TIGER VII (2015) Discretionary Grant Application Pennsylvania Department of Transportation Statewide CNG Bus Replacement Application Supporting Materials TIGER ID rosharp849 Funding Opportunity # DTOS59-15-RA-TIGER7 Funding Opportunity Title FY 2015 National Infrastructure Investments June 5, 2015
Pennsylvania Department of Transportation Statewide CNG Bus Replacement Project TIGER VII (2015) Grant Application Applicant Organization Name: Pennsylvania Department of Transportation DUNS Number: 192300564 Authorized Representative: Robert Sharp TIGERID: rosharp849 Total Project Cost: $60,000,000 TIGER Request: $20,000,000 (33.3%) Total Non-Federal Funding: $40,000,000 (66.7%) Project: Urban Primary Project Type: Transit Secondary Project Type: Transit Bus Changes from Pre-Application The number of buses to be replaced has been increased from 100 to 150. Accordingly, the overall project cost increased from $40 million to $60 million. The TIGER request remains the same. Website with Supporting Information http://www.wgianalytics.com/tiger7penndot/
CONTENTS LIST OF EXHIBITS... II PROJECT DESCRIPTION... 1 Overview... 1 Current Infrastructure Baseline... 2 Proposed Improvements... 3 Expected Users and Beneficiaries of the Project... 3 Challenges the Project Plans to Address... 4 How the Project Will Address These Challenges... 5 How the Project Promotes Ladders of Opportunity... 6 PROJECT LOCATION... 7 Project Location... 7 Project Area and Impacted Populations... 7 PROJECT PARTIES... 10 GRANT FUNDS AND SOURCES / USES OF PROJECT FUNDS... 11 SELECTION CRITERIA... 12 BENEFIT-COST ANALYSIS... 13 Findings... 13 Key Parameters... 14 Detailed Assessment... 14 Risk and Uncertainty... 16 Sensitivity Tests... 16 PROJECT READINESS... 17 Technical Feasibility and Independent Utility... 17 Financial Feasibility... 17 Financial Contingency... 17 Project Schedule... 18 FEDERAL WAGE CERTIFICATION... 19 CONCLUSION... 20 APPENDIX A: WAGE CERTIFICATION LETTER... 21 TIGERID: rosharp849 i P a g e
LIST OF EXHIBITS Exhibit 1 Existing Conditions - Select Service and Cost Variables (2013)... 2 Exhibit 2 Existing Conditions - 10 Most Transit Dependent System Areas (2013)... 3 Exhibit 3 Existing Conditions - 10 Highest Total and Senior Ridership by Transit System (2013)... 4 Exhibit 4 How Project Aligns with the Goals of Ladders of Opportunity Initiative... 6 Exhibit 5 Counties Included in Statewide CNG Bus Replacement Project... 7 Exhibit 6 Impacted Populations - 10 Counties with the Highest Percentage of Families Below the Poverty Level... 8 Exhibit 7 Impacted Populations - 10 Counties with the Highest Percentage of Households Receiving Supplement Security Income (SSI)... 8 Exhibit 8 Impacted Populations - 10 Counties with the Highest Percentage of Households Receiving Food Stamps /SNAP... 9 Exhibit 9 Impacted Populations - 10 Counties with the Highest Percentage of Households Receiving Public Cash Assistance... 9 Exhibit 10 Funding Partners and Impacted Transit Agencies... 10 Exhibit 11 Project Funding Summary... 11 Exhibit 12 TIGER Selection Criteria... 12 Exhibit 13 Benefit-Cost Analysis - General Findings... 13 Exhibit 14 Benefit-Cost Analysis - Summary Findings... 14 Exhibit 15 Benefit-Cost Analysis- Key Parameters... 15 Exhibit 16 Risks and Uncertainty... 16 Exhibit 17 Benefit-Cost Analysis Sensitivity Test Results... 16 Exhibit 18 Project Budget... 17 Exhibit 19 Project Schedule... 18 ii P a g e TIGERID: rosharp849
PROJECT DESCRIPTION Now, in terms of new sources of energy, we have a few different options. The first is natural gas. Recent innovations have given us the opportunity to tap large reserves perhaps a century s worth of reserves, a hundred years worth of reserves in the shale under our feet the potential for natural gas is enormous. 1 -President Barack Obama on America s Energy Security, March 2011 In support of the Statewide Compressed Natural Gas (CNG) Fueling Stations Project, the Pennsylvania Department of Transportation (PennDOT) has launched the Statewide CNG Bus Replacement Project to replace diesel-fueled buses, in service beyond their useful life, with CNG-fueled buses. This project leverages $20 million in federal funding from the United States Department of Transportation (USDOT) with $40 million in PennDOT funds to replace 150 of the oldest diesel-based buses in active service with 150 CNG-fueled buses. PennDOT will administer funding to purchase these vehicles for the 36 transit agencies included within the Statewide CNG Bus Replacement Project. Overview The Commonwealth of Pennsylvania was an early developer of CNG resources. In the mid-1980 s, the Centre Area Transit Authority (CATA) was one of the earliest adopters of CNG for its entire fixed-route fleet. Since then, fuel and maintenance costs at CATA have been much lower than similarsized agencies in the Commonwealth that rely on diesel or diesel-hybrid technologies. CNG Refueling Station at CATA Maintenance Center CATA 40 CNG Bus Leaving the Maintenance Center Because of the consistent cost savings to CATA from the use of CNG, the Commonwealth has made the implementation of CNG as the preferred alternative to diesel fuel at fixed-route service agencies a statewide priority. To support this effort, PennDOT, in partnership with the CNG industry, will update or build CNG fueling stations as part of the Statewide CNG Fueling Stations Project - a public private partnership (P3 project) with a commitment of more than $100 million in state funds and approximately $200 million in private investment. These stations will be located on the properties of 36 transit agencies to not only fuel their fleets but also provide service to privately owned vehicles. In a commitment to support this expansion of CNG-fueling stations, PennDOT will provide an additional $40 million, a 66% local match to the proposed TIGER investment of $20 million, toward 1 https://www.whitehouse.gov/the-press-office/2011/03/30/remarks-president-americas-energy-security TIGERID: rosharp849 1 P a g e
