I notice in my area some track is left unused for decades but not removed. One bit of track used to connect to the NS former CR Chicago to Harrisburg mainline. Another bit of track is a non swing bridge thats runs along side the Ohio turnpike. Too costly to remove no doubt. My question do the carriers still pay taxes on unused lines and are they still obligated to insure these lines? Thank You!
The question of local taxes depends somewhat on jurisdiction, but in general, yes indeed they do still pay taxes on unused lines. The tax will vary, but in most eastern jurisdictions, at least, it has nothing to do with whether the line is used or not, only what facilities (such as track, signals, buildings (including shanties and shacks, signal housings)) are still on the property. These taxes – particularly in New England and New York – can be extremely high, and are a tremendous incentive for the railroad to at least pull up the track, if not get rid of the land entirely. Counterproductive? Of course – but someone once described the whole property tax system as one of the most perverse taxes ever used in the USA.
The question of insurance is one I’m not so sure about – they do still have to carry insurance (it isn’t a law, just common sense – there’s a lawyer behind every bush) but the rates would vary a good bit depending on whether the line is just not used, embargoed, blocked (for instance, by removing a section of track or creation of a physical barricade) or the track torn up.
(1) Sometimes leaving a track in the weeds keeps your competitor out of your backyard. Try to abandon it and BrandX railroad puts an OFA on it.
(2) Please remind Santoman that states assess the taxes, not the counties and cities. The states give the locals a disbursement check from what they collect. (stops most of the tax abuse, but not all of it)…Most people (especially city and county employees) don’t have a clue why this is or that it even works this way. Jamie is correct that New York & New England gouge the railroads (taxwise) much more than most of the other states.
(3) Some lines won’t ever be abandoned because the mitigation costs are too steep. Much cheaper to just leave it sitting in the weeds. (Close your eyes and maybe the headache will go away!
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With all due respect, this isn’t the case everywhere. In Georgia the individual county (and possibly the larger cities, don’t know if they have property taxes) sets the rate for operation of county government and the School Board sets the rate for operation of the schools, and the property owner gets one bill. The state isn’t involved in the process at all, from what I can see.
With all due respect:
…not in the case of railroads. The county is issued a disbursement check from the state. The railroads pay one check to the state (like a utility). Local entities do not tax the railroads directly and do not adjust the rates. By Federal Rule (going back to ICC Act of 1913), this is done to level the playing field and to avoid “taxation without representation”.It has been tested in court regularly. (It keeps counties and town from abusing their powers, which forced the ICC Act of 1913 in large part)
Check with GA’s State Board of Equalization (GA Department of Revenue) - They get the checks every March 1 and disburse them proportionately. rules.sos.state.ga.us/docs/560/11/3/07.PDF
Ophra? What’s she got to do with it? mudchicken-what is an OFA?
I’m not M/C but OFA is Offer of Financial Assistance. You pay, we’ll railroad. If you’re willing to pay extra to keep the line open, we will keep operating. Normally done while negotiating to purchase the line from the railroad wishing to abandon it.
Is this to say, that a competing railroad may offer to pay, to keep the first railroad from abandonding a line?[%-)]
More likely to be a shipper or a local government, a County Railroad Authority for example wishing to keep a rail line open as an industrial development tool. They might need the big railroad to keep operating a line while they seek out a shortline operator. They might lose potential customers during a period between when the Class I shuts down the line and when they purchase and reopen the line. This can easily take a year or more.
Means the second railroad is going to step in and buy the line (usually at scrap value) and operate it as their’s. (STB will order you to sell it at a fair price [forced sale] rather than abandon it if at all possible; you can’t play keepaway with it - 49USC10904 and 49CFR1152.27)
Not necessarily. Short lines have acquired lines this way as well and if there is potential for another Class 1 to use the route to be abandoned it may well decide to grab it.
LC
Okay, I stand corrected.
Not trying to rain on JOdoms parade, but:
The misconceptions about railroad taxes causes all kinds of headaches caused by people assuming they know the system when, in fact, they are promoting a myth. Some of the worst perpetrators of this are county tax people and the folks who create assessor maps.
I see several cases a month where counties have sold railroad property without railroad knowledge or permission in sheriff’s sales, tax lien sales, etc. because they cannot trace the source of the tax income on a parcel of land. While not an epidemic, the problem is headed that way.
Surveyors putting too much faith in assessors assessors maps causes bedlam. Sorting these messes out are a big part of my job. (and then there are the dolts in the Real Estate Title Insurance industry that can’t think and can’t possibly be responsible for their blunders…what a scam!)
I regularly see Assessor Maps relating to railroad right of ways that have all the accuracy and credibility of a cartoon. You put these and the tax collector’s records together and you have problems. Most counties do a really poor job of delineating what is exempt, public or like in the railroad’s case, paid for in an alternate method… Most counties seriously need to better train or re-educate their people.
The whole thing creates an unjustified and incorrect impression that railroads don’t pay their part.
[soapbox][soapbox][soapbox]
Actually, every place I have lived does it a little differernt…[:)]…
In New Mexico, from whence I have recently moved, each county actually is allowed to impose certain mill levys, which are property taxes. You actually pay the tax directly to the county. [:(]
For sales tax, each municipility sets its own rate on top of the general state rate, up to a set amount. So sales tax will vary from what town or county you are in. The state collects sales tax, and then sends the municipality /county its share.[:P]
As far as I know, the state just keeps all the income tax…[:(!]
Thats part of the fun of moving new places…getting to figure out how it all works![:D]
Things are slowly sliding out of context here - my comments are directed specifically at railroad operating real estate. The counties do not dictate tax terms to the railroads. ( Railroad Operating R/W -Not chattel, equipment or private/commercial real estate…and I know Albuquerque northward very well and have worked in other parts of NM as well in my career)
I know it’s off topic but… oh my, MC, you are so right about assessor’s maps! You should see some of the ones I have to deal with here in Connecticut!!! Talk about clueless…
Just noting that Connecticut has “land banked for future transportation purposes” about 200 miles of railroad line altogether. In most cases the track was pulled up, but some is still in place. In some cases there has already been a return to service, as there is now frieght service from Old Saybrook to Hartford without going through New Haven or Ceder Hill, using in part about 17 miles that had been “land banked.” Included in the State’s “portfolio” is much of the old New York and New England “White Train” New Haven - Boston route through Willamantic.