Capital Metro approved an agreement with the Capital Area Rural Transportation System and city of Georgetown to continue providing on-demand bus service.

CARTS service was slated to end Aug. 30 because CARTS would no longer receive funding to operate in Georgetown after the city was designated as part of the Austin urbanized area by the U.S. Census Bureau in 2012.

CARTS is a rural transportation provider of service for cities with populations less than 50,000. Georgetown had been paying $10,000 a year for the service, but under the new agreement with Capital Metro, the city will have to pay $156,000 for the same service in fiscal year 2014. In the past year, CARTS provided more than 11,000 trips and 5,000 hours of service in Georgetown.

Capital Metro approved two agreements July 29: one to authorize a partnership with CARTS to provide service and a second with the city of Georgetown to fund CARTS service.

"This is a three-way agreement that we've been working on for a number of months," said Todd Hemingson, Capital Metro's vice president of strategic planning and development.

Because of the designation state funding for Georgetown's service was slated to disappear in 2012. CARTS worked with the Texas Department of Transportation to extend funding through Aug. 30. The agreement with Capital Metro will cover 50 percent of the $312,000 it costs to operate in Georgetown for fiscal year 2014.

The remaining $156,000 will come from Federal Transit Administration 5307 funds for urbanized areas. The Austin area is designated as very large, meaning it has a population greater than one million, said Meredith Highsmith from the Transit Mobility Program at the Texas A&M Transportation Institute. She said the designation determines the formula for federal and state transit funding.

The FTA provides funding based on the most recent census and uses population, population density, demographics and transit services provided and a basis for doling out the funds. Capital Metro is the designated recipient for the 5307 federal transportation dollars for the area and has received $28.5 million for fiscal year 2013 based on those factors.

Formalizing an agreement with Capital Metro to use 5307 funding for Georgetown CARTS service could pave the way for transitioning to a fixed-route system, Hemingson said. The agreement will allow for Capital Metro and city of Georgetown staff to work together on planning for any additional service. Hemingson said any service plans would be included in both entities' budgets for fiscal year 2015.