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Home My WebLink About5K CMAQ Grant re Operating Funds for Buses O � PRIp ti � V � 4646 Dakota Street SE Prior Lake. MN 55372 '11I NNESp� P CITY COUNCIL AGENDA REPORT MEETING DATE: MAY 28, 2013 AGENDA #: 5K PREPARED BY: JANE KANSIER, ASSISTANT CITY MANAGER PRESENTED JANE KANSIER, ASSISTANT CITY MANAGER BY: AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION GUARANTEEING OPERATING FUNDS FOR BUSES PURCHASED AS PART OF A CONGESTION MITIGATION AIR QUALITY (CMAQ) GRANT DISCUSSION: Introduction The purpose of this agenda item is to determine City Council support for guaran- teeing operating funds for buses purchased with a CMAQ grant, if it is determined new Federal rules will not allow the use of grant funds for operations. Historv In 2009, the City of Prior Lake, in partnership with the City of Shakopee, submitted an application for a Congestion Mitigation Air Quality (CMAQ) grant for the expan- sion of the BlueXpress bus service. The project includes the purchase of three coach buses and two years of operating funds for these buses. The projected funding is shown in the table below: Local Match Component Cost Federal Grant 200 3 Coach Buses $ 1,530,000.00 $ 1,224,000.00 $ 306,000.00 2 Yrs O eratin $ 480,000.00 $ 384,000.00 $ 96,000.00 TOTAL $ 2,010,000.00 $ 1,608,000.00 $ 402,000.00 The local match is to be split evenly between the City of Prior Lake and the City of Shakopee. Current Circumstances When we submitted the CMAQ grant in 2009, Federal rules in effect at the time allowed these grant funds to be used both for transit capital and operations. In 2012, a new set of Federal rules, known as MAP-21, was adopted. MAP-21 only allows the grant funds for capital purchases, and not for transit operations. CMAQ grant applications must be submitted several years before the actual ap- propriation is made, in this case 4 years in advance. Because the applications for current funding appropriations were submitted in good faith under the previous rules, the Federal Highway Administration (FHWA) has been asked for a determi- nation as to whether or not MAP-21 was intended to apply to these earlier applica- tions. To the best of our knowledge, no official determination has been made alt- hough Metropolitan Council staff continues to inquire. As with all Federal transit grants, the Metropolitan Council is the official grantee for the region and, as such, receives the grant funds. These funds are then dispersed to the City by the Metropolitan Council. Due to the uncertainty about the operating dollars, the Metropolitan Council has asked the City to commit to providing both the Federal portion and the local match portion of the operating dollars ($480,000), in the event the FHWA determines the grant funds may not be used for transit op- erations. This would mean that rather than paying $201,000 for our local share, the City would pay $393,000, with Shakopee paying the remainder of the local match in each case. There are adequate funds in the City's Transit Fund for this pur- pose. Conclusion The City Council should decide whether or not to commit transit funds for operat- ing dollars in the event the FHWA determined CMAQ funds may not be used for transit operations. The Metropolitan Council has asked for a decision by June 7, 2013. ISSUES: The three buses to be purchased with the CMAQ funds are intended to serve Mar- schall Road Transit Station, and to provide some expanded service for BIueX- press. The Council has three possible options: 1. Do not commit to provide the operatinq dollars. In this case, we basically forgo the CMAQ grant, and will not receive any additional buses nor will our bus sys- tem have the capacity to operate as it has in the past. In order to serve the Marschall Road Transit Station, scheduled to open in late 2013, we will have to reassign buses from the existing routes serving Southbridge Crossing Transit Station and Eagle Creek Transit Station. While this will not reduce our overall service, it will most likely reduce the number of trips from the existing park and ride lots and therefore added ridership which we expect. 