United States’ highways and roads move 72%, or nearly $17 trillion, of the nation’s goods. Yet, according to the American Society of Civil Engineers, the nation’s roadway infrastructure is struggling to meet the existing demand with nearly half of our existing roadways in poor or mediocre condition. Many communities are looking for new tools to address this roadway infrastructure crisis.
One such public infrastructure tool is the transportation improvement district (TID) or transportation development district (TDD), which operates as a special assessment district to improve the transportation system – road or transit-related – within a designated zone. According to the U.S. Department of Transportation, states such as Delaware, Kansas, Missouri, North Carolina, and Ohio all permit the operation of TIDs and TDDs. This type of special assessment district often adopts a larger, areawide approach that generally considers benefits on a programmatic basis rather than more targeted “special benefits” on a project-specific basis. The designated zone may cross jurisdictional boundaries among several local or regional government entities and, as with any special assessment district, requires a majority vote or petition by property owners to establish.
With more than one jurisdiction participating, a TID or TDD provides a forum for cooperation, pooling, and targeted management of transportation funding resources to carry out specific system improvements. These improvements must originate from an adopted land use or development plan. An entity such as a county commission can act as the district’s lead entity, and a board of directors from its constituent members governs its operation. The district generally functions as a separate governmental entity with authority granted by state legislation to levy a special assessment on property owners (property tax levy) or consumers (sales tax levy) who benefit from the improvement in the district. The district may also have the power to issue debt against future special assessment revenues and enter into contracts related to the improvement. A TID or TDD can help streamline the delivery of what otherwise would have been a challenging project to implement by only one local entity within the district. Districts may be better positioned to respond to projected growth in their regions and often promote selected transportation system improvements as drivers of economic development.
Kentucky recently became the news state in the union to permit the operation of TIDs with the passage of House Bill 274 in 2022, and Governor Andy Beshear signed the act on April 8, 2023. In early 2024, Boone County in Northern Kentucky became to first community to organize a TID with the support of the Montrose Group. Under the Kentucky TID law, a TID may be created by a city with a population of at least twenty thousand, a county, or a group of up to three (3) contiguous counties. A Kentucky TID is governed by a board of trustees appointed by the legislative body of a city or county with specific powers such as to
- adopt bylaws for the regulation of its affairs and the conduct of its business,
- adopt an official seal,
- sue and be sued in its own name,
- purchase, construct, maintain, repair, sell, exchange, police, operate, or lease projects,
- issue transportation improvement district revenue bonds for the purpose of providing funds to pay the costs of any project,
- maintain such funds as it considers necessary,
- make surveys and examinations preliminary to the location and construction of projects,
- make and enter into all contracts and agreements to operate the TID,
- employ, retain, or contract for the services of consulting engineers, superintendents, managers, and such other engineers, construction and accounting experts, financial advisers, trustees, marketing, remarketing, and administrative agents, attorneys, and other employees, independent contractors, or agents,
- receive and accept from the federal or any state or local government loans, grants, and contributions for or in aid of the construction, maintenance, or repair of any project and
- acquire, hold, and dispose of property in the exercise of its powers and the performance of its duties.
TIDs in Kentucky can address a wide range of transportation project costs such as construction, site acquisition, demolition, diverting highways, machinery and equipment, traffic studies, indemnification, surety bonds, insurance, guarantees, engineering studies, feasibility studies, legal expenses, plans, and other expenses. These TIDs will operate as public finance entities that can collect funding from multiple sources and use those funds to create debt through bonds to finance transportation projects. Kentucky TIDs can fund highways, parking, freight rail, bridges, tunnels, overpasses, underpasses, interchanges, and service facilities, to name a few transportation projects. Most importantly, Kentucky TIDs can coordinate regional transportation planning and jointly advocate for transportation project funding. Roadway infrastructure tied to economic development does not always stay within a city or a county- commerce, by its nature, succeeds when it travels. Also, the law allows TIDs to receive revenue from increment bonds as part of a local development area.
Kentucky TIDs do not operate with unlimited authority. The Kentucky TID law retains substantial authority with the legislative body that creates the TID, as the law requires approval of the establishing body of a TID before any project can be started. Also, Kentucky TIDs are not authorized to disturb public utility and common carrier property without their permission. Also, debt incurred by a Kentucky TID must be paid by the TID and is not designed to be guaranteed by other governmental entities. Kentucky TIDs, unlike their counterparts in other states, are not expressly permitted to enact taxes or fees to fund transportation projects and do not expressly have the power of eminent domain.
Kentucky has joined states with TIDs that should enable cities and counties to work regionally to address local transportation needs. The Montrose Group is a leader in the creation and operation of TIDs in Ohio and Kentucky—in fact, the Montrose Group supported the creation of the first Kentucky TID in Boone County in Northern Kentucky and was recently engaged to launch the second TID in the state in Warren County, Kentucky.
Contact Wade Williams, Director Corporate Site Location at the Montrose Group at [email protected] if you need assistance with developing and operating a TID in Kentucky or Ryan Scribner at [email protected] in Ohio.
