IRENE ELIZABETH HowiE 

ATTORNEY AT LAw 

VIA FEDEX & EMAIL 

Mr. Eduardo Angeles 

Associate Administrator for Airports 

Federal Aviation Administration 

800 Independence Avenue, SW 

Washington, DC 20591 

Dear Mr. Angeles: 

September 15, 2016 

On December 8, 2015, the Clayton County Entities1 filed an action plan with the Office of 

Airport Compliance and Management Analysis, which for reasons described in separate 

correspondence to Administrator Huerta dated September 13, 2016, ("letter to the 

Administrator"), they now believe was unnecessary. If it is decided, contrary to analysis included 

with that letter, that the restrictions on aviation fuel tax revenue use in 49 USC §47133 apply to 

taxes imposed by local governments like the Clayton County Entities even though they have no 

ability to spend that tax revenue for any of the purposes specified in that section, and action is, in 

fact, required, we ask on their behalf for Federal Aviation Administration ("FAA") policy as to 

the ad valorem tax offset described in this letter. 

Discussion of the context for this inquiry. 

The Director of the Office of Airport Compliance and Management Analysis signed a 

clarification of the 1999 Policy and Procedures Concerning the Use of Airport Revenue (79 Fed. 

Reg. 66282 (November 7, 2014)) ("2014 clarification"). The 2014 clarification, among other 

things, stated the FAA has long held the revenue use restrictions in section 4 7133 apply to certain 

nonsponsoring local governments. Based on the analysis included with their letter to the 

Administrator, the Clayton County Entities believe that the FAA, if it intended to act consistently 

with the plain language and purpose of the law and its own administrative precedent, could not 

have meant that interpretation to include those nonsponsoring governments that have no ability to 

spend the revenue for any of the purposes specified in section 47133. The Clayton County 

Entities are anticipating a positive response to their letter and analysis. 

The Clayton County Entities, as also explained in that letter, have no ownership of or operational 

relationship with Hartsfield-Jackson Atlanta International Airport ("HJAIA"), the extraterritorial 

1 The Clayton County Entities are: Clayton County Government, Clayton County Public Schools, and 

the Cities of Forest Park, Riverdale, Lovejoy, Morrow, Jonesboro, College Park and Lake City. 

13 DECATUR Avr~NU I-: ANNAPOLIS. MARYLAND 21403 

TEL: 410-267-7225. FAX' 410-2G7-724G. E-t:vlAIL: IRENE.HOWIE@GtvlAIL.COM 

ADMITTED TO PHACTIGE IN TH.E DISTRICT OF Gor.u r-1 J:HA 
Mr. Eduardo Angeles 

Page 2 of5 

September 15, 2016 

airport that occupies a significant part of Clayton County. Instead, HJAIA is owned and operated 

by the City of Atlanta, the latter located in Fulton County and DeKalb County. The Clayton 

County Entities therefore have no ability to spend aviation fuel tax revenue for the purposes 

specified in section 47133 and share no common treasury that would allow revenues to be shifted 

from one account to an account with a purpose specified in section 47133. 

It does not appear that FAA has published policy or guidance addressing how local governments 

so situated can comply with airport revenue use requirements. The concept of indirect cost 

allocation discussed in Section V (B) of the FAA's Policy and Procedures Concerning the Use of 

Airport Revenue (64 Fed. Reg. 7696 (February 16, 1999)) (" 1999 Policy"), and the FAA's 

discussion of offsets in response to the State of Michigan posted in docket FAA 2013-0988, 

appear to assume either a common treasury with the airport account or the ability to fund a state 

aviation program to achieve compliance with airport revenue (including aviation fuel tax revenue) 

use requirements. Neither of these situations applies to the Clayton County Entities and there is 

no other discussion in FAA policy or precedent directly applicable to them in this context that we 

have been able to identify. This absence of policy and precedent is further evidence that section 

47133 and its revenue use principles do not apply to local governments like the Clayton County 

Entities. 

If it should ultimately be found, however, that the Clayton County Entities' analysis and 

understanding of the plain language of the Jaw and its underlying federal policy are not correct --

and it is difficult to envision sound arguments to support such a conclusion -- then the question of 

use of pennissible offsets to this revenue to comply with FAA policy becomes relevant and must 

be decided. 

