The proposal reportedly did well in FTA's economic-development standards, but fell short of FTA's measures for cost effectiveness, as well as population and density.

An option is to begin with a smaller 1-mile route, which might meet FTA's standards.

Tempe and Valley Metro sought federal funds to cover about one-third of the 2.6-mil3 project, estimated to cost $129 million. Maricopa County's regional transit board has approved $73 million for the project. Valley Metro CEO Stephen Banta has stressed the agency's continued support for the streetcar.