# Town of Gypsum, Colorado

Aviation Fuel Tax Action Plan

December 2015

The purpose of this action plan (Action Plan) is to demonstrate compliance by the Town of Gypsum, Colorado (the Town) with : (1) the Federal Aviation Administration (FAA) Policy and Procedures Concerning the Use of Airport Revenue , 64 Fed. Reg. 7696 (Feb. 16, 1999) (the Revenue Use Policy); (2) the FAA policy amendment: Policy and Procedures Concerning the Use of Air

port Revenue; Proceeds from Taxes on Aviation Fuel , 79 Fed. Reg. 66,282 (Nov. 7. 2014) ( the Revenue Use Policy Amendment) ; and (3) FAA’s 2015 guidance entitled Aviation Fuel Tax Grandfathering Action Plans ( the FAA Action Plan Guidance) (available at: www.regulations.gov/#!documentDetail;D=FAA

- 2013

- 0988

- 0041 )

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Part I of the Action Plan provides the necessary explanation and documentation to support this grandfathered portion of the Town’s sales tax. Part II of the Action Plan p rovides the details of the Town’s plan for restructuring its general revenues in orde r to ensure that the aviation fuel tax

revenue derived from the non

- grandfathered portion of its sales tax is appropriately dedicated to lawful aviation purposes permitted under federal law and FAA’s Revenue Use Policy.



### PART I : ACTION PLAN FOR

GRANDFATHER ED AVIATION FUEL TAX REVENUE

A. Background

1. History of the Town’s General Sales Tax

On February 2, 1976, the Town enacted Ordinance No. 1 (Series 1976) to establish a general sales tax on the privilege of selling tangible personal property at retail upon every retailer in the

Town. See Attachment 1 (1976 Ordinance). The 1976 Ordinance s et the tax at two percent (2%) of gross receipts. Id . § 5(a). It became effective on January 1, 1977, after it was approved by a majority of the electors of the Town. Id . §§ 6(a) & 7.

On January 14, 1986, the Town approved and passed Ordinance No. 9 (Series 1985).

Attachment 2 (198 5 Ordinance). The 198 5 Ordinance was adopted in response to the State of Colorado’s desire to impose a uniform statewide method for collecting local taxes. It repealed and revised Title 3, Chapter 8, Section 100 (“Excepted from Sales Amount”) and provided new exceptions for certain sales, including sales to nonresident purchasers, sales of tangible personal property at retail if the transaction was previousl y subjected to a sales or use tax lawfully imposed by another statutory or home rule municipality. Id . at p. 1. The 198 5 Ordinance did not adjust the amount of the sales tax.TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

2 On August 22, 1995, the Town approved and adopted Ordinance No. 10 (Series 1995).

Attachment 3 (1995 Ordinance). The 1995 Ordinance increased the general sales tax to 3

percent. Id . § 2(a). It became effective on January 1, 1996. Id . § 16.

On August 24, 2004, the Town approved and adopted Ordinance No. 15 (Series 2004).

Att achment 4 (2004 Ordinance). The 2004 Ordinance increased the Town

- wide general sales tax by 1% in order to secure additional revenue to construct a Town recreation center. Id . § 2. It also provided that as soon as the payment of all costs for the recrea tion center, including debt service, had been paid, satisfied, or cancelled, the additional one percent tax would terminate.

Id . §§ 2, 4.

On March 12, 2013, the Town approved and adopted Ordinance No. 5 (Series 2013).

Attachment 5 (2013 Ordinance). The 2013 Ordinance repealed and readopted Section 3.08.140 of the Gypsum Municipal Code (Sales Tax Collection and Enforcement) to provide new enforcement mechanisms for the collection of unpaid sales tax.

On August 5, 2014, the Town approved and adopted Ordi nance No. 8 (Series 2014). Attachment

6 (2014 Ordinance). The 2014 Ordinance acknowledged that the debt on the recreation center had been paid, id . at p. 1, and decreased the general sales tax from 4% to 3%. Id . § 1.

The Town’s general sale tax is currently codified at Chapter 3.08 of the Gypsum Municipal Code (Attachment 7).