the purchase of 150 CNG-fueled buses. This project fully satisfies two primary goals of the TIGER program: State of Good Repair through vehicle replacement and Environmental Sustainability through reduced emissions. In addition, it partially fulfills the remaining three primary goals of the TIGER program: Safety through the deployment of newer vehicles with improved safety ratings, Economic Competitiveness through operating vehicles that are completely independent of foreign oil and Quality of Life through better transit service by using buses that are not prone to breakdowns. This project fully satisfies all of the secondary goals of the TIGER program: Innovation in being one of the first states to fully transform its transit vehicle fleets from diesel-fueled to CNG and Partnership in building collaboration between state and local agencies to achieve a statewide priority and support a national strategic goal. Current Infrastructure Baseline The Commonwealth of Pennsylvania has consistently viewed public transportation as a top priority. This has led to PennDOT s continued partnership and financial support of transit agencies operating fixed-route service. TAWC 40 Diesel-fueled Bus at Maintenance Center CATA (Crawford) 40 Diesel-fueled Bus in Service For the 36 transit agencies included in the Statewide CNG Bus Replacement Project 2, as tabulated in Exhibit 1, over 104 million passengers, including 9.6 million seniors, ride 2,846 buses each year, many of which are diesel-fueled and beyond their service life. This has also led to an annual expense of $46.7 million in fuel costs that contribute to a total of $437 million in operations and maintenance costs. Exhibit 1 Existing Conditions - Select Service and Cost Variables (2013) Snapshot of Transit Agencies Included in the Statewide CNG Bus Replacement Project Total Service Area (Square Miles) 24,998 Total Population within Service Area 7,944,881 Total Ridership within Service Area 104,058,639 Total Senior Ridership within Service Area 9,674,742 Total Vehicles Operating at Maximum Service 2,846 Total Cost of Fuel (Diesel and CNG) $46,724,675 Total Operations and Maintenance (O&M) Cost $437,463,841 Source: National Transit Database (NTD) and dotgrants 2 There are a total of 37 fixed-route operators in Pennsylvania. A total of 36 of these operators are included in the Statewide CNG Bus Replacement Project; SEPTA (Philadelphia) is currently not involved in the project. 2 P a g e TIGERID: rosharp849
Proposed Improvements This project leverages $20 million in federal funding from USDOT with $40 million in PennDOT funds to replace 150 of the oldest diesel-based buses in active service with CNG-fueled buses. By investing in this project, long-term fuel and maintenance costs will be minimized. Expected Users and Beneficiaries of the Project Many diverse communities within the Commonwealth rely on transit service for their daily travel needs. This project will impact the quality of service for many transit dependent passengers. Exhibit 2 indicates the number of transit dependent commuters as a percentage of the county population for the 10 highest transit dependent systems included in the Statewide CNG Bus Replacement Project. Exhibit 2 Existing Conditions - 10 Most Transit Dependent System Areas (2013) Transit Agency Included in the Statewide CNG Bus Replacement Project Daily Transit Percent of Commuters Population Port Authority of Allegheny County (PAAC) 55,079 9.4% Monroe County Transportation Authority (MCTA) 3,220 4.4% Centre Area Transportation Authority (CATA) 2,764 3.9% Capital Area Transit (CAT)- Harrisburg 2,792 2.2% Lehigh and Northampton Transportation Authority (LANTA) 3,022 1.9% Erie Metropolitan Transit Authority (EMTA) 2,054 1.6% River Valley Transit (RVT)- Williamsport 769 1.5% Berks Area Regional Transportation Authority (BARTA) 3,401 1.3% Westmoreland County Transit Authority (WCTA) 2,005 1.2% Red Rose Transit Authority (RRTA)- Lancaster 2,832 1.1% Source: 2013 American Community Survey (5-Year Estimate) and dotgrants RTA 40 Diesel-fueled Bus in Service BARTA 40 Diesel-fueled Bus in Service In the Commonwealth, seniors ride for free due to operating subsidies from the state lottery. Exhibit 3 indicates both total and senior ridership for the 10 highest use transit systems included in the Statewide CNG Bus Replacement Project. TIGERID: rosharp849 3 P a g e
