MEMO
Date: Friday, December 20, 2024
Project: WAVE/PEX Multi-modal Transportation Facility Hub Funding Analysis
To: Marie Gress, Executive Director, WAVE
From: Joshua Salazar, HDR
Subject: Financial Strategy Memorandum
Introduction
The purpose of this memorandum is to assist the Western-Washtenaw Area Value Express
(WAVE) and People’s Express (PEX) initiate the financial planning process for a new transit
operations and maintenance facility. The options are both individual and combined:
1) A new vehicle operations and maintenance facility for the WAVE system that will
include expanded administrative space; employee parking; enclosed vehicle storage to
accommodate current revenue and non-revenue fleet vehicles; dedicated spaces to wash
and fuel vehicles; and on-site vehicle maintenance with space for three repair bays,
storage areas, and offices.
2) A new vehicle operations and maintenance facility for the PEX organization that will
include expanded administrative space; on-site employee parking; enclosed vehicle
storage for both revenue and non-revenue fleet vehicles; dedicated spaces to wash, detail
and fuel vehicles; and on-site maintenance space with two standard pull through bays for
basic inspections and light maintenance duties, storage, and offices.
3) One combined vehicle operations and maintenance facility to accommodate both WAVE
and PEX services.
The primary objective of this memo is to provide an overview of the available federal and state
funding opportunities that could be pursued in the future to construct either the combined or
individual facilities. Further the memo is written with the assumption that the WAVE/PEX team
could jointly seek funding for the combined joint use facility option if desired. This assumption
should be reviewed once both organizations have considered project description, scope,
implementation timing needs, and match considerations.
In addition to identifying potential funding opportunities, it is also important to recognize early
in the funding pursuit process the activities and types of information that will be required to
address the grant program requirements and develop a competitive application. Based on the
HDR Team’s experience with recent grant applications for similar facility projects, the most
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critical activities and information needed to develop a competitive and compelling grant
application includes:
- Defining a clear description of the challenges or needs the project(s) will address. This
includes technical analyses that compare the current condition (also known as the No Build
Alternative) to a future condition following the implementation of the planned project (the
Build Alternative) to document the project’s anticipated qualitative and quantitative benefits.
Based on recent applications, the types of information to demonstrate benefits reflects:
addressing safety issues; improving worker productivity; reducing deadhead miles and hours;
increasing storage and maintenance capacity which support expansion of transit service
levels; improved mobility for historically disadvantaged communities; incorporating
environmental sustainability and resilience features in the project’s design; engagement with
workforce through the planning and design of the project; and incorporating workforce
development initiatives such apprenticeship programs or connecting workers to supportive
services (e.g., childcare and transportation assistance) as part of the procurement process and
requirements. - Developing a confident cost estimate and funding approach. A cost estimate that reflects
a detailed Project Description, scope of work of the activities that will be funded through the
grant award and the anticipated implementation schedule will be required as an attachment to
a grant application. Most grants require the estimate be broken down by scope of work
activity which may include planning, design, right-of-way, project management, and the
elements to be constructed. Connected to the cost estimate, grant programs require
documentation of the level of contingency applied to the cost estimate based on the cost and
schedule risks that have information on potential risks that could impact the cost estimate in
the future. The risk information is used by application reviewers to evaluate not only the cost
estimate but to determine if the level of contingency included in the estimate reflects the
identified risks.
For the funding approach, application reviewers will want details on the source(s) of local
matching funds and a description of requirements or prerequisite activities that may need to
be addressed or completed before funding is provided by a partner agency / entity. For the
WAVE/PEX facilities, it is likely that funding related agreements with the Michigan
Department of Transportation (MDOT) would need to be included as an appendix to the
application. - Demonstrating Project Readiness. An objective of most grant programs is to be able to
meet the requirements to obligate the grant award (execute the agreement) within 12 months
of being selected and then start construction within 12 to 18 months. While this is an
objective it is not a requirement; however, most programs will prioritize applications that are
implementation ready. To meet the obligation schedule, applicants must demonstrate that
matching funds are committed to the project, meaning there are no further approvals or
actions required to use the matching funds on the project. Applicants must also demonstrate
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the project has received the required environmental approvals. Since the majority of the
sources considered in this analysis are federal funding programs, the necessary
environmental approvals will need to reflect National Environmental Policy Act (NEPA)
requirements. Applicants must document that the project is included in the region’s
Transportation Improvement Plan (TIP). More specifically, projects that receive federal
funding must be included in the TIP.