2. Annexation of the Eagle County Regional Airport

In 1996, the Town annexed the entire south side of the Eagle County Regional Airport (the Airpo rt)

. Ordinance No. 17 (Series 1996) ( Attachment 8) (1996 Annexation Ordinance)

. This property included almost 100 acres of land including portions of the Airport and the adjacent Cooley Mesa Road. In exchange, the Town agreed to provide water and utility services to the County

- owned and operated Airport, and the County provided the Town with the necessar y easements for these services. Four teen years later, the Town adopted an ordinance approving the annexation of three additional parcels (the Second Eagle County Airport Annexation.) Ordinance No. 9 (Series 2010) (Attachment 9) ( 2010 Annexation Ordinance ).

B. Documentation of Grandfathered Revenue

T he Town falls into the category of : “ State and/or local tax statute in effect on December 30, 1987, and amended in subsequent periods, proceeds used for other than airport purposes, and no current grandfathering determination .” FAA Action Plan Guidance at ¶ 4. Based on a review of the FAA Revenue Use Policy Amendment, the Town has determined that the initial

2% sales tax

– which was in effect on December 30, 1987

– is grandfathered. To that end, the Town provides the following written justification and documentation , as requested by the FAA Action Plan Guidance, in order to demonstrate that the initial 2% sales tax in effect on December 30, 1987, qualifies for grandfathered status.TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

3 1. W ritten justification why tax on aviation fuel qualifies for grandfathered status for portion of tax in effe ct on December 30, 1987.

As described above, the Town has levied a general sales tax on the sale of tangible personal property since 1976. Ordinance No. 1 (Series 1976) (Attachment 1). The sa les tax in effect as of

December 3 0 , 1987, was set at 2 % of gross receipts, not including the amount of any sales or use tax imposed by the State. Id . § 5(a).

Because the 2% general sales tax has applied broadly to the sale of tangible personal property since its onset in 1976, it would have applied to the sale of aviation fuel before the adoption of Airport and Airway Safety and Capacity Expansio n Act of 1987

– i.e ., before C ongress extended the restriction on the use of airport revenue to include any local taxes on aviation fuel. In practice, however, the Town’s general sales tax was not applied to the sale of aviation fuel until

the Town annexed the Eagle County Regional Ai rport through a series of two Ordin a n ces in

1996 and 20 1 0, respectively. See , Ordinance No. 17 (Series 1996) (Attachment 8 ) and Ordinance No. 9. (Series 2010) (Attachment 9 ).

Based on prior correspondence with Director Randall Fiertz, the Town conclude s that the grandfather provisions of the law and FAA policy are applicable to the date of enactment of the initial 2% tax ( i.e ., 1976), notwithstanding the fact that the tax did not apply in practice to the

sale of aviation fuel in the Town of Gypsum until the Town annexed the Airport , which

annexation occurred after December 30, 1987

. See September 18, 2015

, email correspondence

from R. Fiertz ( Attachment 10 )

. Specifically, Mr. Fiertz reviewed the question of whether the grandfather provisions of the law and FAA policy apply to the date of the enactment of the tax (pre

- 1987) or to the date on which it actually was applied to aviation fuel for the first time (post

1987). Mr. Fiertz concluded that the grandfather provisions of the law and FAA policy “appear to be applicable to the date of the enactment of the tax (pre

- 1987).” 1 However, Mr. Fiertz cautioned that the taxing entity would still be obligated to produce appropriate documentation.

T he Town is providing the requisite documentation with this Action Plan.

2. True and correct copies of original legislation and/or tax code and summary explanation of law reflecting tax that was in effect on December 30, 1987, and the

amendments.

The Town provides with this Action Plan, a true and correct copy of the original legislation, namely : Town of Gypsum, Ordinance No. 1 (Series 1976) (Attachment 1).

