Transportation Benefit District

Transportation Benefit Districts (TBDs) are independent taxing authorities that can help cities and counties fund specific transportation efforts. They generally accomplish this through vehicle licenses fees or sales taxes.

According to the Municipal Research and Services Center (MRSC) there are currently over 110 TBDs in Washington state. Most were established by cities, but a handful of counties have also established TBDs.

Any city or county may form a TBD by passing an ordinance, after holding a public hearing, if the city or county finds that the action is in the public interest (RCW 36.73.050). The ordinance must define the geographic area the TBD covers and the transportation benefits to be funded. A TBD may include part or all of the establishing jurisdiction.

A city or county that forms a TBD with the same boundaries as the city or county may absorb the TBD and assume all the rights, power, functions, and obligations of the district. The TBD then no longer exists as a separate legal entity, and the legislative authority takes on the role of governing body for the TBD. That is the City Council in Redmond.

A public hearing is required before the legislative authority of the city or county can pass an ordinance to assume the powers of the TBD. Currently, 85% of cities that have a TBD, in Washington State, have chosen to absorb the TBD.

TBDs primarily raise money through sales and use taxes or vehicle license fees. TBDs may impose up to a 0.3% sales tax, if approved by a majority of voters in the district, or 0.1% if approved by a majority of the governing body. A TBD may impose up to a $20 vehicle license fee at any time, but must meet other requirements for vehicle license fees above $20. Vehicle license fees imposed by a TBD may not exceed $100.

TBDs are required to adopt material change policies, submit annual financial reports to the State Auditor’s Office, and submit an annual transportation improvement report. Material change policies require, at a minimum, that a TBD hold a public hearing if revised costs for a project exceed the original estimate by 20%. The annual transportation improvement report must detail the district revenues, expenditures, and the status of all projects, including costs and schedules.

The Municipal Research and Services Center provides has detailed information about TBDs on their website, https://mrsc.org/explore-topics/finance/special-topics/transportation-benefit-districts.

Redmond does not currently have a TBD. However, the City Council assumed the formation of a TBD in the 2023-2024 biennial budget. TBD formation is currently in process. The first public hearing on the formation of the new TBD will be held on Tuesday, May 2, 2023 at the City Council meeting.

Redmond will use the funds collected from the TBD to support transportation related maintenance and improvements to city streets, public transportation, strategies aimed at maximizing safety and traveling choices, such as biking and walking, parking facilities, and other transportation projects designed to reduce congestion on facilities of city significance.

The City of Redmond TBD will raise money by imposing a 0.1% sales tax on taxable sales within the city limits.