Legacy Corporations Status (B&M/MEC/ST/PTM)

Discussion on the OCS thread has once again reminded all of us of the fact that PAR continues to maintain the existence of at a minimum four separate major legacy corporations related to their acquisitions from 1981 onwards under Guilford Transportation Inc. (GTI). These are Boston & Maine Corporation (B&M), Maine Central Railroad Company (MEC), Springfield Terminal Railway (ST) Company and the Portland Terminal Company (PTM).

All of the four corporations (three in particular, MEC, B&M, and PTM) still are property owners of record for their respective legacy properties of which they have never been divested.

Over the years time and again in these forums discussion has taken place that indicated there were significant and substantial tax benefits to this arrangment. However, the exact benefits and statutory basis for these impressions have never been described. I would like to know once and for all what they are and as such I'm opening this thread for discussion.

While I think almost all of us understand quite well the lease arrangement (and the reasoning for it) for ST on the B&M/MEC and PTM I don't think the other aspects of the arrangement are all that clear at all.

Given the relative continued importance of these corporations to PAR and their respective geographical areas I would also like to expressely include any future changes to the status of these corporations as part of the scope of this thread.

The first obvious tax shelter provided by the separate identities is sales tax, or whatever it is you pay when you purchase a locomotive. With all recent locomotives purchased lately being assigned to Maine Central (the SD40's, GP40-2W's the F's and presumebly the lone SW-1) they are not technically delivered until they reach Maine Central owned property. If I remember what I've read correctly, MEC used to accept delivery of units over the Mtn. Division since VT has much lighter taxes. BN and Santa Fe used to do that, before the merger. BN would pick up Santa Fe's EMD's and drag them out of Illinois and interchange them to SF, while SF would pick up BN's and lug them outta Illinois and interchange them to the BN. A neat way around sales tax that no longer works since BN and SF are now one and EMD's are made in Canada...

Though, I think the SD40's were formally accepted in NH (no sales tax) and I didn't think MEC still owned land in NH...

The other reason I can think of is that it keeps resources like locomotives away from tax collectors in Mass, allows things like depreciation deductions to be taken and used more fully where Maine may have more lax codes.

Of course seperation of operations and ownership consolidates all things payroll into one grouping. ST is the only company who has any payroll, but has little in assets. Payroll cannot really be condensed or sheltered, have to pay SS, Medicare, etc. but assets can be moved, hidden, transferred or valued differently depending on individual state codes.

Hypothetically/ Maine may be more generous on locomotive depreciation, while NH may be more generous on gas taxes, so you purchase fuel for the system from an office in NH, and hide the locomotives under ME law by placing them under control of an ME based company, while you move MofW equipment to B&M since MA introduced rail-reinvestment initiative and offers tax incentives on track materials and equipment purchases./ end hypothetical

SP did that with their SD45 fleet, "selling" units from the railroad to a subsidiary to increase depreciation...I'm sure an accountant could offer a much more detailed/correct answer, but based on what I've read here and elsewhere thats my best guess.

I do believe the rail division of Pan Am has just the 4 companies you listed. PAS (Systems not Southern) has Perma Treat, the PAN AM Brands Division and Guilford Motor Express, maybe others, but just the 4 RR's.

Of course anything I write at 11:30 could be tainted with fatigue, take anything I just wrote with a grain of salt.

One more thing, on the topic of Legacy-when GTI bankrupted the D&H, and CP took over, CP refused to take the Colonie Shops (and who can blame them, its an environmental disaster crossed with an arsonists dream of old buildings full of the greases, fuels and oils of heavy machinery) so which company in the GTI/PAS fold got title to the disaster area that is Colonie?

KSmitty wrote:One more thing, on the topic of Legacy-when GTI bankrupted the D&H, and CP took over, CP refused to take the Colonie Shops (and who can blame them, its an environmental disaster crossed with an arsonists dream of old buildings full of the greases, fuels and oils of heavy machinery) so which company in the GTI/PAS fold got title to the disaster area that is Colonie?

If it's this (which Google Maps says is actually in Watervliet), it appears to be in the hands of a "Realco Inc" of Windermere, FL. No telling how many layers of legal nonsense are between that company and actual people. If that's not the right spot, the town website is colonie.org and it has a mapping app and the tax rolls. Unfortunately, the latter are a series of giant PDF's, but that's what there is.

To be perfectly honest, I wouldn't know what the Colonie Shops look like if they landed in my driveway...Just know that somehow, through the legal mumbo-jumbo of the D&H bankruptcy GTI wound up retaining the property and the environmental wasteland thy represent.

As far as I know they still own the property, its still abandoned, and still as toxic as before.

I might have to dig through the PDF's see if I can find an answer.

markhb wrote:

KSmitty wrote:One more thing, on the topic of Legacy-when GTI bankrupted the D&H, and CP took over, CP refused to take the Colonie Shops (and who can blame them, its an environmental disaster crossed with an arsonists dream of old buildings full of the greases, fuels and oils of heavy machinery) so which company in the GTI/PAS fold got title to the disaster area that is Colonie?

If it's this (which Google Maps says is actually in Watervliet), it appears to be in the hands of a "Realco Inc" of Windermere, FL. No telling how many layers of legal nonsense are between that company and actual people. If that's not the right spot, the town website is colonie.org and it has a mapping app and the tax rolls. Unfortunately, the latter are a series of giant PDF's, but that's what there is.

Actually Wikimapia says that it's the facility across the street.

KSmitty wrote:Though, I think the SD40's were formally accepted in NH (no sales tax) and I didn't think MEC still owned land in NH...

As memory serves PAR still owns a very small portion of the Mountain Division in order to prevent anyone from recreating a contiguous through line. MEC would very likely be the owner of record for this right of way.

