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Volume 6 - Opinions of Counsel SBEA No. 3

Opinions of Counsel index

Railroad property exemption (Amtrak, Conrail) (effect of L.1977, c.920) - Real Property Tax Law, Article 4, Titles 2-A, 2-B; § 489-t:

The new Titles 2-A and 2-B of Article 4 of the Real Property Tax Law relative to railroad ceiling assessments, as enacted by chapter 920 of the. Laws of 1977, apply to any assessment rolls completed in 1977 used for the levy of taxes for fiscal years commencing on or after July 1,1977.  Railroad ceilings must be established under the new law for these rolls, except the new law does not apply: (1) to any current railroad ceiling where the tentative ceiling thereof was determined as of the effective date of chapter 920 (August 11,1977); and (2) unless railroad ceilings were made for that property in 1976. However, ceilings must be established for Amtrak’s railroad real property for New York City’s 1977 assessment roll even though no ceilings were established for the property in 1976.

Our opinion has been requested as to whether the new law governing exemptions accorded railroad real property, Titles 2-A and 2-B of Article 4 of the Real Property Tax Law as enacted by Chapter 920 of the Laws of 1977, applies to all assessment rolls used for the levy of taxes for fiscal years commencing on or after July 1,1977. The answer to this question is important in determining the substantive provisions of law which control the establishment of railroad ceilings for Conrail and Amtrak. Chapter 920 of the Laws of 1977 was approved by the Governor on August 11, 1977 and, by express provisions, took effect “immediately.”

Chapter 920 revised substantially the statutes providing for the exemption of railroad real property of railroad companies. The compelling reason for the revisions was the acquisition in the year 1976 by Conrail and Amtrak of major portions of the taxable operating railroad property in the State formerly owned by the Penn Central Transportation Company and other bankrupt railroads.

The primary problem was that the formulas provided in the old law (Titles 2-A and 2-B of Article 4 of the Real Property Tax Law) for ascertaining the economic factor used in making railroad ceilings were basically unworkable when applied to the property being acquired by Conrail and Amtrak.

The difficulty was temporarily solved in 1976 by the enactment of Chapter 921 of the Laws of 1976 which added a new section 489-t to Title 2-A of the Real Property Tax Law. Among other things, this section provided that railroad ceilings should be established for railroad real property acquired by a railroad company from bankrupt railroads “for (a) assessment rolls completed in 1976 and for (b) assessment rolls completed in 1977 and used for the levy of taxes for a fiscal year commencing prior to July 1, 1977” as if the acquisition had not occurred.

Thus ceilings were established under this provision for railroad real property acquired by Conrail from, for example, the Penn Central Railroad Transportation Company as if it were still owned by Penn Central. The same was true of subsidized railroad real property which was not taken over by Conrail but which continued to be operated pursuant to rail service continuation subsidies paid or payable pursuant to Titles III and IV of the Regional Rail Reorganization Act of 1973, as amended to April 1, 1976.

However, the authority under section 489-t pertained only to ceilings established for 1977 assessment rolls “used in the levy of taxes for a fiscal year commencing prior to July 1, 1977.”

With the enactment of Chapter 920 of the Laws of 1977, railroad ceilings must be established for railroad real property of Conrail, Amtrak and all other interstate railroad companies (whether or not application for exemption has been made) in accordance with the new formulas contained in new Title 2-B (§10 of Chapter 920).(Sections 2 through 9 of Chapter 920 revise old Title 2-A to apply to intrastate railroad companies and the old formula is retained.)

