CI T Y O F 

# HAY WARD

><CART OF Tl ( B;\Y Letter s ent via email and regular U.S. mail December 7, 2015 Mr. James T. Brown (email: Jame s. T
. Brown@faa

.gov ) Finance Management Federal Aviat i on Administration 800 Independen ce Ave., SW Washington, DC 20591 Subj ect: Compliance with an FAA Requirement for a Submitted " Action Plan " Due by December 8, 2015 ; FAA Policy and Procedures Concerning Use of Airport Revenue ; Proceeds from Taxes on Aviation Fuel 79 , Fed. Reg 66282-01 (November 7 , 2014) Dear Mr. Brown : The City of Hayward responds to the FAA's amendment of its Policy and Procedures Concerning the Use of Airport Revenue with the following action plan
. The City of Hayward was not aware of the rulemaking process s urrounding this policy change ; however, our intent i s to comply with this new policy as we are able
. The FAA inte rprets restrictions on the use of " local ta xes on aviat i on fuel (e xcept ta xes in effect on Decembe r 30, 1987) " in 49 U
.S
.C
. section 47107 (b) and 49 section 47133 (a) to include state general sales tax revenue derived from aviation fuel in addition to local aviation fuel exci se ta xes. The policy change says that the City of Hayward should submit an action plan by December 8 , 2015 providing f o r the exp e nditure of such general sales ta x revenues derived from aviation fuel on airport capital and operating costs, and implement the action plan by December 8 , 2017
. Because California's tax system is extensive , wide - ranging , and extremely compl i cated, determining compliance with the policy change is i nhe rently difficult. The City of Hayward has enacted one general sale s t ax rate since December 30, 1987 that went into effect on October 1 , 2014
. • 0
. 5 % rate ena c ted by City of Hayward voters June 3, 2014 , and exp iring on Septembe r 31 , 2034 : o The ballot measure, approved by vote rs, intended discretionary sale s and use tax to fund the building of a new library, rehabilitate fire station s, improve roads, and enhan c e s

t reet ma i ntenance services and police services (Measure 

### C). Th e Hayward E xecutive Airport re side s with in th e City's b o undaries and i s op e rat e d by the City. The City re ceives minimal sales tax re l ated to the se operations and isolating discretionary sale s ta x re ceiptsFed e ral Aviation Administration Dece mber 7, 2015 Page 2 related to jet fuel has proven extremely difficult as the City of Hayward does not segregate discretionary sales tax revenue derived from aviation and jet fuel from other discretionary taxable sa les. In addition , a reliable estimate of the portion of discretionary sales tax revenues de rived from aviation fuel is not easily determined, as the information received from the State of Cal ifornia does not provide fuel receipts for a particular vendor for individual locations
. Thi s is done to protect the proprietary rights of the vendors. As such, the City does not have any basis on which to speculate on the specific location's sale of aviation fuel. That said, the most recent rough estimate of discretionary sales tax revenues specific to the Hayward Executive Airport potentially affected by the FAA's policy change is approximately $21 , 000 annually based on current fuel prices. The City devotes extensive resources in support of aviation programs and capital and operating costs for the Hayward E xec utive Airport. The City of Hayward believes these expenditures far exceed the above estimate of discretionary sales tax revenue derived from aviation fue l and the City of Hayward is in compliance with the law
. Fire protection services (e .g. , currently the City General Fund is purchasing an AARF vehicle totaling $400,000). Public safety services Access to and from the airports including roads, highways, and public transportation Infrastructure, including water, electricity, sewer and storm d rainage Over the next two years, the City of Hayward will continue to work with the City's sales ta x consultant to coordinate the collection of data to refine (1) estimates of the City's discretionary sales tax re ve nue derived from aviation fuel and (2) estimate the local expenditures on and investment in the Hayward E

xecutive Airport, to confirm the City of Hayward complies with the law
. If, contrary to current estimates, the City determines that its expenditures on airport capital and operating costs do not exceed discretionary sales tax revenue derived from aviation fuel , it will act accordingly, including considering legislative solutions , to comply with applicable federal law
. Sincerely,
Tracy Vesely Director of Finance City of Hayward Cc: Fran David, Hayward City Manager Michael Lawson, Hayward City Attorney Morad Fakhrai, Hayward Director of Public Works