Project Information

Bid Title

Zero-Emission Transit Bus Incentive Program

Issuing Agency

South Coast Air Quality Management District

Location

California

Published Date

Mar 11, 2026

Closing Date

Jun 30, 2026

Government Level

State & Local

Status

Closed

Ref. #

PA2026-07

Original Source

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Project Description

Bid Number	Title	Bidder's Conference	Closing Date	Contact Person	Document
PA2026-07	Zero-Emission Transit Bus Incentive Program 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.	Applicant Workshop - 4/02/26 10:00 AM	6/30/2026 05:00 PM	Cynthia Ravenstein (909) 396-3269 Ray Gorski (909) 396-2479	PA2026-07

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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

SECTION 1 – INTRODUCTION

MSRC Clean Transportation Funding™

Zero-Emission Transit Bus Incentive Program

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 inflation‑driven 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™ 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.

2

SECTION 2 – PROGRAM OVERVIEW

MSRC Clean Transportation Funding™

Zero-Emission Transit Bus Incentive Program

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™

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 (H2) fuel cell buses.

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™ 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™

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

3

SECTION 3 – AVAILABLE FUNDING

MSRC Clean Transportation Funding™

Zero-Emission Transit Bus Incentive Program

The total amount of MSRC Clean Transportation Funding™ 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™ 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™ 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™

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:

4

MSRC Clean Transportation Funding™

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

5

Commodity Codes

• NAICS 541611Administrative Management and General Management Consulting Services
• NAICS 541690Other Scientific and Technical Consulting Services

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