Sullivan County Democrat
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New Railroad Company
Wants Tax Abatement

By Dan Hust
FREMONT CENTER — January 14, 2005 – Sullivan County’s only remaining railroad may soon be no more.
As the three other local railroad townships have been told this week, the Town of Fremont Board heard Wednesday that Norfolk-Southern plans to abandon the line unless a tax abatement deal is worked out with a new company leasing the line for just $1 a year.
And such a deal, explained District 5 County Legislator Rodney Gaebel, is highly uncertain.
As first reported in the Democrat on December 31, the Central New York Railroad Corp., based in Cooperstown, has taken over the maintenance and operation of the Southern Tier line, which runs through the Sullivan County towns of Tusten, Cochecton, Delaware and Fremont on its trek between Port Jervis and Binghamton.
Norfolk-Southern was apparently eager to unload the 150-year-old line, since it has been a money-loser ever since the corporation took it over from Conrail in the late 1990s.
However, this new deal was predicated on a “full tax abatement” for the Central NY corporation, according to Fremont Supervisor James Greier.
That’s Gaebel’s understanding too, reinforced by a meeting he attended with fellow legislators Chris Cunningham and Sam Wohl on Wednesday. Held in Hancock, the gathering included officials from the Central NY Railroad Corp. and the Sullivan, Delaware and Broome counties’ industrial development agencies.
“I guess the deal is Norfolk-Southern is going to abandon this line, and it’s going to happen fairly quickly,” said Gaebel to a stunned town board. “[Central NY’s] proposal is . . . they don’t want to see it go by the wayside.”
But, he added, to simply upgrade the line would cost $10 million due to alleged poor maintenance by Norfolk-Southern (an issue in the customer service area as well, he said). And apparently, transportation law limits how railroads can raise revenue in the private sector, he said.
“So naturally, like every other developer, . . . they want to know if there’s any help available to them from the county or towns,” he remarked.
Thus, the corporation is asking the three counties’ industrial development agencies for a full tax break on the entire line. (The portion of the line in Pike County, Pa. is untaxed, which is actually the normal situation throughout the country, said officials, and one the NYS Legislature is considering.)
And they need this break fast – before March 1, which is Taxable Status Day.
“If this doesn’t happen by the middle of February . . . they wouldn’t be able to do it for another year, and this cans the whole project,” Gaebel explained. “You don’t have a lot of time to put this together.”
And a full tax abatement is not an option, he said.
“From my perspective, it’s all pie-in-the-sky,” he remarked, although he admitted Central NY has been successful with such efforts in New Jersey.
Still, he advocated for the towns and county to consider the offer now being discussed by the Sullivan County IDA (which makes the final determination, not the towns): a 20 percent tax reduction per year for the next five years. It’s an offer he said Central NY has expressed interest in.
But wouldn’t that be simply delaying the inevitable?
Not necessarily, said Gaebel, citing the impact of no rail service to the two remaining Sullivan County customers, Cochecton Mills and Narrowsburg Feed and Grain.
“It’s significantly more costly to truck their product in . . . so it’s going to have a ripple effect on the entire area” – especially farmers, he said.
Central NY has said it plans to maintain and increase freight service and possibly even bring back passenger excursions and dinner trains.
Fremont alone has 85 acres of land owned by the railroad and, like its neighboring towns, has lost thousands of dollars through a recent court decision granting a lower assessment to Norfolk-Southern.
So the town is understandably sensitive on this issue.
“I’d hate to see the [National] Park Service end up with it and make a bike trail out of it,” said Town Clerk Paul Kellam. “I would rather see it on the tax rolls.”
So maybe the town should let Norfolk-Southern abandon it, said one town official.
“In our case, that’s some nice real estate,” related Councilman George Conklin, adding that the steel rails could be ripped up and sold by the town if the line was abandoned.
“That would raise the values on those river properties tremendously,” agreed Town Assessor William Quick.
Officials, however, did say that flooding and accessibility problems might hamper efforts to sell the line piecemeal.
Another resident suggested piggybacking the Pegasus power line proposal on this deal, letting Central NY have the line as long as it promises that no high-tension power lines – such as the ones a Canadian power company named Pegasus is proposing – can be strung along the right-of-way, which follows the curves of the upper Delaware River valley.
Although the final decision is up to the involved IDAs (which must be unanimous on the issue), Fremont board members agreed to gather in the next few weeks with Delaware, Cochecton and Tusten board members – and possibly Central NY officials – to determine whether or not to support the 20 percent-per-year abatement . . . or nothing at all.
“We’d like support from the towns that are involved,” said Gaebel. “The bottom line is, if they [Central NY] don’t take it over, Norfolk-Southern will just abandon it and won’t pay taxes.”
“We’re damned if we do and damned if we don’t,” lamented Supervisor Greier.

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