Finally, a detailed schedule is required to demonstrate the project will be able to start
construction shortly after the grant award is obligated. The schedule will need to document
when any third-party agreements would be negotiated and executed, the planned procurement
approach to hire a contractor to complete final design (if required) and to hire the
construction contractor, and finally the timeline for completing construction.
- Communicating with Elected Officials. While the intent of the grant programs described
below is to select projects through a competitive evaluation, scoring and ranking process,
there is a track record of politics being inserted into the final decision process. The following
provides feedback from members of HDR’s National Grants Coordination Team with regards
to communicating with elected officials:
o With regard to reaching out elected officials to request political support for
applications – early, often, later, whenever you can… the squeaky wheel gets the
grease. A key factor in grant success over the years has been having our senator or
representative lobbying the USDOT for our projects.
o The engagement with elected officials may not result in a project being selected in the
first year of applying for a particular grant, but it starts the education process with
elected officials about the project, its benefits, the people behind the project, and
opens the door to talk about other projects and grant programs that an agency will be
pursuing in the future.
o We (HDR) can get the application submittal to the finish line and obtain a highly
recommended evaluation, but if someone is not pounding on the USDOT Secretary’s
desk to fund it, and another politician is lobbying for their project, by nature USDOT
staff will work to keep the politician who is making noise happy.
o The delegation likes to hear from communities and about projects. So, for us, it is
always good to connect with the delegation regardless of grant review timing. It may
not influence USDOT, but we are not always privy to decisions that our delegation
makes in terms of lobbying USDOT with the information we provide them.
Examples of engagement with elected officials include: meeting periodically with local staff;
traveling to Washington DC providing an update on the agency’s near term activities with a
focus on the project(s) that will be submitting application; and developing fact sheets as a leave
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behind that not only describes the project but also makes the connection to the key evaluation
criteria and measures for potential applications.
Potential Federal Funding Opportunities
The following provides an overview of federal competitive grant programs that have been
authorized through the end of federal fiscal year (FY) 2026 and could be targeted for the
combined or individual facilities. In general, these funding opportunities will cover up to 80
percent of total project costs. Additionally, as noted in the next section there are two categories
of grants that WAVE/PEX could pursue to fund project development and construction: Planning
Grants and Construction Grants. Finally, examples of projects similar to the proposed facilities
that were awarded grants are provided.
Grant Categories: Planning (Pre-Construction) and Construction
Each grant program described in the following sections provides an overview of eligible
activities that can be funded through the grant award. In general, there are two grant categories –
Planning Grants and Construction Grants.
- Planning grants provide funding for pre-construction activities including planning,
preparation, or design of eligible surface transportation capital projects that will not result in
construction. More specifically, these activities include environmental analysis, equity
analysis, community engagement, feasibility studies, benefit cost analysis (BCA),
preliminary engineering, NEPA, and Final Design. - Construction grants typically provide funding for construction related costs, include the
acquisition of right-of-way, and the purchase of vehicles and equipment.
The exception to this division is the Rebuilding American Infrastructure with Sustainability and
Equity (RAISE) grant program, which allows for applications requesting funding for both pre-
construction and construction activities. If funding is awarded to both phases of a project, it
would be designated as a capital project. Projects that include both preconstruction and
construction activities need to demonstrate the ability to meet necessary requirements and
obligate all funding within four years of a grant award announcement.
Grant Programs
Congressionally Directed Spending
Description: Since 2022, Congress has engaged an annual Congressionally Directed Spending
(CDS) process which is a mechanism by which members of Congress can request funding for
specific projects in their home state that have been submitted for consideration by nonprofits, as
well as state and local government entities. In February/March elected officials will announce
that the application window is open for eligible entities to requesting funding for planning or
construction project. Compared to the remainder of the programs described in this memo, the
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CDS funding application does not require documentation of detailed technical analysis. Rather
the application process is answering approximately 24 questions and providing a defined
character limit (i.e. 4,000 characters) description of the proposed project’s benefits.
