U.S. Department of Transportation
Federal Transit Administration

Arizona. California. Hawaii. Nevada. Guam

201 Mission Street
Suite 2210
San Francisco. CA 94105-1839
415-744-2726 (fax)

SEP 5 2002

Mr. Peter M. Cipolla
General Manager
Santa Clara Valley Transportation Authority
3331 North First Street
San Jose, California 95134 1906

Re: Preliminary Engineering Approval for the Silicon Valley Rapid Transit Corridor Project

The Federal Transit Administration (FTA) has approved the Santa Clara Valley Transportation Authority's (VTA) request to begin preliminary engineering (PE) for the Silicon Valley Rapid Transit Corridor Project. We have assigned the project an overall project rating of “Recommended” based on FTA's review of the Section 5309 New Starts criteria submitted for Project Justification and Local Financial Commitment. In addition, pursuant to the provision of the Major Capital Investment Projects' Final Rule at 49 CFR 611 (a)(3), FTA approves VTA's use of the TSM alternative as the New Starts baseline, at this time, for FTA's rating applied in the approval to initiate PE.

FTA expects VTA to immediately begin the detailed review of the alternatives as required by the National Environmental Policy Act (NEPA) and its implementing regulations (40 CFR Parts 1500-1508 and 23 CFR Part 771). These regulations require that the “No action" alternative be used as the NEPA baseline in the NEPA evaluation of impacts and benefits, even if the New Starts baseline for calculating the New Starts criteria is changed.

With this approval, VTA has pre-award authority to incur project costs for PE prior to grant approval and retain eligibility for future FTA grant assistance. This pre-award authority does not constitute an FTA commitment that future Federal funds will be approved for this project. As with all pre-award authority, all Federal requirements must be met prior to incurring costs in order to retain eligibility of the costs for future FTA grant assistance. The project has been rated "Recommended" based on the submitted Section 5309 New Starts Criteria. However, FTA's approval to begin PE is not a commitment to fund Final Design or construction of any project that may result. Such a decision must await the outcome of the analyses to be performed during PE.

FTA has serious concerns regarding: 1 ) the travel demand model and resulting technical analysis used during the Alternatives Analysis, and 2) the operating financial plan and the ability of the VTA to operate and maintain the existing bus and rail transit system during the construction and operation of the proposed major capital investment. To resolve these concerns. FTA will provide a more detailed summary of issues that need to be addressed during PE under separate cover. However, below are standard issues that need to be addressed during the PE phase of project development:

• Complete the NEPA process so that FTA can issue a Record of Decision;

• Complete engineering and technical work necessary to support (a) NEPA decisions, (b) a firm definition of the scope of the project, (c) a detailed estimate of the capital and operating costs of the project scope, and (d) an analysis of uncertainties in the scope and cost estimate;

• Develop the Project Management Plan to include final design and construction;

• Refine the Financial Plan;

• Undertake value engineering;

• Develop detailed engineering and construction cost estimates;

• Encourage transit-supportive land-use planning around station areas;

• Confirm commitment of non-Section 5309 New Starts financing;

• Address project readiness issues identified by FTA; and,

• Provide quarterly progress reports.

The quarterly progress report shall discuss issues and project status. The quarterly reporting shall begin one month from the receipt of this letter.

The project may advance to the next appropriate stage of project development. Final Design, only if rated "Recommended" or “Highly Recommended." FTA looks forward to working with VTA to come to agreement on the work scope for PE, and to provide additional technical assistance in the development of this project. As always, we are ready to work with you and your staff in achieving the necessary milestones for the successful completion of the PE effort. Please contact me at (415) 744-3133 if you have any questions or comments.


S/Leslie T. Rogers
Regional Administrator

Copy to: The Honorable Michael Honda