Finger Lakes Railway filing with STB

Any one understand this?

PROVIDED NOTICE THAT FINGER LAKES RAILWAY CORP., A CLASS III RAIL CARRIER, HAS FILED TO ACQUIRE FROM CAYUGA COUNTY INDUSTRIAL DEVELOPMENT AGENCY, ONONDAGA COUNTY INDUSTRIAL DEVELOPMENT AGENCY, ONTARIO COUNTY INDUSTRIAL DEVELOPMENT AGENCY, SCHUYLER COUNTY INDUSTRIAL DEVELOPMENT AGENCY, AND YATES COUNTY INDUSTRIAL DEVELOPMENT AGENCY, AND OPERATE, APPROXIMATELY 86.45 MILES OF RAIL LINES LOCATED IN NEW YORK.

http://www.stb.dot.gov/decisions/Readin ... enDocument

and

CAYUGA COUNTY INDUSTRIAL DEVELOPMENT AGENCY, ONONDAGA COUNTY INDUSTRIAL DEVELOPMENT AGENCY, ONTARIO COUNTY INDUSTRIAL DEVELOPMENT AGENCY, SCHUYLER COUNTY INDUSTRIAL DEVELOPMENT AGENCY, AND YATES COUNTY INDUSTRIAL DEVELOPMENT AGENCY HAVE FILED TO ACQUIRE BY LEASE APPROXIMATELY 86.45 MILES OF RAIL LINES FROM FINGER LAKES RAILWAY CORP.

http://www.stb.dot.gov/decisions/Readin ... enDocument

If I were to guess.......I would guess perhaps the counties own the old Auburn Road and FGLK has been simply an
operator (lessor?) since Conrail sold off the trackage and now FGLK wants to purchase outright?

That's all an assumption on my part, though.

Charlie

Who actually owns that now, the individual counties, right?

This sounds like some kind of deal which results in Finger Lakes having permanent status to operate the lines.

Just read the filing, it's really quite simple:

FGLK states that it originally acquired the rail lines in 1995 and transferred title to the Agencies and then leased back the rail lines for purposes of the PILOT arrangement. FGLK states that to extend and restructure the PILOT arrangement, the Agencies will first transfer title to the rail lines to FGLK. This notice relates to that transaction. Then the Agencies will lease the rail lines from FGLK.[2] Lastly, FGLK will sublease the rail lines back from the Agencies to continue operations over them, including all common carrier service and maintenance of the tracks.[3]

Got all that?

BR&P wrote:Just read the filing, it's really quite simple:

FGLK states that it originally acquired the rail lines in 1995 and transferred title to the Agencies and then leased back the rail lines for purposes of the PILOT arrangement. FGLK states that to extend and restructure the PILOT arrangement, the Agencies will first transfer title to the rail lines to FGLK. This notice relates to that transaction. Then the Agencies will lease the rail lines from FGLK.[2] Lastly, FGLK will sublease the rail lines back from the Agencies to continue operations over them, including all common carrier service and maintenance of the tracks.[3]

Got all that?

You should have dropped the mic at the end!

Pretty clear-cut, thanks DRB!
Charlie

BR&P wrote:Just read the filing, it's really quite simple:

FGLK states that it originally acquired the rail lines in 1995 and transferred title to the Agencies and then leased back the rail lines for purposes of the PILOT arrangement. FGLK states that to extend and restructure the PILOT arrangement, the Agencies will first transfer title to the rail lines to FGLK. This notice relates to that transaction. Then the Agencies will lease the rail lines from FGLK.[2] Lastly, FGLK will sublease the rail lines back from the Agencies to continue operations over them, including all common carrier service and maintenance of the tracks.[3]

Got all that?

how does property tax works? FLRR still pay for it because, technically, FLRR own the tracks, correct? Or there is loophole that they had to do that way, quoted above, to avoid property tax? And maintenance responsibility/cost?

This is speaking generally - I don't know the details of FGLK's arrangements.

