Legislation codifies transportation utility fee rules, requires traffic-based methodology and 10-year reauthorization

League staff and tax-policy advisers reviewed House Bill 425, which codifies the authority for municipalities to adopt transportation utility fees and sets implementation guardrails. Presenters traced the fee’s history to Provo and the Pleasant Grove litigation and said the Utah Supreme Court left unresolved the reasonableness of particular fee amounts.

Under HB425, a municipality that wants a transportation utility fee must complete a study documenting transportation need and why existing funding sources are inadequate; post the study publicly; adopt a methodology tied to transportation impact (traffic/trip counts) rather than to assessed property value; define at least residential and commercial rate classes; hold a public hearing and enact an ordinance; deposit fee receipts into a dedicated account; and reauthorize the fee every 10 years (sunset/renewal).

Roger, a long-time League tax-policy adviser, said the bill explicitly prevents municipalities from using property-valuation-based methodologies "you cannot use the assessed value of property to determine a transportation utility fee" and instead requires trip/traffic-based approaches and exclusion of the lowest-traffic day when calculating peak impacts. The fee is typically collected via municipal utility bills where implemented.

HB425 also restates longstanding limits on imposing a general broadband fee and places conditions on general public-safety fees; exceptions exist for specific service charges or bonded obligations. League presenters described the law as preserving local discretion while standardizing study and methodology requirements to reduce litigation risk and legislative preemption.

Speakers said the League will publish a step-by-step implementation checklist and additional training materials this spring to help cities design studies, post methodology documentation, and structure dedicated accounts.