The arguments in favor of lost ad valorem tax revenue as a permissible offset against aviation 

fuel tax revenue. 

The FAA has stated that offsets against aviation fuel tax revenue are permissible. As mentioned, 

we have found no guidance in the law or FAA written policy as to the test for pennissible offsets 

for nonsponsoring local governments like the Clayton County Entities, but your staff has 

suggested during infonnal discussions that one test may be whether the offset benefits the 

national air transportation system and is quantifiable. Based on this suggestion and the identical 

equities underlying the statutory permission for airports to use airport revenue to pay 

nonsponsoring local governments for lost tax revenue, the FAA should accept as an offset the 

quantified value of ad valorem tax revenues lost to a local government because of the presence of 

an extraterritorial airport within its jurisdiction. 

• HJAIA directly benefits from not paying local ad valorem taxes. as does the national air 

transportation system as a whole. 

The Clayton County Entities December 8, 2015, action plan highlights several offsets of direct 

value to HJAIA, including its exemption from ad valorem taxes. The airport, long ranked as the 

busiest in the world and vital to the national air transportation system, occupies thousands of 

acres of land in Clayton County as an extraterritorial airport. Placed in specific context, of the 

4,700 acres owned by the City of Atlanta making up the HJAIA, 3,146 acres lie within Clayton 

County. The vast majority oftenninals, concourses and runways lie within Clayton County. In 
Mr. Eduardo Angeles 

Page 3 of5 

September 15, 2016 

terms of real estate, Clayton County is, in effect, host to a permanent, nonpaying guest. While 

49 USC §40 116 permits local ad valorem taxes against property owned by an airport, Georgia 

state law prohibits these taxes on the underlying fee interest for extraterritorial airport property? 

Clayton County is the only county in Georgia affected by this restriction. But for this prohibition, 

the Clayton County Entities would impose ad valorem taxes on the underlying fee interest owned 

by HJAIA, as it does on all non-public purpose land in Clayton County. 

An inequity is created by this situation because the airport does not contribute to local public 

services through the property tax mechanism, yet directly and indirectly enjoys the benefits of 

these services. This inequity, which is not required by federal law, is a tremendous boon to the 

airport and to the national air transportation system because hundreds of millions of dollars 

otherwise owed to the county and its cities in local property taxes can be invested in the airport 

and the airport system. This highly significant primary revenue source, at the same time, is lost to 

Clayton County for investment in its schools, cities, and public programs. 

• An ad valorem tax offset is directly analogous to the statutorily permissible use of 

airport revenue to compensate local governments for lost tax revenues and should be 

permitted. 

The loss of tax revenues associated with the presence of an extraterritorial airport in a nonsponsoring jurisdiction is not unique to Clayton County. In 1994, Congress specifically 

recognized the inequities associated with this situation in the context of airport revenue diversion 

and acknowledged that airport revenue may be used (or continue to be used) to pay these local 

governments for lost tax revenue, provided the payment does not exceed stated tax rates. Pub. L. 

103-305, § 112(a), now codified at 49 USC §4 7107(k)(2)(D).3 

In other words, this section of the law permits an airport to alleviate part of the burden of 

its presence in a nonsponsoring jurisdiction by making payments using airport revenue to 

compensate for taxes lost to that local government entity because the land is occupied by an 

airport and exempted from these taxes. This language is incorporated in Section VI (B)(6) 

of the FAA's 1999 Policy. See also letter from David Leitch, FAA Chief Counsel, to Richard 

Simon, July 9, 2001. Further, the FAA has noted that "many payments in lieu of taxes are 

voluntary, not assessed, and should be evaluated under the lost tax provisions of 49 U.S.C. 

§ 47107(1)(2)(0) .... "Airport Compliance Manual, FAA Order 5190.68, section 15.13.g.

4 

The use of revenue to pay local nonsponsoring governments permitted by section 

47107(k)(2)(D) is not time limited. The plain language of this legislative provision does not 

restrict its application to property acquired by the airport after the date of the law's enactment. 

