AGENDA CAPTION:
Title
Consider approval of Resolution 2026-159R, authorizing Amendment No. 1 to the Interlocal Cooperation Agreement with Texas State University to allocate Federal Transit Administration (FTA) grant funds in compliance with the Fiscal Year 2027 FTA Triennial Review; authorizing the City Manager, or her designee, to execute the amendment on behalf of the city; and declaring an effective date.
Body
Meeting date: September 15, 2026
Department: Public Works
Amount & Source of Funding
Funds Required: $0.00
Account or Project Number (C = CIP funds): N/A
Funds Available: N/A
Account Name: N/A
Fiscal Note:
Prior Council Action: Approval of Resolution 2023-137R on August 15, 2023
City Council Strategic Initiative: [Please select from the dropdown menu below]
Mobility & Connectivity
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Comprehensive Plan Element (s): [Please select the Plan element(s) and Goal # from dropdown menu below]
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N/A Transportation - TR-2: Create a multi-modal, well-connected, and efficient transportation network that minimizes congestion, energy use, and climate pollutants
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Background Information:
The purpose of this Amendment is to remain in compliance with the Federal Transit Administration guidelines following the 2026 Triennial Review of the City’s transit program. The FTA requires all direct recipients of federal transit funding to undergo a Triennial Review every three years. The Triennial Review is a collaborative process between the City and the FTA.
Beginning in 2018, City Council through Strategic Initiatives codified this vision for the city to become the Direct Recipient of federal transit funds and to develop a “seamless transit system” with Texas State University. The City became the Direct Recipient on October 1, 2019.
On August 15, 2023, the City Council approved an Interlocal Agreement (ILA) with Texas State University (TXST) designating the University as a subrecipient of Federal Transit Administration (FTA) funds to enhance public transit service in San Marcos. This “overarching” ILA allows the City (direct recipient) to pass through federal transit funding to the University (subrecipient) to fund transit projects that enhance transportation for the residents and visitors of San Marcos.
This agreement:
• Establishes a coordinated framework between the City and TXST for transit operations and future projects supported by federal transit funding.
• Identifies initial transit projects and their corresponding funding allocations.
• Provides a standard subrecipient funding agreement template to streamline approval and execution of future federally funded transit projects.
To date, City Council has approved three funding agreements with TXST totaling $7,399,296 in FTA funds to improve the Bobcat Shuttle system. Because the Bobcat Shuttle is free and open to the public, these improvements benefit the entire community. The most recent Funding Agreement was approved August 18, 2026 with funding Agreement 003.
As a direct recipient of Federal Transit Administration (FTA) funding, the City is required to undergo a Triennial Review every three years to maintain eligibility for federal transit assistance. This comprehensive review evaluates all major components of the City’s Transit Program across 23 areas, including legal compliance, financial management, procurement, Title VI, safety planning, and ADA requirements. The City completed its most recent review in May 2026 and has received the final report from the FTA.
This is the first triennial review to include Texas State University as a subrecipient. Their participation added an additional layer of review across all applicable areas. One finding from the 2026 review requires clarification on how TXST will dispose of vehicles that have not yet reached the end of their useful life. FTA has strict regulations on disposing of a vehicle before it has reached the end of useful life. While this requirement is already addressed in each individual funding agreements, FTA also requires it to be included in the overarching Interlocal Agreement. Amendment No. 1 incorporates this clarification and satisfies FTA guidelines.
FTA staff commended the City for its strong compliance with federal requirements and noted the continued commitment of City leadership and the City Council to expanding and improving transit services in San Marcos.
Additional Information Regarding Transit Funding: Previous Question & Answer information from the September 1st Agenda
On September 1, City Council approved a contract with Capital Area Rural Transportation System (CARTS) to provide transit services in San Marcos. Prior to this meeting, City Council had questions regarding the contract. The following questions and responses are provided below as background:
Question:
Please provide a breakdown of the $2,489,447 proposed CARTS funding by source, including the amount attributable to Section 5307, Section 5310, Section 5339, state funds, City local match, prior-year/carryover funds, and any other source.
