Zero-Emission Transit Bus Incentive Program

ZERO-EMISSION TRANSIT BUS
INCENTIVE PROGRAM
Funding to Accelerate the Transition to Zero-Emissions Public
Transit in the South Coast AQMD Region
PROGRAM ANNOUNCEMENT PA2026-07
MARCH 6, 2026

MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
SECTION 1 - INTRODUCTION
Public transit agencies in the South Coast Air Quality Management District region play a critical role in
achieving California's clean air and climate objectives. These agencies are subject to the California Air
Resources Board (CARB) Innovative Clean Transit (ICT) regulation, which mandates a phased transition
to zero-emission bus (ZEB) fleets. Beginning January 1, 2026, large transit agencies operating more than
65 revenue-service buses must ensure that at least fifty percent of their new annual bus purchases are
zero-emission. Smaller transit agencies will be required to meet a twenty-five percent ZEB purchase
requirement starting in January 2026. These ICT milestones are essential to reducing tailpipe emissions
and advancing regional air-quality goals, yet they place considerable financial and operational
pressures on transit operators.
Transit agencies have experienced significant increases in zero-emission bus procurement costs, driven
by persistent inflation, global supply-chain constraints, and the rising impact of economic tariffs on
vehicle components and manufacturing. These cost escalations have been compounded by uncertainty
surrounding the continued availability of incentive funding under the state's Hybrid and Zero-Emission
Truck and Bus Voucher Incentive Project (HVIP), a program historically relied upon to buy down ZEB
acquisition costs. Adding further complexity is the unresolved status of Senate Bill 752 (SB 752), which
would extend California's partial sales-and-use-tax exemption for qualifying transit bus purchases. The
current exemption expired on January 1, 2026, and absent legislative extension, transit agencies may
incur additional tax liabilities during the same period ICT purchase requirements take effect.
To encourage an accelerated transition to zero-emission fleets - beyond the minimum percentages
required under ICT - the Mobile Source Air Pollution Reduction Review Committee (MSRC) has
established the Zero-Emission Transit Bus Buy-Down Program. This Program is designed to incentivize
public transit agencies that commit to procuring qualifying zero-emission transit buses in the near term.
The MSRC's buy-down incentive is intended to offset a portion of the elevated costs agencies currently
face, including inflationdriven price increases, the potential unavailability of other state incentives,
and the possibility of new sales tax liabilities if the existing exemption is not extended.
This Program Announcement invites eligible public transit agencies to participate in the Zero-Emission
Transit Bus Incentive Program (Program). The Program's objective is to reduce financial barriers,
accelerate the adoption of zero-emission transit buses, and support the continued delivery of clean,
reliable, and equitable mobility throughout the South Coast AQMD region.
The MSRC has allocated a total of $25 million in Clean Transportation Funding(TM) for this Program. As
discussed in subsequent sections of this Program Announcement, proposals will be accepted beginning
on May 1, 2026, through June 30, 2026, or until such time as all available Program funds have been
expended.
The following Sections describe the eligibility requirements and guidelines for Application preparation.
MSRC staff members are available to answer questions and provide technical and programmatic
guidance as appropriate. Please refer to Section 8 of this document for a list of MSRC Staff contacts.
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
SECTION 2 - PROGRAM OVERVIEW
2.1. Eligible Transit Agencies - For the purpose of this Program, eligible funding recipients must be
public transit agencies as defined in title 13, California Code of Regulations (CCR), section 2020(b), and
be regulated under the California Air Resources Board Innovative Clean Transit Regulation, title 13,
CCR, sections 2023 and 2023.1 - 2023.11.
2.1.1. Large Transit Agencies - Large transit agencies are defined per Article 4.3, ICT Regulation,
Section 2023(b)(30) and operate more than 65 buses in annual maximum service.
2.1.2. Small Transit Agencies - Small transit agencies are defined per Article 4.3, ICT Regulation,
Section 2023(b)(49). As stated in Article 4.3, a small transit agency is a CARB-regulated transit
agency that "is not a large transit agency"1.