Given the brief application process, if WAVE and/or PEX decides to pursue CDS funding in the
future it is recommended that staff engage with elected officials 3 to 6 months prior to the
estimated start of the application process to start the “lobbying” process for the project.
Eligible Expenses: Pre-construction and Construction
Estimated Application Cycle: February to April
Funding Examples: If successful in obtaining CDS funding in the future, the funds would be
provided through an FTA grant award. The following provides relevant examples of pre-
construction and construction projects that received CDS funding – both within Michigan and
throughout the United States.
- Clinton Area Transit System (MI) – Rural Transit Facility Expansion: $2.5 million
- Ann Arbor Area Transportation Authority – Ypsilanti Transit Center Design and
Construction: $7.0 million - Saginaw Transit Authority Regional Services – Improving Saginaw County Transportation
Reliability: $4.0 million - Iowa City – Transit Operations and Maintenance Facility: $0.75 million
- Metropolitan Atlanta Rapid Transit Authority (MARTA) – Operations & Maintenance
Facility: $5.0 million - Hampton Roads Transit (VA) – Beach Parks Avenue Facility Replacement: $5.0 million
- Chatham Area Transit Authority – Paratransit Maintenance Facility: $2.5 million
- Regional Transportation Commission of Washoe County – Villanova Maintenance Facility
Replacement Design: $3.0 million
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FTA Section 5339 Buses and Bus Facilities Formula Program (49 U.S.C 5339)
Description: This program includes a formula category and two competitive grant categories
(Buses and Bus Facilities and Low or No Emission Buses) which are discussed in more detail
later in this section. As shown in Figure 1, with the passage of the Bipartisan Infrastructure Law
(BIL) there was a significant shift in total annual funding and funding allocation among the
categories. While annual authorized funding for the Buses and Bus Facilities formula and
competitive categories remained consistent with historical levels, annual authorized funding for
the Low and No Emission category increased from less than $200 million in fiscal year (FY)
2021 to over $1.0 billion per year over the FY 2022 to FY 2026 period. The increase in funding
for the Low and No Emission category is consistent with the Administration’s efforts to
significantly accelerate the transition to zero emission vehicles (autos and transit fleets).
Figure 1: Buses and Bus Facilities Funding: Historical and IIJA Authorizes Amounts for Formula and Competitive
Categories
- Annual Formula Funds: the formula category provides annual capital assistance for
maintenance, replacement, and rehabilitation projects of high-intensity fixed guideway and
bus systems to help transit agencies maintain assets in a state of good repair. Additionally,
State of Good Repairs (SGR) grants are eligible for developing and implementing Transit
Asset Management plans. Eligible expenses include security equipment and systems,
maintenance facilities and service equipment, and operational support equipment, including
computer hardware and software.
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- Buses and Bus Facilities Competitive Category: Provides funding for capital projects to
replace, rehabilitate and purchase buses, vans, and related equipment, and to construct bus-
related facilities, including technological changes or innovations to modify low or no
emission vehicles or facilities. Historically, this competitive category has provided the largest
grant awards to support the construction of maintenance facilities.
- Low Emission and No Emission Buses Competitive Category: Funding is provided to
assist with the purchase or lease of zero-emission and low-emission transit buses as well as
acquisition, construction, and leasing of required supporting facilities.
o Eligible Expenses: Construction and acquisition of vehicles and equipment
including:
Purchasing or leasing low- or no-emission buses.
Acquiring low- or no-emission buses with a leased power source.
Constructing or leasing facilities and related equipment (including intelligent
technology and software) for low- or no-emission buses.
Constructing new public transportation facilities to accommodate low- or
no-emission buses.
Rehabilitating or improving existing public transportation facilities to
accommodate low- or no-emission buses.
