SANTA CLARA 

~,m® Valley Transportation Authority 

December 8, 2015 

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

Finance Management 

Federal Aviation Administration 

800 Independence Avenue SW 

Washington, DC 20591 

Subject: Compliance with an FAA Requirement for a Submitted "Action Plann 

Due by December 8, 2015: FAA Policy and Procedures Concerning the Use of 

Airport Revenue; Proceeds from Taxes on Aviation Fuel 79, Fed. Reg 66282, 

November 7, 2014}. Revenue Implications, Concerns with Implementation 

Requirements and Other Issues. Suggested Action Consideration 

Dear Mr. Brown: 

The Santa Clara Valley Transportation Authority (the uVTA") is submitting this /{Action Plan" 

pursuant to the referenced ruling. Immediate compliance will not be possible and a reasonable 

transition period will be needed for reasons including the need to increase reporting 

requirements for taxpayers and increase tracking and reporting capabilities at the State Board of 

Equalization to identify sales tax revenue attributable to aircraft fuel sales at affected airports. 

Another significant impediment to implementation is the uncertainty as to how to modify the 

specified and limited uses of the voter approved sales taxes to include directly funding airport 

capital or operations. VTA's affected voter initiatives are limited to funding specific 

transportation projects and are not subject to change by legislation. However, VTA will work with 

the State Board of Equalization, our General Counsel and our sales tax consultant to determine 

how to become compliant with the rule by December 8, 2017. 

The VTA would like to note that it was notified on the above-referenced rule by a third party after 

the rule's final adoption. Neither the VTA nor its advocates or industry representatives were 

aware of the rulemaking process surrounding this policy change and thus were not able to 

provide input during the comment period. 

The VTA is impacted by this ruling because there are four airports within the County, including 

the Mineta San Jose International Airport and because we receive revenues from two voter 

approved county-wide sales taxes imposed after 1987. Assuming all four airports have received 

FAA funding that causes them to be subject to this ruling, and based on other assumptions 

regarding types of businesses, we estimate VTA's tax revenues from aviation and jet fuel sales 

may be slightly over $1 million per year. 

We note that State and local governments provide capital improvements and services that 

support the airports, a portion of the costs of which are funded from various sales taxes and 

include key services such transportation, fire and public safety. Other services can include 

lighting, security, roadway maintenance, and noise abatement, etc. The costs for these services 

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and infrastructure far exceed the amount of sales tax revenues received from aircraft fuel sales. 

The current revenue and funding situation facilitates airports in remaining viable and meeting the 

needs of local businesses and communities, while not complicating the tax code and increasing 

administrative costs by imposing additional accounting and reporting requirement on taxpayers 

and the State Board of Equalization. 

Executive Order 13132 (Federalism) establishes the principles and criteria that apply to 

regulations, legislative comments, and other policy statements that have a substantial effect on 

States. We are concerned with the FAA's position that "Federalism implications (if any) are 

substantially mitigated because of the prior legislative intent." The final policy amendment does 

impose substantial direct requirement costs on State and local governments, and should have 

been subjected to Federalism implications. Local jurisdictions rely on state and national 

organizations for policy direction on issues impacting our interests. These organizations include 

for example the National League of Cities, California State Association of Counties, US Conference 

of Mayors, and Government Finance Officers Association. The FAA's adoption of the ruling has 

caught our local community off guard. The cost of implementation, loss of revenues, and ongoing 

future workload involved as a result of this unforeseen ruling is substantial. 

In consideration of the broader concerns outlined above we also request that the FAA consider a 

re-evaluation or immediate sunset of the ruling and commence an open and full public process 

discussion with all stakeholders to ensure full participation by impacted parties. We appreciate 

the FAA's consideration of this request and look forward to working with your team and others 

impacted by this ruling. 

S7/erely, 

~~ ~ Raj Srinath 

Chief Financial Officer 

Santa Clara Valley Transportation Authority 

Cc: Nuria Fernandez, General Manager/CEO, SCVTA 

Rob Fabela, General Counsel, SCVTA