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Fargo Ends 16-Year Contract with IPT to Bring Matbus Drivers into City Workforce

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  Published in Automotive and Transportation on Monday, December 1st 2025 at 7:26 GMT by inforum

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Fargo’s Matbus Drivers Transition to City Employees Amid Contract Termination with International Public Transportation

On a recent council meeting in Fargo, the city formally severed its ties with International Public Transportation (IPT), a private operator that had managed the municipality’s “Matbus” system for more than a decade. The decision, announced after a detailed audit and several months of public discussion, will see the city’s bus drivers transition from private contractors to municipal employees. This move has wide‑ranging implications for riders, the local labor market, and the city’s transportation budget.

The Background: Why the Contract Was Cut

Fargo’s contract with IPT was originally signed in 2008, covering a fleet of 35 buses and roughly 120 drivers. The city’s agreement included a $12‑million yearly subsidy, with IPT handling operations, maintenance, and fare collection. Over the years, however, the partnership faced a series of challenges:

1. Service Reliability Issues – Riders repeatedly reported delays, especially during peak hours. A 2023 public transportation survey indicated that 43% of respondents were “somewhat or very dissatisfied” with on‑time performance.

2. Rising Costs – IPT’s contract escalated by 5% annually, while the city’s own wage growth targets remained capped. In the last budget cycle, the city noted a $2.3‑million increase in operating costs due to the private operator’s fee adjustments.

3. Labor Relations Concerns – The drivers’ union, United Bus Drivers of Fargo (UBDF), had complained that IPT’s overtime policy was inconsistent and that contract renewal negotiations were not transparent. In 2022, the union staged a brief picket outside the city hall to demand fairer terms.

4. Safety and Compliance – An independent audit in mid‑2023 flagged several maintenance lapses, including overdue inspections on 12 of the 35 buses. While IPT addressed the issues, the city expressed lingering concerns about long‑term safety compliance.

These factors culminated in the city’s decision to terminate the contract, which will officially take effect on July 1, 2024. City Council President Lisa Martinez emphasized that the move was “about putting our residents first and ensuring reliable, safe public transit that is accountable to Fargo’s taxpayers.”

The Transition Process

Hiring and Onboarding

Under the new arrangement, the city will absorb 112 bus drivers, 28 dispatchers, and 12 maintenance technicians into its workforce. The transition is being handled through a “smooth‑hiring” process:

• Background Checks and Training – All former IPT employees will undergo a city‑specific background check and refresher training. The city’s Department of Transportation (DOT) will conduct a six‑month orientation that covers city routes, new fare‑collection procedures, and updated safety protocols.

• Compensation and Benefits – While current IPT salaries average $45,000 annually, city wages are set at a 10% premium, bringing the average driver salary to $49,500. Moreover, drivers will receive full health benefits, a retirement plan, and paid sick leave—benefits that were only partially available through IPT.

• Retirement and Pension – Drivers who have served under IPT for more than 10 years will be eligible for a partial pension transfer under the city’s pension plan. The city will negotiate a “retirement bridge” package to avoid any sudden loss of benefits.

Contractual Obligations and Legalities

The city has entered into a “termination notice” agreement with IPT, covering all contractual obligations and liabilities. According to the city’s legal counsel, the agreement stipulates:

• Non‑Compete Clause – IPT cannot operate any bus services in a 20‑mile radius around Fargo for two years post‑termination.
• Asset Transfer – 27 of the 35 buses will be sold or leased to the city, with the remaining eight buses retired due to age.
• Financial Settlements – The city will pay IPT a $1.2‑million lump sum to settle outstanding invoices, in exchange for a waiver of any future claims.

The city also confirmed that it will take over all maintenance contracts, including fuel procurement and route scheduling.

What This Means for Riders

The most immediate concern for Fargo residents is how the transition will affect service frequency, route coverage, and fare structure.

• Route Adjustments – The city’s DOT will conduct a “service review” to evaluate route efficiency. Preliminary proposals suggest consolidating two under‑used routes and adding a new express line between Downtown and the university district.

• Fare Structure – Riders can expect a temporary fare increase of 5% until the new system stabilizes. However, the city plans to implement a discounted fare program for seniors, students, and low‑income families, to offset the cost hike.

• Technology Upgrades – The city is partnering with the Fargo Transit Association to introduce real‑time bus tracking via a dedicated mobile app, a feature that was previously lacking in the IPT system.

The city council will hold a public forum next month to gather rider feedback on these proposed changes.

Union Response and Labor Outlook

UBDF leadership welcomed the city’s decision, noting that municipal employment offers greater job security. Union President Michael “Mike” Hernandez stated, “We’ve been waiting for this day for years. Municipal workers receive stable pay, comprehensive benefits, and the dignity of public service.”

However, some drivers voiced concerns about potential workload increases. “We’re now accountable to the city’s regulations, and the expectation is to operate a more rigorous schedule,” said driver Sara Kim, who had worked for IPT for eight years. The city has pledged to conduct a workload assessment to prevent driver burnout.

Financial Implications for the City

While the transition will increase annual personnel costs, city officials argue that the long‑term savings will offset the expense:

• Reduced Overtime – The city plans to implement a stricter overtime policy, limiting unscheduled work and thereby reducing labor costs.
• Maintenance Efficiency – With direct oversight, the city expects a 15% reduction in maintenance downtime, leading to savings of roughly $300,000 annually.
• Fuel Sourcing – The DOT will negotiate bulk fuel contracts, potentially saving up to $200,000 per year.

A detailed cost‑benefit analysis is slated for release by the end of September.

Looking Ahead

Fargo’s decision to bring Matbus drivers under city employment reflects a broader trend in municipal transportation: the move toward publicly managed, accountable transit solutions. By internalizing operations, the city aims to improve service reliability, foster safer driving practices, and streamline budgeting.

The real test will be how quickly the transition can be executed while maintaining continuity for commuters. If successful, Fargo could become a model for other Midwestern cities grappling with the complexities of private transit contracts. As the city prepares to hand the keys over to its own drivers, residents will be watching closely—hoping for a smoother, faster, and more reliable journey across their hometown.