Exhibit 3 Existing Conditions - 10 Highest Total and Senior Ridership by Transit System (2013) Transit Agency Included in the Statewide CNG Bus Replacement Project Total Seniors Passengers Passengers Port Authority of Allegheny County (PAAC) 61,837,788 4,878,315 Lehigh and Northampton Transportation Authority (LANTA) 4,877,236 801,099 Berks Area Regional Transportation Authority (BARTA) 3,145,899 465,485 Cambria County Transit Authority (CamTran) 1,255,208 257,314 Red Rose Transit Authority (RRTA) 1,886,115 229,435 River Valley Transit (RVT) 1,357,932 228,885 Luzerne County Transportation Authority (LCTA) 1,186,896 220,728 County of Lackawanna Transit System (COLTS) 1,212,495 213,353 Capital Area Transit (CAT) 2,674,422 211,007 Erie Metropolitan Transit Authority (EMTA) 3,319,060 184,070 Source: dotgrants While it is not currently anticipated, transit agencies could potentially expand service with the savings experienced by the use of CNG-fueled vehicles. It is noteworthy that based on the nature of this project, there are no negative impacts associated with the use of CNG-fueled vehicles that might adversely affect transit riders or cause service disruptions. COLTS 40 Diesel-fueled Bus at Maintenance Center LANTA 40 Diesel-fueled Buses at Maintenance Center Challenges the Project Plans to Address The rise in fuel costs and maintenance expenses, combined with a lack of capital funding for bus replacement, has fiscally burdened many of the transit agencies included in the Statewide CNG Bus Replacement Project. Transit agencies in the Commonwealth have addressed a lack of capital funds by extending the useful life of rolling stock beyond the standard 12 years by three to five additional years. To keep the vehicles in operation to an age of 16 or 17 years, diesel-fueled buses require engine rebuilds. These rebuilds, while extending the useful life of the vehicles, result in agencies keeping buses that are more costly to operate and maintain than CNG-fueled vehicles. 4 P a g e TIGERID: rosharp849
How the Project Will Address These Challenges One of the greatest advantages of CNG-fueled buses is the low cost of fuel. CNG, as demonstrated in the benefit cost analysis, has a $0.30 fuel cost per mile compared to $0.75 for diesel. A close second is the maintenance cost per mile for CNG is $1.34 per mile compared to $1.66 per mile for diesel. A comparison of lifecycle costs of diesel, hybrid-diesel and CNG-fueled vehicles shows that CNG is the most cost-effective bus fuel technology 3. CNG Refueling Station at the IndiGO Maintenance Center IndiGO 40 CNG Bus Leaving the Maintenance Center The capital cost for purchasing CNG-fueled vehicles, an average of $400,000 per 40 bus compared to $350,000 for diesel reflects a $50,000 additional marginal cost per bus. As revealed in the Benefit- Cost Analysis, however, for two Pennsylvania transit systems of similar size, the additional marginal cost of CNG over diesel was quickly recovered within two years. By the end of the lifecycle of both buses, the net benefits of CNG-fueled vehicles from lower fuel costs and reduced maintenance accounted for over $15.9 million in savings. 3 http://publicsolutionsgroup.publishpath.com/websites/publicsolutionsgroup/files/content/1417809/transit_hybrid -Diesel_vs._CNG.pdf (p. 20) TIGERID: rosharp849 5 P a g e
How the Project Promotes Ladders of Opportunity We can help communities build projects that create ladders of opportunity which means we can support them in a way that connects people to job centers and education, that revitalizes economically distressed neighborhoods, and that creates pathways to good jobs. 4 -Anthony Foxx, Secretary of Transportation, April 2015 This project promotes USDOT s Ladders of Opportunity initiative by creating new jobs, investing in existing transportation networks and revitalizing communities. As shown in Exhibit 4, the Statewide CNG Bus Replacement Project promotes each Ladder of Opportunity. Exhibit 4 How Project Aligns with the Goals of Ladders of Opportunity Initiative Goal Work Connect Revitalize How Project Satisfies Ladders of Opportunity Goal The Statewide CNG Bus Replacement Project replaces 150 diesel-fueled buses beyond their useful service life with 150 CNG-fueled buses. This project creates a pathway for supporting the alternative fuel industry by providing not only viable, but also environmentally conscious options in the transportation sector. The jobs created by this project put Americans to work in various states, from California to North Carolina - specifically where CNG manufacturing supports the local economy. Beyond the value of work from the production of CNG-fueled buses, the servicing of these new buses will provide access to jobs for those disadvantaged and traditionally underserved communities that rely on transit for their daily commuting needs. At the center of the Statewide CNG Bus Replacement Project is the support of existing networks throughout the Commonwealth. The opportunities provided by transit to connect people and realize their economic potential is central to the Commonwealth s commitment to public transportation. Planning for CNG-fueled bus replacement demonstrates an innovative step in providing reliable access for a diverse workforce. By replacing 150 of the oldest diesel-fueled buses in service, passengers will continue to have not only low-cost and affordable connections, but also a positive environmental impact through clean fuel technology. From the main streets of urban centers and suburban peripheries to residential neighborhoods and small town businesses, the Commonwealth works to support healthy and equitable transportation opportunities. Infrastructure investments have long played a role in revitalizing areas. Through regional transit investments like CNG-fueled bus replacements, PennDOT is actively addressing environmental concerns traditionally associated with diesel-fueled buses. As the Commonwealth moves forward in building CNG fueling stations, targeted investments in CNG-fueled bus replacement will support these revitalization efforts. 4 https://www.dot.gov/fastlane/dot-helping-cities-with-ladders-tep 6 P a g e TIGERID: rosharp849
