2050 Regional Transit Plan: Financial Plan

Existing Funding Sources

Various federal, state, and local programs are available to assist transportation programs in the Pikes Peak Region. A summary of the most common sources of funding are included below.

Federal Funding

  • Rebuilding American Infrastructure with Sustainability and Equity (RAISE) Grants: RAISE is a competitive grant program administered by the U.S. Department of Transportation (USDOT) that provides funding for transportation infrastructure projects. This project supports road, rail, and transit projects that have significant local or regional impact. The funds available through this grant vary based on the appropriations from Congress. Eligible candidates include state, local, and tribal governments, including transit agencies.
  • Multimodal Projects Discretionary Grant Program (MPDG): This USDOT grant aims to fund transportation projects such as highway and bridge, intercity passenger rail, public transportation, etc. that are of national or regional significance and expand surface transportation infrastructure. Eligible candidates include state, local, and tribal governments, including transit agencies.
  • Capital Improvement Grant (CIG): This FTA discretionary program funds many types of transit capital investments. Federal transit law requires every transit agency to complete a series of steps for funding eligibility. For New Starts and Core Capacity projects, completion of two phases in advance of the receipt of the grant is needed. For Small Starts projects, completion of one phase is needed.
  • Buses and Bus Facilities Program (Section 5339): This FTA program supports state and local governments by providing financial assistance to buy or modernize buses, enhance bus-related facilities, and support workforce development. The funding is provided through formula allocations and competitive grants. Eligible applicants include designated recipients such as state or local government entities that support operations of fixed-route buses. 
  • Strengthening Mobility and Revolutionizing Transportation (SMART): The Bipartisan Infrastructure Law (BIL) established the SMART discretionary grant program administered by the USDOT, that provides $100 million annually from FY 2022 to FY 2026 to support public sector agencies in the implementation of advanced technologies to enhance transportation efficiency and safety.
  • Congestion, Mitigation and Air Quality (CMAQ) Funds: The CMAQ program administered by the Federal Highway Administration (FHWA) continues to provide a flexible funding source to State and local governments for transportation projects and programs to help meet the requirements of the Clean Air Act (CAA). Transit investments such as transit vehicle acquisitions and construction of new facilities or improvements to the existing facilities that increase transit capacity are eligible for CMAQ funds.
  • Surface Transportation Block Grant Program (STBG): The FHWA’s STBG program (reauthorized under the BIL through 2026) provides flexible funding that can be utilized by State or local governments for improvement of any surface transportation infrastructure like public roads, pedestrian and bicycle infrastructure, and transit capital projects.
  • Enhanced Mobility of Seniors and Individuals with Disabilities Program (Section 5310): FTA’s Section 5310 program allocates funds for both capital and operating expenses to states and other designated recipients. These funds are intended to improve transportation options and meet the needs of individuals with disabilities and seniors. Although services funded by 5310 funds can be used by the public on an occasional basis, projects receiving these funds are required to cater to the needs of seniors and people with disabilities. In Colorado, CDOT administers 5310 funds for small urbanized and rural areas. PPACG administers 5310 funds for the Colorado Springs urban area, while CDOT provides supplemental 5310 rural transit funding to smaller providers in the region. Projects receiving 5310 funding must be included in a coordinated plan. Additionally, regulations require that at least 55% of those funds must be available for traditional projects (such as mobility management and capital purchases), while the remainder can be utilized for other operating and capital projects. At this time, the following organizations are subrecipients of Section 5310 through PPACG: Envida and Silver Key Senior Services.
  • Rural Area Formula Program (Section 5311): The Section 5311 program offers planning, capital, operating, and administrative assistance to states to aid transit in rural areas with populations under 50,000. Recipients of these FTA funds can be recognized Indian tribes, local governments, public transit operators, and nonprofits. CDOT provides supplemental 5311 funding to smaller providers in the Colorado Springs region (for example, Envida uses 5311 funding to operate deviated fixed routes in eastern El Paso County).
  • Urbanized Area Formula Grants (Section 5307): Section 5307 funds are available from the FTA to assist with operating and capital assistance for transit and for planning related to transportation in urban areas with more than 50,000 people. In the Colorado Springs metropolitan region, MMT is the designated recipient of 5307 funds.
  • Older Americans Act (OAA): Funds through the OAA are distributed to the PPACG and AAA, which supplement grants for human service providers. These funds are administered to PPACG by the Administration for Community Living (ACL), which is part of the U.S. Department of Health and Human Services (HHS).
  • Mobility on Demand (MOD) Sandbox Demonstration Program: Supports projects promoting inventive business models to provide equitable, high quality transportation choices for everyone. MOD funds are administered by the FTA.
  • Innovative Coordinated Access and Mobility Grants (ICAM): These funds are administered by the FTA to support innovative projects improving coordination of services.
  • Integrated Mobility Innovation (IMI): Supporting USDOT’s Smart Cities program, FTA’s IMI program provides funds for projects demonstrating effective and innovative practices, technologies and partnerships enhancing the effectiveness of transit, and projects that improve efficiency, improve quality, foster safety, and upgrade the experiences of travelers.
  • Enhancing Mobility Innovation (EMI): New for 2024, FTA’s EMI program aims to promote projects that focus on the passenger experience and encourage individuals to use transportation services. While the program requires proposals by August 30, 2024, funding within this project may be available in another round of federal appropriations.
  • Other Discretionary Grant Funds: There are a variety of other discretionary grants that could be used to fund transportation programs in the Pikes Peak region, including several that were established under the BIL. As these competitive possibilities are constantly evolving, they are not described in the same detail as the other programs above. Opportunities include the Advanced Transportation Technologies and Innovative Mobility Deployment (ATTIMD) program through USDOT and FHWA, FTA’s Innovative Coordinated Access and Mobility (ICAM) pilot program, the USDOT’s Safe Streets and Roads for All (SS4A) program, and the FTA’s Transit-Oriented Development Planning Program.

