Minnesota Administrative Rules
Agency 181 - Revenue Department
Chapter 8106 - RAILROAD VALUATION
Part 8106.0700 - APPORTIONMENT
Current through Register Vol. 49, No. 13, September 23, 2024
Subpart 1. In general.
After the taxable Minnesota portion of the railroad's unit value has been determined, this value must be distributed to the various counties and taxing districts in which the railroad operates. This distribution will be accomplished by the commissioner of revenue through the use of certain apportionment components. Each of the components in the apportionment method is a reflection of the property owned or used by the railroad within a particular taxing district. The figures making up these components will be developed on information submitted by the railroad companies in annual reports filed with the commissioner, and information supplied to the commissioner by the various county auditors and assessors.
Subp. 2. Apportionment components.
There are three components which will be used in the distribution of the value of railroad property to the various taxing districts. They are railroad operating land, miles of track, and railroad operating structures with a restated cost of $10,000 or more.
Subp. 3. Railroad operating land.
The information for the computation of this apportionment component will be based on information submitted by both the railroads and the various county auditors and assessors. The railroad companies shall file with the commissioner of revenue each year, in conjunction with their annual reports required by part 8106.0300, subpart 1, the number of acres of railroad operating land owned or used by them in each taxing district in which they operate. The county auditor shall also be required to submit to the commissioner of revenue a report showing the number of acres of railroad operating land, detailed by owning railroad, in each taxing district within the county. If either the railroads or the auditors find that it is administratively impracticable to submit this information, the commissioner shall make an estimate of the number of acres of railroad operating land within each taxing district based on the best information available. Such information would usually consist of the miles of railroad track within the taxing district and the normal width of the right-of-way used by the railroad. In addition, information relative to the current estimated market value of all land within the respective taxing districts will be obtained from the county or city assessors by a review of the information reported to the commissioner of revenue in compliance with Minnesota Statutes, section 270C.85. subdivision 9 2. clause (4).
The computation for the railroad operating land apportionment component will be accomplished annually in the following manner:
| Estimated Market Value of All Taxable Land Within Taxing District | $200,000 | |
| Total Area of Taxing District | 210 Acres | |
| Nontaxable or Exempt Acres | 10 Acres | |
| Taxable Acres Within Taxing District | 200 | |
| Average Estimated Market Value per Acre | $1,000 |
| Average Estimated Market Value Per Acre | $1,000 |
| Acres of Railroad Operating Land | x 5 |
| _____ | |
| Gross Railroad Operating Land Component | $5,000 |
The following is an example of how the adjusted railroad operating land component is to be computed:
| Railroad | System Unit Value | Net Investment in Railway Property Used in Transportation Services | |
| ABC Railway | $ 20,000,000 | $ 40,000,000 | |
| FGH Railway | 5,256,000 | 8,000,000 | |
| JKL Railroad | 2,000,000 | 4,780,830 | |
| MNO Railroad | 50,000,000 | 90,000,000 | |
| XYZ Railroad | 22,212,500 | 25,000,000 | |
| _____ | _____ | ||
| $ 99,468,500 | $ 165,780,830 |
Total System Unit Value ($99,468,500) / Total Net Investment in Railway Property Used in Transportation Services ($165,780,830) = 60%
| Gross Railroad Operating Land Component Within the Taxing District | $5,000 | |
| Adjustment Factor | 60% | |
| _____ | ||
| Adjusted Railroad Operating Land Component | $3,000 |
Subp. 4. Miles of track.
The information for the computation of this apportionment component will be based on information submitted by the railroads to the commissioner of revenue in conjunction with the annual report required by part 8106.0300, subpart 1. Each railroad will be required to list the miles of track they own in each taxing district within Minnesota. The track must be separated into two classes, main line track and all other track.
In order to make the miles of track in each taxing district compatible with the other apportionment components, the miles must be converted to dollars. This conversion will be computed annually. The conversion will be accomplished by adding together the following STB accounts for each railroad's net investment in Minnesota: account 3, grading; account 8, ties; account 9, rails; account 11, ballast. The total of these accounts will then be divided by the number of miles of track operated by the respective railroads within Minnesota to obtain a cost per mile figure. This will be used as the average cost per mile for track within Minnesota.
