HomeMy WebLinkAbout1973-01-24; City Council; 1028; TAXES CITY LEASED AT&SF PROPERTY41 CITY J F CARLSBAD,CALJTFOKA/XA
Agenda Bill Wo Date: January 24, 1973
'Referred To:
Subject:
TAXES ON CITY LEASED-A.'T.S S.F. PROPERTY
Submitted By:
WiHiara C. Baldwin
Asst. to C/Mgr.
t eno n t of
The .Santa Fe Railway again is requesting that we pay the taxes on
the depot and the alley -park-ing parcel between 'State Street and the
railroad tracks, Elm and Grand Avenues. The Railroad !s first request
was in the amount of $1,980.00 for the 1970-71 tax year. I contacted the
State Board- of Equilization and after several meetings , they have
reduced the taxes for 1972-73 'to $1,766.03.
Exhibit
1. Letter from A.T.& S.F. Railway
2.- Copies of leases with changes requested (payment of taxes)
3. Letter from State Board of Equalization.
Staff Recommendations
From discussion with the City Attorney we find that the master lease does
provide for the payment of taxes on the improvements. However, if the Council
does_not agree to pay these taxes, the Santa Fe has 'a provision for a
30 day .notice of cancellation of the leases. The previous City Council
refused a similar request two or three years'ago.. The Santa Fe'dropped
their request for payment at that time., ' *
Pate: January 24 f 1973
Ci ty Manager's Re common da^i_o n . •
Should we continue to refuse to pay the taxes on this property, the
. A.T.& S.F. Riii.lv/ay Company may very well cancel our lease. In this case
the Chamber of Commerce would be dispossessed from their offices. Our
basic problem seems to be with the State Board of Equalization rather
than 'with the railroad which is simply trying to recover costs engendered
by our lease of the property. I would suggest we pay the taxes and en-
deavor to have the State Board of Equalization set a more realistic valua-
tion on our leasehold, which is really simply an effort to preserve and
maintain a building of local historical importance-.
If you wish to pay the taxes on this property it .will be necessary to
appropriate $1,767 from the General Fund Reserve to Account 1-104-R.5,
-General Government Buildings-Rental of Land, and Buildings.
Payment of these taxes-and-our budgeted contribution ($22,000) to the
Chamber of Commerce will make the total City allocation to the Chamber
$23,76.7. This is about the largest small city Chamber contribution in
California. During budget discussions for fiscal year 1973-74 mutual
efforts should be made- to assist them to'become more self-supporting
financially and gradually reduce our contribution to a more typical
level.
Council'Action
-2-
Ths Atcli!3Dii,T-opB-ka and Santa ?5 Hallway Company
A Ssn'3 fs Industries Company
121 East Sixth Stresf, Los Angeles, California 90014, Telephona 213/628-0111
Ext.22529
June 11, 1973
Files: H-62001 & AX-70428
Mr. William C. Baldwin
Assistant to the City Manager
City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
Dear Mr. Baldwin:, »
We note that we have received no response from the City
to our letter of February 21 and tracer of April 2 concerning the
status of supplemental agreements amending contracts, Santa Fe's
Nos. 57016 and 68228, covering sites which the City has under lease
from Santa Fe.
I am sure you can understand that we feel it essential
that this matter be resolved as quickly as possible. Therefore,
while we have attempted to answer all questions that have been
raised, I am wondering if there are additional questions that you
might have which are responsible for the delay in completing this
matter.
If this is the case, perhaps a meeting would help to
clarify this matter. Mr. Bentlcy will be pleased to come to
Carlsbad to meet with you and would suggest either June 19 or 20
at 10:00 a.m. Please advise which of these dates would be 'satis-
factory to you. In the event neither date is satisfactory, would
appreciate you suggesting a date and time that would be satisfac-
tory.
