McMinnville council approves ODOT intergovernmental agreement for 3rd Street; federal funds, timing and costs debated

The McMinnville City Council voted to authorize the city manager to sign an intergovernmental agreement (IGA) with the Oregon Department of Transportation to advance the 3rd Street improvement project, after councilors asked staff about the risks and timelines associated with accepting federal transportation funds.

Jeff Hunsucker, public works director, told the council that "if we start spending federal dollars, it federalizes the project," requiring compliance with federal requirements such as Buy American provisions and additional administration; staff warned that to "defederalize" a project later the city would likely need to repay federal dollars already spent.

Councilors asked how quickly the federal funds would be obligated and spent. Project manager Jeff Goodham said contract work is estimated to begin in September 2026, funds to be obligated by September 2027 and fully spent by about September 2032 under the current schedule. Hunsucker and project staff said phasing the project is possible and that the council could prioritize spending local or state dollars before federal drawdown if ODOT agrees.

Councilor Chenoweth (expressing caution about federalization and cost inflation) said the council was weighing whether the long-term additional costs prompted by federalizing the project were worth accepting an $850,000 federal allocation now. Hunsucker acknowledged those tradeoffs and said staff would seek touchpoints for council review as the project progresses.

The council approved Resolution 2026-15 authorizing the IGA; the motion carried 5-0. Councilors and staff agreed to explore whether the city can use local or state match dollars first and to return with cost updates at key decision points.