NYS&W to lose propery tax breaks

Taken form the Observer-Dispatch
Railway taxes hinge on court fight
Tuesday, Oct 24, 2006

By Tory N. Parrish
Observer-Dispatch
[email protected]

A railway company's efforts to obtain tax breaks from Oneida County's development agency have become entangled in a court battle over whether the railroad's lease agreement with a power-line company should become public.

The Industrial Development Agency will not find out the value of the contract between New York Susquehanna & Western Railway Corp. and New York Regional Interconnect unless it can guarantee the information won't be made public, a power company lawyer said Monday.

"We're not going to give an unredacted copy unless we know it's going to be protected," said Paul Sheppard, a lawyer with Hinman, Howard and Kattell LLP, the Binghamton-based law firm representing the railway.

That's a guarantee the IDA has been unwilling to make. The agency will take a "wait-and-see" approach until it discusses the matter with its attorney at a meeting Thursday, said Robert Calli, chairman of the IDA's board.

The IDA already has an edited copy of the contract, which involves plans to build a power line that will run along about 26 miles of the railroad's property in Oneida County. But the IDA had requested an unedited version by Oct. 10 to make a decision on the application at its meeting this Thursday.

Sheppard was one of four lawyers in state Supreme Court at the Oneida County Courthouse on Monday as part of New York Regional Interconnect's petition to block the documents from being released to the Observer-Dispatch under a Freedom of Information Law request.

Other counties

The railway, whose tax break deal with IDA began in 1982, saves about $115,000 annually. The railway has similar deals in place with three other IDAs in Broome, Chenango and Madison counties where the power line might run. The three counties' agencies own the railway's land in title only in exchange for the railway receiving tax breaks.

The agreements with at least two of the other three counties' IDAs, however, are not up for renewal until 2012.

•Chenango County: "As our attorney advises us, what it appears that NYRI and the railroad have worked out would not be in violation of the IDA lease," said Dave Hall, executive director of the Chenango County IDA.

The railway saves about $240,000 in taxes annually on about 62 miles of property in Chenango County, Hall said. His agency's agreement with the railway requires that it be given notice before leasing its right-of-way to the power company, and that hasn't happened yet, he said.

•Madison County: The railway's tax break deal with Madison County's IDA saved it about $29,300 annually on the 12-mile stretch of property in the county.

Although the railway doesn't transport a significant amount of freight in the county, the fact that it could someday makes it worth keeping the tax deal in place, said Peter Cann, executive director of the Madison County IDA. For example, a bio-diesel company that considered relocating to Hamilton would not have done so without the railroad, he said.

The Madison County IDA has approached the railway for more information about its deal with NYRI, but hasn't received a detailed response, Cann said.

"And the reason they're supposed to give us notice is so we can amend our paperwork, not necessarily so we can give them permission" for the New York Regional Interconnect deal, Cann said.

The Broome County IDA did not return a call for comment.

•More on the court case, 1B

Tax break for railroad rejected
Company: power line proposal swayed IDA
Friday, Oct 27, 2006

By Tory N. Parrish
Observer-Dispatch
[email protected]

ROME — A valuable tax relief deal that saved New York Susquehanna & Western Railway Corp. about $115,000 a year has ended.

The Oneida County Industrial Development Agency's Board of Directors rejected the agreement at a Thursday morning meeting.

The board cited an incomplete application as the cause, but the railway is blaming the decision on controversy over a proposed power line project.

"I can tell you that we think it's unfortunate that the decision was made to punish the railroad and its customers because some people don't like the power line proposal," said Thomas O'Neil of The Marcus Group, the Secaucus, N.J.-based public relations firm representing the railway.

The railway's payment in lieu of taxes program, or PILOT, began in 1982 and saved the railway property taxes on the 26 miles of property it owns in the county.

Despite the loss of the tax breaks, the railway will continue to operate in the county, O'Neil said.

At the root of the tax deal being canceled is the railway's agreeing to lease its property to New York Regional Interconnect, the private Albany-based company that wants to build a 200-mile power line from Marcy to Orange County.

The agency's board requested details of the financial deal between the railway and NYRI as part of the tax relief application.

Railway officials refused to submit an unedited lease agreement without the agency's board guaranteeing that the information would not be released to the public.

"Whether that information was privileged or not was irrelevant to the consideration of the PILOT," said David Grow, vice chairman of the board.

Now that the development agency has ended the railway's tax relief deal, the city of Utica will likely just focus its lawsuit on the railway, Utica Mayor Tim Julian said.

The city is suing the railway, alleging that it did not have the right to lease its right-of-way to NYRI because some of the property within it had been acquired by eminent domain.

The development agency had also been named in the suit for not enforcing the eminent domain law.

The city also will pursue the railway to recoup four years of property tax exemptions, since its tax deal with the development agency officially expired in 2002, but has been honored ever since, Julian said.

In a related court case, NYRI has gone to court to block the development agency from releasing its edited lease agreement with the railway to the Observer-Dispatch, which requested the document through a Freedom of Information Law request.

The railway submitted the document to the development agency when it was seeking to renew its tax break deal, but NYRI contends that the contract has not been sufficiently edited.

The development agency's decision to end the railway's tax relief deal won't affect the newspaper's effort to get the lease agreement, according to Michael Grygiel, a partner with Hiscock & Barclay, who is representing the newspaper.

"The IDA's cancellation of the tax subsidy that has historically benefited the railroad is ... separate from the legal issue of public access to agency records under the Freedom of Information Law," Grygiel said.