PROJECT LOCATION The Statewide CNG Bus Replacement Project will provide funds for the replacement of 150 40 foot dieselfueled buses that are beyond their useful life, with 150 40 foot CNG-fueled buses across 36 transit agencies. Each new CNG-fueled bus will cost $400,000 per vehicle and will take two years to be constructed. Due to the straightforward nature of the project and PennDOT s experience with similar grants, USDOT can proceed in the obligation of funds well before September 30, 2017 deadline. Project Location One hundred and fifty (150) of the oldest diesel-fueled buses at 36 transit agencies statewide will be replaced. Exhibit 5 illustrates the counties in which the 36 transit agencies provide service. Exhibit 5 Counties Included in Statewide CNG Bus Replacement Project Project Area and Impacted Populations This project will benefit transit operations throughout the Commonwealth, which is the sixth most populous state in the nation. The Commonwealth is home to over 12.7 million residents, with approximately 9.9 million living in urban areas and 2.8 million living in rural areas. The total population impacted by this project is diverse, and many areas have been hard hit by the Great Recession of 2008. Exhibit 6, Exhibit 7, Exhibit 8 and Exhibit 9 provide a breakdown of the counties with the highest percentages of households in poverty and those receiving public assistance that are part of the Statewide CNG Bus Replacement project. TIGERID: rosharp849 7 P a g e
Exhibit 6 Impacted Populations - 10 Counties with the Highest Percentage of Families Below the Poverty Level County Transit Agency Included in the Statewide CNG Bus Replacement Project Percent of Families Fayette Fayette Area Coordinated Transportation (FACT) 13.4% Erie Erie Metropolitan Transit Authority (EMTA) 12.0% Crawford Crawford Area Transportation Authority (CATA) 11.6% Luzerne Luzerne County Transportation Authority (LCTA) 11.5% National Average 11.3% Lawrence New Castle Area Transit Authority (NCATA) 11.1% Venango Venango County Transportation Office (VCTO) 11.1% Clearfield Dubois, Falls Creek, Sandy Township Transportation Auth. (DuFAST) 10.9% Tioga Endless Mountains Transportation Authority (EMTA) 10.4% Northumberland Borough of Mount Carmel (LATS) 10.2% Berks Berks Area Regional Transportation Authority (BARTA) 10.1% Pennsylvania Average 9.2% Source: 2013 American Community Survey (5-Year Estimate) Exhibit 7 Impacted Populations - 10 Counties with the Highest Percentage of Households Receiving Supplement Security Income (SSI) County Transit Agency Included in the Statewide CNG Bus Replacement Project Percent of Households Fayette Fayette Area Coordinated Transportation (FACT) 8.9% Crawford Crawford Area Transportation Authority (CATA) 7.9% Erie Erie Metropolitan Transit Authority (EMTA) 7.4% Mercer Mercer County Regional Council of Governments (MCRCOG) 7.1% Cambria Cambria County Transit Authority (CamTran) 7.0% Lawrence New Castle Area Transit Authority (NCATA) 7.0% Venango Venango County Transportation Office (VCTO) 6.8% Blair Altoona Metro Transit (AMTRAN) 6.5% Armstrong Mid County Transit Authority 6.3% Beaver Beaver County Transit Authority (BCTA) 6.0% Pennsylvania Average 5.5% National Average 4.9% Source: 2013 American Community Survey (5-Year Estimate) 8 P a g e TIGERID: rosharp849
Exhibit 8 Impacted Populations - 10 Counties with the Highest Percentage of Households Receiving Food Stamps /SNAP County Transit Agency Included in the Statewide CNG Bus Replacement Project Percent of Households Fayette Fayette Area Coordinated Transportation (FACT) 19.7% Erie Erie Metropolitan Transit Authority (EMTA) 16.5% Venango Venango County Transportation Office (VCTO) 16.1% Lawrence New Castle Area Transit Authority (NCATA) 15.8% Cambria Cambria County Transit Authority (CamTran) 15.5% Crawford Crawford Area Transportation Authority (CATA) 15.3% Blair Altoona Metro Transit (AMTRAN) 15.3% Clearfield Dubois, Falls Creek, Sandy Township Transportation Authority (DuFAST) 15.0% Mercer Mercer County Regional Council of Governments (MCRCOG) 14.8% Luzerne Hazelton Public Transit (HPT) 14.8% National Average 12.4% Pennsylvania Average 11.8% 2013 American Community Survey (5-Year Estimate) Exhibit 9 Impacted Populations - 10 Counties with the Highest Percentage of Households Receiving Public Cash Assistance County Transit Agency Included in the Statewide CNG Bus Replacement Project Percent of Households Lawrence New Castle Area Transit Authority (NCATA) 5.1% Fayette Fayette Area Coordinated Transportation (FACT) 4.9% Crawford Crawford Area Transportation Authority (CATA) 4.7% Mercer Mercer County Regional Council of Governments (MCRCOG) 4.5% Erie Erie Metropolitan Transit Authority (EMTA) 4.2% Sullivan Endless Mountains Transportation Authority (EMTA) 4.2% Venango Venango County Transportation Office (VCTO) 4.1% Cambria Cambria County Transit Authority (CamTran) 3.6% Pennsylvania Average 3.6% Blair Altoona Metro Transit (AMTRAN) 3.5% Beaver Beaver County Transit Authority (BCTA) 3.5% National Average 2.8% 2013 American Community Survey (5-Year Estimate) TIGERID: rosharp849 9 P a g e
