December 31 ,2015 Office of the City Ma nag er Brian K .B i esemeyer

,Act

i ng Ci ty Manage

r 3939 North Drinkwater Bouleva

r d Scottsdale, Al. 8 525 1 Federal Av

i ation Administration Attn: Director, Office of A irport Compl iance and Management Analysis 800 Independence Ave

,SW Washington, DC 20591 Re: Local Tax on Aviation Fue

l Exception of **Loca~**Tax from FAA Revenue Use Policy.Requirements

P H O N E 480-312-28 00 F AX 480-312-9055 W E B www

.Scott sd a l eAZ.

.gov City of Scottsdale
is the sponsor of the Scottsdale General Aviation Airport. This letter is

i n regards to the Federal Aviation Administration ("FAA") adopted Policy and Procedures Concerning the Use of A
i rport Revenue (64 FR 7696) and the update to

' that policy known as the Policy and Procedures Co n ,cerning the Use of Airport Revenue; Proceeds From Taxes on Aviation Fuel (79 FR 66282) (co llectivel y the "FA A **Pol i~y").** 

···

· Pursuant to the update effective December 8, 2014, state and

l ocal governments were encouraged to submit an action plan to the FAA

,by December

8 ,2015 stating the government's plan to ame

.nd any non -complia nt state

' or local laws as necessary to conform to the FAA Po li cy .The City of Scottsdale has no local tax laws that fail to conform

' to the FAA Policy

.Scottsdale does im pose a tax on the sale of aviation and jet fue
l that has been in effect since before December 30, 1987 thus qualifying for the except

i on from the FAA Policy requirements as set forth in ·Section u·,Definit ions, Paragraph (B)(2). This letter provides the FAA with the background on the Scottsdale aviation and jet fuel tax to demonstrate to the FAA that Scottsdale's tax qualifies for the exception.

·

· Background and History of the Model City Tax Code Un

l ike the sales tax imposed by most states

,the State and local municipalities

in Arizona impose a transaction privilege tax on the privilege of conducting business

.The tax is levied on the business

,rather than the consumer

,although the business may pass the tax along to the consumer. Municipal transaction

· p· rivilege tax in Arizona is governed by the Model City Tax Code ("MCTC"). The MCTC was originally drafted in response tb a recommendation by a

l egislatively created municipal sales tax study commission
in 1984

.The goal

·of tHe MCTC was to create a more uniform municipal tax code statewide

.In 1987 / all incorporated citi

' e's a·nd towns in the State of Arizona repealed their existing transaclion privilege tax codes and adopted the MCTC

.Since the original adoption of the MCTC in 1987 to the cu rrent version last amended in 2015

,there has been

i mposed by all Arizona cit

i es and towns a transaction privilege tax on the sale of aviat io n and jet fuel.

·

··
'

r

•

• .:. Scottsdale Tax Scottsdale adopted the Model City Tax Code on Feb r uary 2 ,1987, with the law becoming effective on April 1 ,1987

.Both the origina

l Scottsdale City Tax Code (enacted before April

.1 ,1987 ) and the adopted Mode

l City Tax
·Code

i mposed
a transaction priv,ilege tax on .the sa

l e of aviation fuel and jet fuel [Scottsda le Ordinance 19 28]
.

··

··'

·. ' . As Scottsda le had in effect a transaction privilege tax on the sale of aviation and jet fuel since before ,/ \

t _!•

'

t 1
•

• :,, ', !'Letter toFederal Aviation Administration December 31 ,2015 Page Two December 30, 1987, Scottsdale's transaction privilege tax qualifies for the exception setforth

inthe FAA Policy Section

II ,Definitions

,Paragraph (B)(2) related to airport revenueand is therefore not subject tothe revenueuse requirements of the FAA Policy. As anaside, the FAA Policy also references in Section III(A)(2) and Section IV(C)(1) that local taxesonaviation fuel in effect onDecember 30, 1987, are excepted from the requirements of the policy related tothe revenueuse
;the tax imposed by Scottsdale onaviation and jet fuel also qualifies for these exceptions which have been a partof the FAA Policy since

its inception on February 16 ,1999. Thank youfor yourtime and attention tothis matter. Sincerely, Brian K. Biesemeyer Acting City Manager Cc: Jeff Nichols

,City Treasure

r Gary Mascaro

,Aviation Director Cliff Frey

,Senior Assistance City Attorney Gina Kirklin, Enterpr ise Finance Manager Terry Hoglund, Business Services Manager