The following is an example of how the average cost per mile of track in Minnesota will be computed:
| Railroad | Total of Accounts #3, 8, 9, 11 | Mileage Operated in Minnesota |
| ABC Railway | $ 4,000,000 | 154 |
| FGH Railway | 800,000 | 42 |
| JKL Railroad | 500,000 | 20 |
| MNO Railroad | 7,450,000 | 290 |
| XYZ Railroad | 2,500,000 | 104 |
| _____ | _____ | |
| $ 15,250,000 | 610 |
Total cost of track ($15,250,000) / Total miles operated (610) = Average Cost per Mile of Track $25,000.
Main line track shall be weighted at 1.5 times the cost of all other track; thus, if the average cost per mile of track is $25,000, main line track would be worth more than $25,000 per mile, while all other track would be worth less. The calculation for the average cost of both main line and all other track shall be made annually on an industry basis.
The calculation to determine the average cost per mile of main line track and the average cost per mile of all other track will be computed in the following manner:
An illustration of this computation is as follows:
| Railroad | Mileage Operated | Main Line Miles | All other Track Miles |
| ABC Railway | 154 | 96 | 58 |
| FGH Railway | 42 | 10 | 32 |
| JKL Railroad | 20 | 15 | 5 |
| MNO Railroad | 290 | 132 | 158 |
| XYZ Railroad | 104 | 52 | 52 |
| _____ | _____ | _____ | |
| 610 | 305 | 305 | |
| Total Mileage Operated | 610 | ||
| Average Cost Per Mile of Track | $ 25,000 | ||
| Total Track Cost | $ 15,250,000 | ||
| Main Line Miles | 305 | ||
| Weighting Factor | 1.5 | ||
| Adjusted Main Line Miles | 457.5 | ||
| Other Track Miles | 305.0 | ||
| Adjusted Total Track Miles | 762.5 | ||
| Total Track Cost | $ 15,250,000 | ||
| Adjusted Total Track Miles | 762.5 | ||
| Average Cost Per Mile of Other Track | $ 20,000 | ||
| Average Cost Per Mile of Other Track | $ 20,000 | ||
| Weighting Factor | 1.5 | ||
| Average Cost Per Mile of Main Line Track | $ 30,000 |
After the per mile cost figures for main line and all other track are obtained, these per mile cost figures would be multiplied by the length of each type of track in a particular taxing district to obtain the value of the trackage in that district. The same cost figures will be used for all railroads operating in Minnesota.
Subp. 5. Structures.
The information for the computation of this apportionment component will be based on statements submitted by the railroads. These schedules shall be submitted annually to the commissioner of revenue in conjunction with the annual report required by part 8106.0300, subpart 1. The schedules shall show the location, by taxing district, of all operating structures owned by the reporting railroad within Minnesota with a restated cost of $10,000 or more. The schedules shall list a description of the structure and the railroad's current restated cost investment in the structure as it appears in the appropriate STB account.
An example of this listing is as follows:
XYZ Railroad
| Taxing District | Description | Restated Cost |
| St. Paul, S.D. #625 | Office Building | $ 400,000 |
| Minneapolis, S.D. #1 | Depot | 20,000 |
| Fridley, S.D. #16 | Yard Tower | 200,000 |
| Anoka, S.D. #11 | Engine and Car Shop | 250,000 |
| _____ | ||
| Total | $ 870,000 |
Subp. 6. Apportionment computation.
The apportionment of a railroad's taxable Minnesota value is accomplished by totaling the amount of the land, track, and structure components as developed in subparts 3 to 5 for each taxing district, then finding the sum of these totals for all the taxing districts in which the subject railroad operates. The taxable Minnesota portion of the railroad's unit value is divided by the total of the three apportionment components for all taxing districts in which the railroad operates in order to arrive at a percentage. This resulting percentage is then applied to the total amount of the three apportionment components for each specific taxing district. The figure produced by this multiplication process is the taxing district's share of the railroad's taxable Minnesota portion of the unit value. No more value can be distributed to the various taxing districts than that produced by the valuation process described in parts 8106.0100 to 8106.0600.
The example in part 8106.9900 illustrates the apportionment process.
Statutory Authority: MS s 14.388; 270.84; 270C.06