2. Commit to provide a portion of the CMAQ qrant. This would mean scaling back from our original grant application. For example, we could choose to re- quest two coach buses. Our local share would be decreased accordingly. While this would limit the City's potential exposure, it would also limit possible service. In this case, the projected funding would be: Component Cost Federal Local Match C�� Share of Grant Local Match 2 Coach Buses $1,020,000.00 $ 816,000.00 $204,000.00 $ 102,000.00 2 Years O eratin $ 320,000.00 $ 0.00 $320,000.00 $ 160,000.00 TOTAL $1,340,000.00 $ 816,000.00 $524,000.00 $ 262,000.00 DIFFERENCE $ 670,000.00 $ 408,000.00 $ 262,000.00 $ 131,000.00 3. Commit to providinq the City's entire share of the CMAQ grant This would al- low us to move forward and purchase three buses for the Marschall Road Transit Station but would leave us exposed to the possibility of paying the full local share together with Shakopee. It is important to note the City of Shakopee is a full partner in this grant with the 2 City of Prior Lake. If the Council chooses to commit any funding, we would expect the City of Shakopee to share that obligation with us. Shakopee staff has indicated they will recommend the City of Shakopee commit to half of the operating costs. Any decision to commit funds for this purpose should also include specific condi- tions. The attached draft resolution specifies the City's commitment is conditioned on a written determination from the FHWA that CMAQ funds will not be allowed for operations, and on the City of Shakopee's agreement to share this commitment with the City of Prior Lake. If the City decides to reduce the amount of grant funds requested, or to forego the grant completely, the money currently allocated to the City will be returned to the Region, and most likely be used to fund Metropolitan Council transit projects. FINANCIAL If it is determined CMAQ funds may not be used for transit operations, the City's IMPACT: obligation would be as follows: Component Cost Federal Grant Local City Share of Match Local Match 3 Coach Buses $1,530,000.00 $1,224,000.00 $306,000.00 $153,000.00 2 Yrs O eratin $ 480,000.00 $ 0.00 $480,000.00 $240,000.00 TOTAL $2,010,000.00 $1,224,000.00 $786,000.00 $393,000.00 There is no impact on the City's general fund as a result of this action. All costs associated with transit will be taken from the City's Transit Fund. There are ade- quate funds in the City's Transit Fund to cover these costs. ALTERNATIVES: There are three alternatives for the City Council to consider: 1. Adopt a resolution guaranteeing operating funds for buses purchased as part of a Congestion Mitigation Air Quality (CMAQ) grant 2. Adopt a resolution guaranteeing operating funds for buses purchased as part of a reduced Congestion Mitigation Air Quality (CMAQ) grant 3. Adopt a resolution indicating the City's intent to refuse the CMAQ grant. RECOMMENDED The staff recommends Alternative #1: MOTION: A motion and second to adopt a resolution guaranteeing operating funds for buses purchased as part of a Congestion Mitigation Air Quality (CMAQ) grant 3 O sL p ��.�' � � u r�y 4646 Dakota Street SE `�INiVg50'� Prior Lake, MN 55372 RESOLUTION 13-xxx A RESOLUTION GUARANTEEING OPERATING FUNDS FOR BUSES PURCHASED AS PART OF A CONGESTION MITIGATION AIR QUALITY (CMAQ) GRANT Motion By: Second By: WHEREAS, The City Council recognizes the value of providing quality, cost-effective transit services in the Prior Lake community; and WHEREAS, The City values its partnerships with the City of Shakopee and the Metropolitan Council; and WHEREAS, The City's 2030 Vision and Strategic Plan identifies objectives for transit services that are addressed in part by the UTMP and by the 2012 Scott County Transit Service Operations and Capital Plan; and WHEREAS, The City of Prior Lake, in partnership with the City of Shakopee, was awarded a Congestion Mitigation Air Quality (CMAQ) grant for the purchase of 3 coach buses and 2 years of operating funds in 2009; and WHEREAS, There is uncertainty about whether or not the current Federal rules (MAP-21) will permit CMAQ grant funds to be used for transit operations; and WHEREAS, The Metropolitan Council has requested the City of Prior Lake commit to providing both the grant funds and the local match for operations in the event it is determined the CMAQ grant funds will not be allowed for this purpose. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. The City of Prior Lake commits both the grant funds and the operating funds identified in the awarded 2009 CMAQ grant, subject to the following conditions: a. The City receives a copy of the written determination by FHWA that CMAQ funds will not be allowed for this purpose. b. The City of Shakopee agrees to pay 50% of the local share identified in the grant. 3. The City of Prior Lake reserves the right to refuse the grant if the above conditions have not been met, or if it is determined funding is not available. 4. Funding for this project will be taken from the Transit fund: #603 PASSED AND ADOPTED THIS 28T" DAY OF MAY 2013. YES NO Hedber Hedber Keene Keene McGuire McGuire Morton Morton Souku Souku Frank Boyles, City Manager