement, by streamlining of the project development process to obtain an earlier Federal funding commitment, and the opportunity to earn higher returns in exchange for assuming the risk associated with achieving the cost estimates and/or ridership projections.
Projects that propose to use non-New Starts Federal funds may also apply for the Pilot Program, but the Notice cautions that in order to be considered they must present exceptionally high demonstration value. If successful, the non-New Starts projects may receive "certain procedural and substantive benefits, as negotiated with FTA on a case-by-case basis." [7]