FTA Capital Investment Grants (CIG): Navigating New Starts, Small Starts, and Core Capacity

Transit Grants

FTA Capital Investment Grants (CIG): Navigating New Starts, Small Starts, and Core Capacity

The Federal Transit Administration's Capital Investment Grants program (CIG) is the most complex, consequential, and misunderstood federal funding mechanism in the transit industry. Unlike airport or port grants, which are often one-time or episodic awards, CIG is a multi-year, multi-stage process that can take 5-10 years from project conception to full funding grant agreement (FFGA).

CIG is also highly political. The program's funding track—New Starts (large projects >$400M), Small Starts (modest projects <$400M), or Core Capacity (existing system improvements)—determines eligibility, evaluation criteria, and timeline. Understanding which track your project belongs in, and how to advance through each stage of development, is essential.

This guide explains how CIG works, what projects win, and how to position your transit agency for success in a competitive, time-consuming funding process.

Program Overview: Three Tracks, One Mission

CIG, administered by the FTA (part of the U.S. Department of Transportation), provides federal capital grants for major transit projects. The program is divided into three distinct tracks:

Track 1: New Starts (Capital Investment Grants for New Starts)

  • For fixed-guideway projects exceeding $400 million (in FY2026 dollars)
  • Includes rail transit (heavy rail, light rail, commuter rail), bus rapid transit (BRT)
  • Very competitive; 5-10 year typical timeline
  • Federal grant can provide 50% of project cost (varying, but typically 30-50%)
  • Examples: New light rail lines, commuter rail corridors, major rail expansion

Track 2: Small Starts (Capital Investment Grants for Small Starts)

  • For projects under $400 million (in FY2026 dollars)
  • Includes light rail, streetcar, BRT, corridor-based transit improvements
  • Moderately competitive; 2-4 year typical timeline (faster than New Starts)
  • Federal grant typically 80% of project cost
  • Examples: Streetcar projects, smaller light rail segments, BRT corridors

Track 3: Core Capacity (Core Capacity Transit Improvement Grants)

  • For improvements to existing transit systems
  • Projects under $250 million
  • Designed for system enhancements: new vehicles, station renovation, signal upgrades
  • Fastest track: 1-2 years from application to award
  • Federal share: typically 80%
  • Examples: New bus fleet procurement, rail vehicle replacement, station accessibility upgrades

Critical distinction: New Starts vs. Small Starts vs. Core Capacity differ fundamentally in timeline, competitiveness, and federal share. Placing your project in the wrong track will reduce your competitiveness and extend your timeline unnecessarily.

Funding: Available Appropriations and Competition

Total CIG appropriations vary by fiscal year. For recent years:

  • FY2025 appropriation: ~$2.2 billion (all three tracks combined)
  • FY2024 appropriation: ~$2.1 billion
  • FY2023 appropriation: ~$2.0 billion

Typical allocation across tracks (varies):

  • New Starts: 60-65% of total CIG funding
  • Small Starts: 15-20%
  • Core Capacity: 15-20%

For FY2026, expect similar total appropriations ($2.1-2.3 billion), though exact splits are uncertain pending Congress.

Competition: Very high. New Starts typically has 30-50 projects competing for funding, with only 5-10 advancing to construction. Small Starts is somewhat less competitive. Core Capacity is more approachable for smaller transit agencies.

New Starts Track: The Long Road to $400M+ Projects

Eligibility and Project Types

New Starts is for major fixed-guideway transit projects with total capital cost exceeding $400 million (in FY2026 dollars; adjusted annually for inflation).

Eligible project types:

  1. Heavy Rail (Subway/Metro)

    • New rail lines or major extensions
    • Examples: New BART line, Chicago Metra expansion, NYC subway extension

  2. Light Rail Transit (LRT)

    • New light rail lines or major segments
    • Examples: Dallas LRT extension, Houston light rail

  3. Commuter Rail

    • New commuter rail corridors or major improvements
    • Examples: New regional rail lines, significant service expansion

  4. Bus Rapid Transit (BRT) and Automated Guideway Transit (AGT)

    • Exclusive right-of-way transit with advanced features
    • Examples: Dedicated bus lanes with signal priority, elevated guideway systems

