Council Report

City Council Report 
 
Date:  
June 8, 2026 
To: 
 
City Council 
Through: 
Brent Stoddard, Assistant City Manager  
 
 
 
From:  
Jodi Sorrell, Transit Services Director 
 
 
 
Subject: 
Intergovernmental Agreement with Valley Metro Rail, Inc. (METRO) for 
light rail operations and maintenance for Fiscal Year 2026/27 
(Districts 3 and 4) 
 
 
Purpose and Recommendation 
 
The purpose of this report is to recommend and request the City Manager, or his 
designee, to enter into an agreement with Valley Metro Rail, Inc. (METRO) for 
Mesa’s share of costs for operation of light rail service, agency operating costs and 
other costs associated with operating the light rail system. The agreement authorizes 
the City to disburse funds in an amount of $21,148,000 during Fiscal Year 2026/27. 
 
Background 
 
The City of Mesa and METRO entered into a Light Rail Transit Operations Master 
Cooperative Funding Agreement (“Master Agreement’), effective November 17, 
2008. The Master Agreement specifies that each fiscal year the METRO Board of 
Directors will identify annual operations and maintenance funding amounts for the 
member cities. The annual operations and maintenance costs are allocated based 
on the number of miles light rail operates within each city.   
 
Discussion 
 
Operations and maintenance costs established by the METRO Board of Directors 
for Fiscal Year 2026/27 are $129,510,000.  The operations and maintenance 
budget include safety, security, lifecycle maintenance, propulsion power, vehicle 
maintenance, systems and facilities maintenance, transportation contractors, 
materials and supplies, general and administrative agency costs and liability 
insurance. The implementation of Proposition 479 adds some additional costs to 
the operating costs allocated to the Cities.  This includes costs for systemwide 
improvements (ie: travel time improvements and implementing recommendations 
from safety studies) and future project development (this includes projects in the 
early development stages like working with cities on redevelopment of park-and-
rides or applying for grants). The City also has Valley Metro maintain landscaping 
at the Sycamore Transit Center and Gilbert Road Transit Center. This additional 
work is estimated at $22,000 in Fiscal Year 2026/27.  Mesa’s estimated costs are 
$21,148,000.

2
 
Mesa uses several revenue sources to offset the General Fund contribution to fund 
light rail operations. This includes approximately $2,866,000 in forecasted light rail 
fares, advertising revenue, Arizona Lottery funds and other revenues to reduce the 
funding contribution by the City. After applying the various light rail revenue sources, 
Mesa’s net General Fund contribution to light rail operations is estimated to be 
$18,282,000.    
 
Fiscal Impact 
 
Light rail operations, maintenance and agency operating costs are approved and 
included in the City of Mesa Transit Services budget for Fiscal Year 2026/27 in the 
amount of $21,148,000. 
 
Alternatives 
  
Mesa formed a non-profit corporation with Phoenix and Tempe (i.e., Valley Metro 
Rail, Inc.), and as a member of that corporation is bound by the By-Laws, Joint 
Powers Agreement, and Articles of Incorporation.  These documents that regulate 
the corporation and its members provide penalties for not making timely payments, 
including the unpaid balance accruing interest at 12% and suspended voting rights.  
To withdraw as a member of the corporation, Phoenix and Tempe would need to 
agree to assume Mesa’s financial obligations and provisions for the continued use of 
the light rail in Mesa.  The controlling documents do not contemplate removing the 
light rail from Mesa, even if Mesa were to withdraw from the corporation.      
 
 
Coordinated With 
 
METRO has reviewed and agrees with the terms of the funding agreement. The City 
Attorney has also reviewed and concurs with the amendment as to form.