Board staff advise caution on Highlands electric-bus contract citing EPA recapture rules and cost concerns

Madison County — At the Dec. 1 workshop, board members reviewed a vendor’s revised Highlands bus proposal and heard staff analysis urging caution on an all-or-nothing, five-year electric-bus agreement.

A district representative (speaker 9) said the revised proposal shortened a prior 12-year term to five years but includes payout and "recapture" provisions tied to federal grant conditions that could obligate the district financially if the contract is canceled midterm. He warned that EPA-funded replacement programs commonly require retired diesel buses to be rendered inoperable rather than resold, which would prevent the district from recouping proceeds by selling retired vehicles.

Board members asked whether retired buses could be converted for nonroad use (for example, repurposed as stationary structures) to preserve some resale value; staff said EPA criteria for rendering vehicles inoperable are specific and would need close review.

An operations/finance staff member (identified in the transcript as speaker 4) provided a fleet and cost summary: the district operates 30 buses (22 active runs, 8 in reserve), with model years ranging roughly 2008–2025; 16 buses are model years 2017–2025 and eight are under three years old and still under warranty. The staff estimate averaged fuel costs of about $5,000 per active bus annually and maintenance around $4,000 per bus. The speaker expressed concern about entering an $18,000-per-bus financing arrangement now when the district faces other near-term obligations (including negotiated teacher pay increases that will affect the budget retroactively in December).

Given the district’s current fleet position, the finance/operations representative told the board, “I’m recommending that we do not enter into this contract,” and recommended continuing to replace buses incrementally with local capital-improvement funds rather than taking on lease interest costs on a large package.

Board members discussed that the vendor would not agree to provide only one or two buses — it would require taking all eight units tied to the grant — and that the district would be responsible for any grant recapture triggered by early contract termination. The board agreed to keep analyzing options and to revisit the proposal next year rather than commit now.

No procurement decision was made at the workshop; staff will continue negotiations and return with clarified contract language and financial scenarios for the board to consider at a future meeting.