*
Yours very truly,
D. G. Ruegg, General Manager
By
W. D. Bentley 7
Supervisor of Contracts
The Atchison,Tcpeka ssrJ Santa Fe Railway Company
— A Santa Fe Industries Company
121 East Sixth Street, Los Angeles, California 90014, Telephone 213/628-0111 .
Ext. 22529
June 27, 1973
Files: H-62001 & AX-70428
Mr. William C. Baldwin
Assistant to the City Manager
City of Carlsbad
1200 Elm Avenue
Carlsbai, California 92008
Dear Mr. Baldwin:
I appreciate very much the opportunity to meet
with you on June 20 in an effort to clarify Santa Fe's
position regarding the payment of taxes on those sites
which the City has under lease from Santa Fe.
As I explained to you when the State Board of
Equalization places a parcel of leased railroad property in
the non-unit category, it results in an increase in taxes
on that particular parcel. Attached are copies of the
Exhibit A prints from the contracts we have with the City
on which is shown outlined in red that portion of the leased
property which the State Board of Equalization has classified
in the non-unit category. That area shaded blue has not,
as yet, been placed in the no>n-unit category.
Also attached is a breakdown of the 1972-73 taxes
as assessed by the SEE on these leased areas. You will note
that $213.93 has been assessed against the blue shaded area.
As I advised you, since this area is still carried in the
unit category, we would have payed these taxes even if the
property had not been under lease to the City. Therefore,
we are not requesting that the City reimburse us for these
taxes, and will not do so so long as the area remains in
the unit category. However, the remaining taxes in the amount
of $1,835.44 were additional taxes incurred as a direct result
of our making the area available to the City and we feel it is
only equitable that the City reimburse us for these additional
taxes, particularly since we are making this property available
rent free to the City.
I have taken the liberty of making additional copies
of both the prints and the tax breakdown.
I am also attaching a copy of the letter our attorney,
Mr. R. B. Curtiss, addressed to Mr. Kenneth C. Frank, League of
California Cities, in response to a question he had raised
— 2 —
regarding the situation at Carlsbad. While responding to your
particular situation, this letter very well outlines Santa Fe's
policy regarding matters such, as this. Primarily, so long as
we are not faced with additional tax burden, our property will
be made available rent free to public agencies for beautification
and park purposes where such use does not interfear with railroad
operation or prospective plans we might have for the property in
question. We will, however, expect to be reimbursed for any
additional taxes we might incur, and as I told you, the State
Board of Equalization does not appear to be inclined to give
consideration to leaving these areas in the unit category
where they lie outside what might be considered a normal width
operating right of way.
If you should have further questions regarding this
matter, I would appreciate very much hearing from you.
Very truly yours,
D. G. Ruegg
General Manager
By
W. D. Bentley 7
Supervisor of Contracts
• >, i j ."•' . - •
/*' S "\ Tfeo Aec?32r;C?i,Tr>-.:cr:^. anft Sasita Ke n^IIway Company
*<•-.»... ..i^.--, i Si. V rf. V/ ^,..,,
i " * . . .••-.. . . 5
— A Santa fo Industries Company
A 121 Cast Sixth Street. Los Angeles, California 90014, Telephone 213/628-0111
June 15, 1973
120-4 RBC
Mr. Kenneth C. Prank
Staff Assistant • •
League of California Cities .
1108 "0" Street
Sacramento CA 95814
Dear Mr. Frank:
Apparently your letter of June 12 addressed to me in ,
San Francisco crossed my letter to you of June 13 regarding
the Santa Fe's policy regarding landscaping of railroad rights
of way.
The situation in Carlsbad is different from the usual situation
in which a portion of an operating right of way is permitted
witnout charge to be landscaped by a public agency. The
Carlsbad property is a sizable parcel rectangular in shape
which is leased not just for landscaping but for a public park,
public parking and a City museum which occupies an old railroad
station which, incidentally, was donated to the City without
charge. By entering.into the leeise the Santa Fe incurred a
direct and immediate increase in taxes on the property because
the property was then assessed by the State Board of Equalization
as non-operating property and separately taxed on a basis equi-
valent to local property taxation. We do not consider it un-
reasonable where we enter into a lease for public purposes of
this sort to expect the local agency at least to reimburse us
for property taxes on the property so that we are not actually
out of pocket in entering into the arrangement but are only
coming out even. This is a valuable piece of property which
could probably be devoted to a commercial use which would produce
a substantial income to the Santa Fe. Furthermore the tax burden
was created as a direct result of entering into the lease. In
other similar situations our policy has been the same as with
the City of Carlsbad.