KSmitty wrote:The other reason I can think of is that it keeps resources like locomotives away from tax collectors in Mass, allows things like depreciation deductions to be taken and used more fully where Maine may have more lax codes.

This is where I think this theory and everything that follows from it fails in part because currently the MEC is in North Billerica in MA (at least on paper).

KSmitty wrote:One more thing, on the topic of Legacy-when GTI bankrupted the D&H, and CP took over, CP refused to take the Colonie Shops (and who can blame them, its an environmental disaster crossed with an arsonists dream of old buildings full of the greases, fuels and oils of heavy machinery) so which company in the GTI/PAS fold got title to the disaster area that is Colonie?

GIS Records for the Town of Colonie, NY indicate the property at 49 Lincoln Avenue, NY (actually still in Colonie, NY, but per Google Maps shows as "Watervliet, NY") of 33 acres, SBL# 44.10-1-32.2, currently belongs to the "Delaware and Hudson RW CO" with an address of 501 Marquette Ave, Ste 1410, Minneapolis, MN, 55402-1201. As it so happens that address happens to be the "Tax Department" for the "SOO LINE RAILROAD COMPANY" which as we all know is in fact a wholly owned subsidiary of Canadian Pacific Railway. Therefore, despite all impressions to the contrary it does in fact appear to be exactly the case that the CP in fact owns the former site of the D&H Colonie Shops. Q.E.D.

I have to admit given the depth of knowledge on this site and the known experience of many posters here I'm more than a little surprised that the answer hasn't fully emerged yet.

It is certainly an interesting mystery to say the least.

Yes Maine Central is operated out of Billerica, but, it is founded in ME. Similar to how all those companies that found themselves in Delaware for tax shelters, MEC was incorporated in Maine, and so can still call it home regardless of operation status or at least thats always been my interpretation of how those things work, but I'm no expert.

Thanks for the research on the Colonie shops, I didn't mean to hijack your discussion with that but I saw an opprotunity to ask :D

KSmitty wrote:Thanks for the research on the Colonie shops, I didn't mean to hijack your discussion with that but I saw an opprotunity to ask :D

No problem at all. And I found it very interesting myself.

Another interesting discovery was my finding that the Maine Central Railroad Company Records in the collections of the Fogler Library at the University of Maine in Orono.

They are listed as a "Gift of Guilford Transportation Industries in 1984".

I will cross post this information in an appropriate thread in the Boston & Maine/Maine Central forum.

I'll have to check that out on Monday. Thanks again!

I am not sure if PAR still owns a short portion of the Conway Branch or not.
Earlier this year, before Hurricane Irene, the Conway Scenic needed several
cars of ballast for track work and looked into running down to Coleman's in
Albany right where RT. 113 and Rt. 16 intersect. However, it was found
that the track between the Conway station and Coleman's was in such poor
condition, that would not be possible. So it would seem the State of NH
owns from Conway to Albany. The NHN delivered a few cars of lumber to
an home improvement supplier north of the switch to the pit, near the bridge
over the tracks on RT. 171. That company later went out of business.

So if PAR does still own some portion of the line, it must not be right at the
end of either the CSRX or NHN ownership.

gokeefe wrote:GIS Records for the Town of Colonie, NY indicate the property at 49 Lincoln Avenue, NY (actually still in Colonie, NY, but per Google Maps shows as "Watervliet, NY") of 33 acres, SBL# 44.10-1-32.2, currently belongs to the "Delaware and Hudson RW CO" with an address of 501 Marquette Ave, Ste 1410, Minneapolis, MN, 55402-1201. As it so happens that address happens to be the "Tax Department" for the "SOO LINE RAILROAD COMPANY" which as we all know is in fact a wholly owned subsidiary of Canadian Pacific Railway. Therefore, despite all impressions to the contrary it does in fact appear to be exactly the case that the CP in fact owns the former site of the D&H Colonie Shops. Q.E.D.

We've both been doing some digital spelunking, it seems. I found the property owned by the D&H as well, however, that's not the repair shop land... it's the actual railroad. The shop land is listed as 950 5th St. (the Colonie GIS map has a neat "click to identify" feature) and is indeed listed as owned by GTI at Iron Horse Park. Nice piece of property, conveniently situated between the abandoned steel works and the back end of the Watervliet Arsenal (which is still operational).

Dick H wrote:I am not sure if PAR still owns a short portion of the Conway Branch or not.
Earlier this year, before Hurricane Irene, the Conway Scenic needed several
cars of ballast for track work and looked into running down to Coleman's in
Albany right where RT. 113 and Rt. 16 intersect. However, it was found
that the track between the Conway station and Coleman's was in such poor
condition, that would not be possible. So it would seem the State of NH
owns from Conway to Albany. The NHN delivered a few cars of lumber to
an home improvement supplier north of the switch to the pit, near the bridge
over the tracks on RT. 171. That company later went out of business.

So if PAR does still own some portion of the line, it must not be right at the
end of either the CSRX or NHN ownership.

NH state rail map shows Conway Branch in-state owned by "Other" on the Conway Scenic (probably means the Scenic owns its own track or some nondescript, non-state host does), State of NH on the abandoned portion, and NH Northcoast owning the freight-active portion. No remaining PAR ownership because the map does document all their track holdings.

Are Colonie shops a Superfund site? It can't be redeveloped or even have new structures built on it without environmental cleanup to current light industry or RR-zoned standards, so they might be sitting on it hedging on trying to lure some EPA funding if it's in horrible enough shape to meet current or potential mid-term future threshold. There is more state-level money appearing in the northeast for cleaning up and preserving brownfield parcels as the states get their comprehensive freight plans put to paper for the very first time.

I am fairly sure Pan Am has sold it's last owned section of the Conway Branch to the state.