TO: AC Transit Board of Directors
FROM: Salvador Llamas, General Manager/Chief Executive Officer
SUBJECT: FTA 5339b/c Competitive Funding Application(s)
ACTION ITEM
AGENDA PLANNING REQUEST: ☐
RECOMMENDED ACTION(S):
Title
Consider authorizing the General Manager or his designee to submit application(s) and execute funding agreements for the FTA 5339b/c Competitive Programs (Bus and Bus Facilities/Low and No Emissions) for diesel-electric hybrid bus purchases.
Staff Contact:
Paul Kincaid, Interim Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
AC Transit needs to replace its aging buses to sustain safe, reliable service across the District’s service area. An FTA 5339b/c discretionary grant would fund the replacement of diesel buses that have reached or are approaching the end of their useful life with new diesel-electric hybrid 40-foot buses.
BUDGETARY/FISCAL IMPACT:
Staff recommends applying for approximately $32 million in FTA 5339b/c discretionary funds towards diesel-electric hybrid buses.
FTA 5339b Buses and Bus Facilities funds require a 20% local match; FTA 5339c Low or No Emission funds require a 15% local match for low-emission buses. A $32 million application would require a non-Federal match of approximately $5.6 million. The required match will be from the State Transit Assistance (STA) State of Good Repair (SGR) program and cost savings from closing projects. Staff will continue to pursue supplemental grant funding where available to further reduce reliance on STA SGR dollars.
BACKGROUND/RATIONALE:
On July 27, 2026, FTA announced the availability of $589 million under the FY26 Notice of Funding Opportunity (NOFO) for the Low or No Emission Program and $21 million under the Buses and Bus Facilities Grant Program (which limits a single award to a maximum of 10 percent of the total grant pool, equal to $2.1 million per applicant). Applications are due by September 21, 2026.
The FY26 NOFO continues a policy first adopted in FY25 under which FTA has demonstrated an intent to prioritize low-emission projects over zero-emission projects in its review and selection process. Consistent with this perceived policy, low-emission vehicles received approximately 97% of FY25 Low-No Program awards nationally.
A funding award from FTA will help offset the substantial cost to purchase replacement buses beyond anticipated formula funds.
ADVANTAGES/DISADVANTAGES:
FTA 5339b/c funding presents an opportunity to fund the replacement of aging buses with FTA discretionary dollars, preserving flexible District capital dollars for other priority needs.
ALTERNATIVES ANALYSIS:
Staff considered several alternatives to the recommended action, including submitting an application for zero-emission buses or facilities. The Project selected here best fits the current goals of the grant program and is most ready for implementation. This was determined by evaluating successful and unsuccessful applications in prior cycles and researching the grant program.
PRIOR RELEVANT BOARD ACTION/POLICIES:
SR 26-075 State of District's Fleet
ATTACHMENTS:
None
Prepared by:
Regina Tran, Principal Capital Planning Specialist
In Collaboration with:
Emily Heard, Capital Planning and Grants Manager
Approved/Reviewed by:
Richard Oslund, Director of Management & Budget
Cecil Blandon, Director of Maintenance
Aaron Vogel, Chief Operating Officer
Paul Kincaid, Assistant General Manager/Chief Executive Officer
Claudia Burgos, Executive Director of External Affairs & Customer Experience