Governments AN BAG Working Together San Bernardino Associated Governments 1170W. 3rd Street, 2nd Floor San Bernardino,CA 92410-1715 Phone: (909) 884-8276 Fax: (909) 885-4407 Web: www.sanbag.ca.gov ANSPORTATION MEASURE

I •San Bernardino County Transportation Commission

•San Bernardino County Transportation Authority •San Bernardino County Congestion Management Agency

•Service Authority for Freeway Emergencies December

8,2015 Mr.JamesT.Brown Finance Management Federal Aviation Administration 80000 Independence Avenue SW Washington DC 20591 Subject: Compliance withFAA Requirement foraSubmitted "ActionPlan" Due by December

8,2015:FAA Policy and Procedures Concerningthe Use of Airport Revenue;Proceeds from TaxesonAviation Fuel (79,Fed. Reg. 66282, November

7,2014. ("Policy Amendment") Revenue Implications, Concerns with Implementation Requirementsand Other Issues. Suggested Action Consideration DearMr.Brown: The San Bernardino County Transportation Authority (the Authority) wasnotified ofthe above-referenced policy amendment afteritsfinal adoption, viaaprivate party.Neither the Authority,
its advocates norits industry representatives wereawareofthe rulemaking process surrounding this policy change. Authority

isanon-sponsor jurisdiction andhasnotbeen notified by anyairport sponsorsof Federal requirements
for useof aviation fueltaxrevenues. The Authority

is concerned and impacted bythis policy amendment because Authority imposes

aspecial purpose (transportation) transaction andusesales taxwithin San Bernardino County, California pursuant
toa voter-approved ordinance enacted under California law. Theuseofsuch salestax proceeds

is limited by California lawand by voter-approved ordinance
to only transportation purposes. Authority interprets 49 U.S.C. Sec. 47107(b) and 49 U.S.C. Sec. 47133andthe Policy Amendment

as applicable

tolocal "general" taxesonaviation fuel, andnottolocal "special" taxes. Thisis supported by 79F.R.66282 which references "general" taxesseveral times. Stateandlocal governments provide manyservices
tothe airports thatarefunded from general sales taxes, including infrastructure, transportation,
fireand public safety. Other services include lighting, security, roadways, buildings and terminals, and noise controls, etc.,and thesefar exceed aviation fuel revenues.The funding makes surethat airports remain viable and meetthe needsoflocal businesses and communities.

Insomecases, stateandlocal governments

orairport authorities usetax-exemptbondstofund major capital improvements. The redirecting
ofthese revenuescreatesanunfair burden for jurisdictions thatmust payforthe services forthe entities benefiting fromthe policy shift. Executive Order 13132 (Federalism) establishes the principles and criteria that apply to regulations, legislative comments,and other policy statementsthat have
a substantial effect onStates. Weareconcerned withthe FAA's position /'belief that JB151208-DAB Cities of: Adelanto, Barstow, Big Bear Lake, Chino, Chino Hills, Colton, Fontana, Grand Terrace, Hesperia, Highland, Loma Linda, Montclair, Needles, Ontario, Rancho Cucamonga, Redlands, Rialto, San Bernardino, Twentynine Palms, Upland, Victorville, Yucaipa Towns of: Apple Valley, Yucca Valley County of San BernardinoMr. James T. Brown- Federal Aviation Administration December

8, 2015 Page2 "Federalism implications
(if any) are substantially mitigated because of the prior legislative intent." The fmal policy amendment does impose substantial direct requirement costs on State and local governments, and should have been subjected
to Federalism implications. Local jurisdictions rely on State and National organizations
for policy direction on those issues impacting our interests. These include for example the National League of Cities, California State Association
of Counties, US Conference
of Mayors, and Government Finance Officers Association. None of these organizations
are mentioned

in 79 FR 66292 as having commented
on the proposed Policy Amendment. The FAA adoption of the ruling has caught our own local community off guard. The cost, loss of revenues, and current and future workload involved
as a result of this unforeseen ruling is substantial. Notwithstanding

the foregoing objections, Authority submits the following that serves as Authority's intent to comply with the Policy Amendment based on Authority's understanding

of what is required of any "action plan" submitted: Action Plan Requirement: Applicable Law • Local: An ordinance imposing

a one-half percent transactions and use tax (Measure

I) dedicated
to transportation purposes only was adopted by the voters on November

2, 2004 for a 30 year renewal through March 2040. Measure

I was adopted pursuant
to California Public Utilities Code Section 180000 et seq. (Local Transportation Authority and Improvement Act "Act"). The Act and Measure

I limit the expenditure
of such special sales taxes to meeting local transportation maintenance and improvement needs. • State: California's Department
of Finance (DOF) will provide guidance on any laws, regulations and procedures that may need amending. The Authority

at the time of this communication
has not seen
a State prepared action plan. Action Plan Requirement: Tracking System • The Authority
in conjunction with its sales tax consultant has commenced trying to identify sales and use tax revenue
to comply with the requirement. For implementation purposes, there is going to be an issue with some of the taxpayers that comingle sales tax reporting of their retail gas station locations not at an airport and/or non-fuel related sales and their jet fuel sales. The internal process
to undertake this effort

-which is to identify, track and segregate the revenue,

is extensive;

a process
is being develop for the reporting requirements and tracking systems for discrete information
on aviation fuel tax revenues. We would appreciate the FAA provided

a descriptive definition
of the requirements
for the mandated "tracking system." Acton Plan Requirement: Transition Period • To the extent required by law, it is the Authority's intent to comp1y with the requirements
set forth and will notify the FAA if a reasonable transition period, not to exceed three years, is needed to become compliant with the rule.Mr. James T. Brown- Federal Aviation Administration December

8, 2015 Page
3 In consideration

of the broader concerns outlined above we also request that the FAA consider

a re-evaluation

or immediate sunset of the ruling and commence
an open and full public process discussion with all stakeholders

to ensure full participation

by impacted parties. We appreciate the FAA's consideration

of this request and look forward
to working with your team and others impacted by this ruling. Deputy Executive Director cc: Jay Chamberlain, Department
of Finance RESOURCES
• FAA Policy and Procedures Concerning the Use of Airport Revenue; Proceeds from Taxes on Av
i ation Fuel 79, Fed. Reg. 66282, November

7, 2014). This ruling was effective December

8, 2014. https://www.federalregister.gov/articles/2014/11107/2014- 26408/policy-and-procedures-conceming-the-use-of-airport-revenue-proceeds-fromtaxes-on-aviation- fuel#h-8 • State Board of Equalization- District Sales and Use Tax Rates http://www .boe.ca.gov/pdflboe

l 05.pdf • California

C i ty Finance

- FAA Rule Requires Use of State and Local Tax Revenues for Airport Purposes http://califomiacityfmance.com/F

AA 150701. pdf • Department
of Finance, FAA Policy Change on the Use of Sales Tax Revenues (August 11, 20 15)