### 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 Entities 1 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 unneces sary. 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 ofthe 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 ofthe 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 47133 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 ofForest 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.ur-1 J:HAMr
. 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) ofthe 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 favo r 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 ofthe 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. InMr. Eduardo Angeles Page 3 of5 

### September 15, 2016

terms ofreal 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 C layton County. In 1994, Congress specifically r ecognized the inequities associated with this situation in the context of airport revenue diversion and acknowledged that airport r evenue may be used (or continue to be used) to pay these local governments for lost tax revenue, provided the pa yment does not exceed stated tax rates . Pub
. L
. 103-305 , 

### § 112(a), now codified at 49 USC §47107(k)(2)(D). 3 In other words, this section of the law permits an airport to alleviate part of the burden of its pr esence 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 as sessed, and should be evaluated under the lost tax provisions of49 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 l egislative 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 ofairport

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 compensa te 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 entities 5 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 ofRevenue
. 

### 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 sta ted 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 r evenue of the Clayton County Entities , should such an offset be required, and will so advise.

5 Clayton County, Clayton County Public School s and City ofCollege Park. 6 Ifthe response to this inquiry is positive, the sources for this calculation can be provided ifrequested
.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, C ities ofCollege Park, Jonesboro, Lake City, Morrow and Forest Park