Normally a property owner pays taxes, based on a set formula. But sometimes that would present a huge burden and would be counter-productive to the overall economy. Maybe a new factory would not get built, maybe a railroad line would be abandoned.

So a municipality sets up a Payment In Lieu Of Taxes - PILOT. In effect, this is a negotiated and much lower tax. And usually there is some sort of trade-off for that lower payment. For example, say the XY&Z railroad would normally be expected to pay $100,000 in property taxes to Podunk County. That is more than they can afford but the county needs the railroad. And everybody realizes that money is badly needed by the XY&Z to maintain the track.

So Podunk County enters into an agreement whereby XY&Z only pays $10,000 to the county instead of $100,000. And at the same time they agree to put $50,000 - or $75,000 - or $90,000 - whatever the parties agree - dollars into track maintenance within Podunk County, during the timeframe of the agreement.

There are many different ways to structure the deals and again you'd have to read the details of FGLK's agreement to see what they actually have agreed to. But that's an oversimplified idea of what a PILOT agreement is.

BR&P wrote:This is speaking generally - I don't know the details of FGLK's arrangements.

Normally a property owner pays taxes, based on a set formula. But sometimes that would present a huge burden and would be counter-productive to the overall economy. Maybe a new factory would not get built, maybe a railroad line would be abandoned.

So a municipality sets up a Payment In Lieu Of Taxes - PILOT. In effect, this is a negotiated and much lower tax. And usually there is some sort of trade-off for that lower payment. For example, say the XY&Z railroad would normally be expected to pay $100,000 in property taxes to Podunk County. That is more than they can afford but the county needs the railroad. And everybody realizes that money is badly needed by the XY&Z to maintain the track.

So Podunk County enters into an agreement whereby XY&Z only pays $10,000 to the county instead of $100,000. And at the same time they agree to put $50,000 - or $75,000 - or $90,000 - whatever the parties agree - dollars into track maintenance within Podunk County, during the timeframe of the agreement.

There are many different ways to structure the deals and again you'd have to read the details of FGLK's agreement to see what they actually have agreed to. But that's an oversimplified idea of what a PILOT agreement is.

thanks

BR&P wrote:This is speaking generally - I don't know the details of FGLK's arrangements.

Normally a property owner pays taxes, based on a set formula. But sometimes that would present a huge burden and would be counter-productive to the overall economy. Maybe a new factory would not get built, maybe a railroad line would be abandoned.

So a municipality sets up a Payment In Lieu Of Taxes - PILOT. In effect, this is a negotiated and much lower tax. And usually there is some sort of trade-off for that lower payment. For example, say the XY&Z railroad would normally be expected to pay $100,000 in property taxes to Podunk County. That is more than they can afford but the county needs the railroad. And everybody realizes that money is badly needed by the XY&Z to maintain the track.

So Podunk County enters into an agreement whereby XY&Z only pays $10,000 to the county instead of $100,000. And at the same time they agree to put $50,000 - or $75,000 - or $90,000 - whatever the parties agree - dollars into track maintenance within Podunk County, during the timeframe of the agreement.

There are many different ways to structure the deals and again you'd have to read the details of FGLK's agreement to see what they actually have agreed to. But that's an oversimplified idea of what a PILOT agreement is.

I attended the recent RGVRRM dinner, with FGLK President Mike Smith as the key note speaker. Your description is spot-on. Without the PILOT program, FGLK's estimated net revenue after taxes would have been about $200K for their first year. Obviously, that wouldn't have paid for 7-8 employees, 3 locomotives, various buildings and infrastructure improvements.

FGLK came into being in part because Conrail was seriously considering abandonment of at least part of the Geneva-Solvay segment, as well as what is now the Watkins Glen Division. Not only did the PILOT program save the tracks, but it facilitated growth in rail traffic. For example, Seneca Foods received just 12 freight cars during the final year of Conrail operations. Now it ships hundreds of cars per year. In addition to being good for the shipper, those boxcars keep alot of tractor trailers off the local roads.

Mike and his assistant (sorry, I forgot her name) did mention they were reapplying for the PILOT program, so this STB filing is part of the process.