1 The Town notes that author of the initial inquiry to Mr. Fiertz was not aware that the Town sales tax had increased after December 30, 1987, and thus incorrectly described the Town sales tax as “unchanged” since 1987. To be clear, the Town does not rely o n Mr. Fiertz’s response for the proposition that the entire current tax is grandfathered. Rather, the Town only relies on Mr. Fiertz’s guidance on the more narrow question of whether the

post

- 1987 annexation of the Airport affects the grandfathered status of the Town’s pre

- 1987 sales tax. Mr. Fiertz concluded that the date of enactment of the tax was the controlling date on this narrow question. See Attachment 10 (September 18, 2015, email correspondence from R. Fiertz).TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

4 As depicted in the text of the original ordinance, the Town imposed a 2% sales tax on the privilege of selling tangible personal property at retail upon every retailer in the Town. Id . § 5(a). The 1976 Ordinance provided that the amount subject to the sales tax shall not include the amount of any sales or use tax imposed by the state. Id . at § 4(b), currently codified at Gypsum Municipal Code § 3.08.100 (Attachment 7 ). The 1976 Ordinance also allowed an exemption for sales of personal property on which a specific ownership tax had already been paid for certain

nonresidents. Id . at § 4(f), currently codified at Gypsum Municipal Code § 3.08.110.

As requested, the Town is also providing true and correct copies of the subsequent amendments

to the general sales tax. As described below, none of these amendments affects the applicability of the grandfather provisions of the law and FAA policy to the initial 2% sales tax.

- Town of Gypsum, O rdinance No. 9 (Series 1985) (Attachment 2)

. In 1985, the Town

modified and expanded the exemptions to the sales tax to comport with the State’s goal of imposing a uniform statewide me thod for collecting local taxes. Id

. The 1985 Ordinance added exemptions for certain sales of food, construction and building materials, and certain retail sales if the transaction had been previously subjected to a sales or use tax. Id . § § 10(B)

– (D), currently codified at Gypsum Municipal Code §§ 3.08.110 & 3.08.120 (Attachment 7). 2 None of these changes affects the applicability of the 2% sales tax to the sale of aviation

fuel

.

- Town of Gypsum, Ordinance No. 10 (Series 1995) (Attachment 3). In 1995, the Town increased the sales tax in order to address the need “to construct and acquire certain capital improvements and provide other municipal services.” Id . at p. 1 . The 1995 Ordinance

increased the sales tax from 2% to 3%. Id . § 2. However, the Ordinance r estricted the use of the revenue derived from this additional 1% sales tax as follows: Eighty percent (80%) must be spent for law enforcement, town hall and recreation expenses; the remaining twenty percent (20%) may be spent on general administration cost s. Id . § 7. See also

, 2004 Ordinance § 2 (Attachment 4) (clarifying that the restrictions apply only to the revenues derived from the additional 1% sales tax adopted in 1995), currently codified at Gypsum Municipal Code § 3

- 08

- 200 (Attachment 7 ). This 1 % increase occurred after December 3 0

, 1987, and is therefore not eligible for the grandfather provisions of the law and the FAA policy

.

- Town of Gypsum, Ordinance No. 15 (Series 2004) (Attachment 4). In 2004, the Town adopted an ordinance to temporarily increase the sales tax from 3% to 4% for purposes of financing the Town recreation center. Id . § 2. The 2004 O rdinance clarified that the additional 1% sales tax would commence on January 1, 2005, and continue until all the costs of the recreation center (including debt service) were complete, after which the additional 1%

tax would terminate. Id . §§ 2, 4. As noted below, this additional tax was terminated in 2014

.

- Town of Gypsum, Ordinance No. 5 (Series 2013) (Attachment 5). In 2013, the Town repealed and readopted Section 3.08.140 of the Gypsum Municipal Code (Sales Tax

2 While not relevant to the sale of aviation fuel, we note that the original 1985 exemption for certain food

sales is no longer applicable. See Gypsum Municipal Code §§ 3.08.110 & 3.08.120 . (Attachment 7).TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

5 Collection and Enforcement) to provide new enforcement mechanisms for the collection of unpaid sales tax.

- Town of Gypsum, Ordi nance No. 8 (Series 2014) (Attachment 6 ). In 2014, t he Town acknowledged that the debt on the recreation center had been paid, and adopted an Ordinance to decrease the general sales tax from 4% to 3%. Id . § 1.

The Town also provides with this Action Plan a copy of the most recent compilation of Chapter

3.08 of the Gypsum Municipal Code (Sales Tax) (Attachment 7). Please note , however, that the Code has not been formally updated since April 28, 2008. Therefore subsequent amendments ( i.e

., the 2013 and 2014 a mendment s ) are not yet reflected in the text.

