This page provides a general overview of transportation benefit districts (TBDs) in Washington State, including formation procedures, revenue sources, reporting requirements, and sample documents.
Chapter 36.73 RCW authorizes cities (see also RCW 35.21.225) and counties to form transportation benefit districts (TBDs), quasi-municipal corporations and independent taxing districts that can raise revenue for specific transportation projects, usually through vehicle license fees or sales taxes.
RCW 36.73.015(6) allows TBD revenue to be used for transportation improvements included in a local, regional, or state transportation plan. Improvements can range from roads and transit service to sidewalks and transportation demand management. Construction, maintenance, and operation costs are eligible.
List of TBDs
As of 2015, MRSC is aware of over 75 TBDs throughout Washington State, and more are being created every year. For full details, download MRSC’s List of Transportation Benefit Districts.
RCW 36.73.050 allows any city or county to form a TBD by ordinance, following a public hearing, if it finds that the action is in the public interest. The establishing ordinance must specify the boundaries of the district – which may include all or part of the city or county establishing the TBD – and the transportation improvements that will be funded. The boundaries and functions of the TBD may not be changed without further public hearings.
RCW 36.73.020(2) allows TBDs to include all or part of the territory in another jurisdiction (city, county, port district, county transportation authority, or public transportation benefit area) through interlocal agreement.
Almost all TBDs share the same boundaries as their establishing jurisdiction, in which case they must be governed by the members of that jurisdiction's legislative body, acting as a separate legal entity, unless the jurisdiction assumes the TBD's powers (see below). Note that in mayor-council cities, the mayor is not part of the legislative body and is not eligible for membership on the TBD board.
If a TBD includes territory in multiple jurisdictions, it must be governed under an interlocal agreement pursuant to chapter 39.34 RCW. Under RCW 36.73.020(3), the governing board must consist of at least five members, including at least one elected official from each participating jurisdiction, or – if the TBD has the same boundaries as the metropolitan planning organization (MPO) – it may be governed by the MPO governing body.
The governing body of the city or county creating the TBD and the governing body of the TBD, even when comprised of the same members, are separate and distinct bodies, and their meetings must be separate and distinct.
Assumption of Powers
New legislation in 2015 (2ESSB 5987) allows a city or county that forms a TBD with the same boundaries as the city or county to absorb the TBD and assume all of its “rights, powers, functions, and obligations,” with the result that the TBD would cease to exist as a separate entity. For more details, see MRSC’s blog post on New Legislation Affecting Transportation Benefit Districts.
Vehicle License Fees
The most common TBD funding source is a vehicle license fee in accordance with RCW 82.80.140, as authorized by RCW 36.73.040(3)(b). TBDs may impose vehicle license fees up to $50 without a public vote, subject to the conditions below, or may impose fees up to $100 with voter approval.
Until 2015, vehicle license fees of $20 or less could be imposed without voter approval, but 2ESSB 5987 increased the allowable nonvoted vehicle license fee up to a $50 maximum. However, a TBD may only impose a nonvoted vehicle license fee above $20 as follows:
- Up to $40, but only if a $20 fee has been in effect for at least 24 months.
- Up to $50, but only if a $40 fee has been in effect for at least 24 months. Any nonvoted fee higher than $40 is subject to potential referendum, as provided in RCW 36.73.065(6), as amended by Section 309 of 2ESSB 5987.
Any license fees over these amounts, up to $100, must be approved by a simple majority of voters. However, voters have rejected these measures almost every time. The only TBD to successfully pass a voted vehicle license fee is the Seattle TBD, whose voters approved a $60 fee increase in 2014 after rejecting a similar increase in 2011.
If two or more TBDs with the authority to impose a nonvoted fee overlap, credits must be issued so that the combined nonvoted fees do not exceed $50 total.
If a countywide TBD wishes to impose a vehicle license fee, RCW 82.80.140(2)(a) requires it to distribute the revenues to each city in the county by interlocal agreement, which must be approved by 60% of the cities representing 75% of the city population. If this threshold cannot be met, RCW 36.73.065(5) allows a district that includes the unincorporated areas only to impose the nonvoted license fees discussed above.
For a list of current TBD vehicle license fees, see the Department of Licensing’s page on local transportation benefit district fees.
