Railroad seeks county tax breaks

By DAVID HULSE

MONTICELLO, NY — Sullivan County doesn’t want to buy a railroad, but the county is investigating tax breaks to try and keep the trains rolling on the Southern Tier line that shadows the New York-Pennsylvania border between Port Jervis and Binghamton.

The River Reporter last week exclusively reported that the December 31 lease agreement between the Norfolk Southern Railroad and the Central New York Railroad (CNYR) was based on plans to sell the railroad to an unnamed government agency or gain a minimum 50-percent tax break on the line before February 28 of this year.

Sullivan County Legislator Sam Wohl, who chairs the county’s Industrial Development Agency (IDA), said that a January 10 presentation to the IDA by the CNYR left the county little choice.

“We were told if doesn’t happen, the trains disappear,” Wohl said.

Wohl said that CNYR owner Walter Rich notified the county that Norfolk Southern plans to abandon the line by 2009, and that trains serving Narrowsburg Feed and Grain and Cochecton Mills would stop as of March 1 if his company fails to receive a significant tax reduction before that date. To prevent the abandonment, taxes would continue to be reduced to zero on a sliding scale before the 2009 abandonment date.

Wohl said the IDA rejected the railroad’s initial reduction schedule, identified in the Norfolk Southern-CNYR lease at a minimum of 50 percent, but is continuing to negotiate a more moderate scale. “The town’s couldn’t absorb that kind of loss in one year,” Wohl said.

The towns of Tusten, Cochecton, Delaware and Fremont have already absorbed significant tax losses on the railroad property, as combined tax revenues from the properties fell from $247,000 in 2002 to $188,000 in 2003, as the result of a 2004 tax claim settlement.

Sullivan West School District tax revenues on the railroad properties declined from $475,000 in 2001-02 to $251,000 in 2002-03.

Wohl said the IDA must now negotiate with the Delaware County Board of Supervisors and the office of the Broome County Executive, in order to frame a proposal. “We’ll be going up to Hancock tomorrow,” Wohl said on Tuesday.

“We’re reaching out to everyone. There’s a lot of people depending on that railroad and once a railroad is shut down, it never starts up again,” Wohl said.

Assemblywoman Aileen Gunther said Rich had discussed plans with her to employ state and federal transportation enhancement funding to expand local use of the line. “He spoke of shipping for locally produced or used commodities such as logs, agricultural products and road salt,” she said.

Under the terms of 19th century agreement, the line takeover will not impact Pike County taxes, since the railroad is exempt from property taxes in Pennsylvania. “It’s not even assessed on our rolls,” a spokesperson at the Pike County Assessors Office confirmed.

Shohola Township Secretary Nelia Wall said the oddity dates back to the building of the old Erie Railroad in the 1850s. “It was a deal. Somebody was friend of somebody else’s,” she said.

New York State Department of Transportation Albany spokesman Steve Burgess said that similar development agency tax exemptions or outright purchases of low-volume rail lines is becoming commonplace. “The government buys the line, rendering the property as tax exempt, and leases it back to the railroad,” he said.