(The following story by Judy Rife was published in the January 24 online edition of the Middletown Times Herald-Record.)
MIDDLETOWN, N.Y. — Town supervisors and school administrators focused yesterday on the price that every property owner in Orange County will have to pay for Metro-North Railroad’s pending takeover of the Port Jervis line.
The fine print in the new lease agreement between Metro-North and the Norfolk Southern Corp. for the 65-mile railroad notes that the property will now become exempt from real estate taxes. As a government agency, Metro-North doesn’t pay taxes on property it rents or owns.
“Are you kidding?” said Deerpark town Supervisor James Chandler, whose $2.6 million budget relies on Norfolk Southern for about $50,000 a year.
“Any diminishing of taxes hurts this town. We’re an extremely poor town. If we lose even a lousy $10,000, it’s a big increase in taxes for us – 2.4 percent.”
Priscilla Holden, assistant superintendent for business in the Minisink Valley School District, said Norfolk Southern’s last bill was for $240,000, making the railroad one of the district’s biggest taxpayers.
“Whenever we lose any revenue stream, it impacts programs in the schools or taxes in the community or a little of both,” Holden said.
Just how much Norfolk Southern pays in town, county and school district taxes in Orange County is difficult to determine, but the best estimates put it above $1.5 million a year. The railroad has property in 13 of the county’s 20 towns and 10 of its 15 school districts. It is also subject to county taxes.
Norfolk Southern spokesman Rudy Husband said the railroad didn’t break taxes down by rail line and Metro-North spokesman Dan Brucker said his railroad didn’t have the information, either. Town and county taxes, due Jan. 31, total more than $475,000 and should be paid as scheduled. School taxes, due Sept. 31, may or may not be paid since the lease could kick in mid-year.
What complicates the tax picture is a federal lawsuit that Norfolk Southern and CSX Corp. filed against the State of New York challenging their assessments in 2000. The two companies, which bought the assets of Conrail and divided them in 1997, won reductions of up to 50 percent in a similar lawsuit settled five years ago. The lawsuits are filed against the state because it gives municipal assessors direction about how to value railroad property.
The judge, pending resolution of the case, is permitting the two companies to pay municipalities and school districts only what they think they owe – rather than what they were billed. The difference is placed into a court-supervised escrow account. For example, Holden said Norfolk Southern only paid $181,000 of that $240,000 last year.
Bill Novak, the supervisor of the town of Mount Hope, said commuters to the city – there’s a Metro-North station in Otisville – complain all the time about the service, but he doesn’t know if improvements are worth giving up $50,000 in taxes every year.
He pointed out that commuter rail service has been instrumental regardless in bringing more people to Orange County and putting financial pressure on towns and school districts – something that he expects the expansion of Metro-North service and the opening of the Secaucus transfer late this year to fuel.
In fact, Metro-North said it sought a deal with Norfolk Southern that would give it responsibility for maintaining and upgrading the aging line because of the tremendous jump in ridership that Secaucus is likely to bring – perhaps twice as many as the 1,800 it has now in another 10 years.
“The town has a lot of headaches because of the railroad,” said Novak. “There’s no security and people ride ATVs on the tracks all the time, to the point where we had to buy our police department an ATV to chase them. I’d like to see that change.
“But any loss of revenue today is a big deal. We earned $50,000 to $60,000 less on our investments last year because of low interest rates and that meant another 30 or 40 cents on the tax rate. We lose $50,000 from Norfolk Southern and that’s another 10 to 12 percent increase.”
Terrence Olivo, superintendent of the Monroe-Woodbury School District, said he knows the hundreds of commuters who have contributed to the district’s explosive growth are likely to welcome Metro-North’s stewardship of the Port Jervis line.
“It’s a big hit – $151,631.50 for us last year, which is the equivalent of three teachers, every year,” said Olivo. “It’s unfortunate that this will result in a cost shift to the homeowner. Any erosion of the tax base is never good news for the community.”
Woodbury Town Supervisor Sheila Conroy called the pending loss of $70,000 from Norfolk Southern “unbelievable.”
Like Olivo, she questioned whether Metro-North’s proposal to build a new train station at Woodbury Common Premium Outlets would result in further losses. Metro-North intends to lease a portion of the parking lot at the outlet center, one of the biggest taxpayers in the town and school district.
“The financial impact on the community is part of the environmental review but I never expected that could include a loss of taxes,” said Conroy. “It would hurt. It would be a double insult to the community [since Metro-North already has tax-exempt property on which to expand at the Harriman station]. But if it’s a possibility, it’s better that it comes out now.”