### City of Bullhead 

### City Office of the City Manager 2355 Trane Rd. Bullhead City, AZ 86442

December 9, 2015

Federal Aviation Administration Attn: Director, Office ofAirport Compliance and Management Analysis 800 Independence Avenue, SW Washington, DC 20591

Re: Local Tax on Aviation Fuel Exception of Local Tax from FAA Revenue Use Policy Requirements
This letter is in regards to the Federal Aviation Administration ("FAA") adopted Policy and Procedures Concern i ng the Use ofAirport Revenue (64 FR 7696) and the update to that policy known as the Policy and Procedures Concerning the Use of Airport Revenue; Proceeds From Taxes on Aviation Fuel (79 FR 66282) (collectively the "FAA Policy").
Pursuant to the update effective December 8, 2014, state and local governments were encouraged to submit an action plan to the FAA by December 8, 2015 stating the government's plan to amend any noncompliant state or local laws as necessary to conform to the FAA Policy. The City of Bullhead City (" Bullhead City") bel ieves in good faith Bullhead City has no local tax laws that fail to conform with the FAA Policy; however, Bullhead City does impose a tax on the sale of aviation and jet fuel that has been in effect since before December 30, 1987 thus qualifying for the exception from the FAA Policy requirements as set forth in Section II, Definitions, Paragraph (B)(2)

. The purpose of this letter is to provide the FAA with the background on the Bullhead City aviation and jet fuel tax to demonstrate to the FAA that Bullhead City' s tax qualifies for the exception. Background and History of the Model City Tax Code Unlike the sales tax i mposed by most states, the State and local municipalities in Arizona impose a transaction privilege tax on the privi lege of conducting business. The tax is levied on the business, rather than the consumer, although the busi ness may pass the tax along to the consumer. Municipal transaction privilege tax in Arizona is governed by the Model C ity Tax Code ("MCTC"). The MCTC was originally drafted in response to a recommendation by a legislatively created municipal sales tax study commission in 1984. The goal ofthe MCTC was to create a more uniform municipal tax code statewide. In 1987, all incorporated cities and towns in the State ofArizona repealed their existing transaction privilege tax codes and adopted the MCTC

. Since the orig inaI adoption of the MCTC in 1987 to the current version last amended in 2015, there has been imposed by all Arizona cities and towns a transaction privilege tax on the sale of aviation and jet fuel.
Bullhead City Tax Bullhead City adopted the MCTC on July 21 , 1987, with the law becoming effective on August 21, 1987. Both the original Bullhead City Tax Code (enacted before August 21, 1987) and the adopted MCTC (effective on August 21, 1987) imposed a transaction privilege tax on the sale of aviation fuel and jet fuel

. [Bullhead City Ordinance 87

- 130]
As Bullhead City had in effect a transaction privilege tax on the sale of aviation and jet fuel since before December 30, 1987, Bullhead City's transaction privilege tax qualifies for the exception set forth in the FAA Policy Section II, Definitions, Paragraph (B)(2) related to airport revenue and is therefore not subject to the revenue use requirements of the FAA Policy. As an aside, the FAA Policy also references in City of Bullhead City Office ofthe City Manager 2355 Trane Rd, Bullhead City, AZ 86442 Phone(928)763

-0122

### Federal Aviation Administration December 8, 2015 Page2

Section III(A)(2) and Section IV(C)(1) that local taxes on aviation fuel i n effect on December 30, 1987, are excepted from the requirements ofthe policy related to the revenue use; the tax imposed by Bullhead C ity on aviation and jet fuel also qualifies for these exceptions which have been a part of the FAA Polic y since its inception on February 16, 1999. Thank you for your time and attention to th is matter

.

cc: Garnet Emery, Esq., Bullhead City Assistant City Attorney Rudy Vera, Finance Director Loretta Kearns, Revenue Manager/Tax Administrator

City of Bullhead City Office ofthe City Manager 2355 Tra ne Rd, Bullhead City, AZ 86442 Phone(928)763-0122