The policy referred to at the March 8 meeting and reiterated
in my June 13 letter relates to landscaping licenses or leases
of operating right of way entering into which does not increase
our tax burden. Operating properties are assessed by the State
Mr. Kenneth C. Frank - 2 - • Juno IS, 1973
Board as a unit v;ith a value being placed upon our overall
operation in California and spread over the entirety of the
operating properties. V?here the Board, however, treats a
railway property as non-operating or non-unit there is an
immediate and direct tax increase because we pay taxes
equivalent to county taxes on the non-unit property and
have no reduction in our overall unit or operating property
tax.
So far as I know up to now the Board has not eliminated from
the unit strips of right of way licensed for landscaping and
consequently entering into such licenses does not impose an
increased tax burden upon us. If, however, the Board were
to do so and we were unsuccessful in persuading it otherwise
I have to say that we would intend to ask the local agency to
reimburse us for the increased tax burden resulting from the
landscaping.
, Very truly yours,
Robert B. Curtiss
RBC mp
cc Messrs. Taggart, Vorkink, Bridges, Lyon, Ruegg (BD-59027)
>v
— THE ATCHISON, TOPEK A AN D SANTA FE RAILWAY COMPANY
OPERATING DEPARTMENT • 121 East Sixth Street, Los Angeles, California 90014 • 213/628-0111
Ext.22528
January 10, 1973
H-62001
City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
Gentlemen:
I shall appreciate your advising when the supplemental
agreements to leases, our contracts Nos. 57016 and 68228, covering
leases of sites for parking of automobiles and office building at
Carlsbad, California, to provide for payment of taxes will be
executed by the City and returned for completion by Santa Fe.
Very truly yours,
D. G. Ruegg, General Manager
By
Supervisor of Contracts
.Ufcj^ -.THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY
OPERATING DEPARTMENT • 121 East Sixth Street, Los Angeles, California 90014 • 213/628-0111
Ext.22529
November 6, 1972
H-62001
City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
Gentlemen:
You presently have in effect two agreements with us, dated
October 16, 1953, and March 15, 1963, and identified in our records
as Contracts Nos. 57016 and 68228, respectively, covering lease of
sites for parking of automobiles and office building.
These sites are currently being made available to the City
for the small amount of $106.46 per year. Even though these sites
would produce a substantially greater return to Santa Fe if used for
industrial or commercial purposes, as an accommodation to the City
and in the interest of being good neighbors, we are willing to continue
to make these sites available at no increase to the City insofar as
rental is concerned.
However, whenever a piece of railroad property is put under
lease, the State Board of Equalization classifies such property as
non-operative and taxes it separately. This handling amounts to an
increase in our taxes, since there is not a corresponding decrease in
the taxes paid on the remainder of our property. This tax increase
is a direct out-of-pocket expense which for the tax year 1970-71
amounted to $1,980.00 for the two sites under lease. I trust you can
agree that it is neither appropriate nor equitable for Santa Fe to
assume this additional expense, particularly since we already pay our
full share of taxes to the City. Therefore, attached are two copies
each of supplemental agreements amending the existing contracts to
provide for reimbursement of taxes.
Please have these documents executed by the person authorized
to sign on behalf of the City and enclose evidence of authority for
this person's signature. Return all copies for completion by Santa Fe.
Executed copies will be returned to you.
Your cooperation and prompt handling will be appreciated.
Very truly yours,
D. G. Ruegg, Acting General
Manager
Supervisor of Contracts
SUPPLEMENTAL AGREEMENT, made as of this 3rd
day of October . j 19_72 j between
THE ATCHISONj TOPEKA AND SANTA FE
- ' ' RAILWAY COMPANY, a Delaware corporation,
hereinafter referred to as "Santa Fe", and
CITY OF CARLSBAD
hereinafter, whether one party or more, referred to as "Second
Party".