The effective date clause of Chapter 920 (§15) reads as follows:

This act shall take effect immediately, except that the provisions of sections one through ten of this act shall not apply to any assessment roll finally completed prior to January first, nineteen hundred seventy-seven, nor to any assessment roll used in the levy of taxes for a fiscal year commencing prior to July first, nineteen hundred seventy-seven, nor for the state fiscal year commencing April first, nineteen hundred seventy-seven, to any current railroad ceiling where the tentative thereof has been determined as of the effective date of this act, and except that railroad ceilings shall not be made for use on assessment rolls completed prior to January first, nineteen hundred seventy-eight for any railroad real property of any railroad company for which railroad ceilings were not made in the calendar year nineteen hundred seventy-six unless such property is located in a city having a population of one million or more and was acquired by a corporation created under or in compliance with the rail passenger service act of nineteen hundred seventy.

Some assessment rolls (and particularly that of the City of New York) which were completed in the year 1977 have been used for the levy of taxes for a fiscal year commencing on July 1, 1977.

The first question presented is: Since Chapter 920 did not go into effect until August 11, 1977, do the provisions of new Titles 2-A and 2-B apply to assessment rolls completed in 1977 for use in the levy of taxes for a fiscal year commencing on or after July 1, 1977, but prior to August 11? In our opinion, the provisions of Chapter 920 relating to ceiling assessments do apply to these assessment rolls. Thus railroad ceilings must be established for those rolls pursuant to new Titles 2-A and 2-B unless covered by one of the express exceptions contained in section 15.

A cardinal rule of construction is that statutes or general laws which are in pari materia are to be construed together as though forming part of the same statute (McKinney’s Statutes, §§221-223). The text of McKinney’s has the following to say about the meaning of the phrase “in pari materia” (id., at p. 374):

In pari material” when literally translated, means upon the same matter or subject. The phrase is applied particularly to statutes or general laws, usually enacted at different times but with reference to the same subject matter, that is, statutes which relate to the same person or thing, or to the same class of persons or things, and which are not in substance inconsistent with each other.

That the provisions of section 489-t as added by Chapter 921 of the Laws of 1976 (and repealed by §9 of Chapter 920 of the Laws of 1977) are in pari materia with the provisions of section 15 of Chapter 920 is patent. Namely, both relate to a transition period-that is, to the establishment of railroad ceilings for assessment rolls completed in the year 1977.As such, both laws should be construed together for the purpose of giving effect to the legislative intention.

When the assessment rolls and railroad ceilings to which the respective laws are expressly made applicable are compared, the overall intent is readily apparent. Section 489-t is specifically applicable to assessment rolls completed in 1977 used for the levy of taxes for a fiscal year commencing prior to July 1, 1977, whereas new Titles 2-A and 2-B, insofar as assessment rolls completed in 1977 are concerned, are specifically made inapplicable to assessment rolls used in the levy of taxes for a fiscal year commencing prior to July 1, 1977. The important fact to note is that there is a continuous sequence. The obvious intent is that there be no hiatus in the establishment of railroad ceilings. Thus. new Title 2-B was intended to apply to 1977 assessment rolls used for the levy of taxes commencing on or after July 1, 1977.

This interpretation - that no gap was intended - is further borne out by an exception in section 15 of Chapter 920 to the applicability of new Titles 2-A and 2-B. In recognition of the fact that at the time Chapter 920 went into effect some tentative railroad ceilings may have been established for 1977 assessment rolls under the old law which might be affected by the new law, these were excepted.

This interpretation is not only logical but buttressed by the memorandum submitted to the Legislature with the bill which became Chapter 920. In that memorandum, after pointing out that in all but a few localities local assessors have ceased to make independent assessments of railroad property and accept railroad ceilings without modification, it is stated:

Accordingly, it is our judgment that any lapse or discontinuance in the production of the ceilings or of an acceptable substitute therefor would cause consternation among assessors statewide and would lead to many questionable assessment practices and results.