3. Document t he effective date of the aviation fuel tax.

- The 2% general sales tax went into effect on January 1, 1977, after it was approved by a majority of the electors of the Town. Ordinance No. 1 (Series 1976) §§ 6(a) & 7 (Attachment 1).

- The increase from 2% to 3% went into effect on January 1, 1996. Ord inance No. 10 (Series 1995) § 8 (Attachment 3)

- The increase from 3% to 4% went into effect on January 1, 2005. Ordinance No. 15 (Series 2004) § 4 (Attachment 4)

.

- The increase to 4% was repealed in September 2014 , at which point the tax reverted to 3%

. Ordinanc e No. 8 (2014 Series) § 6 (Attachment 6).

B ased the Revenue Use Policy Amendment and FAA’s Action Plan Guidance, th e 2% tax in

effect as of December 3 0 , 1987, is eligible under the grandfather provisions of the law and FAA policy. The additional 1% tax currently in effect is not eligible.

4. Document the purpose and applicability of the tax.

The general purpose of Town’s Sales Tax was identified in the initial 1976 Ordinance. It is “to impose a sales tax on the privilege of selling tangible personal property at retail upon every retailer in the Town of Gypsum.” 1976 Ordinance at § 1 (Attachm ent 1). That purpose and has not changed since 1976 ; it is currently codified at Section 3.08.010 of the Gypsum Municipal

Code (Attachment 7).

As to applicability, t he initial 1976 tax applied to “all sales of tangible personal property at

retail.” 19 76 Ordinance at § 5(a) (Attachment 1). The language was broadened in 1995 to cover “the sale of tangible personal property at retail, the furnishing of services, and sale of food items.” 1995 Ordinance § 2(a) (Attachment 3). It was modified most recently in 2004 to cover “the sale of tangible personal property at retail, the furnishing of services, and sale of food items, machinery and machine tools.” 2004 Ordinance § 2(a) (Attachment 4), and is currently codified at Gypsum Municipal Code § 3.08.080(a) (A ttachment 7 ). W hile the language has beenTOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

6 modified slightly since December 30 , 1976, there is no change to the general applicability of the sales tax to all sales of tangible personal property at retail. Thus, the sale of aviation fuel has been subject to the Town’s tax since its inception in 1976.

5. Document the use of the proceeds from the tax.

Use of the revenue derived from the 2% sales tax initially imposed in 1976 is not restricted.

Use of revenue derived from the 1% increas e adopted in 1995 is restricted. In 1995, the Town acknowledged a new need “to construct and acquire certain capital improvements and provide other municipal services.” To that end, the Town increased the sales tax from 2% to 3%. 1995 Ordinance at § 2 ( Attachment 3). At that time, the Town imposed restrictions on t he use of the

revenue derived from the additional 1% sales tax. Eighty percent (80%) must be spent for law enforcement, town hall and recreation expenses; the remaining twenty percent (20%) ma y be spent on general administration costs. Id . § 7. See also

, 2004 Ordinance at § 2 (Attachment 4) ( clarifying that the restrictions apply only to the revenues derived from the additional 1% sales tax adopted in 1995), currently codified at Gypsum Municipal Code § 3

- 08

- 200 (Attachment 7 ).

6. Document any administrative costs charged for the collection and allocation of the

proc eeds of the aviation fuel taxes.

Vendors are permitted to retain three and one

- third percent (3 1/3 %) of the total amount of sales tax collected. Gypsum Municipal Code § 3.08.130 (Attachment 7 ). 3 While this language was not incorporated in the full text of the original 1976 Ordinance, concurrent correspondence between the State of Colorado Department of Colorado and the then Town Clerk clarifies that the Town requested that merchants be permitted to retain a 3 1/3 percent vendor’s fee. See

, December 1976 correspondence between Colorado Department of Revenue and Town of Gypsum ( Attachment 11 ). Thus, the vendor’s fee has been in effect since before December 30

, 1987.

There are no other administra tive costs charged for the collection and allocation of the proceeds

of the aviation fuel taxes.

