Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 31, 1992 TAG: 9203310301
SECTION: VIRGINIA PAGE: B2 EDITION: NEW RIVER VALLEY
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Railroads doing business in the state contended that the method wrongly discriminates against railroads because it values their property above true-market value.
In a divided opinion, the justices let stand rulings that a challenge to Virginia's system cannot be pursued in federal courts. Justices Byron White and Sandra Day O'Connor voted to hear arguments in the case, but four votes are needed to grant such review.
The 1990 lawsuit said the state's valuation method violates a provision of the federal Railroad Revitalization and Regulatory Reform Act of 1976.
But a federal judge and the 4th U.S. Circuit Court of Appeals ruled that the 1976 law allows challenges based only on how states apply their property-valuation methods to railroad property - and not the actual valuation methods used.
Until 1984, Virginia assigned the responsibility of assessing railroad property, for the purposes of imposing property taxes, to the State Corporation Commission.
The SCC calculated the property's fair market value by comparing it with adjacent or nearby industrial and commercial property, a so-called across-the-fence or over-the-fence method.
In 1984, the General Assembly transferred the assessment responsibility to the state Department of Transportation. It ditched the previously used method for one that resulted in lower revenues for the cities and counties that actually collected the taxes.
The city of Alexandria and Arlington County sued in state court to block use of the newer valuation method. The Virginia Supreme Court eventually struck down the method because it was not based on fair market values.
In 1990, the Department of Transportation reverted to the method that had been used by the SCC. That action precipitated the railroads' federal suit.
Attorneys for the railroads said the present method of determing the value of railroad property results in assessments far higher than true market value.
"Because other commercial and industrial property in Virginia is concededly assessed at or below true-market value, the excessive valuation of railroad property" violates the 1976 federal law, the appeal said.
Railroads that joined in the appeal were Chesapeake Western Railway, CSX Transportation, Interstate Railroad Co., Norfolk and Western, Norfolk Southern and Richmond Fredericksburg and Potomac.
Memo: shorter version ran in the Metro edition.