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OI~H CAROLINA ASSOCIATION OF COUNTY COMMISSIONERS <br /> <br /> URGENT - - IMMEDIATE ATTENTION NEEDED <br /> <br /> MEMORANDUM <br /> <br /> TO: Chaiz-men, Managers, Attorneys <br /> <br /> FROM: Robert Hunter, President, N. C. County Attorneys' Association <br /> Butch Gunnells, Staff Counsel <br /> <br /> DATE: July 28, 1981 <br /> <br /> RE: Defense by Counties of Railroad Lawsuit Challenging <br /> Property Taxes <br /> <br /> Purposes of this memo are to direct your immediate attention to a <br /> lawsuit which has adverse implications for every county in North <br /> Carolina and 'to request that your county join in a pool to provide <br /> a collective legal defense fund. <br /> <br /> Ail major railroads and their subsidiaries in the State have brought <br /> an action in Federal District Court challenging that their system <br /> property is valued and taxed at a higher rate than other property <br /> valued by local taxing jurisdictions. The laWsuit is based on a <br /> Federal law, the Railroad Revitalization and Regulatory Reform Act <br /> of 1976, which requires the railroads to prove at least a 5% disparity <br /> between their tax valuation and that of other property owners in order <br /> to obtain relief. In the lawsuit, railroads generally are attempting <br /> to show that: (1) their property is valued at true market value (by <br /> the state's property tax commission) and such valuation is updated <br /> every year; and (2) counties generally value real property only every <br /> eight:years, which means discrepancies develop and grow between <br /> true value and tax value in the years following a revaluation. <br /> Specifically, using sales ratio studies conducted in each county <br /> comparing 1979 sales to 1979 assessments, the railroads intend to <br /> show the extent to which each affected county is valuing property <br /> at less than true market value, and will then request the Federal court <br /> to order corresponding reductions in railroad property. Eighty-seven <br /> counties are named in the suit. <br /> <br /> The lawsuit is officially between the named railroads (Plaintiffs) <br /> and Mark Lynch, State Secretary of Revenue and Douglas Holbrook, <br /> Director of the Depactment's Ad Valorem Tax Division (Defendants). <br /> The Federal District Court has refused motions to dismiss the action <br /> against the state defendants and/or to add counties as actual taxing <br /> jurisdictions to the lawsuit. The problem with the case in this <br /> "posture" is that the State defendants apparently do not have info,nation <br /> or data' relating to how property has been valued at the county leval~ <br /> <br /> - OVER - <br /> <br /> ALBERT COATES LOCAL GOVERNMENT CENTER <br /> <br /> <br />