State/Local Programs

  • Pikes Peak Regional Transportation Authority (PPRTA): PPRTA was approved by voters in 2004, authorizing a 1% sales tax supporting PPRTA goals. Funds are assigned to capital and maintenance projects, in addition to transit (which receives 10% of funds). Subsequently renewed in 2012 and in 2022, PPRTA-2 and PPRTA-3 included capital and program funds for transit, which were not included in the original PPRTA transit funds.
  • Funding Advancements for Surface Transportation and Economic Recovery Act of 2009 (FASTER) Transit Grants: Provide $15 million every year to support transit projects in Colorado. A third of these funds are awarded competitively as local transit grants, with the rest of the funding being dedicated for statewide projects. Local recipients must provide at least 20% as local match.
  • Colorado SB17-267 Funding: Provides $500 million every year to transportation projects, with 10% of those funds being dedicated to transit. However, this transit funding must be utilized on capital investment projects (therefore, it does not support operating needs of providers).
  • SB24-032 Funding: Passed in May 2024, this bill creates a consolidated zero fare transit grant program through the Colorado Energy Office. $7 million is allocated annually for fare-free transit during the ozone season and another $7 million is allocated specifically for youth fare-free transit all year long. Eligible transit agencies outside of the Denver RTD would apply for and receive grants via the Colorado Association of Transit Agencies (CASTA). Agencies will be required to report information back to CASTA. A committee is also established to develop a statewide transit pass, with a report due in 2026.
  • Multimodal Transportation and Mitigation Options Fund (MMOF): The Colorado State Legislature created MMOF in 2018, initially providing a one-time provision of funding. In 2021, Colorado SB21-260 designated a significant share of Colorado’s COVID Fiscal Recovery Funds to MMOF in addition to generating yearly state revenues for the program for the next decade. MMOF funding is allocated by formula across the 15 different Transportation Planning Regions (TPR) in the state, and qualifying projects include operating or capital costs for on-demand and fixed-route transit, programs dealing with transportation demand management, multimodal mobility projects enabled by new technologies and studies dealing with multimodal transportation.
  • Colorado SB24-230 Oil & Gas Production Fees Funding: TheColorado State Legislature recently created new oil and gas production fees to be paid quarterly beginning late 2025 with a portion dedicated for transit operations, competitive transit grants, and statewide passenger rail. Specifically for transit, fees will be collected by CDOT and administered by the Department of Revenue (DOR). PPACG will receive 8.9% of total funds for transit operations while MMT will receive roughly 81% of PPACG’s share of those funds. MMT will also be eligible to receive competitive transit grants, which comprise approximately 10% of the total funds raised through the new fees.

Financial Analysis

As a part of the 2050 RTP, a financial model was developed to help MMT assess future costs and revenue. This model will help the agency in determining the affordability and need for additional funds to sustain current services and infrastructure and accommodate proposed vision elements.

The model uses current budget and plans from the agency to detail revenue and expense streams for both operations and capital needs. The future revenue and expense streams were anticipated based on the following:

  • Historical data
  • Inputs from MMT officials
  • Recommendations per the 2050 RTP

“Constrained” and “unconstrained” scenarios were developed by the project team. The constrained scenario builds on the business-as-usual approach assuming the agency continues to operate with existing services at current levels with no recommendations adopted per the 2050 RTP. The unconstrained scenario builds on the consideration that all the recommendations per the 2050 RTP are adopted by the agency.

Both the constrained (baseline) and unconstrained scenarios rely on a series of assumptions that allow forecasts based on current revenues and expenses. Changing one or more of the assumptions can impact future financial forecasts.

Assumptions

Revenue and expense assumptions were made and affect both scenarios. Revenue assumptions include those related to the operating, non-operating, and capital revenue streams and annual reserves held by MMT. Expense assumptions include those related to operating, non-operating, and capital costs. For the unconstrained scenario, proposals from the 2050 RTP are included as subsections within expenses.

