Title
Primary Interlocal Agreement for Implementation and Fulfillment of the Projects for Advancing Vehicle-Infrastructure Enhancements Act
Action
Action:
A. Adopt a resolution approving and ratifying an interlocal agreement between the City of Charlotte and the Metropolitan Public Transportation Authority for their joint undertaking and implementation of requirements to fulfill obligations under the Projects for Advancing Vehicle-Infrastructure Enhancements Act, and
B. Authorize the City Manager to negotiate and execute all documents and contracts, including for transfer and expenditure of funds necessary to implement and fulfill the city’s obligations under the Projects for Advancing Vehicle-Infrastructure Enhancements Act and the interlocal agreement.
Body
Staff Resource(s):
Andrea Leslie-Fite, City Attorney
Lina James, City Attorney’s Office
Liz Babson, City Manager’s Office
Shawn Heath, City Manager’s Office
Explanation
§ Effective July 1, 2026, the Projects for Advancing Vehicle-Infrastructure Enhancements (PAVE) Act requires the City of Charlotte to transfer its transit operations to the Metropolitan Public Transportation Authority (MPTA). Because the parties recognize the benefits of a phased transition and share a desire for a smooth transition, the city will operate the transit system through the transition period, which is anticipated to extend through December 31, 2026.
§ The Primary Interlocal Agreement is intended to address critical items that require mutual agreement to begin the initial phase of operations on July 1, 2026, and create a long-term plan for the transfer of assets and repayment of debts.
§ The Primary Interlocal Agreement is divided into three phases:
- Phase One: Begins July 1, 2026, and is anticipated to end on December 31, 2026. During this phase, the city will continue to operate the transit system with the MPTA’s governance and policy oversight. The MPTA will continue to establish the infrastructure, systems, and approvals necessary to own and operate a public transportation system and to employ staff that support its operations.
- Phase Two: Anticipated to begin on January 1, 2027, and anticipated to end on June 30, 2027. During this phase, the city may provide some shared services in support of the operation of the public transportation system to ensure a smooth transition.
- Phase Three: Anticipated to begin July 1, 2027, and anticipated to end once (i) all CATS debt has been repaid, (ii) all grant requirements have been satisfied, and (iii) all assets have been transferred to the MPTA. During this phase, the city and the MPTA will operate independently except to address outstanding debt obligations, grant requirements, and the transfer of encumbered assets.
§ On June 10, 2026, the MPTA Board of Trustees unanimously adopted and ratified the Primary Interlocal Agreement, which will be submitted by the MPTA to the North Carolina General Assembly by June 30, 2026, to ensure all PAVE Act requirements are satisfied. The Agreement will become effective on July 1, 2026.
§ Additional agreements between the city and the MPTA are anticipated prior to the conclusion of Phase One and Phase Two.
§ Under Interlocal Cooperation law, Article 20 of Chapter 160A of the North Carolina General Statutes, the city and MPTA are authorized to enter into interlocal agreements for the joint cooperation and exercise of powers and the performance of governmental functions, including to perform jointly any function that they have the power to perform alone, or to contract with one another to perform any governmental function that they have the power to perform alone, and to enter into contracts to specify the details of these joint undertakings, including the transfer to and expenditure of funds collected by any participating unit of government to another consistent with the parties’ agreements.
Background
§ On July 1, 2025, the PAVE Act was enacted by the North Carolina General Assembly. The PAVE Act authorized Mecklenburg County to obtain an additional source of revenue to expand and improve roadway systems and public transportation for the Mecklenburg County region by assessing a one-percent local sales and use tax subject to voter approval.
§ On November 4, 2025, Mecklenburg County voters approved the one-percent local sales tax referendum as outlined by the PAVE Act, and on December 2, 2025, the Mecklenburg County Board of Commissioners adopted a resolution to levy the one-percent local sales tax effective July 1, 2026.
§ The Mayor established a City Council work group comprising of Council members Driggs, Owens, and Watlington to advise on the development of the Primary Interlocal Agreement. The work group met with staff regularly for progress updates, offered real-time feedback to staff during negotiations, and provided summaries to Council’s Transportation, Planning, and Development Committee and to full City Council.
§ On March 2, 2026, the City Attorney and the city’s outside legal counsel, Parker Poe, provided an overview of the transfer process under the PAVE Act, including the need for an interlocal agreement, to City Council during the Annual Strategy Meeting.
§ On April 6 and May 4, Council Member Driggs, Chair of the Transportation, Planning, and Development Committee, provided informational updates on the transition process to the Committee. Both updates were accompanied by a memo provided to City Council that summarized the update.
§ On May 7, an initial draft of the Primary Interlocal Agreement was distributed to City Council for review and comment.
§ On June 1, the City Attorney and the city’s outside legal counsel provided an update on changes to the draft Primary Interlocal Agreement compared to the May 7 draft to the Transportation, Planning, and Development Committee.
§ On June 3, a second draft of the Primary Interlocal Agreement was distributed to City Council for review and comment.
§ On June 8, a final draft of the Primary Interlocal Agreement with mutual agreement on all provisions was distributed to City Council for review and comment. Additionally, the City Attorney and the city’s outside legal presented to full City Council at the June 8, 2026, Business Meeting. This presentation addressed specific questions or concerns raised by Council members over the past month and included a summary of changes to the Primary Interlocal Agreement compared to the draft initially distributed on May 7.
§ On May 18, May 20, May 26, June 5, and June 8, the City Attorney’s Office, the city’s outside legal counsel, and city staff hosted optional office hours for City Council.
Attachments
Attachment(s)
Resolution
Primary Interlocal Agreement