Sales and Use Taxes
Another common TBD funding source is a sales and use tax of up to 0.2% in accordance with RCW 82.14.0455, as authorized by RCW 36.73.040(3)(a). This tax may not be imposed for longer than 10 years at a time, except to repay debt, and must be approved by a simple majority of voters.
In recent years, voters have approved the vast majority of all proposed TBD sales and use taxes. At least three jurisdictions - Seattle, Tacoma, and Enumclaw - have imposed a sales tax on top of an existing vehicle license fee. For individual results, see MRSC’s Local Ballot Measure Database.
Other Funding Sources
Other potential funding sources include:
- General obligation bonds (RCW 36.73.070) – MRSC is only aware of one TBD that has attempted to pass a bond measure, and it failed with 50% of the vote (Auburn TBD, 2012).
- Border area fuel tax, only available to TBDs that include a Canadian border crossing (RCW 82.47.020). MRSC is aware of one TBD – Point Roberts – that uses this funding mechanism.
- Impact fees on commercial and industrial development in accordance with chapter 39.92 RCW (RCW 36.73.040(3)(c) and RCW 36.73.120).
- Vehicle tolls (RCW 36.73.040(3)(d)).
- Excess property taxes (RCW 36.73.060).
- Local improvement districts (RCW 36.73.080).
Material Change Policies
RCW 36.73.160(1) requires TBDs to adopt a material change policy that addresses significant changes to the transportation improvement finance plan that affect project delivery or the ability to finance the plan. The policy must at least address material changes to cost, scope, and schedule, the level of change that will require governing body involvement, and how the governing body will address those changes. At a minimum, the policy must require the governing body to hold a public hearing if the revised cost exceeds the original estimate by more than 20%.
State law does not clearly require TBDs to adopt an appropriations budget. However, adopting a budget would be considered a best practice, and a number of TBDs have done so, setting up the budget process to coincide with the annual/biennial process used by the establishing jurisdiction. It is up to the TBD governing board to develop and adopt a budget policy.
Under RCW 36.73.020(4), the treasurer of the establishing city or county must serve, in an independent and ex officio capacity, as the TBD treasurer.
Accounting and Financial Reporting
RCW 43.09.230 requires TBDs to submit annual financial reports to the State Auditor’s Office using the BARS reporting templates.
For information on the specific TBD accounting requirements, see the BARS Manual, Section 3.11.1. For assistance developing financial reports, see MRSC’s Annual Financial Reporting Checklists page.
Annual Transportation Improvement Report
In addition to the annual financial report, RCW 36.73.160(2) requires TBDs to issue a separate annual transportation improvement report detailing the district revenues, expenditures and the status of all projects, including cost and construction schedules. The report must be distributed to the public and newspapers of record in the district.
RCW 36.73.170 requires a TBD to end its day-to-day operations within 30 days after the specified transportation improvements are completed, although the district may continue to collect revenue and service any remaining debt or financing. A TBD must be completely dissolved within 30 days after the financing or debt service is paid off.
The state legislature authorized the establishment of TBDs in 1987 as an option for local governments – other than those in King, Pierce, and Snohomish counties - to fund transportation improvements. Over the next 20 years, only three districts were created: Point Roberts (1992), Fords Prairie (1993), and Liberty Lake (2002).
The state legislature amended the statutes in 2005 and again in 2007 to expand TBD uses and revenue authority. Following the 2007 legislation, which ended the exclusion of King, Pierce, and Snohomish counties and authorized nonvoted vehicle license fees and impact fees, many jurisdictions began implementing TBDs. In 2010, the statutes were amended again to clarify project eligibility, allow sales tax collection, and make governance more flexible. In 2015, the statutes were revised to increase the amount of councilmanic vehicle fees and allow cities and counties to assume the powers and responsibilities of the TBD.
For more on TBD history, see:
- Senate Bill Report, 2ESSB 5987, Laws of 2015, ch. 244
- Final Bill Report, ESSB 6774, Laws of 2010, ch. 250
- Final Bill Report, ESHB 1858, Laws of 2007, ch. 329
- WSDOT: Transportation Benefit Districts Analysis and Report, 1998