7. Document the tax rate o r rates, credits, or exemptions.

Tax Rate . As documented above in response to item 1, the sales tax rate in effect as of

December 30 , 1987 was 2% and the sales tax rate currently in effect is 3%. 1976 Ordinance §

3 Section 3.08.130 provides, in its entirety: “ The vendor shall be entitled as collection agent for the town to withhold an amount equal to three and one

- third percent of the total amount to be remitted by the vendor to the executive director each month to cover the vendor's expense in the collection and remittance of the sales tax. If any vendor is delinquent in remitting the sales tax, other than in unusual circumstances shown to the satisfaction of the executive director, the vendor shall not be allowed to retain any amounts to cover his expense in collecting and remitting said sal es tax, and an amount equivalent to the full amount of the sales tax imposed by this chapter shall be remitted to the executive director by any such delinquent vendor.”TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

7 5(a) (Attachment 1); Gypsum Municipal Code § 3.08.080 (Attachment 7), as modified by 2014

Ordinance § 1 (Attachment 6).

Credits . In 1985, the Town offered a credit against the Town’s sales tax with respect to the sale of tangible personal property at retail of the furnishing of services if the transaction was previously subjected to a sales or use tax lawfully imposed on the purc haser or user by another statutory or home rule municipality equal to or in excess of two percent; the credit could not exceed two percent. 1985 Ordinance § 10(D). That credit is currently codified as an exemption

in Section 3.08.120 of the Gypsum Munici pal Code (Attachment 7) , which provides in relevant

part that t he applicability of the sales tax is subject to C. R.S. § § 29

- 2

- 105 (2) & (4)

. In turn,

C.R.S. Section 29

- 2

- 105 (4) offers an exemption granted against the sales tax equal in amount to

the tax im posed by the other jurisdiction, but not to exceed the sales tax imposed by the subsequent jurisdiction (in this case, the Town ). See infra n. 7.

Exemptions

. The Town currently provides an exception to and several exemptions from the Town’s general sales tax. 4 All of these provisions were adopted before December 3 0 , 1987, and therefore cannot affect the grandfathering analysis. Further, n one of the exemptions applies to

the sale of aviation fuel. The references below are to the Town Municipal Code (Attachment 7 ).

- 3.08.100

- Excepted from sales amount. The amount subject to the sales tax shall not include the amount of any sales or use tax imposed by Article 26 of Title 39, C.R.S. 5 See

also 1976 Ordinance at § 4(b) (Attachment 1)

.

- 3.08.110

- Specific ownership tax exemption. All sales of personal property on which a specific ownership tax has been paid or is payable shall be exempt from the sales tax when such sales meet both of the following conditions: (1) The purchaser is a nonresident of, or has his principal place of busi ness outside the limits of the town, and (2) Such personal property is registered or required to be registered outside the limits of the town under the

laws of the State of Colorado. See also 1976 Ordinance at § 4(f) (Attachment 1).

- 3.08.120

- Sales tax sales subject to other local sales or use taxes. The applicability of the sales tax shall be subject to the provisions of C.R.S. §§ 29

- 2

- 105 (2)[ 6 ] and (4)[ 7 ]

. See

also 1985 Ordinance at §§ 10 (C)

– (D) (Attachment 3).

4 As noted above in footnote 2, the Town expanded the available exemptions in 19 85 to include an exemption for the sale of food except for sales of food to be consumed at or near the place of sale, such as sales of food by restaurants, bars, cafes, etc. 1985 Ordinance § 10(B) (Attachment 2 ). That exemption was eliminated in

the 1995 Ordi nance. (Attachment 3). However, the history of this particular exemption does not affect the analysis of the application of the tax to the sale of aviation fuel.

5 Part 1 of Article 26 of Title 39 of the Colorado Revised Statutes is the “Emergency Retail Sales Tax Act of

1935” as amended.

6 C.R.S. § 29

- 2

- 105(2) provides in its entirety: “No sales tax of any statutory or home rule city, town, city and county, or county shall apply to the sale of construction and building materials, as the term is us ed in section 29

- 2

- 109, if such materials are picked up by the purchaser and if the purchaser of such materials presents to the retailer a building permit or other documentation acceptable to such local government evidencing that a local use tax has been p aid or is required to be paid.”TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

8 8. Document commitment to advise FAA of any subsequent amendments that could affect grandfathered status.