2.2. Eligible Transit Buses - Transit buses eligible to receive an MSRC Clean Transportation Funding(TM)
inventive must conform to the following requirements:
2.2.1 Eligible Transit Bus Technology - Transit buses must be 100% zero tailpipe emissions.
Eligible propulsion technologies include battery-electric buses and hydrogen (H ) fuel cell buses.
2
Hybrid-electric buses that incorporate internal combustion engines are not eligible.
2.2.2 Eligible Transit Bus Weight Classes - Includes Class 4 through Class 8 heavy-duty buses:
* Class 4 - 6 transit buses have a Gross Vehicle Weight Rating (GVWR) between 14,001
and 26,000 pounds;
* Class 7 - 8 transit buses have a GVWR of 26,001 pounds or greater.
2.2.3 New Transit Buses Only - Transit buses eligible to receive an MSRC Clean Transportation
Funding(TM) inventive must be new, Original Equipment Manufacturer (OEM) vehicles. Used zero-
emission buses, or conversions of conventional or alternative fuel buses to zero-emissions, are
not eligible under this Program.
2.3. Eligible Transit Bus Chargers - Transit agencies can request MSRC Clean Transportation Funding(TM)
for the purchase of battery electric bus chargers. Only charging equipment designed and intended to
charge battery-electric transit buses is eligible for MSRC incentives. Only the charging unit, also known
as the dispenser, is eligible for an MSRC incentive. No other costs associated with electric vehicle
supply equipment (EVSE) and infrastructure are eligible.
2.4. Zero-Emission Bus Purchase Commitment Deadline - Transit agencies receiving MSRC zero-
emission bus incentives must execute a bus purchase order or bus manufacturer purchase agreement
no later than 270 calendar days from the date the contractual agreement between the transit agency
and the South Coast AQMD, acting on behalf of the MSRC, is fully executed.
1 https://ww2.arb.ca.gov/sites/default/files/2019-10/ictfro-Clean-Final_0.pdf
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
SECTION 3 - AVAILABLE FUNDING
The total amount of MSRC Clean Transportation Funding(TM) allocated for the Zero-Emission Transit Bus
Incentive Program is $25 million. This funding level is a targeted amount - the MSRC reserves the right
to increase the amount of total funding available. Also, should the MSRC receive Applications with
total requests less than the amount allocated, the MSRC reserves the right to reduce the total funding
available and reallocate funds to other Work Program categories. Finally, the MSRC reserves the right
to not fund any of the Applications received, irrespective of the merits of the Applications submitted.
Please note that the source of MSRC Clean Transportation Funding(TM) for projects submitted in
response to this Program Announcement is motor vehicle registration fees collected by the California
Department of Motor Vehicles (DMV) in accordance with the California Health and Safety Code. Thus,
the availability of MSRC Clean Transportation Funding(TM) is contingent upon the timely receipt of funds
from the DMV. Neither the MSRC nor South Coast AQMD can guarantee the collection or remittance
of registration fees by the DMV.
3.1. Maximum Funding Per Transit Agency - The maximum MSRC Clean Transportation Funding(TM)
award to any single public transit agency is as follows:
3.1.1. Large Transit Agencies - Agencies for which the ICT regulation requires, starting January
1, 2026, that fifty percent (50%) of all new annual bus purchases be zero-emission buses, are
eligible for a maximum funding award up to $3 million.
3.1.2. Small Transit Agencies - Agencies for which the ICT regulation requires, starting January
1, 2026, that twenty five percent (25%) of all new annual bus purchases be zero-emission buses,
are eligible for a maximum funding award up to $1 million.
3.1.3. Funding Requests in Excess of Maximum Funding Per Transit Agency - Public transit
agencies may request transit bus incentive amounts that exceed the maximum funding levels
identified in Sections 3.1.1 and 3.1.2. Any request exceeding these limits will be placed on a
Backup List. Backup List funding will be made available only if: (a) total eligible Program funding
requests do not fully utilize the $25 million currently allocated by the MSRC, or (b) the MSRC
elects to provide additional funding to the Program.
3.1.4. Geographical Funding Minimum - The MSRC has established a Geographical Funding
Minimum of $3.125 million for each county within the South Coast AQMD. This allocation
ensures that every county has access to a baseline level of funding to procure zero-emission
transit buses. After the close of the Application submittal period on June 30, 2026, any funds
remaining within a county's geographic minimum will be reallocated and made available to
eligible transit agencies from any other county, consistent with the funding allocation process
described in Section 4.
