City Council Staff Report Page 1 of 4 November 4, 2025
Agenda Item No. 4.1
DATE: November 4, 2025
TO: Honorable Mayor and Members of the City Council
FROM: Joan Malloy, City Manager
SUBJECT: Adopt a Resolution Authorizing the City Manager to Execute the Second Amendment to the Agreement with Gillig, LLC, Reducing the Number of Battery-Electric Thirty-Five-Foot (35’) Heavy-Duty FixedRoute Transit Vehicles (Buses) to be Purchased from Fourteen (14) to Eight (8)
EXECUTIVE SUMMARY
Staff recommends that the City Council adopt a resolution authorizing the City Manager to execute the Second Amendment to the Agreement with Gillig, LLC, reducing the number of battery-electric thirty-five-foot (35’) heavy-duty fixed-route transit vehicles (buses) (BEBs) to be purchased from fourteen (14) to eight (8), in a form approved by the City Attorney.
STRATEGIC PLAN ALIGNMENT
This agenda item is aligned with the following:
Goal D, Strategy 9: Environmental Sustainability and Infrastructure – Transition UC Transit to Zero Emissions.
BACKGROUND
Union City Transit’s heavy-duty fixed-route transit vehicles (buses) each have a useful life of twelve (12) years or 500,000 miles. The useful life is a number set by the Federal Transit Administration (“FTA”) for durability, as defined by the Surface Transportation and Uniform Relocation Assistance Act of 1987 (Public Law 100-17). The useful life is part of the criteria for eligibility for replacement using FTA formula funds. FTA formula funds are federal grants allocated to state and local transit agencies based on specific formulas set by Congress, providing a stable, predictable source of federal funding for Union City Transit fleet operations, unlike FTA discretionary funds, which are subject to the FTA's discretion.
On February 25, 2020, the City Council adopted Resolution No. 5568-20, committing to the procurement of Zero-Emission Union City Transit Fixed-Route Vehicles. Since then, Union City Transit has been coordinating with transportation funding agencies at the federal level (FTA), the state level (California Department of Transportation or “Caltrans”), Agenda Item No. 4.1
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the regional level (Metropolitan Transportation Commission or “MTC”), and the county level (Alameda County Transportation Commission or “Alameda CTC”) to secure grant funds to replace the existing compressed natural gas (“CNG”) vehicles that are approaching the end of their useful lives with zero-emission vehicles.
Staff worked with the MTC to successfully secure FTA formula funds to replace eight (8) CNG buses that met the end of their useful lives in 2021 with BEBs. On September 2, 2022, the FTA awarded $6,336,138 in Section 5307 (formula) Capital funds (Grant No.
CA-2022-183-00) to Union City Transit for the purchase of the BEBs. The MTC programmed AB664 bridge toll revenues, in the amount of $343,242, as part of a match for the purchase of the BEBs. Although the objective was to replace the buses in 2022, those efforts were unsuccessful, and as of this date, fourteen (14) of our eighteen (18) buses are past their useful lives.
In 2022, Union City Transit was presented with an opportunity to partner with a bus manufacturer for a grant application and procurement through an FTA Low or No Emission Grant Program (Section 5339(c)) Low-No Emission Grant (a discretionary grant). Union City Transit partnered with Gillig, LLC (Gillig) of Livermore, California, to submit a grant application in May 2022 for an additional six (6) BEBs to replace six (6) CNG buses set to meet the end of their useful lives in 2024. Union City Transit’s grant application was successful, and the City was awarded approximately $8 million in August 2022 to purchase the additional BEBs and to build the required infrastructure improvements to fuel them at the Corporation Yard. As this was a discretionary grant, it required a two-step process: another application had to be submitted through the FTA to “obligate” (commit) the funds for the award.
In addition, Union City Transit has been coordinating with the FTA to modify the previously awarded Grant No. CA-2019-110-00 for Union City Transit Section 5307 (formula) funds to use about $800,000 of the $1.2 million grant towards the purchase of the BEBs.
Union City Transit anticipated that the funds for the Low-No Emission Grant award for the additional six BEBs would be obligated by June 30, 2023. However, in the City’s interest to preserve the advantageous 2022 bus pricing offered by Gillig, the City Council adopted Resolution No. 6067-23 on January 10, 2023, approving the procurement of fourteen (14) BEBs through a purchasing agreement with Gillig through the Washington State Department of Enterprise Services (WADES) Master Contract No. 06719, in the amount of $16,516,360. A link to the staff report can be found here: Coversheet Starting in January 2025 with the new presidential administration, the federal government immediately began implementing regulatory changes. FTA staff advised the City to pursue CNG buses rather than the six BEBs that were part of the discretionary FTA Low or No Emission Grant Program (Section 5339(c)), even though these six buses were on order with Gillig. Under the City’s current agreement with Gillig, all fourteen (14) BEBs would be completed and delivered to Union City Transit in late 2025.