PROJECT PARTIES The Statewide CNG Bus Replacement Project will leverage $40 million in state funding with $20 million from TIGER - a total of $60 million to be administered by PennDOT to 36 partner transit agencies. Exhibit 10 below provides a detailed overview of funding partners and potential recipients of federal and Commonwealth funds. Exhibit 10 Funding Partners and Impacted Transit Agencies Funding Partner Amount USDOT $20 million PennDOT $40 million Transit Agency Included in the Statewide CNG Bus Replacement Project (Sub-recipient) 5 Altoona Metro Transit (AMTRAN) Area Transportation Authority (ATA) Beaver County Transit Authority (BCTA) Berks Area Regional Transportation Authority (BARTA) Borough of Mount Carmel (LATS) Butler Transit Authority (BTA) Cambria County Transit Authority (CamTran) Capital Area Transit (CAT) Carbon County Community Transit (CCTA) Centre Area Transportation Authority (CATA) City of Washington County of Lackawanna Transit System (COLTS) County of Lebanon Transit Authority (COLT/LT) Crawford Area Transportation Authority (CATA) Dubois, Falls Creek, Sandy Township Joint Transportation Authority (DuFAST) Endless Mountains Transportation Authority (EMTA) Fayette Area Coordinated Transportation (FACT) Hazelton Public Transit (HPT) Indiana County Transit Authority (IndiGO) Lehigh and Northampton Transportation Authority (LANTA) Luzerne County Transportation Authority (LCTA) Mercer County Regional Council of Governments (MCRCOG) Mid County Transit Authority Mid Mon Valley Transportation Authority (MMVTA) Monroe County Transportation Authority (MCTA) New Castle Area Transit Authority (NCATA) Port Authority of Allegheny County (PAAC) Pottstown Area Rapid Transit (PART) Red Rose Transit Authority (RRTA) River Valley Transit (RVT) Schuylkill Transportation Authority (STS) Transit Authority of Warren County (WCTA) Venango County Transportation Office (VCTO) Westmoreland County Transit Authority (WCTA) York Adams Transit Authority County Blair Elk Beaver Berks Northumberland Butler Cambria Dauphin Carbon Centre Washington Lackawanna Lebanon Crawford Clearfield Bradford Fayette Luzerne Indiana Lehigh Luzerne Mercer Armstrong Washington Monroe Lawrence Allegheny Montgomery Lancaster Lycoming Schuylkill Warren Venango Westmoreland York 5 SEPTA (Philadelphia County) is the only fixed-route service provider not participating in the Statewide CNG Bus Replacement project at this time. 10 P a g e TIGERID: rosharp849
GRANT FUNDS AND SOURCES / USES OF PROJECT FUNDS For the 2015 TIGER discretionary grant program, PennDOT is seeking $20 million in federal funds with a local match of $40 million toward a total project cost of $60 million for the replacement of 150 standard 40 diesel-fueled buses with 150 CNG-fueled 40 buses. PennDOT has authorization for $40 million in Commonwealth funds since the passing of Act 89 in 2013 by the Pennsylvania General Assembly. This Act doubled the Commonwealth s commitment to capital funding for public transportation. Leveraging $40 million in state funding with $20 million in TIGER funding will permit the Commonwealth to advance the Statewide CNG Bus Replacement Project towards project completion with all vehicles in service by 2018. As summarized in Exhibit 11, following the execution of the grant agreement, PennDOT will administer $60 million to transit agencies included in the Statewide CNG Bus Replacement Project. The use of these funds will be solely for the purchase of 150 buses. Exhibit 11 Project Funding Summary Amount of FY 2015 TIGER funds requested Availability/Commitment of Local Match Source of Local Match Use of Total Project Funds Total Project Cost Percentage of Project paid by TIGER Funds 33.3% Pending or Prior Funding Requests None $20 million $40 million PennDOT This TIGER grant will be used to fund the replacement of 150 40 diesel-fueled buses that are beyond their useful life with 150 40 CNG-fueled buses. $60 million TIGERID: rosharp849 11 P a g e
SELECTION CRITERIA The FY 2015 TIGER program lays out several primary and secondary goals for the program. These goals have been codified into selection criteria. Exhibit 12 describes how this project satisfies each of the TIGER selection criteria. Exhibit 12 TIGER Selection Criteria Criteria Primary Safety State of Good Repair Economic Competitiveness Quality of Life Environmental Sustainability Secondary Innovation Partnership How the Project Satisfies Criteria Partially Applicable. This project replaces vehicles 12 years of age or older with new vehicles built according to the latest safety standards. Fully applicable. This project directly improves the condition and resiliency of existing transit systems across the Commonwealth by addressing a leading cause of operations and maintenance costs: vehicles in service beyond their useful life. This project builds upon existing momentum lead by PennDOT to improve the state of good repair by addressing these high operating expenses statewide. Partially applicable. This project puts into service 150 CNG buses that are completely independent of foreign oil. This project also supports the domestic natural gas industry to advance the United States as a leader in energy production. Partially applicable. The introduction of 150 new CNG buses demonstrates PennDOT s commitment, as an industry leader, anchoring transformative change in support of partner transit agencies. By investing in the reliability of public transportation, this project improves the quality of life for daily passengers that rely on transit as an essential service. Fully applicable. By addressing the environmental impact of bus-based transit systems, this project significantly reduces output of vehicle emissions by introducing 150 low-emission CNG-fueled buses. Fully applicable. This project utilizes innovative alternative fuel technology that is domestically produced and environmentally friendly. The transition from diesel to CNG is part of a greater strategy by PennDOT to improve long-term operations and maintenance costs of transit agencies throughout the Commonwealth. Fully applicable. This project is part of a collaborative partnership by PennDOT to implement a statewide CNG infrastructure system, specifically by assisting transit agencies with funding to purchase CNG-fueled buses for immediate service. 12 P a g e TIGERID: rosharp849
