# C ITY oF HoLLISTER II 375 Fifth Street • Hollister, CA 95023-3876
December 4 , 2015

Mr. James T. Brown (Ema il : James.T. Brown @faa.gov) Finance Management Federal Aviation Administration 800 Indepen d ence Avenue SW Washington, DC 2059 1
Subject: Action P l an Submission Pursuant to FAA Po l icy and Procedures Concerning the Use of Airport Revenue (79 Fed

. Reg. 66282
-01, Novem ber 7, 2014).

Dear Mr. Brown: 'this letter is in respo n se to the request for an action plan for City of Hollister, CA to convey its

**in ~:ent**  t o comply with the FAA rul ing related to sales tax revenues derived from aviation fuel sales to the extent that ruling comp l ies with federal law

. This includes the process likely necessary to amend any n on compliant local ord i nances to achieve compliance and the developmeiJt of reporting requi rements and tracking systems for specific information on aviation fuel tax revenues which in California means "jet fuel" as other types of aviation fuels are exempt from sa. les tax in this state. It is our understanding that the State of California

.will be subm itting an Action Plan pertaining on ly to the state's portion ofthe tax

. Ca l ifornia's state and local governments already provide extensive serv ices to ai rports i ncluding infrast ructure maintenance, fire protection, public safety, environmental protecti on and noi se abatement

. Th ese services and improvements are funded with general sales taxes and other taxes an d City of Holl ister be li eves these loca l expenditures exceed the sales tax revenues derived from the sa le of avi ation f u el. Applicable law that May Require Amendments for Compliance • The City has enacted one general sales tax which is a one percent (1%) transaction ta.x. This tax was enacted after December 30, 1987 but will expire on M arch 30

. 2018. The transaction tax is a general tax which would require the vote of the e lectorate to am end the use of the tax

. • The only airport the City of Holli ster maintains is the Ho lli ster Municipal Airport

. In addition to the locally imposed transaction and use tax rate, City of Hollister receives revenues de rived from the state sales and use tax- rate f or the pu rposes of 

### ( Fire Protection, Public Safety, and public transportation). These statewi de voter-approved tax rates h ave been designated for specific purposes. It is ou r understanding that th e state will provide an action plan response as it relates to necessary steps for assuring compliance re lated to these revenues.
City Attorney



### 636A306 Oty Clerk 

### 636-4304 OtyManager 

### 636-4305 Finance 

### 636-4301 Management Services 

### 636-4324 Fax (831) 636-4310 • TDD Line 

### Only (831) 636-4319 Personnel 

### 636 4308

### Reporting Requirement and Tracking System City of Hollis te r i n conjuncti on with its advisors has begun to identify the required data and steps necessary to comp ly. The internal process to undertake this effort, including deve lop i ng a tracking system for discret e i nformation on aviation fuel tax revenues, is complex and extensive. For example , the State Board of Equalization, the tax collection agency with wh ich City of Hollister has a contract for sales tax collection s, does not require jet fuel sellers to segregate sales tax revenue derived from the sale of jet fuel f rom other types of taxable sales made by the same vendor. Therefore, it is presently impossible City of Hollister to determine the exact amount of sales tax derived from sales of jet fuel. local agencies would need the state to change its tax reporting standards to require fuel sellers to quantify the amount of tax derived from the sale of aviation fuel to achieve compliance. Segregating and reporting the correct amount of tax revenue will further complicate California's already complex sales tax system and increase administrative costs. Transition Period If, contrary to current expectations, City of Hollister determines that its expenditures on airport capital and operating c osts do not exceed sales tax revenues derived from aviation fuel , it will consider legislative soluti ons. It is the intent of City of Hollister to attempt to comply with the requirements set forth by the FAA ruling , to the extent it complies with federal law

. City of Hollister will notify the FAA of specific actions, if any, to be completed during the transition period and work with the state to ensure compliance before the December 8, 2017 deadline.

William B. Avera City Manager

cc: Ignacio Velazquez, Mayor Ray Friend, Vice
- Mayor Mickie Solonio luna, Council Member Karson Klauer, Council Member Victor Gomez, Council Member Brett I. 

### Miller, Di rector of Administrative Services/ Assistant City Manager Michael Chamb less, Management Services Director/ Assistant City Manage Jay Chamberlain, D epartment of Finance (Jay.Chamberlain@dof. ca.gov)