  5. Streetcar and Modern Streetcar

    • Fixed-route rail in urban corridors
    • Must meet size/capital thresholds (rare for streetcar alone to exceed $400M)

The Project Development Process: Stages and Timeline

New Starts projects go through a structured development process with defined stages. Each stage requires FTA approval before advancing:

Stage 1: Project Development

  • Duration: 2-3 years
  • FTA funding: Up to $5 million in planning grants (80% federal share)
  • Activities:
    • Corridor alternatives analysis
    • Initial ridership/financial modeling
    • Community and stakeholder engagement
    • Preliminary environmental review (NEPA)
    • Local funding commitment documentation
    • Preliminary engineering (10-30% design)
  • Outcome: Project Development Report (PDR) demonstrating project merit and readiness for next stage
  • Evaluation: FTA reviews PDR; approves advancement to Engineering or requests additional work

Stage 2: Engineering (Final Design and Environment)

  • Duration: 2-4 years
  • FTA funding: Up to $10-30 million (80% federal share for design, NEPA)
  • Activities:
    • Complete final design (90%+)
    • Complete NEPA review (typically EIS for major projects)
    • Finalize ridership and financial models
    • Confirm local match (sources and amounts)
    • Detailed cost estimation
    • Utility coordination and right-of-way acquisition planning
  • Outcome: Engineering Report and NEPA Record of Decision (ROD)
  • Evaluation: Project now moves to Construction phase when local funding is committed

Stage 3: Construction (Full Funding Grant Agreement)

  • Duration: 4-8+ years (actual construction time)
  • FTA funding: Capital grant covers agreed federal share (30-50% typical for New Starts)
  • Activities:
    • Award design-build or design-bid-build contracts
    • Execute right-of-way acquisition
    • Construct the project
    • Procure rail/bus vehicles
    • Systems integration and testing
    • Project closeout
  • Outcome: Operational transit system; FTA grant closeout

Total timeline: 8-15 years from initial concept to project completion.

New Starts Evaluation Criteria

FTA evaluates New Starts projects on quantitative and qualitative metrics:

1. Mobility Improvements (35% weight)

  • Ridership: How many daily riders will the project serve?
  • Network connectivity: Does it fill a gap in the regional transit network?
  • Service expansion: Does it extend transit into underserved areas?
  • Market potential: Is there significant travel demand?

FTA wants projects serving tens of thousands of riders daily. A 20,000-rider-per-day light rail project is competitive. A 5,000-rider project will struggle.

2. Cost-Effectiveness (30% weight)

  • Cost per new rider: Total capital cost divided by new daily riders
  • Operating efficiency: Operating cost per rider
  • Leveraging existing infrastructure: Does it use existing transit lines?

FTA targets cost-effectiveness of $15-30 per new rider. Projects exceeding $50 per new rider score lower.

3. Financial Commitment (15% weight)

  • Local match: Does the sponsor have committed, dedicated funding?
  • Operating support: Can the agency afford to operate the system long-term?
  • Financial stability: Is the agency's finances healthy?

FTA requires New Starts sponsors to demonstrate committed local funding covering the non-federal share. This is often the biggest hurdle for mid-size metros.

4. Land Use and Economic Development (10% weight)

  • Transit-oriented development: Is the corridor zoned for density near stations?
  • Job access: Does the project improve access to employment centers?
  • Economic growth: Will it stimulate redevelopment or business expansion?

5. Environmental Mitigation and Quality of Life (10% weight)

  • Environmental benefits: Air quality, emissions reduction, noise mitigation
  • Community cohesion: Does the project address environmental justice?
  • Quality of life: Pedestrian and cycling amenities, safety

Advancing Your New Starts Project

To maximize competitiveness:

  1. Ensure true demand: Conduct rigorous ridership modeling. FTA will peer-review your numbers. Do not inflate.
  2. Secure local match before PD stage: Have your city or state commit the non-federal share in advance.
  3. Get political support: FTA appreciates projects with strong bipartisan support from elected officials.
  4. Address equity: Ensure the project serves lower-income communities; show community engagement.
  5. Start planning now: Even if you don't expect to seek federal funding for 5+ years, begin local planning immediately to build the foundation for later federal application.