BENEFIT-COST ANALYSIS While this project has many indirect benefits, its primary long-term benefits are a reduction in operations and maintenance costs for CNG over diesel buses. Numerous Department of Energy (DOE), Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) studies have documented the benefits (of lower costs) of CNG in comparison to diesel-based systems. As such, the Benefit-Cost Analysis focuses on those aspects of the project to demonstrate the project s merits. It was found that within two years the marginal benefits of CNG exceeded the marginal costs associated with its implementation. Exhibit 13 demonstrates these findings. Two Pennsylvania transit agencies of similar size were chosen for the Benefit-Cost Analysis - Capital Area Transit (CAT) and Center Area Transportation Authority (CATA). They were also chosen for their vehicle fleet composition - CAT operates diesel-fueled buses and CATA operates a total CNG-fueled fleet. Exhibit 13 Benefit-Cost Analysis - General Findings Current Status / Baseline & Problem to be Addressed Current operating expenses for transit agencies with extended-life (3-5 years on average) buses. Change to Baseline / Alternatives Replace 150 diesel buses with 150 CNG buses. Type of Impacts Reduced O&M costs for transit systems. Population Affected by Impacts Number of transit agencies included in CNG fleet conversion. Economic Benefit Net cost savings of $23,562,688 over 12 year lifecycle. BCA Page Summary Tab 6 Summary of Results Significant fuel cost savings, reduced maintenance costs, an overall decrease in operations and maintenance costs. Diesel Engine Rebuild at CAT Maintenance Center CATA 40 CNG Bus Prepared for Service Findings In the short-term (i.e., during the construction phase of the project), the project will have no negative impacts. CNG buses will be constructed and delivered offsite, without negative impacts to traffic or other forms of public disruption. Based on the nature of this project, short-term impacts were not addressed in the Benefit-Cost Analysis. The net present value (NPV) of the expected benefits of the project exceed the project cost and are summarized in Exhibit 14. 6 http://www.wgianalytics.com/tiger7penndot/docs/benefitcostanalysis-tiger7-penndot-cng.xlsx TIGERID: rosharp849 13 P a g e
Exhibit 14 Benefit-Cost Analysis - Summary Findings Year Net Present Value Sub-project Buses Year Delivered Retired No Build Project Savings B/C Positive 1st Vehicles in Service 75 2018 2030 $72,308,420 $60,352,967 $11,955,453 1.165 2020 2nd Vehicles in Service 75 2019 2031 $70,202,350 $58,595,114 $11,607,236 1.165 2021 Total 150 2018 2031 $142,510,770 $118,948,082 $23,562,688 1.165 2020 Key Parameters Estimating the net present value of a proposed project involves a series of parameters that quantify benefits and convert their future value to their present day value. The goal of the analysis is to understand whether the project s benefits exceed its costs, in both the short and long-term. Any number of parameters can change the outcome of the analysis, such that the chosen parameters should be realistic, documented and tested so that decision-makers understand not only the benefits but where error or uncertainty could yield a different result. Exhibit 15 presents the general parameters used to determine the net present value of the Benefit-Cost Analysis, as well as the sources of underlying assumptions. These parameters are used consistently to evaluate all alternative scenarios. Detailed Assessment Transmitted with this document is the detailed Benefit-Cost Analysis spreadsheet developed for the project. The detailed assessment of benefits and costs evaluated the project during construction (2 years) and operating (12 years) phases. Due to the time necessary to manufacture such a large number of vehicles, the benefit-cost assessment evaluated two batches of 75 vehicles, delivered in 2018 and 2019 respectively. Each batch of buses delivered, as well as each bus, has independent utility. The primary spreadsheet can be downloaded from the supporting website 7. It is organized as follows: 1 st Tab KeyAssumptions This is where any of the assumptions used in benefit and cost analysis are input and the source of parameters documented. 2 nd and 3 rd Tabs BenefitCost1 and BenefitCost2 This is where the parameters from the KeyAssumptions are applied and results are calculated for each year out to 12 years for the two deliveries- 75 buses in two separate years. This includes separate analyses for each of the following: o Fuel and Maintenance Costs; o Subtotal O&M Cost; o Undiscounted Net Cost and Discounted Cost @ 3.00% 2015 $; and, o a Running Total. It is important to note that the values for fuel and maintenance cost per mile are derived from the most recently available (FYE 2014) certified audits for CAT, which operates a diesel-fueled fleet and CATA, which operates a CNG-fueled fleet. Both systems are comparable in size. Annual vehicle mileage was estimated based on the average number of miles for all fixed-route buses at both agencies so as to have a consistent estimate of impacts. The No Build scenario assumes the same number of buses will be replaced with diesel-fueled vehicles. The analysis therefore focuses on the marginal costs and marginal benefits of diesel vs. CNG fueled vehicles. The net project benefit (cost savings) discounted over the 12 year lifecycle is calculated at the bottom of the second table under Total Cost Discounted Over 12 Year Lifecycle (Capital + O&M). 7 http://www.wgianalytics.com/tiger7penndot/docs/benefitcostanalysis-tiger7-penndot-cng.xlsx 14 P a g e TIGERID: rosharp849
