C ITY oF HoLLISTER 

II 

375 Fifth Street • Hollister, CA 95023-3876 

December 4, 2015 

Mr. James T. Brown (Email: James.T.Brown@faa.gov) 

Finance Management 

Federal Aviation Administration 

800 Independence Avenue SW 

Washington, DC 20591 

Subject: Action Plan Submission Pursuant to FAA Policy and Procedures Concerning the Use of Airport 

Revenue (79 Fed. Reg. 66282-01, November 7, 2014). 

Dear Mr. Brown: 

'this letter is in response to the request for an action plan for City of Hollister, CA to convey its in~:ent t o 

comply with the FAA ruling related to sales tax revenues derived from aviation fuel sales to the extent 

that ruling complies with federal law. This includes the process likely necessary to amend any noncompliant local ordinances to achieve compliance and the developmeiJt of reporting requirements 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 submitting an Action Plan pertaining only to the state's portion of the tax. 

California's state and local governments already provide extensive services to airports including 

infrastructure maintenance, fire protection, public safety, environmental protection and noise 

abatement. These services and improvements are funded with general sales taxes and other taxes and 

City of Hollister believes these local expenditures exceed the sales tax revenues derived from the sale of 

aviation fuel. 

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 March 30. 2018. The transaction tax is 

a general tax which would require the vote of the electorate to amend the use of the tax. 

• The only airport the City of Hollister maintains is the Hollister Municipal Airport. 

In addition to the locally imposed transaction and use tax rate, City of Hollister receives revenues 

derived from the state sales and use tax- rate for the purposes of (Fire Protection, Public Safety, and 

public transportation). These statewide voter-approved tax rates have been designated for specific 

purposes. It is our understanding that the state will provide an action plan response as it relates to 

necessary steps for assuring compliance related 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 Hollister in conjunction with its advisors has begun to identify the required data and steps 

necessary to comply. The internal process to undertake this effort, including developing a tracking 

system for discrete information on aviation fuel tax revenues, is complex and extensive. For example, 

the State Board of Equalization, the tax collection agency with which City of Hollister has a contract for 

sales tax collections, does not require jet fuel sellers to segregate sales tax revenue derived from the 

sale of jet fuel from 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 costs do not exceed sales tax revenues derived from aviation fuel, it will consider 

legislative solutions. 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, Director of Administrative Services/ Assistant City Manager 

Michael Chambless, Management Services Director/ Assistant City Manage 

Jay Chamberlain, Department of Finance (Jay.Chamberlain@dof.ca.gov)