# CITY OF RED BLUFF 555 Washington Street Red Bluff, California 96080 (530) 527-2605 Fax (530) 529-6878 www.cityofredbluff.org

December 4, 2015 Randall S. Fiertz Director, Airport Compliance and Management Analysis Federal Aviation Administration 800 Independence Ave., SW Washington, DC 20591 Re; Local Tax Revenues for Airport Purposes Mr. Fiertz, The City of Red Bluff owns and operates the Red Bluff Municipal Airport (RBL). Consistent with our understanding ofthe FAA's recently amended Policy and Procedures Concerning the Use of Airport Revenues, the City of Red Bluff is proposing an action plan to comply with this policy change . As we currently understand this policy change, the federal regulation by the Federal Aviation Administration has clarified the rule, requiring that the local taxes on aviation fuel may not be expended for any purpose other than the capital or operating costs of the airport. The City of Red Bluff currently receives the following California Sales and Use Tax components to which the FAA rule applies: State : Local Revenue Fund (County realignment) State: Local Publ ic Safety Fund (Proposition 172) Local Transactions and Use Taxes (1/4 cent sales tax increase) 0.50% 0.50% 0 .25% The City of Red Bluff established the % cent sales tax increase with the approval of a ballot measure in November 2015 . Beginning April2015, the% cent increase was implemented, affecting the sales tax collected within the City of Red Bluff. There are no restrictions mandating the use ofthe % cent sales tax increase. Currently the City of Red Bluff does not segregate the general sales tax revenue, derived from the aviation and jet fuel sold at the Red Bluff Municipal Airport, fromother taxable sales. It is difficult to estimate in advance the portion of general sales tax revenues derived from aviation fuel because of the fluctuating price of aviation fuel and the intermittency ofjet fuel customers. However the City is now requiring that the fixed base operator submit monthly reports differentiating between Jet Fuel and Gas sales and report on the sales tax allocation associated with those sales. In 2014, the Red Bluff airport sold approximately 22,200 gallons Jet fuel at an average price of $4.74 per gallon; yielding at the applicable FAA tax rate (1 .25%) an annual expenditure obligation of less than $1,500. The City of Red Bluff spends far more on the aviation services, maintenance and operating costs at the airport than the estimate ofthe relevant sales tax revenues derived from aviation fuel. The City's operation costs include , but are not limited to: • Fire protection services • Public safety services • Emergency response services • Access to and from the airports, roads, and highways • Infrastructure, including water, electricity and sewer • Government supplied employee services Over the next two years , the City of Red Bluff will work to provide confirmation that the allocated tax revenues and Airport related expenditures the complies with the FAA policy relative to the expenditures of applicable sales tax revenues on capital and operating costs for the Red Bluff Municipal Airport. The City will commit to continuing to refine its estimates of both relevant sales tax revenue and expenditures on capital and operating costs for the airport to certify that the City complies with the FAA policy. If, the City determines that its expenditures on airport capital and operating costs do not exceed sales tax revenues derived from aviation fue l, it will consider legislative solutions . Respectfully,

# ~~ City of Red Bluff Airport Manager Public Works Director (530) 527-2605 X 3055

# CITY OF RED BbUFF 555 Washington Street, Red**Bluff~** Ca 96080 

# FAX
NAME Randall S. Fiertz 

### FROM Anita Rice 

### DEPARTMENT FAA Compliance and Management 

### DEPARTMENT Red BluffMunicipal Airport 

### PHONE PHONE 527-2605 X 3067 

### FAX (202) 267-4629 

### ttb3o FAX 529-6878 Mr. Fiertz, Re: local Tax Reve nues for Airport Purposes Please accept this fax from the City of Red Bluff Municipal Airport regarding the City's plan in regards to local tax revenues for airport purposes . I will overnight the original today. Thank you, Anita Rice

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