Exhibit 15 Benefit-Cost Analysis- Key Parameters General Parameters Parameter Name Description Value Unit / Note Project / Vehicle http://www.fta.dot.gov/documents/useful_life_of_buses_ Years 12 Life Final_Report_4-26-07_rv1.pdf Discount Rate 3.00% per annum Values Expressed in 2015 $ Diesel Vehicle Cost Per 40' Bus $350,000 Standard replacement cost per PennDOT Bureau of Public Transportation CNG Vehicle Cost Per 40' Bus $400,000 Standard replacement cost per PennDOT Bureau of Public Transportation Grant Agreement in Place 9/30/2016 Straightforward Grant Agreement, allow one year to execute RFP / Procurement Begins 30 10/30/2016 30 Days from Grant Agreement / Letter of No Prejudice 1st # of Vehicles delivered 75 TIGER Requested # of Vehicles Vehicles Start Service 540 4/23/2018 18 months from RFP before first vehicles enter service 2nd # of Vehicles delivered 75 TIGER Requested # of Vehicles Vehicles Start 12 months from 1st vehicle delivery to place 2nd set of 365 4/23/2019 Service vehicles into service O&M Cost Per Diesel Bus (Representative Agency = Capital Area Transit/CAT, NTD ID=3014) Maintenance Cost $3,206,788 FYE 2014 Urban Fixed-Route (Diesel) from Certified Audit Fuel & Lubricant Cost $1,450,718 FYE 2014 Urban Fixed-Route (Diesel) from Certified Audit Total Vehicle Miles 1,928,439 FYE 2014 Urban Fixed-Route (Diesel) from Certified Audit Total Vehicles 75 FYE 2014 Urban Fixed-Route (Diesel) from Certified Audit Miles / Vehicle 25,712.52 FYE 2014 Urban Fixed-Route (Diesel) from Certified Audit Fuel Cost / Mile $0.75 FYE 2014 Urban Fixed-Route (Diesel) from Certified Audit Maint. Cost / Mile $1.66 FYE 2014 Urban Fixed-Route (Diesel) from Certified Audit O&M Cost Per CNG Bus (Representative Agency = Centre Area Transportation Authority /CATA, NTD ID=3054) Maintenance Cost $2,437,927 FYE 2014 Fixed-Route (CNG) from Certified Audit Fuel & Lubricant Cost $545,609 FYE 2014 Fixed-Route (CNG) from Certified Audit Total Vehicle Miles 1,813,116 FYE 2014 Fixed-Route (CNG) from Certified Audit Total Vehicles 66 FYE 2014 Fixed-Route (CNG) from Certified Audit Miles / Vehicle 27,471.45 FYE 2014 Fixed-Route (CNG) from Certified Audit Fuel Cost / Mile $0.30 FYE 2014 Fixed-Route (CNG) from Certified Audit Maint. Cost / Mile $1.34 FYE 2014 Fixed-Route (CNG) from Certified Audit Average Miles / Vehicle Average Miles / Vehicle All 26,592 Average of CAT & CAT Observed Miles / Vehicle Per Year TIGERID: rosharp849 15 P a g e
Risk and Uncertainty A summary of risks and uncertainty is presented in Exhibit 16. Because the project requires no rightsof-way, no environmental clearance and no preliminary engineering or design, the risk of schedule or cost overruns is minimal. Exhibit 16 Risks and Uncertainty Variable Risk Rationale/Mitigation Strategy Right-of-Way None No right-of-way required. Environmental Clearance None Categorical Exclusion per Map-21. Schedule Adherence Minimal All capital purchases will be scheduled following the availability of funds. CNG manufacturing takes approximately two years. Project Cost Overruns Minimal All capital purchases will be administered through PennDOT within known unit costs. Capital Funding None PennDOT has committed matching funds to be administered to transit agencies for CNG-fueled vehicle procurement. O&M Funding None PennDOT has funding mechanisms that provide substantial funding for O&M. Sensitivity Tests To ensure the project maintains a net positive value regardless of a change in circumstances, a series of sensitivity tests were performed evaluating the relative cost savings assumed under various scenarios. Because fuel and maintenance cost savings are key to the analysis, various tests were performed on these and other variables. As demonstrated in Exhibit 17, under all scenarios evaluated, the project maintains a positive net present value. Exhibit 17 Benefit-Cost Analysis Sensitivity Test Results Sensitivity Test 8 B/C Year NPV is Positive Baseline 1.165 2020 Double CNG Fuel Costs 1.082 2022 Assume CNG and Diesel have same maintenance cost 1.077 2022 Increase CNG fuel cost by 50% and assume CNG and diesel have same maintenance cost 1.036 2024 Double Number of Annual vehicle miles 1.211 2019 Assume 7% discount rate 1.144 2020 8 Download from http://www.wgianalytics.com/tiger7penndot/docs/bcatests-tiger7-penndot-cng.zip 16 P a g e TIGERID: rosharp849
