Transportation Benefit District
In 2023, Redmond formed a Transportation Benefit District (TBD) to fund maintenance and improvements to city streets, public transportation, strategies aimed at maximizing safety and traveling choices, parking facilities, and other transportation projects designed to reduce congestion.
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A city may form a TBD by passing an ordinance, defining the geographic area and transportation benefits to be funded. On May 2, 2023, at their regular business meeting, by a unanimous vote, the City Council adopted an ordinance to form a Transportation Benefits District. The TBD will fund maintenance and improvements to city streets, public transportation, strategies to maximize safety and traveling choices, parking facilities, and other transportation projects designed to reduce congestion, through a sales tax increase of 1/10th of 1%.
At their June 6, 2023, regular business meeting, the City Council conducted a public hearing on an ordinance to assume the rights, powers, functions, and obligations of the Transportation Benefits District and to abolish the governing board of the TBD as an entity separate from the City Council. Immediately following the public hearing, the City Council voted unanimously to adopt the ordinance. Then during their June 20, 2023, regular business meeting, the City Council adopted by a 6-1 vote an ordinance imposing a 1/10th of 1% sales tax in the City of Redmond.
Transportation Benefit Districts are independent taxing authorities that can fund specific transportation efforts. There are currently over 110 TBDs in Washington state, established by cities and counties. TBDs primarily raise money through sales and use taxes or vehicle license fees, and Redmond’s TBD will impose a 0.1% sales tax on taxable sales within the city limits to raise funds.
Learn more about TBDs from the Municipal Research and Services Center or read the FAQs below.
- What is a Transportation Benefit District or TBD?
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.
- How common are TBDs?
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.
- How are TBDs created?
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.
- What is the Assumption of Power?
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.
- How do TBDs raise money for transportation improvements?
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.
- How are TBDs kept accountable?
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.
- Where can I learn more about TBDs?
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.
- Does Redmond have a TBD?
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.
- What transportation improvements will Redmond use a TBD to fund?
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.
- How will a Redmond TBD raise money?
The City of Redmond TBD will raise money by imposing a 0.1% sales tax on taxable sales within the city limits.