Small Starts Track: Faster Path to $250-400M Projects

Small Starts is designed to accelerate funding for smaller projects that don't warrant a decade-long New Starts process.

Eligibility

Projects with total capital cost of $250 million to $400 million (in FY2026 dollars).

Project types similar to New Starts: light rail, BRT, commuter rail, streetcar—but smaller scope. Examples:

  • Light rail extension (5-10 miles)
  • BRT corridor in major metro
  • Streetcar line in a mid-size city

Expedited Development Process

Small Starts uses a simpler, faster evaluation:

  • Phase 1: Project Development (18-24 months)

    • Alternatives analysis
    • Preliminary engineering (20% design)
    • NEPA categorical exclusion or EA
    • Community engagement and local match documentation

  • Phase 2: Construction (3-5 years)

    • Final design and construction
    • Fed up to 80% of project cost

Total timeline: 4-7 years (significantly faster than New Starts).

Small Starts Evaluation Criteria

Simpler than New Starts:

  1. Project Justification (40%): Does the project address a clear need? Ridership demand?
  2. Local Commitment (35%): Is local match committed? Can the agency operate it?
  3. Readiness (15%): How far along is design and local planning?
  4. Equity and Sustainability (10%): Does it serve disadvantaged communities? Environmental benefits?

Less emphasis on ridership modeling minutiae; more emphasis on local readiness.

Why Choose Small Starts?

  • Speed: 4-7 years vs. 8-15 for New Starts
  • Simplicity: Less intensive FTA review
  • Likelihood: Higher award rate (fewer competitors in Small Starts)
  • Sufficient federal share: 80% federal is generous

If your project is $250-400M, do not pursue New Starts. Small Starts is a better option.

Core Capacity Track: The Accessible Option for System Improvements

Core Capacity is the most accessible FTA capital grant program. It's designed for improvements to existing transit systems.

Eligibility

Projects under $250 million (in FY2026 dollars) that improve capacity or service on existing systems. Examples:

  • Procurement of new transit vehicles (buses, rail cars)
  • Station rehabilitation or accessibility improvements
  • Signal system upgrades
  • Parking facilities or intermodal centers
  • Bus facility improvements (maintenance, operations buildings)
  • Technology improvements (real-time passenger information, fare collection)

Critical: Core Capacity is not for new services or major line extensions. It's for enhancing existing assets.

Streamlined Application and Award Process

  • Timeline: 12-18 months from application to award (much faster)
  • Application: Modest—typically 20-30 pages, financial documentation, project plan
  • Evaluation: Straightforward—project readiness, financial feasibility, equity
  • Federal share: Up to 80%

Why Choose Core Capacity?

For a mid-size transit agency, Core Capacity is often the pragmatic choice:

  • Fast: Award in 12-18 months
  • Achievable: No requirement to build major new service; enhancing existing is acceptable
  • Predictable: Clearer evaluation criteria; less politics
  • Implementable: Shorter project delivery (new buses in 3-4 years, not 10)

Core Capacity Evaluation Criteria

  1. Project Readiness (40%): Is preliminary design complete? Environmental review done?
  2. Financial Feasibility (30%): Does the agency have committed local match? Can it operate?
  3. System Efficiency and Equity (20%): Will it improve ridership? Serve disadvantaged communities?
  4. Sustainability (10%): Zero-emission vehicles? Accessibility improvements?

Comparison: New Starts vs. Small Starts vs. Core Capacity

Feature New Starts Small Starts Core Capacity
Project cost $400M+ $250-400M <$250M
Project type New rail/major BRT Rail extension/BRT Vehicle/system improvements
Timeline to award 5-10+ years 4-7 years 1-2 years
Federal share 30-50% Up to 80% Up to 80%
Competitiveness Highly competitive Moderately competitive Less competitive
Evaluation weight: ridership Heavy (35%) Medium (20-30%) Light (10-15%)
Evaluation weight: readiness Low (scored in development stages) Medium (15-25%) High (40%+)
Typical sponsor Large metro (>1M population) Medium metro (500K-1M) Any transit agency
Best choice if... Major new rail corridor needed and local match secured Light rail extension, mid-size metro Need transit improvement without 5-year planning

