COUNTY OF ALBEMARLE
Transportation District Funding Options
Discussion of Transportation District Funding Options
Tucker, Foley, Davis
LEGAL REVIEW: Yes
November 3, 2004
ACTION: INFORMATION: X
The Board of Supervisors has previously received a Memorandum of Law setting forth funding options for the County to participate in funding the proposed Meadowcreek Parkway interchange located in the City of Charlottesville. One possible funding option involved the creation of a multi-member transportation district by the County and the City. The Board requested additional information and analysis regarding how a transportation district might be funded.
4. Serve the Public Efficiently and Effectively.
The only practical transportation district enabled by the Virginia Code is one created pursuant to Virginia Code Title 15.2. As set forth in the attached Memorandum of Law, such a transportation district has broad powers and can be a means to address transportation projects on a regional basis. However, the enabling legislation is limited in that it does not generally provide any taxing authority for a transportation district. Without direct taxing authority, any local revenue to be used by a transportation district would have to come from appropriations made by the City and County. For a county, this revenue by necessity would be general fund revenue or proceeds from a bond issue that was approved by a majority vote of the county’s voters. Without a guaranteed revenue source, a transportation district is unable to issue revenue bonds to finance major projects.
There is precedent for the General Assembly to grant special taxing authority to a transportation district. In 1980 the General Assembly authorized the imposition of a motor vehicle fuels tax for the Northern Virginia Transportation District. That authority enables the transportation district to impose a two percent sales tax on all motor vehicle fuels sold within the district. However, the General Assembly has not extended that authority to any other existing or proposed transportation districts. In fact, in the 2004 Session the request for this authority by localities in the Fredericksburg region was defeated in the House. To extend such authority to a transportation district within the City and County, Section 58.1-1720 of the Code of Virginia would need to be amended by the General Assembly to specifically enable the taxing authority.
A possible alternative source of local funding that could be used by the City and County to fund a transportation district is to separately create a joint service district to provide transportation services within a service district having the same boundaries as the transportation district. The City and County have authority to impose a special service district tax on the real property within the service district to be used to fund transportation improvements. There is no statutory limit as to the amount of such service district tax. Those funds, which are required to be segregated and used only for the purposes of the service district, could then be appropriated to the transportation district to construct the transportation projects. Although bond counsel has advised that the County cannot use service district taxes as the basis for revenue bonds, revenue generated by the service district tax that is committed to a transportation district could be the basis for revenue bonds issued by the transportation district. The service district tax would be collected by the City and County as a separate line item on the real estate tax bills and appropriated annually to the transportation district. This approach has not been used by any locality to date.
Without a dedicated funding source, a transportation district has no legal authority to generate local revenue and no apparent basis to issue revenue bonds necessary to fund major transportation projects. Before establishing a transportation district, staff recommends that the Board identify a dedicated funding source for the transportation district.
One possible funding source is a motor vehicle fuels tax. If the Board supports this tax option, the Board must ask the General Assembly to amend Virginia Code Section 58.1-1720 to enable such a tax within the City and County. It is estimated that a two percent tax would generate in excess of three million dollars of revenue annually.
Another possible funding source would be proceeds from a general obligation bond issued by the County. Such a bond would require approval by a majority vote of the County voters in a general referendum. A property tax rate increase, subsequent to a general referendum, may be necessary to pay the debt service for a general obligation bond.
A third possible funding source is the creation of an overlapping service district. If the Board supports this option, the Board must be committed to imposing a new dedicated property tax in the service district for the purpose of funding transportation district projects. The amount of the tax would depend on the cost of the projects and the ability to leverage the revenue by having a transportation district issue debt in the form of revenue bonds.
Attachment A – July 15, 2004 Memorandum re Funding Options for Meadowcreek Parkway Interchange
Attachment B – Virginia State Code Section 58.1-1720, Sales tax on fuel in certain transportation districts
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