A joint meeting of Montgomery County’s Government Operations & Fiscal Policy Committee and the Transportation & Environment Committee on Nov. 6 recommended that the County Council approve a supplemental appropriation to securitize state Bus Rapid Transit (BRT) grant funding for the 355 Central BRT project.

The committee recommended approving supplemental appropriation 26‑13, which would appropriate about $168 million in FY26 to be securitized as part of a planned long‑term financing package expected to support roughly $191 million in bonds. Council staff said the funding switch would not change the project’s total cost of $452 million or the project delivery schedule, and would allow Montgomery County Department of Transportation (MCDOT) to use a progressive design‑build contracting approach to accelerate work and reduce inflation risk.

Mr. Kenny, council staff, described the financing authority in state law and the effect of a 2023 General Assembly provision permitting state BRT fund lottery proceeds to be used for bond financing. “These lottery funds may be used for the financing and refinancing of the costs related to the construction, acquisition, improvement, equipping, rehabilitation, and expansion of bus rapid transit projects,” Mr. Kenny said, describing how the programmed state BRT grant revenue could be structured to support the bonds and noting precedent for similar use of lottery‑derived funds in stadium and school projects.

Nancy Feldman, Department of Finance, told the committee the funds are recorded in the capital improvement fund and are not general‑fund revenues. “These funds are not general funds,” Feldman said, and she added that the proposed bonds would be treated as non‑tax‑supported debt for spending‑affordability calculations even though the county would still pay debt service if the bonds are issued.

Committee members asked whether securitizing the grants would affect Montgomery County’s AAA bond rating. Finance staff said the state remains the obligor for the appropriation‑backed revenues, the county has disclosed the potential bonds to rating agencies, and staff does not expect the county’s AAA rating to be affected. Members requested that municipal advisors and bond counsel provide independent analysis and that the council review a bond resolution and final transaction details before any issuance.

Council staff and finance outlined risks and mitigants: the bonds would be payable solely from state BRT fund revenues and thus are subject to annual appropriation by the state, but the county would disclose appropriation risk to investors, consider structural mitigants (such as insurance or intergovernmental coordination), and rely on precedent from similar state transactions. Staff also proposed a technical amendment to the fiscal note to refer to the state BRT fund rather than to state lottery funds specifically; the committee recommended the appropriation with that technical amendment.

The joint committee voted unanimously to recommend the supplemental appropriation with the technical amendment to the full council. No formal bond issuance was approved at the meeting; staff said a separate council action would be required to approve any bond sale and expected to return with a bond resolution and additional analysis in the coming months.