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CDOT falls behind on payments to providers amid growing transit mandate

The leader of a small nonprofit transportation provider recalled making a plea directly to a state transportation official to speed up the approval of her grant contracts before money ran short. At stake was a door-to-door shuttle service for people with disabilities, older people and low-income clients across El Paso County.

Another nonprofit transit provider said it opted to put off a planned expansion of a similar paratransit service into Weld County and other northern Front Range communities while it waited for state grant reimbursements to kick in.

The culprit in both cases: a contracting bottleneck this year at the Colorado Department of Transportation, which has struggled to keep up with its expanding mandate to support transit programs across the state, especially in rural areas.

Recent months have brought anxiety-inducing moments for the leaders of dozens of small providers, transit agencies and bus contractors across the state. The grant contracts and payments they depend on have been late, the result of unusually widespread processing delays at an understaffed CDOT division responsible for passing out $77 million in operating, planning and capital grants the last fiscal year — the one that ended a month ago.

The delays to contracts, some of which should have been in place by early 2023, have forced operators to dig into often-scant reserve funds. It imperiled others’ ability to provide specialized services or operate a growing network of rural bus routes to far-flung destinations, under CDOT’s “Bustang Outrider” name.

CDOT spokesman Matt Inzeo told The Denver Post that the Division of Transit and Rail has been catching up with help from a “surge” team since April. That work has happened during a period that saw several key division officials depart the high-turnover division as they faced frustration and pleas from providers.

“Providing timely awards and reimbursements to transit agencies is our goal,” Inzeo wrote in a statement issued to The Post. “We are committed to getting the application/award and reimbursement process onto a better schedule for everyone. We fell behind (in 2023) and we are determined to not fall behind” in the coming year.

About $25 million worth of contracts (out of the original $77 million) are still pending, he said, with a goal of getting on track by the end of August. CDOT provided an accounting of contract progress that shows it has fully executed 103 of 204 transit-related contracts from the 2022-23 fiscal year, with another 15 in the final steps.

Inzeo said the transit division coordinated with other parts of state government to prioritize the most critical grants and “ensure essential transit services could continue.”

It has finalized all but two contracts under a pair of major federal transit programs, which partially fund rural transportation providers and programs that serve older and disabled people, often with local grant-matching requirements. Many of those transport people to medical appointments and other vital services.

The bulk of the remaining contracts, CDOT data shows, are for state and federal capital programs that help pay for bus purchases or facility costs. Inzeo says contract reviewers are now prioritizing them.

Colorado lawmakers and Gov. Jared Polis in recent years have expanded CDOT’s support role for transit and other alternatives to driving. A state transportation funding overhaul two years ago greatly expanded some funding programs. CDOT now handles grants for a range of federal and state programs, doling out remaining federal stimulus money. It also oversees the enlarged Multimodal Transportation and Mitigation Options Fund, which bolsters transit and alternative mobility projects in communities.

Among grant recipients in the programs that faced delays were small rural counties, mountain towns — including Breckenridge and Winter Park — and small nonprofits.

Colorado Springs-based Envida says its door-to-door transit service in El Paso County depends heavily on CDOT’s partial funding support. The mission of its transportation program is to help its clients maintain independence and access health care.

But in the late winter, Envida wasn’t able to bill CDOT for reimbursements under a grant agreement worth tens of thousands of dollars — because the agreement hadn’t been finalized yet, preventing the handling of claims in the state billing system. Envida CEO Gail Nehls said a separate capital contract to help pay for specially equipped vehicles also was held up.

So she contacted CDOT. She said a call with executive director Shoshana Lew and the department’s finance chief resulted in a faster contract process. Both contracts were soon approved, she said.

“Once we reached out, we’ve been able to get the support we needed,” Nehls said. “We’re a small nonprofit — a small business, really. … Cash load is always an issue.”

Inzeo said CDOT similarly prioritized many contracts that providers needed to stay in business. For private operators of Bustang Outrider routes, he said, CDOT made partial payments while their contracts were still under review so they could keep buses running. One of those contracts was still pending as of Friday.

Boulder-based Via Mobility Services operates a variety of direct and contracted transit services in metro Denver, including the Regional Transportation District’s on-call FlexRide service. Grants handled by CDOT fuel some of its other programs, particularly paratransit services — a partnership that spokeswoman Zoe DeVito says enables Via to “do so much more than we can do on our own.”

Via weathered the contracting delays earlier this year without losing out on money, but it did opt to hold back the Weld County expansion of the paratransit service, DeVito said. The latest plans called for it to launch Tuesday.

Still, chief financial officer Bill Patterson credited CDOT for promptly approving the organization’s reimbursements once it did sort out Via’s grant.

“I’ll also say that CDOT was good at communicating the problem, even if the news was not always good,” he wrote in an email, expressing sympathy for CDOT’s staff shortages.

The Division of Transit and Rail still has several vacant positions, but Inzeo cited recent progress, including the hiring of a new director, Paul DesRocher, who started Monday. DesRocher came from RTD, where he most recently was a program manager supporting its bus operations.

The lengthy contract backups prompted contracting changes by CDOT for the state’s new fiscal year, which began July 1. In a reversal, CDOT officials decided to end a recent practice of accepting applications for more than 200 contracts of different types — seeking federal or state grants — all at the same time, rather than staggering deadlines.

That consolidated process, while intended to streamline the process for applicants, “significantly overloaded internal CDOT resources,” Inzeo said.

CDOT in recent months has accepted some categories of transit grant applications for the 2023-24 fiscal year that just began, but so far it’s held off on setting a timeline for capital grants — since the previous fiscal year’s contracts remain largely unfinished.

But Inzeo said the plan for the recovering Transit and Rail Division to finalize the new transit operating and planning contracts is the end of 2023.

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