Revenues

  • Operating, non-operating, and capital revenues were provided by MMT for a base year of 2023.
  • An inflation rate of 2% is assumed for all revenues.
  • Operating revenues
    • Fare and advertisement revenue: MMT provided a base year assumption of $2.8 million. Based on historical data, revenues from fares are assumed at 79% of the total and advertising and other streams are 21% of the total.
    • Ozone Season Transit Grant program (OSTG) better known as Zero Fare for Better Air program: based on SB24-032. Base year has been assumed at $1 million and $1.5 million in 2025.
    • Oil and gas funds are based on the recent Colorado SB24-230 legislation that will provide MMT roughly $6.3 million in ongoing operating and capital funds starting in FY26 (due to the timing of the start of legislation, FY25 will provide around $2.9 million) of which 70% is assumed for operations.
  • Non-operating revenue: These streams include discretionary and formula-based grants such as 5339 (a), 5307, FASTER, City general fund, PPRTA annual transit sales tax, and STBG & Surface Transportation Program (STP).
    • Oil and gas funds are based on the recent Colorado SB24-230 legislation that will provide MMT roughly $6.3 million in ongoing operating and capital funds starting in FY26 (due to the timing of the start of this legislation, FY25 will provide around $2.9 million) of which 30% is assumed for non-operating revenues.
    • The FASTER grant is assumed to be a constant $700,000 through 2050.
  • Operating and Grant Match Reserves:
    • The operating reserve is based on 17% of the sum of MMT’s annual operating budget and the City operating budget, which is then reduced by the amount of 7% of the PPRTA transit sales tax (10% minus 3% for the Taxpayer’s Bill of Rights). In FY24-25 this was around $3.8 million.
    • Grant match reserve is matching funds budgeted for formula and other awarded grants. This is generally the amount of two lagging years of FTA Section 5307 funds primarily due to the timing of application and award of those funds. In FY24, MMT held roughly $40 million in grant match reserves, $8 million of which was for a downtown transit center, and another nearly $20 million was the total of FY22 and FY23 funds.

Expenses

  • Expenses include those for operations, capital/fleet replacement, and other capital (projects) expenses. Planned operating expenses for 2024 were provided by MMT.
  • An inflation rate of 3% is assumed for all the operating expenses that include fixed-route, ADA paratransit, specialized transportation, Metro Rides, and administrative.
  • The fleet replacement expenses are based on vehicle replacement costs and the useful life of the fleet per MMT’s input. These costs have been summarized by four vehicle categories: fixed-route transit, paratransit, Metro Rides (vanpool), and non-revenue vehicles (which for now is unused since these vehicle types tend to be recycled fleet vehicles and/or marginal costs to MMT). Costs were also parsed by vehicle length. For 40’ and 35’ fixed route buses, the useful life is assumed to be 12 years and regular replacement is assumed through 2050. The same is assumed to be 10 years and 8 years for 29’ fixed route buses and paratransit and Metro Rides (vanpool), respectively.  
  • Capital expenses account for nine different types of project-based outlays that are funded in the operating budget. These expenses have been provided by MMT for 2025-2029 and are totaled by year. No ‘other capital’ expenses are accounted for after 2029 per MMT’s indication. 2050 RTP capital expenses that are currently not accounted for by MMT were added to understand fiscal implications of full implementation.

Baseline Scenario

A preliminary comparison of the forecasted revenues and expenses for the baseline scenario is presented in Figure 64. MMT’s typical annual operating expenses and revenues are closely aligned in most years of the forecast. Due to the presence of substantial carryover from MMT’s PPRTA allocation and the previously mentioned unspent 5307 grant funds, MMT experiences a surplus of available funding at the beginning of the financial forecast period that could accommodate piloting several short-term RTP expansion projects during the early years of the plan. However, that budget surplus is forecast to significantly decrease with expected maintenance and fleet replacement costs out to the 2050 horizon year. The baseline financial model does not account for one-time, discretionary grants that are available to fund these types of capital investments (like FTA 5339(b) competitive bus and bus facility grants), so the likely financial impact of these expenses may not result in the substantial funding deficits presented in this graph. However, this baseline scenario makes clear that to fully implement the 2050 vision, MMT would require additional financial assistance.

Figure 65. Forecasted Revenues and Expenses for Baseline Scenario (2024-2050)

Bar chart of revenues, expenses, and reserve for the baseline scenario for years 2024 to 2050 in the regional transit plan.
Click here for an accessible version of Figure 65. Forecasted Revenues and Expenses for Baseline Scenario (2024-2050).

Limitations of Financial Scenarios

The financial model’s output and summaries are only as accurate as the data and assumption inputs into the model. The model and associated outputs are the project team’s best attempt at capturing the agency’s revenues and expenses and were part of an iterative process vetted by MMT. The model’s reliability to predict cashflow into the future with a reasonable degree of certainty assumes a stable regional economy and funding streams consistent with model assumptions.