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

Finance Management 

Federal Aviation Administration 

800 Independence Avenue SW 

Washington, DC 20591 

Subject: Action Plan Submission Pursuant to FAA Policy and Procedures Concerning the Use of Airport 

Revenue {79 Fed. Reg. 66282-01, November 7, 2014). 

Dear Mr. Brown: 

This letter is in response to the request for an action plan for the City of Santa Monica to convey its intent 

to comply with the FAA ruling related to sales tax revenues derived from aviation fuel sales to the extent 

that ruling complies with federal law. This includes the process likely necessary to amend any noncompliant local ordinances to achieve compliance and the development of reporting requirements and 

tracking systems for specific information on aviation fuel tax revenues which in California means "jet fuel" 

as other types of aviation fuels are exempt from sales tax in this state. It is our understanding that the 

State of California will be submitting an action plan pertaining only to the state's portion of the tax. 

California's state and local governments already provide extensive services to airports including 

infrastructure maintenance, fire protection, public safety, environmental protection and noise 

abatement. These services and improvements are funded with general sales taxes and other taxes and 

the City of Santa Monica believes these local expenditures related to the Santa Monica Airport exceed the 

affected sales tax revenues derived from the sale of aviation fuel. 

Applicable law that May Require Amendments for Compliance 

• A transactions and use tax, adopted by the City's voters on November 2, 2010 is imposed upon all 

retailers in the incorporated territory of the City at the rate of one-half of one percent of the gross 

receipts of any retailer from t he sale of all tangible personal property sold at retail within the 

territory of the City, per Santa Monica Municipal Code 6.62. 

In addition to the locally imposed transaction and use tax rate, the City of Santa Monica receives a share 

of revenues derived from statewide voter-approved sales taxes and Los Angeles County voter-approved 

sales taxes that are designated for specific purposes. It is our understanding that the State and County 

will provide an action plan response as it relates to necessary steps for assuring compliance related to 

these revenues. 

tel: 310 458-8301 • fax: 310 917-6640 
The City of Santa Monica, in conjunction with its advisors, has begun to identify the required data and 

steps necessary to comply. The internal process to undertake this effort, including developing a tracking 

system for discrete information on aviation fuel tax revenues, is complex and extensive. For example, the 

California State Board of Equalization, the tax collection agency which Santa Monica contracts with for 

sales tax collections, does not require jet fuel sellers to segregate sales tax revenue derived from the sale 

of jet fuel from other types of taxable sales made by the same vendor. Therefore, it is presently impossible 

for Santa Monica to determine the exact amount of sales tax derived from sales of jet fuel. Local agencies 

would need the state to change its tax reporting standards to require fuel sellers to quantify the amount 

of tax derived from the sale of aviation fuel to achieve compliance. Segregating and reporting the correct 

amount of tax revenue will further complicate California's already complex sales tax system and increase 

administrative costs. 

Transition Period 

If, contrary to current expectations, Santa Monica determines that its expenditures on airport capital and 

operating costs do not exceed sales tax revenues derived from aviation fuel, it will consider legislative 

solutions. It is the intent of Santa Monica to attempt to comply with the requirements set forth by the 

FAA ruling, to the extent it complies with federal law. Santa Monica will notify the FAA of specific actions, 

if any, to be completed during the transition period and work with the state to ensure compl iance before 

the December 8, 2017 deadline. 

7iJ G! 

Rick Cole 

City Manager 

cc: Gigi Decavalles-Hughes, Director of Finance 

Martin Pastucha, Director of Public Works 

Marsha Moutrie, City Attorney 

Joseph Lawrence, Assistant City Attorney 

Ivan Campbell, Deputy City Attorney 

Nelson Hernandez, Senior Advisor for Airport Affairs 

Jay Chamberlain, Department of Finance (Jay.Chamberlain@dof.ca.gov)