To keep the federal discretionary funds, City staff worked with the FTA on the Section 5339(c) grant. Staff amended the application to remove the six BEBs and obligate the funds for CNG buses before September 30, 2025, the deadline (end of the federal fiscal year). To address the regulatory changes, the City must now execute a second amendment to the bus purchase agreement with Gillig.
Agenda Item No. 4.1
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The First Amendment (C5942-A) was executed on April 1, 2025, when the City and Gillig both extended the term of the Agreement and authorized Gillig to file and submit for Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) vouchers to the California Air Resources Board (CARB) for the purchased buses. CARB approved and assigned HVIP vouchers, in the amount of $138,000, for each of the 14 BEBs, totaling $1,932,000, with these funds being provided directly to Gillig. Gillig successfully secured the vouchers on behalf of the City.
DISCUSSION
On Friday, August 22, 2025, through the City’s transit consultant advising on FTA matters, staff learned that the Section 5339(c) discretionary grant application was not going to move forward unless Union City Transit changed propulsion types to satisfy the new administration’s definition of clean air vehicles. The only viable option for Union City Transit was to maintain the status quo and to procure six CNG buses as opposed to the planned six BEBs. With the federal fiscal year deadline of September 30, 2025, rapidly approaching, Union City Transit staff moved quickly to avoid the risk of losing funds for the bus purchases, successfully rewriting the grant funding obligation application to comply with the new requirements. On September 23, 2025, the FTA approved the obligation of Grant No. CA-2025-277-00 for Union City Transit Section 5339(c) Low or No Emission Grant Program Capital Projects, in the amount of $9,342,346, with a local match of $1,546,536, totaling $10,888,882, for the purchase of seven (7) thirty-five foot (35’) CNG vehicles and for improvements to the Corp Yard where the buses are parked. See Attachment 1 for the updated full funding plan, which includes both previously approved and currently approved uses of funds.
Immediately after accepting the FTA Grant No. CA-2025-277-00: Union City Transit notified Gillig that the City had only a budget to purchase eight (8) BEBs. On October 20, 2025, Gillig presented the City Manager, Deputy City Manager, Public Works Director, and Transit Manager with an opportunity to cancel the additional six (6) BEBs that no longer have FTA Low-No Emission Grant (Section 5339(c)) funding without penalty and to reduce the contract amount to $8,501,822 (Attachment 2). The HVIP vouchers, totaling $138,000 for each of the eight (8) battery-electric heavy-duty fixed-route buses, still apply, totaling $1,104,000, and these funds will be provided directly to Gillig.
Subsequently, the City Manager sent the cancellation notice to Gillig on October 21, 2025, allowing Union City Transit to absolve itself of the unfunded obligation for the six (6) BEBs (Exhibit A). The revised Agreement with Gillig for $8,501,822 is now a funded contract with $994,323 (including local matching funds) from FTA Grant No. CA-2019-110-00, $6,366,138 (including local matching funds) from FTA Grant No. CA-2022-183-00, $343,242 funds from AB664, and $1,104,000 in HVIP vouchers. (Note, this reduction in the voucher amount from the $1,932,000 identified in the Background discussion is consistent with the reduction of 6 BEBs from the procurement.) The eight (8) Union City Transit BEBs entered production at Gillig on October 23, 2025.
The first BEB is scheduled to be delivered on November 7, 2025, and all eight (8) BEBs are anticipated to be added to the Union City Transit fleet by November 24, 2025.
The CNG buses are expected to be delivered in January 2029, based on current information from Gillig.
Agenda Item No. 4.1
City Council Staff Report Page 4 of 4 November 4, 2025
FISCAL IMPACT
The revised Agreement with Gillig for $8,501,822 is now a funded contract with $994,323 (including local matching funds) from FTA Grant No. CA-2019-110-00, $6,366,138 (including local matching funds from FTA Grant No. CA-2022-183-00), $343,242 funds from AB664, and $1,104,000 in HVIP rebates.
There is no impact on the General Fund.
RECOMMENDATION
Staff recommends that the City Council adopt a resolution authorizing the City Manager to execute the Second Amendment to the Agreement with Gillig, LLC, reducing the number of battery-electric thirty-five-foot (35’) heavy-duty fixed-route transit vehicles (buses) (BEBs) to be purchased from fourteen (14) to eight (8), in a form approved by the City Attorney.
Prepared by: Steve Adams, Transit Manager
Submitted by: Marilou Ayupan, Public Works Director
Attachments
1. Attachment 1 – Bus Funding Original Approved Use and Current Approved Use
2. Attachment 2 - Second Amendment to Agreement C5942
3. Draft Resolution
4. Exhibit A – Letter to Gillig Cancelling 6 BEBs