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CSX Transportation, Inc. v. Delaware County Board of Assessment Appeals

Commonwealth Court of Pennsylvania

November 19, 2014

CSX Transportation, Inc., Its Affiliates and Subsidiaries
v.
Delaware County Board of Assessment Appeals. Appeal of: Chichester School District; CSX Transportation, Inc., Its Affiliates and Subsidiaries, Appellant Property Located at 329 Bethel Ave., Chichester, Upper Chichester Twp., Delaware County, PA 19014. Tax Folio Number: 09-00-01050-10; Upper Chichester Township Delaware County Board of Assessment Appeals

Argued October 7, 2014

Page 613

Appealed from No. 2010-015679. Common Pleas Court of the County of Delaware. Green, J.

John E. Van Allen, Harrisburg, for designated appellant CSX Transportation, Inc.

Stephen J. Polaha, Media, for designated appellee Chichester School District.

BEFORE: HONORABLE ROBERT SIMPSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge. 

OPINION

COVEY, JUDGE

Page 614

CSX Transportation, Inc., its affiliates and subsidiaries (collectively, CSXT) and Intervenor Chichester School District (School District) cross-appeal from the Delaware County Common Pleas Court's (trial court) December 30, 2013 order (Order) affirming the Delaware County Board of Assessment Appeals' (Board) determination tat the property in question was taxable, but holding that a 7.883 acre portion of a 72.63 acre property is exempt from local real estate taxes.

CSXT, a wholly-owned subsidiary of CSX Corporation, provides transportation services through a 21,000-mile railroad network. It is regulated by the United States Surface Transportation Board and the Pennsylvania Public Utility Commission, and is subject to the act commonly known as the Pennsylvania Public Utility Realty Tax Act (PURTA).[1] CSXT owns property located at 329 Bethel Avenue, Upper Chichester Township, Delaware County, Pennsylvania by virtue of a Certificate of Merger under which the Baltimore and Philadelphia Railroad Company (B& PRC) merged with CSXT. B& PRC had acquired 62.32 acres of land from Sun Refining and Marketing Company on January 30, 1985 and 27.88 acres of land from Transco Development Company on February 14, 1985 (the Property). The Property is reflected on Delaware County Tax Map No. 09-16-065-000. Folio No. 09-00-1050-10 (Folio 10) and Folio No. 09-00-01050-50 (Folio 50) were assigned to that tax map.[2]

Essentially, the issues for this Court's review are: (1) whether the Property is used or useful in furnishing a public utility service, and if so, whether it is constitutionally exempt from local real estate taxes; (2) whether the Property is " utility realty," as defined by PURTA; (3) whether the Property is land owned by a railroad as a right-of-way and is exempt from local real estate and PURTA taxes; (4) whether the trial court properly determined the taxable market value of the Property; and, (5) whether the trial court properly found that the Property is composed of 72.63 acres and has rails on it.

Page 615

After review, we affirm in part and reverse in part.

The parties' stipulated facts which described CSXT's use of the Property are as follows:

18. CSXT receives automobile shipment orders from major automobile manufacturers, including General Motors, Ford, Chrysler, Nissan, Hyundai, Kia and Volkswagen, to transport automobiles by rail.
19. The automobiles to be transported are loaded onto rail cars owned by CSXT and many other railroads, including Norfolk Southern, Union Pacific, Burlington Northern Santa Fe, Canadian Pacific, and Canadian National Railway Company, as it is industry practice for one railroad to use other railroads['] rail cars.
20. Upon arrival, the automobiles are unloaded by third[-]party contractors from CSXT's trains and the unloaded automobiles are moved to assigned parking bays or spaces on the Property. Automobile and parking bay or space information is electronically transmitted to PUC-regulated Common Carrier auto transporters ([ ]Common Carriers[ ]).
21. The Common Carriers, which operate pursuant to subleases, plan vehicle loads and assign those planned loads to drivers.
22. Common Carrier drivers load the automobiles onto automobile transport trailers, submit required documentation to the facility's security personnel, and exit the facility with those loaded automobiles.
23. Automobiles transported from the Property are distributed by the Common Carriers to automobile retailers located primarily in the Philadelphia and New Jersey area.
24. On average, 67 rail cars containing 842 automobiles are unloaded each day.
25. The average turnover time between the unloading of an automobile from a rail car and its departure from the Property via the Common Carriers is about 24 to 48 hours.
26. There are four buildings located on the Property having a combined area of 9,545 square feet.
27. Approximately 9,000 feet of electric fencing surrounds and encloses almost all of the Property.
28. 60.918 acres of the Property are paved with macadam.
29. By a lease dated September 1, 1998 ([ ]Lease CSX-033616[ ]), CSXT leased 84.5 acres to Total Distribution Services, Inc. ([ ]TDSI[ ]), an affiliate of CSXT and a wholly-owned subsidiary of CSX Corporation.
30. Through a supplemental agreement dated September 21, 2011, CSXT and TDSI supplemented Lease CSX-033616 to reflect a correct lease area of 81.25 acres.
31. Through an Automobile Terminal Operations Agreement, effective April 15, 2009, TDSI engaged third-party contractor Auto Logistics Providers, LLC ([ ]ALP[ ]) to provide automobile loading and unloading services at the facility.
32. Under the Automobile Terminal Operations Agreement, ALP is responsible for unloading inbound automobiles from CSXT's rail cars and loading outbound automobiles onto automobile transport trailers operated by Common Carriers.
33. Through sublease agreements, CSXT and TDSI have subleased office space in buildings located on the Property to Common Carriers, namely Leaseway Motorcar Transport Company, UPS Supply ...

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