Railroad Real Estate Taxes - Operating v. non-Operating

http://www.seedetroit.com/pictures/mcsweb/index.htm

Take a peek at the photo album linked above, and in the first couple of exterior photos of the abandoned Detroit Michigan Central Station see if you note the TTX flatcars spotted. They are so spotted (parked if you will) for a specific reason and I think such would be of interest to Members that review material submitted at this forum.

The reason those cars are parked at a platform track is that being so establishes the property is operating property rather than non-operatiing. So long as the property is railroad owned, operating property's real estate tax assessment value includes a number of factors such as railroad operating income produced from a defined 'parcel' as well as of course the traditional ad-valorem (how much could you get for it?) factor. Since the propertys railroad operating earnings is "zilch', that portion of the factor is $0, and favorably affects assessed valuation.

Other visible examples of such included B&O's Grand Central in Chicago, where even after the head house had been demolished, there was one track into the property and on which a string of boxcars were parked. The same applied to Dearborn as well. Elsewhere, I believe I once saw a photo of same at Memphis Union (not IC/Amtrak) station. In all likelihood, same existed at the CNJ Jersey City station until it was sold for development into a public park.

If the trackage and cars were to be removed, then the property becomes non-operating or otherwise is assessed in the traditional way of your home and mine.

Now sometimes, things can go afoul with this plan; case in point with Grand Central. CSX was able to sell a parcel South of Polk Street that roundly covers the "throat" to the head house. A condo development stands there ("affordable downtown living") so needless to say the track and the boxcars had to be removed. Accordingly the vacant parcel along Harrison St where the head house stood became non-operating property and became taxed accordingly.

Or, well, so it should be. But then who knows what goes on in Mayor-for-Life Daley's 'puzzle palace' aka City Hall. Lest we forget that over the years, a Tax Assessor or two's "CV" has been known to include a little "slammertime"..

Mr Norman, while this is a bit off topic, if you want to learn more about the world of an abandoned world, I suggest you visit www.uer.ca

Taxation rules differ from state to state. The evidence in New York is that disused rail lines are quickly abandoned, so my conclusion is that rail lines are taxed pretty heavily. Given that CSX was crying for tax relief on the St. Lawrence sub a year or so ago, that's not surprising.

RussNelson wrote:Taxation rules differ from state to state. The evidence in New York is that disused rail lines are quickly abandoned, so my conclusion is that rail lines are taxed pretty heavily. Given that CSX was crying for tax relief on the St. Lawrence sub a year or so ago, that's not surprising.

ah but there are some railroads who don't own the line they operate on the countys in which the track runs thuew or the state owns it. The railroad maintains it or leases it till a more perminant operator can take up the rains. Would this count as almost a freebe in taxes for a railroad??

MCS in Detroit is actually not owned by the Railroad. It's owned by a private entity, Controlled Terminals Inc., which also owns the Ambassador Bridge to Canada.

What would be the difference in taxes between non-operating and abandoned?

CarterB wrote:What would be the difference in taxes between non-operating and abandoned?

I would assume that the state takes control of the land for back taxes?? New York charges about the same in tax rates on ROW's weather the track is used or not. The only way to get a better tax brake is to remove the track. This is also why so many factorys have whole buildings condemed and reduced to rubble so as to pay half the tax rate on the property till it can be sold or abandoned which ever comes first.

RussNelson wrote:Taxation rules differ from state to state. The evidence in New York is that disused rail lines are quickly abandoned, so my conclusion is that rail lines are taxed pretty heavily. Given that CSX was crying for tax relief on the St. Lawrence sub a year or so ago, that's not surprising.

NY has the highest railroad property taxes in the nation last I checked.
(Given this, I am surprised that so few railroad lines in NY have been transferred to public agencies, which makes them tax-exempt. I think all of the NYS&W lines are actually owned by local governments and leased to NYS&W, though.)

PA exempts active railroad property from taxes *entirely*. Very different.... yet there are still a lot of lines owned by public agencies.

neroden wrote:

RussNelson wrote:Taxation rules differ from state to state. The evidence in New York is that disused rail lines are quickly abandoned, so my conclusion is that rail lines are taxed pretty heavily. Given that CSX was crying for tax relief on the St. Lawrence sub a year or so ago, that's not surprising.

NY has the highest railroad property taxes in the nation last I checked.
(Given this, I am surprised that so few railroad lines in NY have been transferred to public agencies, which makes them tax-exempt. I think all of the NYS&W lines are actually owned by local governments and leased to NYS&W, though.)

PA exempts active railroad property from taxes *entirely*. Very different.... yet there are still a lot of lines owned by public agencies.

I'm not sure how many RR's here in NY lease there ROW's from the counties in which they operate in but I do believe that your right about the NYS&W I think they lease there ROW. Finger Lakes Railway also leasese there ROW from the county's when the line was put up for sale by Conrail and the idea of the county's buying and then leasing the line to Finger Lakes came to question Cayuga County almost killed the whole thing. I was told by a friend that Nucor threatened the county that it would close up shop if the county did not do an about face and buy the line.