RECITALS:
Santa Fe and Second Party are now parties to a contract dated October 16,—1953 1
Santa Fe's Secretary's Contract No. 57016 } together with any and all modifications, sup-
plements and amendments thereto, being hereinafter referred to as "Original Contract", under
i which Second Party pays Santa Fe a compensation of $—17 . 74 per year for the use of
• a portion of Santa Fe property at or near Carlsbad, San PiJego County, California
[__ as a site for parking automobiles.
i •
i ' The parties desire to modify the Original Contract as hereinafter provided.
: ".-' i "'-Z7~. " " -. i ... . • ... . ... -..." _ "'. _"."-'*•
\ "' AGREEMENT : /
L - It is mutually agreed that effective October 16, 1972 —
the compensation section of the Original Contract is hereby changed to read, as follows:
"Second Party shall pay to Santa Fe on or before the first day of each period of one year
during the continuance of this contract as compensation for the use of the Premises for
such period the sum of Seventeen and 74/100--- Dollars
(S 17.74 ). Santa Fe may revise the amount of sucn3nnua.1 compensation
after the end of each five (5) year period during which this contract may remain in ef-
fect, and without affecting the right of either party hereto to terminate this contract at
any time as may be provided elsewhere herein."
It is also mutually agreed that Second Party shall reimburse Santa Fe
promptly upon receipt of statement therefor, for all general taxes which
, are during the term of this contract levied upon or assessed against the
Premises, and in the event that such taxes are levied or assessed against
a larger parcel of which the Premises constitute only a part, such reim-
bursement by Second Party shall be in the amount of such tax equitably
or fairly apportionable to the Premises.
IN WITNESS WHEREOF, the parties hereto have executed this Supplemental Agreement
in duplicate as of the day and year first above written.
THE ATCHISON. TOPEKA AND SANTA FE RAILWAY COMPANY
Its_
CITY OF CARLSBAD
Its
(Second Party)
s, Fe Origins.!
SUPPLEMENTAL AGREEMENT, made as of this 3rd
.fry of October , 19_Z2_, between
THE ATCHISON. TOPEKA AND SANTA FE
RAILWAY COMPANY, a Delaware corporation,
hereinafter referred to as "Santa Fe", and
CITY OF CARLSBAD
hereinafter, whether one party or more, referred to as "Second
Party".
RECITALS:
Santa Fe and Second Party are now parties to a contract dated March 15,—1963 ,
Santa Fe's Secretary's Contract No. 68228 f together with any and all modifications, sup-
plements and amendments thereto, being hereinafter referred to as "Original Contract", under
which Second Party pays Santa Fe a compensation of S 88. 72 per year for the use of
a portion of Santa Fe" property at or r»»ai- Carlsbad. San Diego County. California
as a site for office building.
The parties desire to modify the Original Contract as hereinafter provided.
I - :
1 ' AGREEMENT
It is mutually agreed that effective- December 31, 1972
the compensation section of the Original Contract is hereby changed to read, as follows:
'Second Party shall pay to Santa Fe on or before the first day of each period of one
; during the continuance of this contract as compensation for the use of the Premises for
| ; such period the sum of Eighty Eight: and 72/100 Dollars
j ' (S 80.72 ). Santa Fe may revise the amount of such annual compensation
j after the end of each five (5) year period during which this contract may remain in ef-
». feet, and without affecting the right of either party hereto to terminate this contract at
: any time as may be provided elsewhere herein."
j It is also mutually agreed that Second Party shall reimburse Santa Fe
• promptly upon receipt of statement therefor, for all general taxes which
| , are during the term of this contract levied upon or assessed against the
• Premises, and in the event that such taxes are levied or assessed against
: a larger parcel of which the Premises constitute only a part, such reim-
[ • bursement by Second Party shall be in the amount of such tax equitably
or fairly apportionable to the Premises.
