SCHUMER REVEALS: WAYNE COUNTY RAIL LINES ARE VITAL TO REGION’S TOP EMPLOYERS BUT RAILROAD TAX CREDIT IS KEY TO BEGINNING +$3M IN REPAIRS & UPGRADES; SENATOR LAUNCHES PUSH TO MAKE TAX CREDIT PERMANENT & GREEN-LIGHT MAJOR UPGRADES, INCREASE SAFETY AND EFFICIENCY OF ROCHESTER-FINGER LAKES SHIPPING, & BOOST ECONOMY
Ontario Midland Railroad’s $3.1 Million Upgrade To Wayne County Rail Infrastructure—Critical To Major Employers Like Keurig Dr. Pepper/Motts, Baldwin Richardson Foods, And More—Contingent On Expired Railroad Tax Credit
Schumer Calls On Senate To Pass Legislation Making Tax Credit Permanent & Ensure Short Line Railroads Have Resources To Improve & Enhance Rail Shipping Industry & Promote Public Safety
Schumer: Make Short Line Tax Credit Permanent To Keep Economy-Boosting Rail Infrastructure Repairs And Safety On Track
Standing at the K.M. Davies Railyard in Williamson, NY and flanked by advocates and top Wayne County employers, U.S. Senator Charles E. Schumer revealed that the Ontario Midland Railroad’s plans to begin a multimillion-dollar infrastructure investment next year are now at risk because of the recent expiration of a vital federal tax credit for short line railroads. The Railroad Track Maintenance Tax Credit (45G Tax Credit) is an extremely important tax provision for short line railroads, like Ontario Midland Railroad, used for keeping their tracks safe and in proper condition. Schumer explained that the tax credit expired in 2017, stripping short line railroads of hundreds of thousands of sorely-needed dollars and impeding critical infrastructure repair projects that can boost economic output by increasing shipping efficiency. Therefore, Schumer today urged his colleagues in the Senate to pass the Building Rail Access for Customers and the Economy Act (BRACE Act) of 2019, which he cosponsors, as part of any upcoming tax extenders package. This bipartisan legislation would make the 45G Tax Credit permanent and ensure that railroads like Ontario Midland Railroad have the necessary resources to maintain infrastructure and safety on short line railroads.
“Ontario Midland Railroad has fantastic plans to invest millions of dollars in infrastructure improvements beginning next year, to serve new clients with new services, grow its operations and the regional economy as a result, and, most importantly, boost public safety at rail crossings across the Rochester-Finger Lakes Region. However, the railroad depends on the 45G Tax Credit to offset the cost of these plans that are now at risk because this tax credit ran out of gas years ago and is now dormant,” said Senator Schumer. “Wayne County’s top employers like Keurig Dr. Pepper (Motts), Baldwin Richardson Foods, Thatcher Company of NY, Sodus Cold Storage, and more depend on this railroad infrastructure to ship raw materials and products and maintain local jobs. We must make sure they have the federal support needed to keep their tracks and infrastructure in tip-top shape and that their multi-million upgrade doesn’t stall out. That’s why I’m calling on my colleagues in Congress to pass the BRACE Act, which would not only re-instate the now-expired 45G tax credit but make it permanent. Since this can’t wait, I’m also pushing to include this as part of any upcoming tax extenders package that Congress is likely to take up this fall, to keep public safety, economic growth and the creation of good-paying jobs in the Rochester-Finger Lakes Region moving full steam ahead.”
Schumer explained that the Ontario Midland Railroad receives roughly $100,000 in reimbursement from the 45G Tax Credit each year for maintenance in repairs. The money Ontario Midland Railroad receives annually from the 45G Tax Credit enabled the railroad to develop ambitious plans for a $3.1 million upgrade and renovation of rail infrastructure in Wayne County. Specifically, the plans include the replacement of worn-out rail ties along the 15 miles of track between the Village of Newark and Wallington, the construction of a new siding to switch cars, the addition of tons of new ballast stone, and the re-opening of a now defunct railyard in the Village of Newark to serve new customers and enable a future planned project to build a new customer transload area. Additionally, Ontario Midland Railroad is planning to make rail crossing safety upgrades to safeguard motorists and drivers by installing gates and lights at certain railroad intersections that don’t currently have them. However, to start the project, Ontario Midland Railroad intends to leverage federal 45G Tax Credit funding as the local match needed to access a $2.9 million New York State rail grant, meaning that the expiration of the 45G Tax Credit puts the sorely-needed project in jeopardy.
Beyond this $3.1 million project, the 45G Tax Credit is also vital to Ontario Midland Railroad’s future plans to expand service. For example, Fleischmann’s Vinegar in the Town of North Rose wants to add a new rail siding needed to expedite raw materials shipments, as does CRC Polymer Systems in Sodus. Additionally, only 23 of the railroad’s 68 rail crossings currently have gates and warning lights, so future 45G Tax Credits would enable the railroad to install gates and lights at a greater number of crossings. For example, in the past, the 45G Tax Credit allowed the Ontario Midland Railroad to upgrade six rail crossings, including the busy crossings at Townline Road and Ridge Road in Sodus.
