Title
Transportation Benefit District (TBD) Debt Financing
Body
Issue:
Review and evaluate the issuance of debt using Transportation Benefit District funds
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Treasurer's Recommendation:
Discuss the legal and practical concerns surrounding the issuance of debt by a Transportation Benefit District (TBD) and/or the City of Olympia issuing revenue debt with the TBD revenues as the sole revenue stream.
Staff Contact:
Jane Kirkemo, TBD Treasurer, 360.753.8499
Presenter(s):
Jane Kirkemo, TBD Treasurer
Background and Analysis:
At the January meeting of the Olympia TBD, the Board asked staff to evaluate two debt proposals: 1) Can the TBD issue its own debt? 2) Can the City of Olympia issue revenue debt by pledging TBD revenues? The questions have to be looked at from both a legal and a practical aspect. I contacted Foster Pepper, the City's bond counsel, as well as the State Auditor's office. Currently there are approximately 50 TBDs in Washington State (no county TBDs) established with a $20 fee and none have issued bonds.
The TBD statute states that a TBD is a "quasi-municipal corporation, an independent taxing authority and a taxing district." TBDs are statutorily authorized to issue general obligation bonds within a statutory limit as well as revenue bonds. A Washington State Supreme Court case, however, analyzed a library district and whether it was truly an independent entity. The case is Granite Falls Library Capital Facility Area v. Taxpayers, 134 Wn.2d 825. Based on this and other cases, the concern is that courts may look to the facts and circumstances to determine whether the TBD acts sufficiently independently of the City, and if it does not, the TBD debt could be determined to be debt of the City. A court would look at whether there are sufficient guidelines and safeguards to ensure the TBD Board acts solely in their capacity as members of a governing board separate from the City Council, that the TBD funds were not commingled, that...
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