Additionally, 0.5% of a request may be for workforce development training
and an additional 0.5% may be for training at the National Transit Institute
(NTI). Applicants for zero-emission vehicles must also spend 5% of their
award on workforce development and training as outlined in the agency’s
Zero-Emission Transition Plan, unless the applicant certifies that their
financial need is less.
o Estimated Application Cycle: February to April
o Funding Examples: With regards to utilizing annual formula funds for the new
maintenance facility, WAVE/PEX would need to evaluate its entire capital
improvement program to see if there are opportunities to program a portion of the
annual funds to the project. However, in terms of the largest funding opportunity, the
Buses and Bus Facilities competitive grant category is the program to target. As
shown in the table below, construction grant awards from this program have ranged
from less than $1 million to $54 million.
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State Project Sponsor Grant Award
($ in millions)
Description
SD South Dakota
Department Of
Transportation
$0.69 South Dakota Department of Transportation will receive funding on behalf of Prairie
Hills Transit to build a bus facility for bus maintenance and storage, an office area, and a
training room. The depot will also serve as a central hub for riders.
NM City of Las Cruces $2.17 The City of Las Cruces will receive funding to complete construction on a new transit
maintenance and operations facility, allowing them to expand its RoadRUNNER Transit
fleet, support new electric buses and charging equipment and enlarge maintenance
areas. The building will support the city’s transition to a fully electric fixed-route fleet
while providing access to jobs, schools, and essential services.
VT Vermont Agency of
Transportation
$3.28 The Vermont Agency of Transportation will receive funding to build a bus depot for the
Marble Valley Regional Transit District, replacing an outdated facility in Rutland with a
new office building and bus barn. The depot will provide storage and protection for the
fleet, generate solar power, and include charging equipment, part of VTrans’ transition
to zero-emission vehicles.
NC North Carolina
Department of
Transportation on behalf
of ICPTA
$3.30 The North Carolina Department of Transportation, on behalf of the Inter-County Public
Transportation Authority, will receive funding to build an operations and maintenance
facility. The building will help maintain the fleet in a state of good repair and improve
service for residents in the five-county regional system of Camden, Chowan, Currituck,
Pasquotank, and Perquimans in the state’s northeast coastal region.
AK Gulkana Village Council $4.21 The Gulkana Village Council, on behalf of Soaring Eagle Transit, will receive funding to
build a multi-purpose operations and maintenance facility. The facility, which will be
GVC’s first bus shelter, will include a warming shelter for riders, administrative and
operations offices, and maintenance bays, all of which will help maintain the fleet in a
state of good repair and improve service for residents in the Copper Valley.
OR Oregon Department of
Transportation, Public
Transportation Division
$4.63 The Oregon Department of Transportation will receive funding to buy battery electric
buses and install electric chargers. UPTD will also build a maintenance facility and bus
wash station and install a solar-powered covered parking area.
MI Michigan Department of
Transportation on behalf
of Interurban Transit
Authority and People’s
Express
$10.70 The Michigan Department of Transportation will receive funding on behalf of the
Interurban Transit Authority to rehabilitate and expand its maintenance and
administrative facility outside Grand Rapids. The Michigan Department of
Transportation will also receive funding on behalf of People’s Express to build a transit
maintenance and operations center near Ann Arbor. These projects will allow the
transit providers to improve safety and efficiency in their communities.
NY Rochester Genesee
Regional Transportation
Authority
$16.00 The Rochester Genesee Regional Transportation Authority will receive funding to build
a new operations maintenance facility. This project will improve service reliability and
state of good repair needs.
MT Missoula Urban
Transportation District
$39.14 The Missoula Urban Transportation District will receive funding for a new maintenance
and administrative base facility (MOAB) to replace its outdated operations site
supporting its Mountain Line bus service. Mountain Line needs the MOAB to meet
future demand growth, expand service to underserved neighborhoods and transition its
fleet to 100-percent zero-emissions.
CO State of Colorado,
Department of
Transportation
$34.77 The Colorado Department of Transportation, on behalf of Summit Stage, a rural transit
agency serving Summit, Park, and Lake counties, will receive funding to build a new
charging and operation bus facility, which will include 100% electrification, fleet
storage, and electric vehicle charging. The new facility will replace Summit Stage’s
current aging facility.
