CI T Y O F 

HAYWARD ><CART OF Tl ( B;\Y 

Letter sent via email and regular U.S. mail 

December 7, 2015 

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

Finance Management 

Federal Aviation Administration 

800 Independence Ave., SW 

Washington, DC 20591 

Subject: 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 surrounding this policy change; however, our intent is to comply with this new policy as we are 

able. 

The FAA interprets restrictions on the use of "local taxes on aviation fuel (except taxes in effect on 

December 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 excise taxes. The policy 

change says that the City of Hayward should submit an action plan by December 8, 2015 providing for 

the expenditure of such general sales tax 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 icated, determining 

compliance with the policy change is inherently difficult. The City of Hayward has enacted one general 

sales tax rate since December 30, 1987 that went into effect on October 1, 2014. 

• 0.5% rate enacted by City of Hayward voters June 3, 2014, and expiring on September 31, 2034: 

o The ballot measure, approved by voters, intended discretionary sales and use tax to 

fund the building of a new library, rehabilitate fire stations, improve roads, and enhance 

street maintenance services and police services (Measure C). 

The Hayward Executive Airport resides within the City's boundaries and is operated by the City. The City 

receives minimal sales tax related to these operations and isolating discretionary sales tax receipts 
Federal Aviation Administration 

December 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 sales. In addition, a 

reliable estimate of the portion of discretionary sales tax revenues derived from aviation fuel is not 

easily determined, as the information received from the State of California does not provide fuel 

receipts for a particular vendor for individual locations. This 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 Executive Airport. The City of Hayward believes these expenditures far exceed the above 

estimate of discretionary sales tax revenue derived from aviation fuel 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 drainage 

Over the next two years, the City of Hayward will continue to work with the City's sales tax consultant to 

coordinate the collection of data to refine (1) estimates of the City's discretionary sales tax revenue 

derived from aviation fuel and (2) estimate the local expenditures on and investment in the Hayward 

Executive 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