T he Town is scheduled adopt a Resolution acknowledging its obligations under federal law and its commitment to advise FAA of any future amendments that could affect the grandfathered status of the initial 2% sales tax. ( Attachment 12 ). Town Council meetings are conducted on the 2nd and 4th Tuesday of each month. The Resolution is scheduled for the Decemb er 8, 2015, meeting

.

7 C.R.S. § 29

- 2

- 105(4) provides in its entirety: “(4) No sales tax of any statutory or home rule city and county, city, or town shall apply to the sale of tangible personal property at retail or the furnishing of services i f the transaction was previously subjected to a sales or use tax lawfully imposed on the purchaser or user by another statutory or home rule city and county, city, or town equal to or in excess of that sought to be imposed by the subsequent statutory or ho me rule city and county, city, or town. A credit shall be granted against the sales tax imposed by the subsequent statutory or home rule city and county, city, or town with respect to such transaction equal in amount to the lawfully imposed local sales or use tax previously paid by the purchaser or user to the previous statutory or home rule city and county, city, or town. The amount of the credit shall not exceed the sales tax imposed by the subsequent statutory or home rule city and county, city, or town. ”TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

9 

### PART II : ACTION PLAN FOR

NON

- GRANDFATHERED AVIATION FUEL TAX REVENUE

The Town understands that the portion of revenue derived from any sales tax on aviation fuel beyond the grandfathered 2% tax must be dedicated to lawful aviation purposes permitted under federal law and FAA’s Revenue Use Policy. This Section describes the Town’s pla n for compliance.

A. Background Information

1. Collection of Sales Taxes, Generally

When the Town’s sales tax was initially imposed, it was collected by the State of Colorado Department of Revenue on behalf of the Town. 1976 Ordinance at § 5 (Attachment 1). However, as of July 1, 2008, the Town has assumed the responsibility for collecting, administering and enforcing the sales tax. See, Gypsum Municipal Code § 3.08.140 ( Attachment 7 ).

2. Use of Sales Taxes, Generally

The Town currently imposes a 3% sales tax on the privilege of selling tangible personal property at retail upon every retailer in the Town

. Ordinance No. 8 (Series 2014) at § 1 (Attac hment 6).

As documented above in Part I of this Action Plan , the initial 2% sales tax that was in effect on

D ecember 30, 1987, is grandfathered; however, any tax beyond that initial 2% is subject to federal revenue use requirements.

As also documented above in Part I, there are no use restrictions on the initial

– grandfathered

– 2% sales tax. However, use of revenue derived from the 1% increase adopted in 1995 is

restricted: Eighty percent (80%) must be spent for law enforcement, town hall and recreat ion expenses and the remaining twenty percent (20%) may be spent on general administration costs. Gypsum Mun icipal Code § 3

- 08

- 200 (Attachment 7 ).

3. Collection of Aviation Fuel Taxes

There are currently three vendors operating within Town limits that currently sales tax on aviation fuel. These operators are: (1) Av f uel Corporation ; (2) the Vail Valley Jet Center; and (3) Wo rld Fuel Services Corporation. Av f uel Corporation and World Fuel Services Corporation sell only aviation fuel. Thus all of the tax revenue collected by these two entities must be reviewed for compliance with FAA’s Revenue Use Policy. T he Vail Valley Jet Center is the

fixed

- based operator at the Airport, and in that capacity, sells a broad range of products, beyond just aviation fuel. The Vail Valley Jet Center does not currently provide an itemized account to the Town of the portion of sales tax revenue related to the sale of aviation fuel. However, the data is readily available and can be provided to the Town with the monthly reporting.TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

10 Once collected by the vendors, the t axes are remitted to the Town Finance Department

. Avf uel Corporation and the Vail Valley Jet Center remit sales tax to the Town on a monthly basis. World Fuel Services Corporation remits sales tax on a quarterly basis.

Town employees are prohibited by state law from divulging the specific amount of sales tax collected by any individual vendor. 8 As a result, the Town cannot prepare public reports regarding the amount of aviation fuel tax collected from individual vendors. However, the Town can make public the number reflecting the total annual revenue derive d from the Town’s sale tax

on the sale of aviation fuel.

