TO: AC Transit Board of Directors
FROM: Salvador Llamas, General Manager/Chief Executive Officer
SUBJECT: Application for Fiscal Year 2025-26 LCTOP Funds
ACTION ITEM
AGENDA PLANNING REQUEST: ☐
RECOMMENDED ACTION(S):
Title
Consider adoption of Resolution No. 26-028 authorizing the General Manager or designee to file and execute applications and funding agreements with the California Department of Transportation (Caltrans) for allocations of the FY 2025-26 Low Carbon Transit Operations Program (LCTOP) funds for the Realign Service Operating Service Assistance Project and International Boulevard Transit Lane Delineation Phase 2 Project, execute related Certifications and Assurances and assign the General Manager, or designee, as the Authorized Agents for resulting LCTOP grants.
Staff Contact:
Paul Kincaid, Interim Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
These LCTOP funds will support the Operating and Capital Budgets.
BUDGETARY/FISCAL IMPACT:
The District’s share of Cycle B revenue-based allocation is $2,897,757 and population-based allocation is $1,617,138. There was no cycle A allocation for population-based funds.
Staff anticipates receiving the LCTOP allocations by March 2027. There is no matching requirement for these funds. Both the new operating and capital funds have been included in the FY 2026-27 Operating and Capital Budgets. The operating funds will offset operating costs on Realign routes and the capital funds are for the improvements on International Boulevard corridor.
No match is required for the LCTOP funds.
BACKGROUND/RATIONALE:
The LCTOP program is administered by Caltrans and is funded by auction proceeds from the California Air Resource Board’s (CARB) Cap and Trade Program, with proceeds distributed to transit operators annually using the State Transit Assistance (STA) formula.
The STA formula consists of two parts, with a portion of the funds directly to transit operators based on their revenue (referred to as “revenue-based”) and another portion of funds is distributed to regions based on their population (referred to as “population-based”).
Following the reauthorization of Cap and Invest (formerly Cap and Trade) the LCTOP program cycle is transitioning its allocation process to Fall. As the transition year, FY 2025-26 funds are being distributed in two cycles, with Cycle A following the traditional schedule of Spring allocations and Cycle B transitioning to Summer/Fall allocations. Staff brought the Cycle A funds to the Board in Resolution 26-008 on April 22, 2026.
The District’s Cycle B share of revenue-based allocation is $2,897,757 and the population-based allocation is $1,617,138. Staff anticipate receiving the LCTOP allocations by March 2027. There is no matching requirement for these funds.
To claim their respective shares of the revenue-based funds each year, operators must submit an application for an eligible project. Since these funds are not competitive, the District only needs to select an eligible project for its application.
This year, staff requests that the revenue-based funds are used to provide operating service assistance for the new service lines under Realign. Realign is AC Transit’s all-new bus network designed to match how the East Bay travels today. Operating budget support is critical given the District’s current fiscal outlook.
In recent years, these funds have been used to support operations on Tempo BRT. However, LCTOP is limited to supporting operating costs on new service implemented in the last five years, and the Tempo BRT service has passed that time limit. This year, staff applied for revenue-based funds to support Realign service operating service assistance on new service lines. This enables the District to continue to use the revenue-based LCTOP funds to support the operating budget at a critical time, given the District’s current fiscal outlook.
The population-based funds are programmed by MTC via their Transit Priority Initiatives (TPI) Program. This is a competitive grant program that funds capital investments to enhance transit reliability and service.
Under TPI, MTC awarded LCTOP population-based funds to the International Boulevard Transit Lane Delineation Phase 2 project. The project will install proven, low-cost transit priority elements at locations where the buses along the Tempo bus rapid transit (BRT) corridor face the greatest delays. The potential priority elements include but are not limited to centerline hardening to restrict crossing and illegal U-turns and left turns, delineation with channelizers to visually guide and direct drivers away from curbside bus and dedicated bus lanes, pavement markings etc.
ADVANTAGES/DISADVANTAGES:
The advantage of this application is that the District will receive additional operating and capital funding for Realign service operating assistance and International Boulevard Transit Lane Delineation Phase 2 projects.
There are no identified disadvantages to the application.
ALTERNATIVES ANALYSIS:
The alternative to applying these funds for the selected projects would be to either not apply or apply for another project. Other than the eligible operating and capital expenses identified above, the District would have to apply for other eligible capital projects. The District’s most pressing need currently is for operating funds.
Project eligibility for LCTOP funds is limited by the complex requirements of using Cap and Trade funds. Projects generally must reduce greenhouse gas emissions, benefit Disadvantaged Communities and increase public transit mode share, with a general exception that zero-emission bus purchases are usually eligible. Staff must also plan for future allocations from three separate Cap and Trade grant programs up front so that greenhouse gas emission reductions are only captured once.
LCTOP is one of the few programs that can fund operating expenses arising from new service implemented within the last five years. The program allows the District to use LCTOP funds to help support and sustain the Realign service.
PRIOR RELEVANT BOARD ACTION/POLICIES:
SR 26-154 / Resolution 26-008 - FY2025-26 Low Carbon Transit Operations Program Application
ATTACHMENTS:
1. Resolution 26-028
2. Authorized Agent(s) and Certifications & Assurances
3. Staff Report 26-154
4. Staff Report 26-154 - Resolution 26-008
Prepared by:
Seema Prasad, Senior Capital Planning Specialist
In Collaboration with:
Emily Heard, Capital Planning and Grants Manager
Approved/Reviewed by:
Richard Oslund, Director of Management & Budget
Aimee L. Steele, General Counsel/Chief Legal Officer
Paul Kincaid, Interim Chief Financial Officer