3.2. Incentive Amount Per Transit Bus - The MSRC has established the following per-bus incentive
amounts:
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
* Class 4 - 6 Buses - a maximum MSRC incentive of 25 percent of the transit bus capital
cost (including destination and delivery charges and taxes) not to exceed $100,000 per
bus;
* Class 7 - 8 Buses - a maximum incentive of 25 percent of the transit bus capital cost
(including destination and delivery charges and taxes) not to exceed $400,000 per bus.
3.3. Incentive Amount Per Charger - a maximum MSRC incentive of 25 percent of the charger unit
capital cost (including destination and delivery charges and taxes) not to exceed $50,000 per charger.
SECTION 4 - FUNDING ALLOCATION PROCESS
Public transit agencies are required to submit a funding request Application to participate in the Zero-
Emission Transit Bus Incentive Program. Application preparation instructions are discussed below in
Section 9.
Program funds will be distributed to eligible public transit agency applicants in accordance with the
funding distribution process outlined below:
Funding will be awarded on a first-come, first-served basis to qualifying public transit agencies;
For the purposes of this Program, all qualified Applications submitted on the first day of the
Application Acceptance Period - May 1, 2026 - will be deemed received simultaneously. If first-
day submissions oversubscribe the Zero-Emission Transit Bus Incentive Program, MSRC funds
will be allocated to qualified applicants on a pro rata basis;
In cases where prorating is required, the Geographic Funding Minimums described in Section
3.1.4 will take precedence;
Qualified Applications received after May 1, 2026 will be funded in order of receipt, subject to
the availability of remaining Program funds;
Backup List incentives will be allocated in accordance with Section 3.1.3 and the above funding
distribution process.
SECTION 5 - PARTICIPATION CONDITIONS & RESTRICTIONS
The following guidelines, requirements, and conditions apply to all funding requests:
1. Allowable Use of MSRC Funds - MSRC funds may be used to offset the capital acquisition cost of
qualifying zero-emission transit bus purchases only.
2. MSRC Funds Remitted on a Reimbursement Basis - MSRC funds will be distributed on a
reimbursement basis only upon delivery and acceptance of a qualifying zero-emission transit bus
and submission of all required reports and invoices.
3. Additional Conditions on MSRC Funding
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
* Audit Provision - In accordance with state law, all projects awarded MSRC Clean Transportation
Funding(TM) are subject to audit.
* Certificate of Insurance or Letter of Self Insurance - All transit agencies that accept an MSRC
incentive award must provide a Certificate of Insurance or Letter of Self Insurance within 45
days of notification of a funding award.
* Agencies that have previously received MSRC funding for the purchase of a zero-emission
transit bus under a current or prior Work Program are not eligible to receive additional
incentives under this Program for that same transit bus.
* The MSRC reserves the right to modify this Program Announcement or issue addenda,
supplemental information, or guidelines. Any amendments will be posted on the MSRC website
at www.cleantransportationfunding.org.
* Once submitted, applications may not be modified without the prior written consent of the
Mobile Source Air Pollution Reduction Review Committee.
SECTION 6 - PROGRAM ANNOUNCEMENT TIMETABLE
The MSRC Zero-Emission Transit Bus Incentive Program will be implemented in accordance with the
timeline shown in Table 1. Project applications will be accepted electronically via the MSRC website
from May 1, 2026, through 5:00 p.m. on June 30, 2026. Only electronic submissions will be accepted;
paper applications will not be accepted.
Incentives will be awarded on a first-come, first-served basis to eligible projects that meet all Program
requirements. Funds may be fully committed prior to the June 30, 2026 deadline; therefore, funding
availability is not guaranteed through the end of the application period.
Table 1 - Key Program Dates
Match Program Event Date
Program Announcement Release Date March 6, 2026
Applicant Workshop April 2, 2026 10:00 a.m.