The existing Title 2-A would continue to be satisfactory in respect to most of the railroad corporations for which ceilings are now being made. However, in respect to Amtrak. tor which ceilings have not heretofore been made, and Conrail (the two companies that will probably own at least 75% of the taxable railroad property in the State), the present law will pose very serious substantive and administrative problems. At the very least there will be an absence of ceilings for one or two years depending on ownership and location of property. (This hiatus was eliminated for one year for Conrail by legislation enacted in 1976 (chapter 921), the effect of which has for all practical purposes now expired.) Also, because of the unavailability of certain data, ceilings for Conrail could not be made under existing law for the next four years. While such data is probably available for Amtrak, it would be very expensive to obtain and process. These problems arise principally from the failure to anticipate in the drafting and enactment of existing law (in 1959) the emergence of the new interstate railroad systems. [emphasis supplied]

From this language, the Legislature must have understood that the new provisions were specifically intended to apply to railroad ceilings to be established for Amtrak and Conrail for 1977 assessment rolls not covered by old section 489-t. (Notice also that the “exception” to an exception in section 15 of Chapter 920 to the establishment of ceilings for 1977 assessment rolls definitely requires that a railroad ceiling be made for New York City’s 1977 assessment roll for railroad real property acquired by Amtrak in the City. See later discussion in this opinion.)

That this is the legislative intent is further bolstered by the illogical state aid consequences otherwise resulting. Under the new subdivision 9 of section 54-b of the State Finance Law, which is added by Chapter 920, a municipality may elect to take as state aid for partially exempt railroad real property for its first fiscal year commencing on or after April 1,1977, the same amount as paid in the year immediately preceding. If no railroad ceilings are made for the 1977 assessment roll of New York City, and the taxes payable are those levied on the assessed valuation on railroad real property not reduced by railroad ceilings (which will result, we are told, in taxes five times the taxes payable if railroad ceilings are made for Conrail and Amtrak), then New York City could nonetheless elect to take last year’s state aid of $3.7 million. The underlying concept of this state aid is, of course, to compensate a locality for tax losses resulting from partial exemptions under railroad ceilings. This will not have occurred if railroad ceilings are not made for New York City’s 1977 roll. The Legislature cannot by a strained interpretation of the effective date claused be said to have meant this result.

For these reasons, we conclude that Chapter 920 (including new Title 2-B) applies to any assessment rolls completed in 1977 used for the levy of taxes for fiscal years commencing on or after July 1, 1977, and that railroad ceilings must be established for these rolls unless either of the two express exceptions set forth in section 15 is applicable.

Exceptions

New Titles 2-A and 2-B do not apply to:

1.  “[A]ny current railroad ceiling where the tentative thereof has been determined as of the effective date of this act.”

This exception removes any doubt as to whether or not any tentative railroad ceilings established prior to August 11,1977, under the old law (and as a matter of tact there were some which were not made final until August 23), are valid and could be made final after the effective date, or August 11,1977.

2.  “[R]ailroad ceilings shall not be made for use on assessment rolls completed prior to January 1, 1978 for any railroad real property of any railroad company for which railroad ceilings were not made in the calendar year 1976 unless such property is located in a city having a population of one million or more and was acquired by a corporation created under or in compliance with the rail passenger service act of 1970.”

The effect of this exception is that no railroad ceilings for railroad real property of a railroad company are to be made for assessment rolls completed in 1977 for use in the levy of taxes for a fiscal year commencing on or after July 1,1977 unless railroad ceilings were made for that property in the year 1976. Under this exception, for example, ceilings cannot be made for railroad real property of railroad companies such as Norfolk and Western and other companies which did not receive the partial exemption under the old law because they had never applied for the exemption.

Note, however, the “exception to the exception.” It is specifically provided in section 15 that this exception does not apply (which, ergo, means that Title 2-B does apply) to property located in New York City (the only “city having a population of one million or more”) acquired by Amtrak (a “corporation created by or in compliance with the rail passenger service act of 1970”). In this case, ceilings must be established for Amtrak’s railroad real property for the City’s 1977 assessment roll even though no ceilings were established for the property in the year 1976.

November 21, 1977
Revised January 30, 1979

Updated: