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IDA to Consider
No Railroad Tax

By Jeanne Sager
CALLICOON — February 18, 2005 – The future of the railroad in Sullivan County is in the hands of the IDA.
The county’s Industrial Development Agency will hold a meeting this morning at 10 a.m. at the government center in Monticello to decide whether to grant tax abatements to Central New York Railroad, the company leasing the Norfolk Southern line through Broome, Delaware and Sullivan counties.
The meeting comes on the heels of four public hearings held yesterday in the towns of Tusten, Cochecton, Delaware and Fremont to determine town residents’ opinions on a reduction in real estate taxes for the company.
The upstate company has been in the county since a deal went through with Norfolk Southern in late December to lease the line for just $1 a year.
Folks at Central New York (CNY) want to whip the line back into shape, but they need help.
During a hearing at the Delaware Youth Center in Callicoon, the railroad’s executive vice president, Nathan Fenno, explained the company’s objective – to maintain and improve the line to keep service steady to the current customers, but also to attract new business.
Already they are in talks with two companies near Deposit, and they’re “beating the bushes” for others who would join businesses like Narrowsburg Feed and Grain and Cochecton Mills in receiving rail service off of the 123-mile line.
But in order to improve and upgrade the line, the small company needs funding, Fenno said, which they’re seeking from a number of sources.
Asked by Callicoon resident and businessman Ed Sykes whether the project was viable without tax abatements from the four Sullivan County towns affected, Fenno said frankly, “No.”
What CNY has proposed is to accelerate a plan by the New York State Legislature to reduce real estate taxes for railroads throughout the state by 2009.
In addition, the company plans to apply to the federal government to abandon an old and expensive signal system.
That won’t affect the grade crossings, which will still be set up to warn motorists of an incoming train.
From a safety standpoint, the system, which is essentially a “stop and go light for trains,” is not necessary for a company that operates only one train on the line at a time.
“Our goal is to reduce costs,” Fenno said, “to redirect cash from costs that don’t benefit the railroad and put it into maintaining the railroad.”
Questioned on the viability of the move – in light of a recent rail tragedy in South Carolina involving chlorine tankers – by North Branch resident Joe Walker, Fenno said there are no hazardous materials being delivered on the line and there are other ways to check the line for service needs.
Liberty businessman Gene Blabey, who owns railroads in other parts of the state, said abandonment of the signal system is not really a question facing the Sullivan County IDA – it’s up to the federal government.
Fenno said CNY is aware of the South Carolina incident, and they realize it may affect the federal government’s decision.
“I’d love to see you come into town,” Walker said, “but I’d also like to protect the Delaware Valley.”
“The answer is, there can always be an accident,” Fenno responded. “With a signal system, there can still be an accident.”
Blabey said one of the more pressing issues in terms of safety is the track itself, something CNY is trying to address.
The last major work done on the line was in the 1970s when Conrail took over, he said, and the natural life of a wooden railroad tie is 30 years.
“You can add 1978 and 30 years . . . within five to seven years there’s going to have to be major, major work on the replacement of ties,” Blabey said. “If you’re concerned about safety, the replacement of ties and dealing with the substructure is a critical issue.”
River Road resident Janet Threshman agreed.
“Cinder is coming down onto the road,” Threshman said. “You talk about repairing the ties, but you’re going to have a railroad on River Road!”
“The tracks need work,” Sykes, who also lives on River Road, attested. “They need work in my backyard, they need work in your backyard.
“All you’ve gotta do is take a walk.”
Blabey estimated that a railroad company should be investing about $10,000 a year per mile on track maintenance.
“That’s to keep things status quo.”
Neither Norfolk Southern or Conrail before them did that, he said. Now it’s time to do catch-up work, and that will require money.
“Not today, but unless that is addressed, then you are going to have problems,” Blabey warned.
Fenno said the company is already looking to the state for help, and the commissioner of transportation has asked the governor for $600 million over the next five years to help small railroads in the state with rail-freight projects.
The commissioner has also sent a letter to the IDA advocating for the tax abatements to help CNY. According to Blabey, 18 of 28 short-line rail companies in the state operate under some form of tax abatement.
“It is, if anything, the norm with light-density lines to give them some sort of tax abatement,” Blabey said.
That said, CNY is trying to help itself, with funding from the state extremely uncertain.
“Where we’ve been successful is in identifying local benefit and investing our own money – not just depending on the state,” Fenno said.
Asked by Threshman where those benefits lie, both Blabey and Fenno said there is no clear answer.
Owners of both Narrowsburg Feed and Grain and Cochecton Mills were present at an earlier public hearing to express their concerns should the line close down – not only would the two Sullivan County companies face problems remaining competitive, but their increased costs would be passed along to local farmers.
Blabey said they’d also heard from the Sullivan County Partnership, which CNY has recently joined.
When the county is studied by companies looking to relocate, access to rail service is always requested – without it, the county might not even make the short list in terms of industrial development.
Blabey reiterated that losing the railroad could have a detrimental effect on Sullivan County.
A study done several years ago to see if the New York O&W could be brought back showed the costs would be in excess of $1 billion, he said.
“When it’s gone, it’s gone,” Blabey noted. “Putting it back is probably not feasible.
“I just wonder if, if you let this line go 20 or 30 years from now someone will be saying, ‘I wish they’d had the foresight to preserve the asset.’”
Asked what would happen if the line were to go, Fenno had no clear answer.
Sometimes the land is handed over to the National Park Service and a Rails to Trails system is built up for hikers.
Other times the company will sell the railroad piece by piece.
Asked by Threshman what would become of the line where deeds exist stipulating it only be used as railroad, Fenno said there are sections that could revert to original landowners.
But CNY is hoping not to see the line get to that point. The IDA will vote this morning on whether to approve the tax abatements – in time for the railroad to meet New York’s March 1 taxable status deadline.
If granted, the abatements will be offered only to CNY and would not affect plans Pegasus Power has to run its energy project along the same line.
And CNY has promised to make changes for the better.
“One of the benefits we feel we bring to this is this line is going to be much more important to us than it was to Norfolk Southern,” Fenno said.

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