Earliest Date for Application Electronic Submission May 1, 2026
Last Date and time Electronic Applications will be Accepted 5:00 pm on June 30, 2026
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
SECTION 7 - APPLICANT WORKSHOP WEBINAR
A virtual Applicant Workshop for the Zero-Emission Transit Bus Incentive Program will be held on April
2, 2026. Attendance is voluntary. The workshop will provide an overview of the Program, highlight new
or updated information, clarify this Program Announcement, and address general questions related to
application preparation and electronic submittal. The workshop will be held at the following time:
When: Thursday, April 2, 2026, 10:00 AM-11:30 AM (UTC-08:00) Pacific Time (US & Canada).
Where: https://aqmd.zoomgov.com/s/1605550913
Join from a PC, Mac, iPad, iPhone or Android device:
Please click this URL to join. https://aqmd.zoomgov.com/s/1605550913
Or join by phone:
Dial (for higher quality, dial a number based on your current location):
US: +1 669 216 1590 or +1 669 254 5252 or +1 415 449 4000 or +1 646 828 7666 or +1 646
964 1167 or +1 551 285 1373
Webinar ID: 160 555 0913
International numbers available: Zoom International Dial-in Numbers - Zoom for Government
SECTION 8 - IF YOU NEED HELP...
MSRC staff members are available to answer questions and provide technical assistance as appropriate
during the application preparation and acceptance period. To facilitate timely assistance, applicants
should direct inquiries to the appropriate staff contact:
For General or Administrative Questions, please contact:
Cynthia Ravenstein, MSRC Program Administrator
Phone: 909-396-3269
E-mail: cynthia@cleantransportationfunding.org
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
For Technical Assistance, please contact:
Ray Gorski, MSRC Technical Advisor
Phone: 909-396-2479
E-mail: ray@cleantransportationfunding.org
SECTION 9 - APPLICATION PREPARATION INSTRUCTIONS
This Program Announcement is available on the MSRC website at
www.cleantransportationfunding.org. The forms included in the following Sections should be
completed by the applicant and submitted in accordance with the instructions provided in Section 11,
"Electronic Submittal Instructions. There are four (4) primary parts A through D to be completed, plus
Certifications and a signed Cover Letter. Each part is briefly summarized as follows:
Part A - Applicant Information, requests general information from the transit agency.
Part B - Transit Bus Information, requests a description of the transit bus vehicle purchases for
which MSRC incentive funding is requested;
Part C - Project Budget, requests a cost breakdown of the proposed transit bus purchases;
Part D - Project Implementation Schedule, requests the submittal of a schedule depicting key
project milestones. Please note that all projects should be completed no later than 48 months
from the date of contract execution.
Certifications - All applicants must complete and submit the following certification forms as an
element of their Application:
o Business Information Request
o Disadvantaged Business Certification
o W-9
o Form 590 Withholding Exemption Certificate
o Federal Contract Debarment Certification
o Campaign Contributions Disclosure
Cover Letter - Each application must be accompanied by a signed Cover Letter. The cover letter should
be prepared on your agency letterhead and be signed by a representative with appropriate signing
authority.
SECTION 10 - APPLICATION FORMS & TEMPLATES
Applicants should complete the following forms and templates and submit them during the application
submittal period, which opens on May 1, 2026, and closes at 5:00 p.m. on June 30, 2026.
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
Section 11 includes instructions for submitting funding applications using the MSRC Electronic
Application Submittal Portal.
APPLICANTS MUST REGISTER ON THE MSRC CLEAN TRANSPORTATION FUNDING(TM) WEBSITE
BEFORE AN APPLICATION CAN BE SUBMITTED!
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MSRC Clean Transportation Funding(TM)
Zero-Emission Transit Bus Incentive Program
PART A - APPLICANT INFORMATION
A. Please provide the following transit agency information in the space provided.
Transit Agency Name
Agency Size Per ICT
Large Transit Agency Small Transit Agency
Article 4.3 (check box)
Address
City
State Zip
Phone ( ) - Ext Fax ( ) -
Contact Name Title
E-mail Address
Payment Name if
Different
B. Funding Request Summary:
Total MSRC Clean Transportation Funding(TM) Requested: $
Other Total Co-Funding Applied to Project: $
Total Project Cost: $
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