IN WITNESS WHEREOF, the parties hereto have executed this Supplemental Agreement
in duplicate as of the day and year first above written.
THE ATCHISON, TOPEEA AND SANTA FE RAILWAY COMPANY
By : ;
Its.
CITY OF CARLSBAD
By
Its
(Second Party)
. f
i
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
Valuation Division
P. 0. Box 621?
Santa Ana, California 92706
,\
Ax
January 12, 1973
GEORGE R. REILLY
Firit District, San Francisco
JOHN W. LYNCH
Second District, Fresno
WILLIAM M. BENNETT
Third District, San Rafael
RICHARD KEVINS
Fourth District, Pasadena
HOUSTON I. FLOLJRNOY
Controller, Sacramento
W. W. DUNLOP
Executive Secretary
IN REPLY REFER TO:
for. William Baldwin
City of Carlsbad
1200 Elm Avenue
Carlsbad, California
Dear Mr. Baldvdn:
I write with reference to your lease or leases with the Atchison, Topeka and
Santa Fe Railway Company.
Recently, I discussed these leased parcels with the tax department and was
informed that the taxes for 1972-73 allocated to the City of Carlsbad are
$1,766.03..
I suggest that you contact the real estate department of the A. T. & S. F. Ry Co,
if you have any questions.
Very truly yours,
R
Area Office Administrator
RPR-.jms
cc: Hdqtrs.
Hon. John W. Lynch
Leases.AB o
- 73
~ '"'
&/€*
J/.37?
\ >':' '<
fY "[, f- '
F V M ! R 1 T k * /\ "1_- /\ ii J t,~J ! I f i
ATTACH HO TC CONTRACT GETWEEN
H 7 AT C H I S O N . T O r E K A A r J 0 S A N T A F E R A ! L W A Y C O M PA N Y
AND
CITY OF
SAN BERNARDINO. CALIF.
DECRMoER
Ofc
DESCRIPTION CORRECT
J.W. COWQOY
' *£w6^—-"-.-/-—
i
!
aoo
so' so
u-i
W
ft)
1
W
i
?C
*
- ~
^
F
iS'
it
i
-~5T
X
-,«T
11
-- -£
/—
M
W
•<vr
-
-. -L&:
<-.„. .-'•=..*.
— . —
<J ~ £
^:
^•\
>^p?c,r
SCALi:':
5s
VT' \rr— — iv
\Z
-
-i-r.
„
f
O • '
Z *
u
ft
?v
10
/'
r
i?/. '-:..
f.;- 7,
___..,_.
- » L_
V
?T
1
*"C-
9
-J'x-
- ^--J ^
v! '-
• •* •! -
i;
.<- - - '•""j;
IN.
•
a
'j/=.
•5 '^
. —
•Tr .
—
TO
jT,
7
rai
- -VS
^d
tvC
^
"~ "
Oc-v
Z~*
^">\
DIVISION
\OO FT.
'/<5
5
,
:^J
'rll^
/•J -
\1
y
•- C-T -
-''-)
-- — .
— —
f
3
70 /
j_-i^'
'../•:
71
5T.
t
6'~
.
I
.,z
/- . - -y^ -71
— "v -X
= —
Et
5_^.
-*•'**
<f\~,
i
SGJWt
L-J
M
f
r
X
K- '
— —
:t-:r
O
^
?
" O
' c
^POVCR V-IN3
j
,., """~| "
eoo
MO'.DCl. JCT. UtiXT
9
or
i
To
(, _| POMTO
/VnONAL C\TY
_J
LU
l-l-in
T
AsUO LEA5ED
I \ A P R O V F M E M T 5 :A3 5V-IOWK.
AT CARL5B/\O DIVISION EMGINEER'S DRAWHMG NO .