Administration Policy Considerations: The Current Environment

FTA policy priorities have evolved and can affect competitiveness. As of early 2026:

  • Equity emphasis: Projects serving low-income and communities of color score higher
  • Climate/sustainability: Zero-emission vehicles and clean energy infrastructure are favored
  • Equity in local match: FTA prefers sponsors that can fund projects without crushing local budgets; may favor smaller metros with lower federal match requirements
  • Workforce development: Projects with labor partnership agreements and apprenticeship programs score higher
  • Practical outcomes: FTA increasingly values projects with clear ridership demand and realistic financial sustainability

Projects pitched as transformational but lacking clear demand or financial sustainability will struggle regardless of track.

Keys to Success: Project Positioning Strategy

1. Conduct Rigorous Demand Analysis

Do not guess at ridership. Use travel demand modeling software (VISUM, Cube, etc.). Have third-party peer review. Be conservative—FTA will challenge inflated numbers.

2. Secure Dedicated Local Match in Advance

Before FTA application, your mayor or governor should have committed the non-federal share via ordinance, bond authorization, or state law. "We plan to fundraise" is not sufficient.

3. Build Political Coalition

New Starts especially requires strong political support. Get your governor, U.S. senators, and congressional delegation aligned.

4. Plan for Long-Term Operations

FTA will scrutinize operating cost and revenue forecasts. Show the agency can sustain the service without subsidy growth beyond forecasts.

5. Engage Community Early

Document extensive community input. Show that the project addresses community priorities, not just agency planning.

6. Choose the Right Track

Don't pursue New Starts for a $350M project. Use Small Starts instead. Don't wait 5 years to pursue New Starts if a Core Capacity project can deliver results sooner.

Timeline for Your Agency

If you're considering a transit capital project:

  • Planning phase (Months 1-12):

    • Conduct alternatives analysis (corridor options)
    • Develop preliminary ridership model
    • Engage community and identify local match sources

  • Project Development (Months 12-36):

    • Complete demand modeling (peer review)
    • Secure local match commitment from city/state
    • Begin NEPA environmental review
    • Develop 20-30% preliminary design

  • FTA Application (Months 36-42):

    • Submit project development report or application
    • Address FTA data requests
    • Refine modeling based on FTA feedback

  • FTA Review and Advancement (Months 42-60+):

    • FTA peer review of ridership and cost estimates
    • Possible advancement to engineering phase (New Starts) or construction (Small Starts/Core Capacity)
    • Local match and design finalization

  • Final Design and Construction (Months 60+):

    • Detailed engineering and procurement
    • Construction execution
    • Vehicle procurement and testing
    • System startup and service launch

The timeline emphasizes early, local planning. Federal funding is not the start of your project—it's the endpoint of years of local groundwork.

Conclusion: Choose Your Track, Build Local Support, Execute Disciplined Planning

CIG is a powerful tool for transit agencies, but only for those with patience, political support, and realistic financial planning. The track you choose—New Starts, Small Starts, or Core Capacity—determines your timeline and likelihood of success.

Large metros with major new rail corridors and strong local funding should pursue New Starts. Mid-size metros with light rail extensions should pursue Small Starts. Smaller agencies seeking system improvements should prioritize Core Capacity.

In all cases, success requires:

  1. Genuine ridership demand (backed by rigorous modeling)
  2. Committed local match (in law or bond, not promises)
  3. Political support from local and state leaders
  4. Realistic financial and operating plans
  5. Equity and community engagement
  6. Environmental sustainability

The agency that wins a $1 billion FTA grant is not the one that waits until year 5 to start planning. It's the one that begins local planning in year 1, secures political and financial commitments in year 2-3, and applies for federal funding in year 4-5, fully prepared.

Is your agency ready?

This analysis was prepared with AI-assisted research by DWU Consulting. It is provided for informational purposes only and does not constitute legal, financial, or investment advice. All data should be independently verified before use in any official capacity.

This article was prepared with AI-assisted research by DWU Consulting. It is provided for informational purposes only and does not constitute legal, financial, or investment advice. All data should be independently verified before use in any official capacity.