4. Intergovernmental Agreement for Cooperative Law Enforcement Services

Eagle County and the Town of Gypsum are parties to an Intergovernmental Agreement for Cooperative Law Enforcement Services (the IGA) (Attachment 13) . The most recent version of this agreement is the Amended and Restated Intergovernmental Agreement for Cooperative Law Enforcement Services (the IGA) made and entered effective January 1, 2013, and extending through December 30, 2017 . Through this agreement, the Town pays for 684 hours per month of County law enforcement protection services within the corporate boundaries of the Town. Id

. §

II. The cost escalates each year. For example, in 2015, the cost for law enforcement services provided to the Town is set at $ 787,500

. Id

. § VII

. The services provided to the Town under the

IGA are comprehensive. They include the placement of law enforcement officers at schools and for special events; they also include general law enfor cement activities such as general traffic enforcement, inv estigation of traffic accidents, inv estigation of criminal offenses, and n arcotics investigations throughout the Town, including at the Airport. Id . § II.C. The County provides an annual report to the Town of the services provided under the IGA. The most recent report is provided as Attachment 14

.

A portion of the law enforcement services provided to the Town under the IGA represent
reimbursement for the costs of services that are actually received at , and solely be nefit

, the airport. These are lawful aviation purposes as provided for under the Revenue Use Policy. See,

e.g., Revenue Use Policy § IV (D)(1) (“Congress ... prohibited the diversion of airport revenues through: Direct payments or indirect payments, other than payments reflecting the value of services and facilities provided to the airport”); id . at § V.A (1) (“Airport revenue may be used for: ... capital or operating costs of the airport, the local airport system ... Such Costs may

in clude reimbursements to a state or local agency for the costs of services actually received and documented ... .”).

8 See

, C.R.S. § 29

- 2

- 106(4)(C)(II) (“ Except in accordance with judicial order or as otherwise provided by law, no official or employee of a municipality

... shall divulge or make known to any person not an official or employee of such municipality

... any i nformation which identifies or permits the identification of the amount of sales taxes collected or paid by any individual licensed vendor. The municipal or county officials or employees charged with the custody of such sales tax information shall not be r equired to produce any such information in any action or proceeding in any court except in an action or proceeding under the provisions of this article to which the municipality or county having custody of the information is a party, in which event the cou rt may require the production of, and may admit in evidence, so much of said sales tax information as is pertinent to the action or proceeding. Any municipal or county official or employee who willfully violates any of the provisions of this paragraph (c) is guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than

one thousand dollars and shall be dismissed from office. ” )TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

11 While the County’s annual reports have not historically tracked airport

- specific services, the Sheriff’s office is already required to prepare monthly written reports to the Town Manager detailing law enforcement and public service a ctivities (IGA § VI) an d, going forward, the

Sheriff’s Office will track those law enforcement services actually provided at the Airport. Beginning in 2016, the County will then be able to include in its annual report a calculation of the percentage of law enforcement services provided to the Airport. Based on that calculation, the Town will be able to calculate the percentage of the annual IGA cost that can be used as an offset against any of its non

- grandfathered tax revenue that must be expended toward lawful aviation expen ses.

B. Action Plan to Comply with the FAA Revenue Use Policy

1. Summary

T he Town will track compliance with the use restrictions on the additional 1% tax by monthly accumulating the relevant sales tax receipts and qualified expenditures to calculate the net amount of tax revenue subject to the FAA Revenue Use Policy

. In brief, at the end of each calendar year, as part of the Town’s annual audit cycle, the Town will review the sales tax reports and calculate the tota l revenue derived from the tax on aviation fuel (the Total Aviation

Fuel Tax Revenue). The Town will then calculate the portion of the Total Aviation Fuel Tax

Revenue that is not grandfathered. This portion of the Total Aviation Fuel Tax Revenue (the Covered Revenue) is the amount of revenue that is subject to the Revenue Use Policy and must be used only for lawful aviation purposes.

The Town will then calculate the value of aviation

- related services provided through the IGA for the same calendar year. This total is the permissible offset against the Covered Revenue (the Offset). Because the Town does not own or operate any airport facility, a ny amount of the

Covered Revenue that exce eds the Offset shall be remitted to Eagle County annually to be used solely for aviation purposes at the Eagle County Regional Airport

.