(~r *• ri *s
:' I'M 7 AT CM
I
ATTACHED TO CONTRACT BETWEEN
(SON. TOPEKA AND SANTA F E RAILWAY COMPANY
AND
C\TY OF CARL5>3AD
SAN BERNARDINO. CALIF. DESCRIPTION CORRECT
O E C £ >--•
/Hi *<=• / >v
iO ^O
;>^
cJ
O*w(\J
*j
,V i£v. R^_
/\- - - - / - -i
wi
i z[ —
i -k
\
6-,Vafi.-'1^iT3.fc J.W COWQOY
J/--.T «.-, 7,^.5. DIVISION ENG!NU;ERvv
^;>. SCALE: 1 !N. TO \OO FT.
\>>>
X^/
40 . •«>
LJ
$
' X,' o
F\P5T xxV ST « •I 1 « \ V_^ 1 >v ' ' *% ^*— ' * •
> x^/ ^ -P
!
-.t 15 VV U '•! it 10 9 3 1 4 ' 5 <v 3 t I! !
_tiL_lg_J^^L^^^^^,I^
t r : ~- _ ^ r ^—J- , — —. t.~ — — - ., i . . — ' *" .f ~ , -. > ~-.s~..'^.-* . »xC. ~ • -- .^ ..f . „-/ ,.. ,.,
' i
I ^
OJ
xf
-^—
X
r.j
„ — _-
,- p O^ ^, Vt. V. k N O
/ 0_._
1 T U^-S^-"---~— -- '--'^-'.-^i--.-^- ^ <-,-,--.,.',/>..- '/:/ i 1 f
\ !
I .„ „ ,
:
j_--_Y i-5.T.— t'-'"T"'>
-. — -»- 150' ,'''. ^ --"' • • :,' " , yVe^»O)». — •-- — ' "*»^ x'^^^-j^-^ ^^° — ^o^~ ~"^*'""U~^T_. - — ~— ~- \^ -^. ^9^4^ N i?
— i--^- — ^5" - x^> • ^ JT-- ^r^^-S'f ,-,A • " A-^: '-^'--^ ^"^
^H/-"^-^-^' ^iV-?>* :^ , -•: -''&/*/ ^ 7,£Too&*- '-J
? /"
;"~-2 Fo;-L£;vrau
(
"t
"• *• "
! f
^ — -''U-'T I (J ••.("'^'C '•' O- \ .--•*•— .-i-.--*.—-™ ., - / ;
! 1
c'.OO
- —
-^- c
LC.A5T ^ ec r' ^ - ^ -' - " '-^_? ^ „_ »— — . ~ ."— ; f | | i; ' ^
1 ^ . ~- — ,- •* / T >i '• ". | - f- '• . r ^. N i '-I v • ' t I-.-"1- j __ _____ Imt-. ..'..^....n.urr wm-n.-Tr-aT.- l~," -n,T
^ n e '"' J- -:.~~~i-k?- -~- ~ — ~ ' '~" ' "~
'_.j
i
. —'
1
'.
. O
~"*~7
' <T
C£
\ C_v
49, 9
A "*••• r^ '• rv • i CON r~
^_______— — • — TT7T"7"; . ( _ . . .._ , , . , r ^ - , S
& -*%/" S/ esaa &'' " " ^" "
5i.s oiec,o &/vs t euEtrr^c. pc^s^ ...<>= secv's " jZE?.t^"
b ^<9O€?0^' A4«. «$o ^
^-*~ ' /-co' -„-_..
; i
. i1
TO N\A,T]OWAL. CITY
, _• POt-iJC -^ c. x \
! 1
T
WA,cVHlMGTOKi 5t. ; f
!
QA&0'&£f s*t/~C£l /^/fa/''/:
>- !_J !
llJ
O
0-t
\in
;0
t
' -f
' fO
DESCRIPTIOM '^
TWO PARCH us OF LA.KO ucA-beo co^.!TA,\tvJl^4G PJ
fcO -S'O FT. cjViOv7\4 OOT\..ll-iEO A 7. 9.
L£.'-.b£c 5 EX1. ^f\M^- H/lV^KC'/i; N'. EMT5 ! AS oVtOVjM.
J ^, , , ,r.. ,.l,,. D'V:SiON E>!Girjf.:ER'S DRAWING No L-3- £55& .'.I.
.\ I. !<•,•..„„