Transportation Benefit District

Street Overlay Picture 2019

A law passed by the Washington State Legislature in 2007 allows city or county governments to create local transportation benefit districts (TBD) and impose a local sales tax to fund local transportation projects. On November 8, 2016, the Lynnwood voters approved a 0.1% sales tax increase to fund roads in Lynnwood through the TBD. The tax increase went into effect on April 1, 2017, lasts for 10 years and is expected to generate approximately $2.5M per year. The projects to be funded (in whole or in part) by the sales tax include:

  • Preventative and routine pavement maintenance and reconstruction
  • Street and traffic maintenance and operations
  • Other capital projects as identified in the City’s Transportation Plan
Lynnwood City Council Establishes a TBD

On May 24, 2010 the Lynnwood City Council approved Ordinance #2837 that formed the Lynnwood Transportation Benefit District and adopted a new chapter to the Lynnwood Municipal Code, 12.14, entitled “Transportation Benefit District”. The ordinance specifies that the boundaries for the TBD be coextensive with the City limits.

Lynnwood TBD Chronology of Events

At the November 29, 2010 Board Meeting the TBD Board adopted TBD Ordinance #2 enacting an annual $20 vehicle registration fee (for each eligible vehicle registered in Lynnwood). The $20 fee went into effect on July 1, 2011. At the July 27, 2016 Board Meeting the TBD Board adopted TBD Ordinance #10 increasing the fee to $40. The $40 fee (increase from $20 to $40) went into effect on February 1, 2017. At the April 20, 2016 Board Meeting the TBD Board voted to submit a ballot proposition for the November 8, 2016 election to impose a sales and use tax increase in the amount of 0.1%. On November 8, 2016, the Lynnwood voters approved a 0.1% sales and use tax increase to fund road improvements in Lynnwood. The increase went into effect on April 1, 2017 and last 10 years. In November 2019, Washington State voters approved Initiative 976 which eliminated the vehicle registration fee option for TBDs. On March 24, 2020 the Lynnwood City Council voted to assume the powers of the TBD which essentially means the TBD no longer holds separate meetings or approves separate budgets from the City. The TBD now is essentially a separate revenue fund of the City. 

Who may create a TBD?

The legislative authority of a county or city may create a TBD by ordinance following the procedures set forth in Chapter 36.73.

Who governs the TBD?

Lynnwood Mayor and City Council.

What transportation improvements can be funded by a TBD?

A TBD can fund any transportation improvement contained in any existing state, regional, or local transportation plan that is necessitated by existing or reasonably foreseeable congestion levels. This can include maintenance and improvements to city streets, county roads, state highways, investments in high capacity transportation, public transportation, transportation demand management and other transportation projects identified in the agency’s transportation plan.

Can a TBD fund maintenance and preservation activities?

Yes. A TBD may fund the operation, maintenance, and preservation of the programs and facilities noted above.

What revenue options do TBD’s have?

TBD’s have several revenue options subject to voter approval: Property taxes – a 1-year excess levy or an excess levy for capital purposes; Up to 0.2% sales and use tax; and Vehicle tolls. Please Note: There are exemptions or unique requirements when using the vehicle fee or vehicle tolls.

Are TBD revenues required to be spent as they are collected?

No. The governing body must develop a plan that specifies the transportation improvements to be provided or funded by the TBD. As part of this plan, the TBD’s governing board can indicate if the funds will be used immediately, or if they will be collected for a specified period. Typically, funds that are collected for a specified period before being expended are used to fully fund large projects, when bonding, or serve as a match for state or federal funds that may only become available in a specified time frame.

What other requirements should I be aware of?

If project costs exceed original costs by more than 20 percent, a public hearing must be held to solicit public comment regarding how the cost change should be resolved. The TBD must issue an annual report to include the status of project costs, revenues, expenditures, and construction schedules.

The TBD must be dissolved upon completion of the project(s) and the payment of debt service.