TN Memphis Area Transit
Authority (MATA)
$54.00 The Memphis Area Transit Authority will receive funding to build a new operations and
maintenance facility. The new facility will be designed to accommodate more than 300
vehicles, improving safety and the state of good repair for the bus fleet.
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RAISE
Description: Another possible source of federal funding is the RAISE Grant program. This
program, formerly known as TIGER and BUILD, provides funding for road, rail, transit, and
port projects that may be multi-modal and/or multi-jurisdictional and difficult to support through
traditional DOT programs.
Annually, this program award approximately $1.5 billion. The maximum grant award is capped
at $25 million. Construction grants awarded must be at least $5 million for urban areas and no
more than 15 percent of total annual funds can go to any one state in a single year.
RAISE projects are reviewed and selected based on merit. Projects are evaluated on statutory
criteria of safety, environmental sustainability, quality of life, mobility and community
connectivity, economic competitiveness, state of good repair, partnership, and innovation.
Finally, applicants are also encouraged to consider how their projects would create workforce
development opportunities. Applications are considered more competitive if the projects would
create jobs with free and fair choice to join a union, use good labor standards, create jobs that
underserved communities can access, or support worker opportunities and training. Applicants
are also encouraged to utilize registered apprenticeship and local and economic hire agreements.
Finally, a RAISE construction grant application requires the most time and effort to address the
program’s requirements and evaluation criteria. Additionally, the RAISE construction grant
application required a benefit cost analysis (BCA), and it can be a challenge for transit
maintenance facility projects to obtain a benefit cost ratio great than 1.0 – which indicates the
anticipated project benefits exceed the cost estimates. Pursuit of a RAISE planning grant does
not require a BCA.
- Eligible Expenses: Pre-construction and Construction
- Estimated Application Cycle: November to January
- Funding Examples: The following table summarizes the transit maintenance facility
projects that have received grant awards from the TIGER/BUILD/RAISE program since
2013.
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Project Name Recipient Project Description Grant
Award
Total
Project
Cost
Jackson Intermodal
Connectivity
Jacksonville
Transportation
Authority
Construct three projects: a new regional bus transit
facility featuring maintenance, fueling garages and
administrative offices, and two pathways connecting
to the new transit facility.
$8.0 $52.0
Connecting
Communities
City of
Brownsville, TX
Funds two components to support transit and
bicycle/pedestrian improvements: 1) rehabilitating a
regional bus maintenance facility, the purchase of 8
hybrid buses, and the renovation of approximately
50 bus stops; 2) widening the Queen Isabella
Causeway to accommodate a dedicated 14-foot
wide, two-way pedestrian and bike pathway to South
Padre Island.
$10.0 $23.8
Maintenance
Facility, Vehicle
Wash Bay, and
Fueling Station
North Central
Regional Transit
District, NM
Construct a maintenance facility, standalone vehicle
wash bay, and fueling station. $1.3 $6.1
Operations and Bus
Storage Facility
Siouxland
Regional Transit
System, IA
Design and construct a new joint use facility that will
include bus maintenance areas, indoor bus storage, a
bus wash, and driver training areas.
$7.0 $7.0
Transportation
Renewal Project
Red Cliff Band of
Lake Superior
Chippewa, WI
Construct a multi-purpose transportation center with
storage, maintenance bays, and office space, and
purchases a road grader, front-end loader, tracked
backhoe, plow trucks, and two additional buses for
Miskwaabekong Transit.
$5.8 $5.9
RFTA Regional
Transit Center
Roaring Fork
Transportation
Authority, CO
Renovates and expands satellite maintenance facility
into a regional transit hub. $13.0 $18.6
Zero-Emission Bus
Operations,
Maintenance, and
Administration
Facility
Yuba-Sutter
Transit Authority,
CA
This project will replace an existing undersized and
obsolete transit facility in a new location on an
approximate 19.72-acre former brownfield site, and
the new facility will support conversion to a zero-
emission bus fleet.