Schumer said that in recent years, shipping volume on the Ontario Midland Railroad has increased from 200 railcars to 400 railcars per year of goods that support local Wayne County companies. The railroad estimates that with continued upgrades it could expand to over 600 railcars per year, serving a boosted number of local businesses and helping to facilitate trade. Schumer said that the Ontario Midland Railroad is key to many of the region’s top employers including Keurig Dr. Pepper (Motts), Fleischmann’s Vinegar, Thatcher Chemical, Xerox, Baldwin Richardson Foods, Wolcott Cold Storage, CRC Polymer Systems, Maco Packaging, K.M. Davies Co., Nutrien Ag, which is a major supplier of fertilizer to local Wayne County farms, and more. Schumer explained that in order to ensure on-time delivery of raw materials and to ensure these companies’ products hit the market quickly and efficiently, the Ontario Midland Railroad must have access to 45G Tax Credits to continue maintaining and upgrading its infrastructure.
Schumer explained that other railroads in the Rochester-Finger Lakes Region are also being impacted by the expiration of the 45G Tax Credit. Additionally, the following railroads are being stripped of a vital resource for infrastructure maintenance and renovation:
- Finger Lakes Railway (Ontario and Seneca Counties)
- Livonia Avon and Lakeville Railroad and Subsidiaries (Livingston and Monroe Counties)
- Arcade and Attica (Wyoming County)
- Falls Road (Orleans County)
- Delaware, Lackawanna and Western Railroad (Erie and Genesee Counties)
- New York & Lake Erie (Cattaraugus County)
- Buffalo Southern (Erie County)
Schumer explained that when all the railroads listed above are combined with the track owned by Ontario Midland Railroad, roughly 750 miles of track that must be maintained on a regular basis are represented. Schumer said that the 45G Tax Credit is an extremely important resource for small business railroads to help fund infrastructure rehabilitation and safety improvements to keep these tracks in safe and proper condition. The 45G Tax Credit provides $3,500 to short line railroads for every mile of track they maintain.
The Building Rail Access for Customers and the Economy Act (BRACE Act) of 2019 was introduced in the Senate by Senator Mike Crapo (R-ID) and is cosponsored by Schumer. Specifically, the bill would renew the 45G Tax Credit and make it permanent. To ensure that short line railroads across the Finger Lakes Region and Upstate New York have access to necessary infrastructure improvement funding, Schumer is calling on his colleagues in Congress to include the BRACE Act in any upcoming tax extenders package.
Sandi Saracen, Vice President/General Manager of Ontario Midland Railroad Corp. said, “We appreciate Senator Schumer’s push to reinstate the now-expired federal short line railroad tax credit and to make it permanent because it is vital to maintain the railroad infrastructure that many of Wayne County’s top employers – Keurig Dr. Pepper (Motts), Baldwin Richardson Foods, CRC Polymer Systems, Fleishmann’s Vinegar, Thatcher Company of NY, KM Davies, Sodus Cold Storage, and more – reply on to run their business. Our plans to begin construction on over $3 million in infrastructure upgrades next year rely on this tax credit program. It’s vital to reinstate this tax credit so that our plan to construct a new siding to switch cars, add tons of new stone ballast, upgrade rail ties along 15 miles of track, and re-open a now defunct rail yard in the Village of Newark to serve new customers are not placed at risk.”
James Bowers, Partner in Charge, Railroad Practice of Bowers & Co which provides accounting services to ten short line railroads in the Rochester Finger Lakes and Western New York region including Ontario Midland, Finger Lakes Railway, Livonia Avon & Lakeville said, “The Short Line Railroad 45G tax credit is an extremely important resource for small business railroads to help fund infrastructure rehabilitation and safety improvements to keep these tracks in safe and proper condition. The ten railroads we represent in the Finger Lakes and Western New York alone represent approximately 750 track miles that must be maintained on a regular basis. At $3,500 per mile, 45G can provide $2,625,000 of tax credits, which translates into $5,250,000 of privately funded track infrastructure improvement that these railroads can undertake. This is extremely important to these railroads and to the Western and Central NY economy, providing jobs and growth in the short line railroad sector. It is estimated that the customers of these railroads employ over 7,500 workers and that the railroads themselves employ and additional 300 workers. These railroads handle over 12,000 carloads of freight annually. This is equivalent to 36,000 to 48,000 truckloads which would be on the highways if the railroads weren’t handling that traffic.”
Chuck Baker President of the American Short Line and Railroad Association said, “The Short Line 45G Tax Credit is critically important to New York State’s economy, from western New York to the Southern Tier, from the Finger Lakes to Long Island. Short lines connect dozens of small towns and villages in New York and hundreds of small businesses to the larger railroad network that takes goods across the U.S and to the ports that will take them to overseas markets. These connections are crucial to keeping a vibrant economy throughout the Empire State. More than half of all freight rail miles in New York are operated by short line railroads, which on their own provide more than 1,000 skilled family-wage job in the state and support thousands more jobs at railroad supplier companies and in the communities they serve. In addition to job creation and retention, the short line 45G tax credit supports community growth as new businesses are attracted to rail-served locations. Finally, the short line tax credit ensures that safe, reliable, efficient, and environmentally sustainable transportation service remains available, maintaining an economic lifeline for New York’s small towns and villages and rural communities. The entire short line railroad industry is grateful to Senator Schumer for his support of this legislation and we are eager to see his leadership help keep this credit in place.”