PROJECT READINESS This project will proceed to procurement within 60 days of executing the grant agreement. PennDOT and the partner agencies already have FTA approved procurement procedures in place to expedite the delivery of the buses. Since bus replacement is a routine activity of PennDOT and the transit agencies, this project has demonstrated the technical and financial feasibility to adhere to the project schedule. Technical Feasibility and Independent Utility The primary capital expenditures associated with the project are rolling stock capital purchases for the CNG-fueled buses. Based on the nature of the improvements, the project will not significantly impact the natural, social or economic environment. The project qualifies for a Categorical Exclusion (CE) from the NEPA process per MAP-21 as no right-of-way is required. No environmental issues are expected during construction or during operations. Financial Feasibility PennDOT has committed $40 million in funding to replace 150 buses. The award of the TIGER grant will complete the necessary funding. No additional funding commitments will be necessary. The cost of ongoing O&M will be the responsibility of selected transit agencies that are included in Statewide CNG Bus Replacement Project. A summary of the project budget is shown in Exhibit 18. Exhibit 18 Project Budget Funding Source Project Cost PennDOT funding TIGER Funding TIGER % of Cost 1 st Delivery 75 Buses $30 million $20 million $10 million 33.3% 2 nd Delivery 75 Buses $30 million $20 million $10 million 33.3% Total $60 million $40 million $20 million 33.3% Financial Contingency The Pennsylvania General Assembly passed Act 44 in July of 2007. This law has dedicated an increase in annual public transportation funding for the next 10 years of approximately $1 billion dollars per year, largely for operating subsidies. In addition, Act 89 passed in 2013 has dedicated an additional $476 to $497 million per year for public transit by FY 2017-2018 to support capital investments. With a secure and steady source of tax revenues, PennDOT will ensure the availability of contingency reserves should cost estimates increase. TIGERID: rosharp849 17 P a g e
Project Schedule All rolling stock capital purchases will be completed 24 months from the execution of the grant agreement and are estimated to begin in September 2016. New CNG buses will take approximately 2 years to be manufactured and delivered. Transit agencies can expect new CNG buses to begin service in 2018. A summary of the proposed project schedule is shown in Exhibit 19. Exhibit 19 Project Schedule PROJECT TIMELINE TIGER 2015 Application Funds Awarded CNG Buses Ordered CNG Buses Manufactured CNG Buses In Service 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 START END 18 P a g e TIGERID: rosharp849
FEDERAL WAGE CERTIFICATION In anticipation of a possible award, PennDOT has included Appendix A: Wage Certification Letter to ensure the USDOT that PennDOT is prepared to meet all federal wage requirements consistent with the requirements of the 2015 FY TIGER Notice of Funding Availability (NOFA). TIGERID: rosharp849 19 P a g e
CONCLUSION The Commonwealth of Pennsylvania is seeking a partnership with USDOT to provide funding to accelerate PennDOT s Statewide CNG Bus Replacement Project. The project will purchase 150 new, cleanfuel CNG buses for 36 transit agencies across the Commonwealth. This project is the result of a collaborative partnership between USDOT, PennDOT, and 36 fixed-route public transit agencies that serve the 12.7 million residents of the Commonwealth. This project aligns with USDOT strategic goals embodied within the TIGER primary selection criteria to improve the state of good repair and to promote environmental sustainability. It also builds upon existing plans between PennDOT, the 36 transit agencies and private partners working together to build CNG infrastructure across the Commonwealth by administering funds to agencies for the purchase of CNG-fueled buses. New rolling stock will replace 150 diesel buses that operate, on average, four years beyond their useful life. Improving the state of good repair directly targets high operating costs experienced by many transit agencies across the Commonwealth by introducing innovative CNG technology. Investments in alternative fuel promotes environmental sustainability in addition to supporting the economic competitiveness of the American energy industry at home. In addition to endorsements from key legislators, the project continues to receive endorsements from communities across Pennsylvania that are directly impacted through improved transportation service and renewed commitments to transit investments. With no adverse effects on traditionally underserved communities or detrimental impacts to the environment, the project will be fully implemented within 24 months of PennDOT executing the grant agreement. As reported in the findings of the Benefit-Cost Analysis, this project has the ability to recover costs associated with implementation in two years. On a statewide level, CNG will help to reduce high operating costs for each transit agency. This project is an example of a win-win-win by showing how: An investment in public infrastructure will result in long and short-term cost savings, The transportation system is brought into a good state of repair as a result of collaborative efforts of USDOT and the Commonwealth of Pennsylvania; and, The greater use of domestically-produced alternative fuels serves the strategic interests of the United States by reducing dependence on foreign oil. To review all of the supporting materials for this TIGER VII (2015) grant application, please visit the website http://www.wgianalytics.com/tiger7penndot. 20 P a g e TIGERID: rosharp849
APPENDIX A: WAGE CERTIFICATION LETTER TIGERID: rosharp849 21 P a g e
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