Offsetting the value of property taxes lost to Clayton County due to the presence of HJAIA in its 

jurisdiction against aviation fuel tax revenue is directly analogous to this permitted use of airport 

2 O.C.G.A. § 6-3-21 (2015). 3 49 USC §47 107(k)(2)(D) provides that airport revenue diversion includes only "payments to compensate 

nonsponsoring governmental bodies for lost tax revenues exceeding :stated tax rates." 4 49 U.S.C. §47 107(1)(2)(0) is now 49 U.SC. § 47107(k)((2XD). 
Mr. Eduardo Angeles 

Page 4 of5 

September 15, 2016 

revenue, except an offset costs nothing whatsoever to the airport or the national air transportation 

system. In the case of this offset, the airport would make no payment using airport revenue to 

the nonsponsoring local government entities. The revenue at issue is not revenue the airport or 

the national air transportation system will ever receive. The offset instead would be based on the 

principle codified in the law that airport revenue may be used to compensate for lost property 

taxes to nonsponsoring governments that, as here, are not legally permitted or assessed. 

• An ad valorem tax offset would be based on a stated tax rate and is transparently 

quantifiable. 

A calculation of the offset for lost ad valorem taxes would be a straightforward calculation 

meeting the revenue use conditions of section 47107(k)(2)(D). As mentioned, the number of 

acres occupied by HJAIA in Clayton County is known and published. The millage (property tax) 

rates for all three taxing entities5 are published (stated) and apply without variation to all taxable 

real property in Clayton County. 

Further, the taxable value of the property, for purposes of determining the quantified amount of 

lost property taxes, is based on the values derived by the Clayton County Tax Assessor using 

sales information obtained from the best available record sources and is not 

speculative. According to information provided by the Clayton County Tax Assessor, the 

amount of the property taxes lost to the three taxing Clayton County Entities is approximately 

$III ,685,806 annually based on the published, current, applicable ad valorem tax rate applying 

the published state law calculation. 

6 This lost tax value far exceeds the approximately 

$18,000,000 annual amount of general local taxes attributed to aviation fuel in Clayton 

County determined using information provided by the Georgia Department of Revenue. 

Conclusion. 

The 20 14 interpretation does not discuss the costs of its implementation to nonsponsoring 

governments like the Clayton County Entities. The crippling loss of revenue, if section 47133 is 

found to apply to the Clayton County Entities, is explained in their letter to the Administrator. 

Further, the bureaucratic costs of preserving that revenue by other potential offsets would be 

highly significant. Because these local governments do not share a common treasury with the 

airport or, because they are not state governments, have a state aviation program, they have no 

accounting structure in place to track the direct and indirect benefits enjoyed by the 

extraterritorial airport located within their respective jurisdictions and the unreimbursed costs 

suffered due to its presence. Establishing such accounting mechanisms would result in yet 

additional costs that these governments can ill afford. An ad valorem tax offset, in contrast to all 

the other potential offsets, can be easily calculated, based on a stated tax rate and other data 

transparent to the FAA and the public without burdening local government accounting systems 

and is directly analogous to a statutorily permitted use of airport revenue. We, therefore, 

anticipate you will agree that this would be a permissible offset to the aviation fuel tax revenue of 

the Clayton County Entities, should such an offset be required, and will so advise. 

5 Clayton County, Clayton County Public Schools and City of College Park. 6 If the response to this inquiry is positive, the sources for this calculation can be provided if requested. 
Mr. Eduardo Angeles 

Page 5 of5 

September 15, 2016 

Again, we are confident, for the numerous reasons discussed in the analysis included with their 

letter to the Administrator that the Office of Airport Compliance and Management Analysis did 

not intend to include local nonsponsoring governments like the Clayton County Entities in its 

2014 clarification and its call for action plans to change the status quo. We make this inquiry to 

explore an alternative should it be decided to the contrary. On behalf of my clients, the Clayton 

County Entities, thank you for your attention to this matter and we look forward to your response. 

re owie 

Counsel for the Clayton County Entities 

cc: Detrick Stanford, Clayton County 

Kenneth Thompson, Clayton County Public Schools 

Jack Hancock, Clayton County 

L' Erin Barnes, City of Riverdale and City of Lovejoy 

Steve Fincher, Cities of College Park, Jonesboro, Lake City, Morrow and Forest Park