Resolution authorizing the City Manager to apply for the 2027 Transit Operating and Capital Grant and enter into an agreement with MnDOT to provide Public Transit Service.

Adoption of the attached resolution.

This action is a process requirement of the Minnesota Department of Transportation Office of Transit and Active Transportation when applying for federal resources under the Urbanized Area Formula Funding program (49 U.S.C 5307). The Urbanized Area Formula Funding Program authorizes grants to public transit systems in urban areas with populations of more than 50,000 for both capital and operating projects. Based on population and density figures, these funds are distributed directly to the transit agency from the Federal Transportation Administration. 

The local share of eligible operating costs for the Fixed Route is reduced to 15% and Paratransit is at the statutory level of 15%. Capital costs for the system remain at the statutory level of 20% for local share.

The City provides the balance of eligible expenses through a local match which may include:

• Cash from nongovernmental sources i.e., farebox revenue.
• Non-farebox revenues from the operations of public transportation services, such as the sale of advertising and concession revenues.
   
• Amounts received under a service agreement with a state or local service agency or private social service organization i.e., Minnesota State University – Mankato and North Mankato.
• Amounts appropriated or otherwise made available to a department or agency of the government, i.e., transit property tax levy $415,000.

Ineligible expenses include such items as charter bus operations, sightseeing services, services wholly outside the urbanized area, capital replacement funding, or school busing operations.

Greater Minnesota Public Transit Operating Grant Budget — Preliminary (4% increase over 2026).
 

Grant Type	Year	Total Operations	Federal Funds	State Funds	Local Funds
Operating	2027	$5,997,200	$703,587	$4,377,003	$896,580

American Rescue Plan Act of 2021 (ARPA) appropriated $1,044,449 for transit operations which must be programmed by the year 2024 and dispersed by September 30, 2029. 

• Transit will spend an estimated $176,916 on operations, leaving a balance of $457,812 with planned yearly drawdowns until expended.

If a service is proposed that affects the levy, a separate action is required.