COUNCIL

DATE 11/25/08
AGENDA ITEM 6A

CITY COUNCIL MEETING

Olympia, Washington
November 25, 2008

Establishing a Transportation Benefit District (TBD)

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CITY MANAGER’S Hold the public hearing to consider establishing a Transportation

RECOMMENDATION: Benefit District (TBD) and allow public comment.

Provide direction to staff on next steps.

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STAFF CONTACT: Jane Kirkemo, Administrative Services Director, 753-8325

jkirkemo@ci.olympia.wa.us

ORIGINATED BY: Olympia Finance Committee

OTHERS NOTIFIED: Public Works Transportation Division

Thurston Regional Planning Council

ATTACHMENTS: 1. Frequently Asked Questions on TBD’s

BUDGET IMPACT/
SOURCE OF FUNDS: Varies on the option(s) the chosen to be implemented and
the effective date of the option(s)

PRIOR COUNCIL/
COMMITTEE REVIEW: Finance Committee meeting September 23, 2008
City Council meeting Oct. 21, 2008
City Council meeting Nov. 3, 2008

BACKGROUND: A TBD is a quasi municipal corporation that can impose an array of taxes
and fees either through a vote of the people or through Council action.
TBD’s are flexible: they allow cities and counties to work cooperatively
on addressing both regional and local transportation challenges.

Statutory authority for Transportation Benefit Districts has existed for 20

years. However, until 2007 to establish a TBD required a vote of the
people. In 2007 the Association of Washington Cites (AWC) worked
with the Legislature to provide some relief to cities and counties for traffic
congestion. AWC was successful in amending the law to allow some
flexibility. A City (or County) may now implement up to a $20 per vehicle
fee with City Council (or County Commissioner) approval.

The law was written to encourage a regional approach to traffic

congestion. From July 2007 to January 2008 only Counties could
implement a TBD. Olympia did approach Thurston County last year
about establishing a county wide TBD. At the time, Thurston County
notified us they were not interested in establishing a Regional TBD.
ANALYSIS AND OPTIONS: For years, there has been a difference between the revenue
received and expenditures made for maintenance and expansion of
our City streets. Beginning in 2000 the Legislature eliminated funding
from Motor Vehicle Excise Tax (MVET). Today, the revenue from
the motor vehicle fuel tax is declining as the price of gas increases
and the economy declines. Consumers are purchasing significantly
fewer gallons of gas (fuel tax is on the number of gallons sold not the
price per gallon). And, while the revenues are decreasing the cost of
petroleum based projects are increasing.

With the establishment of a TBD, the City can begin to replace the
transportation funding that has been lost over the years, reduce or
eliminate the General Fund subsidy, and be better able to preserve,
maintain or expand the City’s transportation infrastructure into the
future.

A significant advantage of a TBD compared to impact fees is the

ability to accumulate revenue. Using impact fees, the City must
spend all impact fees within 6 years of collection. However,
revenues of a TBD may be accumulated to offset the cost of a
project.

There are several revenue options available with a TBD.

Options Available with a Council vote include imposing one or both
of the following:

1. Annual Vehicle Fee up to $20 per year per vehicle. This fee
is collected at the time of vehicle renewal.

2. Transportation Impact Fees on commercial and industrial

buildings. However, since the City Of Olympia already
charges impact fees a credit would have to be given for
already imposed impact fees.

Options Available with a vote of the people include:

1. A one year excess levy or an excess levy for capital
purposes

2. Up to a 2/10% sales and use tax

3. Up to a $100 annual vehicle fee per vehicle registered in the

district

4. Vehicle tolls

In a letter to the City Council, the Olympia Business Coalition

consisting of the Olympia Master Builders, West Olympia Business
Association, Thurston County Realtors and Government Building
Owners & Lessors Association has recommended formation of a
TBD (letter attached to the Transportation Impact Fee staff report on
the Finance Committee’s agenda).

The purpose of the public hearing tonight is for the City Council to
take public comment on whether to establish a Transportation
Benefit District. Following the public hearing the City Council may
request staff to prepare an ordinance establishing a TBD. If

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 established, the TBD board (also the City Council) would hold a
public hearing to discuss how much to charge and what projects
would be funded with a TBD. Once the amount and projects is
established the State Department of Licensing is notified and they
have 6 months to implement the TBD. If established, below is a
tentative timeline for the TBD.

December 9 Ordinance Establishing TBD

December 16 Second Reading

January 16 Effective Date of Council ordinance

January 20 forward TBD board meets to discuss fund

option(s) recommendation and
project(s) to be funded

February 3 (or forward) TBD holds public hearing on funding

options and project(s) to be funded

February TBD adopts ordinance setting the

funding recommendation

Prior to March 1 Notify Department of Licensing

September 1 Department of Licensing begins

implementing fee

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