# SANTA CLARA

# ~,m**®** ValleyTransportationAuthority

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 Requirementfor a Submitted "Action Plann Due by December 8, 2015: FAA Policy and Procedures Concerning the Use of Airport Revenue; Proceedsfrom Taxes on Aviation Fuel 79, Fed. Reg 66282, November

### 7, 2014}. Revenue Implications, Concerns with Implementation Requirements and OtherIssues. SuggestedAction Consideration

Dear Mr. Brown:

The Santa Clara Valley Transportation Authority (the uVTA") is submitting this /{Action Plan" pursuantto 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 fortaxpayers and increase tracking and reporting capabilities atthe State Board of Equalization to identify sales tax revenue attributable to aircraftfuel sales at affected airports. Another significant impedimentto implementation is the uncertainty as to howto modifythe specified and limited uses ofthe voter approved sales taxes to include directlyfunding airport capital oroperations. VTA's affected voter initiatives are limited to funding specific transportation projects and are notsubject to change by legislation. However, VTA will work with the State Board of Equalization, our General Counsel and our sales tax consultant to determine howto become compliant with the rule by December 8, 2017.

The VTA would like to note that itwas notified on the above-referenced rule by athird party after the rule's final adoption. Neitherthe VTA nor its advocates or industry representatives were
aware ofthe rulemaking process surrounding this policy change and thus were notable to provide input duringthe 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 otherassumptions regarding types ofbusinesses, we estimate VTA's tax revenues from aviation and jetfuel sales may be slightly over $1 million peryear.

We note that State and local governments provide capital improvements and services that support the airports, a portion ofthe costs ofwhich 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 forthese services

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### www

.vto.organd infrastructurefar exceed the amount ofsales tax revenues received from aircraftfuel sales. The current revenue and funding situation facilitates airports in remaining viable and meetingthe needs of local businesses and communities, while notcomplicating 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 applyto regulations, legislative comments, and other policy statements that have asubstantial effecton States. We are concerned with the FAA's position that "Federalism implications (ifany) are substantially mitigated because ofthe 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 ofCities, California State Association ofCounties, US Conference of Mayors, and Government Finance Officers Association. The FAA's adoption ofthe ruling has caught our local community offguard. The cost of implementation, loss of revenues, and ongoing future workload involved as a result ofthis unforeseen ruling is substantial.

In consideration ofthe broader concerns outlined above we also request thatthe FAA consider a re-evaluation or immediate sunset ofthe 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 ofthis request andlookforward toworking with yourteam and others impacted by this ruling.

S 7/erely,

# ~~**~** Raj Srinath Chief Financial Officer Santa Clara ValleyTransportation Authority

Cc: Nuria Fernandez, General Manager/CEO, SCVTA Rob Fabela, General Counsel, SCVTA