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Railroad files complaint that 14 counties are assessing property tax at higher rate

Plumas County is one of 15 California counties named in a complaint by a major railroad company concerning tax assessment.

On Nov. 4, 2019, Burlington Northern Santa Fe Railroad Company filed a complaint in the U.S. District Court for the Northern District of California. BNSF claims that the 15 counties are charging it a higher property tax rate “generally applicable to commercial and industrial property in their respective jurisdictions.”

Plumas County Assessor Chuck Leonhardt cut to the chase on the tax situation. Leonhardt and assessors from the involved counties do not assess BNSF — the State Board of Equalization assesses it, he said.

Leonhardt said he discussed the complaint with state Department of Equalization Deputy Director David Yeung on Friday, Jan. 24. Essentially, BNSF doesn’t agree with the department’s assessment methodology, Leonhardt explained.

In order to change the assessment the statute would have to be changed, Yeung told Leonhardt.

In 2017, Leonhardt said that BNSF was assessed at more than $15 million. In 2019 that figure went up to more than $18 million. In California BNSF has 600 miles of track surfacing.

Providing additional clarification, Plumas County Treasurer-Tax Collector Julie White said that BNSF and Union Pacific Railroad paid more than $400,000 to Plumas.

White said she couldn’t separate the two railroads within her department. That is the way it comes into the Treasure-Tax Collector’s office from the county assessor.

Statewide, BNSF was assessed by the California Board of Equalization at $3.6 billion in 2017-18, and at $3.8 billion in 2018-19.

Complaint

Within the complaint, BNSF indicates that Congress prohibits discrimination in property tax rates applied to railroads. In fact, within the complaint, BNSF states that the defendants’ “excessive taxation of BNSF’s property is a violation of federal law.”

The case is considered a civil action.

Deputy Plumas County Counsel Gretchen Stuhr submitted the consent agenda item for approval by supervisors Tuesday, Jan. 21. They did not pull the request for discussion during the meeting.

Counties in addition to Plumas named in the complaint are Alameda, Contra Costa, Fresno, Kern, Kings, Madera, Merced, Orange, Riverside, San Bernardino, San Diego, San Joaquin, Stanislaus and Tulare.

Supervisors approved the request that Plumas County join the consortium of counties engaging Olson Remcho, LLP for federal district court representation.

Olson Remcho has experience in handling complex tax proceedings, Stuhr explained in her request to the board.

Under the terms of the agreement the cost to partner counties is $424 per hour and would be shared equally. “Thus, the cost to Plumas County will be much smaller than if we attempted to retain counsel on our own,” Stuhr explained.

Looking at the total per hour dollar amount and dividing that amount among the counties, Plumas County’s share would be $30 per hour. Based on the same division of costs, paralegal costs would be about $10.71 per hour, Stuhr explained. Paralegals with the firm are billed at $150 per hour.

In the complaint, in addition to injunctive relief, BNSF seeks a declaratory judgment.

Also spelled out in the complaint is the taxable property for assessment plan. The state board for state assessed property includes property such as railroads, telephones companies and others. “Under the principle of unit valuation, all of a taxpayer’s assets, wherever located, are valued as a unit, and that unitary value is then allocated among particular taxing jurisdictions.”

The complaint also indicated that local assessors determine the value for assessment purposes of all locally assessed property.

BNSF is reportedly the largest freight railroad in North America.

County Counsel Craig Settlemire said that he tasked Stuhr with monitoring the complaint and didn’t feel as prepared as Stuhr to give further comment. Stuhr did not respond for comment.

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