$15.0 $45.2
COMO
Transportation
Center Project
City of Columbia,
MO
The project will construct three transit
improvements that include remodeling the transit
maintenance and parking facility, the addition of an
upgraded time point located at the City’s new
Opportunity Center, and upgraded bus stops along
current routes.
$23.2 $23.2
West Virginia
Department of
Transportation
Eastern
Panhandle Rural
Multimodal
Transit Center
The project will construct a multimodal transit center
in Martinsburg, which will include a transfer center,
administrative building, fuel station, maintenance
and storage facilities, storm water improvements,
ADA compliance, bicycle parking, and charging
infrastructure for electric buses and personal
vehicles.
$10.3 $19.4
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Potential State Funding
Based on the development of funding strategies for major capital improvement projects within
the State of Michigan, the typical source to provide the required 20 percent matching funds for
federal capital grants is MDOT’s Comprehensive Transportation Fund program (CTF). The CTF
is the State’s primary source of revenue for funding the public transportation program and is
derived from a combination of:
- Taxes on motor fuels
- Vehicle registration fees
- Revenue from a portion of the sales tax on; motor fuels, motor vehicles and automotive parts
- Other miscellaneous revenue.
The Michigan Transportation Fund (MTF) is the depository for these motor fuel taxes and
vehicle registration fees. Annually, up to 10 percent of total MTF revenues are allocated to the
CTF. In addition to the MTF allocation, the CTF receives a percentage of revenues from the
auto-related sales taxes (noted above). The CTF money is used to fund all non-road and non-
aeronautics, transportation projects within Michigan, with most of the funding provided to public
transportation authorities and eligible agencies.
STRATEGY CONSIDERATION: EARLY MDOT COORDINATION AND CASH FLOW ANALYSIS
It is important to note that the State will not appropriate the CTF funds for a project until the
federal grant has been awarded. As a result, WAVE/PEX will have to fund the majority of pre-
construction costs from existing sources. Additionally, MDOT has limited CTF funds available
for matching Federal Funds. Typically, the request for Transit Capital funds exceeds available
funds. The CTF operates on a cash basis, meaning if MDOT were to execute an agreement with
WAVE and PEX to provide matching funds for a RAISE or Buses and Bus Facilities grant,
MDOT must set aside that complete match in one fiscal year, even though the funds will be spent
over a multi-year period. Therefore, in order to use the limited resources available most
effectively, MDOT seeks to provide match for large projects over a multi-year period, by
providing the match in the fiscal year the funds will be actually spent. Thus, there is a need for a
multi-year cash flow projection early in the project development process to support efforts to
coordinate with MDOT in terms of the potential timing for CTF funds.
Next Steps
This initial potential funding analysis represents a first step in the financial planning process for
the new WAVE, PEX and/or combined facilities. Potential next steps in the financial planning
process could include:
- Finalize the Project Description, scope of work to be funded through a federal grant or
grants, cost estimate for remaining pre-construction and construction activities, and
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implementation schedule through the end of construction for each of the proposed
facilities.
- Once WAVE and PEX have final project descriptions for the desired facilities and
accurate cost estimates, they could decide whether they want to apply for funding for the
desired facilities under one application or divide the facilities into separate application
projects. - Educate elected officials on the purpose and need for the project; status of current project
development activities; preferred implementation and construction schedule; and
anticipated federal grant pursuit strategy. - Determine if WAVE/PEX will pursue a RAISE Planning Grant or Congressional
Designated Spending award to fund the completion of pre-construction activities or if the
entities will complete pre-construction activities utilizing existing revenue sources. - In terms of a construction grant, the FTA Buses and Bus Facilities grant is the most
promising opportunity. As WAVE/PEX moves through the pre-construction activities the
agency should review this grant program’s application requirements and data needs so
that this information can be developed or obtained well in advance of developing the
grant application. - An alternative approach that could be pursued at the same time as the FTA Buses and
Bus Facilities grant is to request construction funding through a Congressionally Directed
Spending award. - Initiate conversations with MDOT to discuss the potential timing for when CTF matching
funds would be needed.