Tuesday, January 6, 2009

CSX Railroad Refund Explained

Hi All:

I would like to clarify the process and sequence of events around the Tax Abatement Committee (of which I am the Chair) and then the full Board of Aldermen decision to refund tax payments to CSX Railroad.

Railroads, under Federal law, do not pay local property taxes to each municipality but pay a gross receipts sales tax to the state. In our case CSX Railroad leased part of their New Haven yard to an entity called “Circle of Life”. The assessor’s office opined that Circle of Life is not either a railroad company or engaged completely in railroad activities. The City sent the owner of the property, CSX, a bill for local taxes as we felt that the land use was not exempt. CSX disagreed with the assessor but paid the taxes under protest. They then started proceedings to sue the City.

Prior to going to court the City has a committee that reviews litigation suits to see if it pays for the City to go to Court or settle. This committee is given its power and authority by the City Charter. This is the same document that gives power to the Board of Aldermen and the Mayor. This committee has the authority to enter the City into a legally binding settlement agreement.

In the case of CSX & Circle of Life vs. the City of New Haven, the City’s attorney – the Corporation Council – said that the city did not have a case and would probably lose. The charter authorized Litigation Settlement Committee agreed with the Corporation Council and voted to refund the payments.

I am not sure why the issue had to come in front of the BOA but it did. We heard the item and learned that our hands were tied in regard to denying the refund as the City was already legally bound to refund the payments. What we did do was ask the President of the Board – Carl Goldfield – to engage outside council to give an opinion if we should go after the upcoming years and suggest a strategy to pursue this with.

Sorry for the long write up but this is a pretty complicated issue and needs clarity.


PS NHI had a pretty good story on this issue when it was voted out of litigation settlement.

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