Monday, May 16, 2016

Tax Revenue from Great Lake Basis RR


In response to numerous questions regarding property taxes paid by railroads, I have compiled
some general information on the railroads currently operating in Boone County and the Great
Lakes Basin Railroad being proposed.
Boone County currently has two operating railroads and their 2015 tax bills (payable this year)
are summarized as follows:
As track passes through multiple taxing districts, the tax bill is calculated based on the mileage of
track in each district. The
revenue for a given taxing district is based on the miles of track
existing in that district, the assessment per mile, and the district's tax rate.
The width of the right-of-way for existing track in Boone County is typically 1 00 feet. The land
area consumed by a 1 00 ft. wide right-of-way is about 12.1 acres per mile of track, for a total area
of approximately 429 acres in Boone County. This computes to an average assessment of
$10,564 per acre and an average tax bill of $1,128 per acre.
For comparison, the average assessment for cropland in Boone County is $308 per acre, with an
average tax bill around $35 per acre. 429 acres of cropland would have a total tax bill around
$15,000 depending on the specific districts involved and their tax rates.
Proposed GLB Railroad
The current proposal is for approximately 33 miles of right-of-way, 200 feet wide. This would
consume approximately 800 acres of land.
Railroad property is assessed by the State of Illinois and involves multiple factors. There are
three methods used to evaluate railroad property:
1. The cost approach (what it costs to build the railroad)
2. The income approach (revenue generated by the track for its owner)
3. The stock & debt approach (factors pertaining to the railroad company's balance sheet)
If a railroad were built by an upstart corporation with no record of operating revenue, the initial
assessment would be based mostly on the cost approach and would be very high. However, as
time goes on, the assessment would be based mostly on the company's profitability and could be
much lower per mile of track than the railroads we currently have.
In other words, estimating future assessments and tax revenue from a proposed railroad would
require a crystal ball. I think it's a safe bet that a new railroad would generate more property tax
revenue than the farmland it replaces. Beyond that, there are too many unknowns to speculate
on the dollar amounts.

Above is from:$file/Railroad%20Tax%20Information_201605061358.pdf

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