Transportation Benefit Districts
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.
New legislation: Effective July 1, 2022, Sec. 406-407 of ESSB 5974 increases the maximum transportation benefit district (TBD) sales tax authority from 0.2% to 0.3% and authorizes indefinite renewals of up to 10 years with voter approval.
In addition, for TBDs that include all of the territory within the boundaries of the jurisdiction(s) that established the TBD, the legislation authorizes the governing board to impose 0.1% of the sales tax councilmanically (without voter approval) up to 10 years at a time. We will update this page soon to reflect this new legislation.
Below are examples of this new authority:
- Airway Heights TBD Resolution No. 2022-001 (2022) – Submitting ballot measure to voters to increase the TBD sales tax from 0.2% to 0.3% for an additional 10 years. Voters had previously approved a 0.2% sales tax in 2013.
- Battle Ground Ordinance No. 22-05 (2022) – Imposing a councilmanic 0.1% TBD sales tax up to 10 years and stating intent to place a ballot measure before the voters for an additional 0.2% in November 2024. (City did not have a TBD sales tax previously.)
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
As of July 2022, MRSC is aware of more than 110 cities and towns in Washington that have established TBDs, many of which are funded by sales taxes or vehicle license fees as described below.
MRSC is only aware of five counties that have established a TBD. One of those (a partial-county TBD serving the Point Roberts peninsula) relies on the border area fuel tax, while the rest are unfunded.
For the complete list of TBDs that MRSC is aware of, download the following file:
- List of transportation benefit districts (Excel) – Includes funding information for each TBD, as well as when it was formed and whether its powers have been assumed. Information can be sorted and filtered.
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. 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.
However, if the jurisdiction that established the TBD votes to "assume" its powers as described below – which most jurisdictions have – the TBD ceases to be a separate legal entity and no longer requires separate meetings.
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
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 ceases to exist as a separate legal entity (chapter 36.74 RCW).
The city or county legislative authority must first hold a public hearing according to the requirements of RCW 36.74.020-.030. If, after the hearing, the legislative authority determines that “public interest or welfare would be satisfied” by the assumption of the TBD, it passes an ordinance or resolution that abolishes the TBD governing body and vests the city or county legislative authority with all the rights, powers, functions, and obligations that the TBD governing body possessed.
As of July 2022, about 85% of the cities and towns that have established TBDs have also assumed their powers. (See the "List of TBDs" section above for details.)
Note: A section has been added to the BARS Manual discussing the requirements for jurisdictions that assume the powers of their TBDs. In particular, a jurisdiction assuming a TBD must (1) still file an annual financial report for the year in which the TBD was assumed and (2) submit a New Entity Creation or Dissolution Notification form. For more details, see the BARS Manual, Section 126.96.36.199 (see Cash Basis Manual and GAAP Manual).
For more details on accounting and reporting requirements related to TBD assumption, see our blog post: Assuming the Powers of Your Transportation Benefit District?
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)). Initiative 976, approved by voters in 2019, would have eliminated the ability to impose any TBD vehicle license fees. However, this initiative was ruled unconstitutional by the state Supreme Court in 2020 (Garfield County Transp. Auth. et al. v. State et al.)
TBDs may impose councilmanic vehicle license fees up to $50 without voter approval, subject to the following conditions, or may impose fees up to $100 with voter approval.
A TBD may impose a nonvoted vehicle license fee up to $20 at any time, but 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 a maximum of $100, must be approved by a simple majority of voters. However, most jurisdictions have opted for the councilmanic (nonvoted) fees. The only TBD to successfully pass a voted vehicle license fee is the Seattle TBD, where voters approved a $60 fee increase in 2014 after rejecting a similar increase in 2011. A handful of other jurisdictions have attempted voted TBD license fees without success, including Bremerton, Burien, and Edmonds (all in 2009) and King County (in 2014).
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)), which must be approved by a simple majority of voters. This taxing option is limited to 10 years, with the ability to place this same sales tax option back before the voters for one additional 10-year period. The exception to this time limitation is for the repayment of debt; if the TBD sales tax is to be used to repay debt, the ballot measure should state the intended use and duration of the debt service.
In recent years, voters have approved the vast majority of all proposed TBD sales and use taxes. For individual results, see MRSC’s Local Ballot Measure Database (select "Filter by Ballot Categories," select the "Funding Type/Statutory Authority" drop-down menu, and look for the TBD sales tax and TBD vehicle license fee options).
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 (see Cash Basis Manual and GAAP Manual). For assistance developing financial reports, see MRSC’s page on Annual Financial Reporting.
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).
Examples of TBD Documents
- Anacortes Ordinance No. 2926 (2014) – Establishes powers of district and board, identifies potential revenue sources
- Enumclaw Ordinance No. 2524 (2013) – Identifies eligible projects as those in the six-year Transportation Improvement Program, authorizes creation of advisory committee
- Issaquah Ordinance No. 2823 (2018) – Establishes TBD
- Leavenworth Municipal Code Ch. 3.92 – Mayor-council city; clearly specifies that the mayor serves as the chair and presides over the board meetings but does not have a vote
- Pierce County Ordinance No. 2014-28 (2014) – Establishes TBD within unincorporated county
- Snohomish County Amended Ordinance No. 10-103 (2011) – Establishes a TBD in unincorporated areas after failing to reach an interlocal agreement
- Toppenish Ordinance No. 2012-2 – Establishes powers of district and board
- Grandview Ordinance No. 2015-09 – Repeals entire chapter of municipal code
- Black Diamond Ordinance No. 15-1059 (2015) – Assumes the powers of a newly formed TBD with no pre-existing funds, assets, or contracts
- Roy Ordinance No. 933 (2015) – Replaces "governing board" section in municipal code
- Sedro-Woolley Ordinance No. 1823-15 (2015) – Short and simple ordinance
- Shoreline Ordinance No. 726 (2015) – Detailed ordinance assuming the powers of a TBD formed in 2009 with existing funds and contracts
Vehicle License Fee Resolutions
- Covington Ordinance No. 12-15 (2015) – $20 fee following assumption of TBD
- Des Moines TBD Resolution No. 0003.TBD (2015) – $40 nonvoted fee
- Grandview TBD Ordinance No. 2011-TBD-02 (2011) – $20 fee
- Maple Valley TBD Ordinance No. O-12-001-TBD (2012) – $20 fee, specifying which projects will be funded
Sales Tax Initial Imposition
- Clarkston TBD Resolution No. TBD-2015-01 (2015) – Ballot proposition to impose a 0.2% sales tax and rescind a nonvoted $20 vehicle license fee
- Moses Lake TBD Resolution No. 3 (2017) – Ballot proposition to impose a 0.2% sales tax and rescind a nonvoted $20 vehicle license fee. Includes staff report and voter fact sheet
- Shoreline Resolution No. 430 (2018) – Ballot proposition for 20-year, 0.2% sales tax to finance sidewalk improvements through debt
- Waitsburg TBD Resolution No. 2012-593 (2012) – Ballot proposition for a 0.1% sales tax
Sales Tax Renewals
- Sequim Resolution No. R-2018-03 (2018) – Ballot proposition for a 10-year, 0.2% sales tax renewal following assumption by city. Includes list of specific projects and cost estimates.
- Auburn TBD Resolution No. 2012-2 (2012) – Seeking voter approval for $59 million in general obligation bonds for transportation improvements; failed with 50% approval.
Material Change Policies
- Maple Valley TBD Resolution No. R-12-004-TBD (2012) – Fairly standard material change policy used by many TBDs
- Prosser TBD Resolution No. 11-TBD-07 (2011) – Includes a definition of “material change”
- Arlington TBD 2015 Budget – Includes work plans and costs for individual projects
- Leavenworth TBD 2019-20 Biennial Budget – Contains narrative to guide readers
- Prosser TBD 2017 Budget – Short document with a one-page budget table
- Wilkeson TBD 2018 Budget – Very simple, one-page budget
Annual Transportation Improvement Reports
- Ferndale TBD 2015 Annual Report – Short, two-page overview
- Marysville TBD 2017 Annual Report – Includes project maps and photos
- Yakima Ordinance No. 2014-006 (2014) – Dissolving TBD after projects were funded by other means
- WA Department of Licensing Local Transportation Benefit District Fees – List of current TBD vehicle fees imposed by local jurisdictions