Each year the City of Billings MET Transit Division applies for Federal Transit Administration (FTA) grant funds through the U.S. Department of Transportation (USDOT) Federal Transit Act. Section 5307 grant funds can be utilized for operating costs and capital assistance, while Section 5339 grant funds are specifically designated for bus and bus facility purchase, replacement, or rehabilitation. Typically the Section 5339 grants are secured via a pass through program administered by the Montana Department of Transportation (MDT) Transit Division; however, over the past two years MET has applied for competitive funding directly from the FTA, and in 2018 was awarded $1,360,000 and in 2019 was awarded $840,000.  These competitive 5339(B) grants will come directly from the FTA instead of the MDT.  For FY 2020, MET Transit is intending to utilize Section 5307 funding for operating costs, as it has in past years. This is a matching grant, prorated 50% Federal and 50% local dollars. The Section 5339(B) funds will be used for bus purchases and technology upgrades. The Section 5339 grant funding program is typically an 80% grant, 20% local share program; however, due to the conditions of the grant application and structure of the purchase of the equipment, these percentages could change some.

The FTA will reimburse the City up to the apportioned allocation for the year, which will be $1,851,501 for Section 5307 funds and $840,000 for Section 5339(B) funds. The grant application for FTA funds requires a public hearing and a Resolution authorizing the Mayor to execute the grant documents with the USDOT.  Public hearing notices were published in the Yellowstone County News on December 13, 20, and 27, 2019.

City Council may:

• Approve the Resolution for the City of Billings to apply for and execute the grant agreements to provide Section 5307 operating assistance and Section 5339(B) capital assistance; or
• Disapprove the Resolution and do not file the grant applications. This would reduce MET operating revenue by approximately 33%, possibly require service reductions, and delay the purchase of much needed equipment to replace and improve the MET Transit fleet.

For FY 2020, the Section 5307 Federal grant application for operating assistance is for $1,851,501, which represents approximately 33% of MET Transit's operating revenue. The Section 5339(B) Federal grant for capital assistance for $840,000 will enable MET Transit to make much needed improvements to its bus fleet.

Staff recommends that the City Council conduct a public hearing and approve the Resolution authorizing the submittal of the Section 5307 and Section 5339(B) grant applications, and allowing the Mayor to execute all Section 5307 and Section 5339(B) documents with the USDOT FTA related to the receipt of grant offers.