EXAMPLE 1:

If the Sales Tax is set at 3%

And the Total Fuel Aviation Tax Revenue = $500,000

And the Total Cost of t he IGA = $787,500 And 22% of the IGA hours were for airport

- related services

Then:

Covered Revenue = $166,500 [ Covered Revenue is 1/3 of the Total Aviation Fuel Tax Revenue (because the grandfathered portion of the tax on aviation fuel (2%) is 2/3 of the 3% tax ]

Offset = $173,250 [The Offset is calculated by multiplying the Total Cost of IGA by the percentage of IGA hours expended on airport related services]

Total Aviation Fuel Tax Revenue to

be Remitted to the Cou nty $0 [ Offset exceeds Covered R evenue ]TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

12 EXAMPLE 2 :

If the Sales Tax is set at 4%

And the Total Aviation Fuel Tax Revenue = $500,000

And the Total Cost of the IGA = $ 787,500 And 22% of the IGA hours were for airport

- related services

Then:

Covered Revenue = $250,000 [Covered Revenue is 1/2 of the Total Aviation Fuel Tax Revenue (because the grandfathered portion of the tax on aviation fuel (2%) is 2/4 of the 4% tax]

Offset = $173,250 [The Offset is calculated by multiplying the Total Cost of IGA by the percentage of IGA hours expended on airport related services]

Total Aviation Fuel Tax Revenue to be Remitted to the County $76,750 [Covered Revenue less Offset equals amount owed to County to be expended on airport

- related services at the Eagle County Regional Airp ort]

The Town will engage an Independent Auditor to annually apply auditing procedures to test and verify that the Town’s annual a viation f uel s ales t ax c alculation s are correct and are presented in

the annual financial statements.

2. Timing of Implementation

The Town will implement this Plan beginning on January 1, 2016. That will permit the necessary time to ensure that each existing vendor of aviation fuel can prepare the appropriate

documentation for its monthly or quarterly reports to the Town . It will also permit the necessary time for the County Sheriff’s office to create procedures so that it can track the portion of IGA services provided to the Airport each month.

3. Compliance Checklist

To implement this plan, the Town will take the steps outlined in the checklist below :

PART 1

– Town Council

 The Town Council will adopt a Resolution on December 8, 2015, committing to comply with federal law and the FAA Revenue Use Policy, and to notify FAA, as necessary, of any changes to its sales tax that may affect this current action plan.

 The Town Council will coordinate with the Finance Director and legal counsel, as necessary, prior to implementing any change to the Town sales tax, in order to understand the implications to the existing grandfathered s ales tax and the need for any amendments to this Action Plan in order to ensure compliance going forward.TOWN OF GYPSUM, COLORADO Av iation Fuel Tax Action Plan

December 2015

13 PART 2

– Town Finance Director

 The Town Finance Director wil l notify any new vendor selling and collecting tax on

aviatio n fuels that when reporting sales tax revenue to the Town, the vendor must provide

a line

- item identifying the total revenue collected from the sale of aviation fuel.

 As part of the annual auditing cycle, t he Town Finance Director will oversee the

prep aration of an annual Aviat ion Fuel Tax Calculation Report containing the following

information :

- An annual total of all tax revenue collected from the sale of aviation fuel (the

Total Aviation Fuel Tax Revenue);

- A calculation of the portion the Total Aviat ion Fuel Tax Revenue that is attributable to the initial, grandfathered, 2% sales tax (the Grandfathered Revenue);

- A calculation of the portion of the Total Aviation Fuel Tax Revenue that is not grandfathered and is subject to the FAA Revenue Use Policy ( the Covered Revenue) ;

- The annual total of fees paid by the Town to Eagle County for law enforcement

services (the Law Enforcement Contract) ; and

- A calculation of the portion of law enforcement services directly benefitting the airport (the Offset)

.

 If the Covered Revenue exceeds the Offset in any year, the Finance Director shall remit payment to Eagle County for use on lawful aviation expenses.

PART 3

– Town Auditor

 The Town Auditor shall review the Aviation Fuel Tax Calculation Report as part of each

annual audit.

 The audit shall include line items for the Total Aviation Fuel Tax Revenue, the Covered Revenue, the Law Enforcement Contract, the Offset, and any amount required to be remitted to the County.