NORWICH – The Chenango Industrial Development Agency should review whether or not to terminate its tax-free deal with the New York Susquehanna & Western Railroad before March 1, the IDA’s attorney told the board earlier this week, saying the company hasn’t lived up to its end of the agreement for over a year.
Opponents of New York Regional Interconnect have called on the IDA to cancel the agreement since it was learned in March 2006 that the NYS&W sold land use rights to the power line in Chenango, Madison and Oneida counties.
One problem: Terminating the deal could halt an expensive environmental clean-up in the City of Norwich, IDA legal counsel James Downey added.
The railroad has been out of operation since June 2006 from Chenango Forks to Sherburne after flooding damaged that stretch of tracks.
The NYS&W has asked for, but is yet to receive, over $400,000 in public or private funding to fix and re-open the line. As of 2002, the company had already received $12 million in state money, according to the Department of Transportation, and $4 million specifically for the tracks running through Chenango County from Binghamton to Utica.
If it doesn’t get funding, the railroad says it will seek to abandon the line, leaving open any number of options for the property, including creating a scenic rail line or trail system.
In the meantime, Downey said the NYS&W is technically only eligible for the tax free status as long as it’s in operation.
“They’re not running a railroad,” said Downey Tuesday. “They’re not doing what they agreed to do for tax exemption.”
The railroad has been operating tax-free in Chenango County since 1982, saving the company around $200,000 annually in recent years. If the agreement is terminated before March 1 – the start of the tax year – it will not be listed as “exempt” for 2008. The IDA is likely to make a decision during one of its next three meetings.
Under the exemption – called a payment-in-lieu-of-taxes (PILOT) agreement – the IDA, a non-profit governmental body, holds nominal title of the tracks and qualifies the railroad to operate tax-free. The NYS&W, however, can buy back the tracks for $1 and break the deal at anytime.
But, as Downey has pointed out in the past, because the railroad is designated as an IDA property, the state Department of Environmental Conservation is currently paying 90 percent of a $600,000 tab – the NYS&W pays the other 10 percent – to clean up a TEC chemical dumping ground on Lee Avenue in the City of Norwich. If the PILOT were terminated, the Lee Avenue project would no longer be qualified for that state aid. The railroad, which did not cause the spill, would not have to pay for the clean-up, meaning city taxpayers would foot the bill or the clean up would end.
“If you take government out of ownership, there’s no one that can afford to pay for it,” said Downey. “The IDA needs to stay involved.”
IDA Executive Director Maureen Carpenter said it’s not clear who caused the chemical spill – Bennett-Ireland, Simmonds Precision and Hercules Inc. were all located near the Lee Ave. tracks – explaining that the state will attempt to re-coup the cost of the clean up from one or all of those companies once it’s complete.
Carpenter did say that NYS&W officials have said they have pressure from their board of directors to “abandon this line.”
NYS&W has said it will seek to abandon if repair funds are not acquired. Railroad spokeswoman Melanie Boyer said Thursday that the company hasn’t moved any closer to filing for abandonment.
Downey said the IDA has asked that the NYS&W cooperate on altering the agreement to keep two stretches of track – the clean-up site on Lee Ave and the still operational portion between Sherburne and Earlville – off the tax rolls and put the rest back on.
Boyer was unaware of that request, and did not return with a confirmation from railroad officials by press time Friday.
The IDA sent a letter several months ago asking the NYS&W to move forward with definite plans – whether it be to repair or abandon the line.
Carpenter said the response was vague, adding that, “It wasn’t an answer.”
When asked what the status of the tracks was Thursday, Boyer said, “there have been no changes.”
To abandon the railroad, the NYS&W would have to file with the federal Surface Transportation Board and go through a hearing process. In the fall, the company put out a notice of abandonment, but has yet to file with the STB.