This page provides a general overview of transportation benefit districts (TBDs) in Washington State, including formation procedures, assumption of powers, 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.
Transportation benefit district revenue may be used for transportation improvements included in a local, regional, or state transportation plan (RCW 36.73.015(6)). Improvements can range from roads and transit service to sidewalks and transportation demand management. Construction, maintenance, and operation costs are eligible.
List of TBDs
MRSC is currently aware of about 90 TBDs throughout Washington State, and more are being created every year. For details, including an interactive map, see our List of Transportation Benefit Districts.
Any city or county may form a TBD by ordinance, following a public hearing, if it finds that the action is in the public interest (RCW 36.73.050). 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.
A transportation benefit district may 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 (RCW 36.73.020(2)).
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). Even though they comprise the same members, the legislative body and the governing board are separate and distinct bodies and must hold separate and distinct meetings.
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. 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 (RCW 36.73.020(3)).
Assumption of Powers
Effective July 2015, any city or county that forms a TBD with the same boundaries as the city or county may 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 (chapter 36.74 RCW). As of June 2016, roughly 45 TBDs - about half of the total - have been assumed by their cities or towns. (See MRSC's List of Transportation Benefit Districts for details.)
For more details, see:
Transportation benefit districts are primarily funded through vehicle license fees and/or sales taxes. There are several other funding options available such as border area fuel taxes, bonds, and impact fees, but these are seldom or never used.
Vehicle License Fees
The most common TBD funding source is a vehicle license fee (RCW 82.80.140, 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).
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, it must 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 (RCW 82.80.140(2)(a)). If this threshold cannot be met, a district that includes the unincorporated areas only may impose the nonvoted license fees discussed above (RCW 36.73.065(5)).
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% (RCW 82.14.0455, 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
TBDs must 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 (RCW 36.73.160(1)). 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.
Required Annual Reporting
Transportation benefit districts must submit annual financial reports to the State Auditor’s Office using the BARS reporting templates (RCW 43.09.230).
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.
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.
A transportation benefit district must 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 (RCW 36.73.170).
Sample TBD Documents
Vehicle License Fee Resolutions
Sales and Use Tax Resolutions
Material Change Policies
Annual Transportation Improvement Reports