Response:
The breakdown by source is as follows:
- $273,635.00 Federal Transit Administration (FTA) American Rescue Plan grant funding
- $1,077,906.00 - FTA section 5307 Small Urbanized Area grant funding
- $285,805.00 - TxDOT-PTN Urbanized Area grant funding (Texas Department of Transportation Public Transportation Division)
- $792,101.00 - General fund
- $60,000.00 - Interurban Express fares (projected and from route 1517)
The City does not currently receive FTA section 5310 funding.
FTA Section 5339 funding may only be utilized for the purchase of busses or bus facilities.
Question:
Please also identify which amounts are currently programmed specifically for CARTS operations versus funds that could legally be programmed for another eligible transit project.
Response:
The FTA section 5307, American Rescue Plan, and TxDOT-PTN grant funds are currently programmed for purchased transit operations and maintenance for the San Marcos urbanized area. Those transit services are provided by CARTS, on behalf of the City. The transit services include local fixed route bus service, paratransit (door to door demand-response) service for eligible participants and Interurban Express service from San Marcos to Austin with return trips.
Additionally, please evaluate whether the City could program a portion of its Section 5310 and/or Section 5307 funding for an on-demand transportation program, including transportation vouchers or contracted transportation services, without jeopardizing the City’s existing federal funding.
The City does not currently receive FTA Section 5310 funding.
FTA defines public transportation in 49 U.S.C. 5302 as regular, continuing shared-ride surface transportation services that are open to the general public or a segment of the general public defined by age, disability, or low income. Public transportation generally includes transportation services provided by buses, heavy rail, light rail, commuter rail, hybrid rail, bus rapid transit, passenger ferryboats, trolley buses, inclined railways, people movers, vanpools, streetcars, jitneys, and aerial tramways. Public transportation can be either fixed route or demand-response service but excludes intercity passenger rail provided by Amtrak, intercity bus service, charter bus service, school bus service, sightseeing services, courtesy shuttle services provided by individual businesses, and intra-terminal or intra-facility shuttle services.
Before introducing a new transit service, such as an on-demand service zone, the City must complete a public participation process, as defined by the FTA, and the proposed service must be formally adopted by the City Council in a planning document. City staff is currently engaged in the Transit Development Plan process, and the City Council may consider adoption upon completion of the Plan. The FTA requires all direct recipients of federal transit funding to complete a Transit Development Plan every five years. Federal funding (including FTA section 5307 funds) cannot be used for a new transit service until the requirements are met.
To satisfy the public participation requirement, staff is evaluating on-demand service options as part of the ongoing update to the Transit Development Plan. Public outreach for the Transit Development Plan is scheduled to begin in September and will include a community survey and a variety of open-house events.
There are two rounds of public outreach scheduled for this plan:
- September 2026: Round one - to gather existing conditions information.
- February 2027: Round two - to propose service changes and get feedback.
Question:
After reviewing responses on the message board, there is a mention of updates to the Transit Development Plan. Related to the proposed service changes, will this address potential changes to routes, schedule, shelters, in addition to potential on-demand options? I see section 5 of the agreement outlines that the City has a role in scheduling and route changes.
Response:
Yes, we will review all the topics outlined above. Any proposed changes to the transit program will be guided by public participation to ensure the system reflects the community’s needs. The City maintains full administrative authority over routing and scheduling, and CARTS operates the service based on our direction.
Question:
Additionally, have there been any surveys collected or conducted that detail rider experience with the “Real Time Bus Tracker”?
Response:
Yes, we have received 17 responses and have gotten good feedback.
Question:
Has there ever been any discussion about pursuing funding for the creation of an app or in-person digital screen depicting bus tracking? I’ve seen Austin has some of these screens on certain stations equipped for the infrastructure.
Response:
Yes, we have been working through grant applications. While we haven’t had success yet, we will continue to pursue a resolution.
Council Committee, Board/Commission Action:
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Alternatives:
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Recommendation:
Staff recommends approval.