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Railroad fires back against Jim Thorpe

The operator of passenger train rides to and from Jim Thorpe Borough said Monday they are not tying the hands of future borough councils in requests regarding an amusement tax dispute dating back nearly a decade.

Reading and Northern Railroad’s response came after the borough issued a letter Friday stating it couldn’t legally meet a request for a binding written agreement that “the railroad does not owe an amusement tax, has never owed an amusement tax and will never owe an amusement tax.”

In an email to Jim Thorpe’s borough manager and borough council president last week, Reading and Northern Railroad President Wayne Michel said, “Simply put, RBMN needs an actual agreement with the current borough council that there will be a permanent cessation of legal actions seeking to recover any form of amusement tax from RBMN or Lehigh Gorge (Scenic Railway) for any period of time up until the date of our settlement. Contrary to your attorney’s suggestion, we are not asking this council to bind future councils. We are asking this Council to bind itself and to make clear that the prior lawsuit is dropped with prejudice, meaning it cannot be refilled.”

Back to 2011

The dispute goes back to 2011 when Jim Thorpe’s tax collector notified the railroad it was subject to the amusement tax. The railroad, however, claimed it was exempt under a federal transportation statute.

The railroad was added to the delinquent tax roles in 2017. A complaint was filed with the local district justice, who determined the railroad had failed to comply with the amusement tax ordinance. The railroad appealed the decision to the Carbon County Court of Common Pleas in 2019.

Berkheimer, the tax collection agency representing Jim Thorpe borough, sought nearly $100,000 in unpaid amusement taxes for the past three years, leading to train’s decision to stop the rides in late 2019, including the popular Santa trains in December.

Soon after the train made its announcement, the two sides met on multiple occasions, with the borough eventually agreeing to drop the lawsuit.

After both sides had seemingly reached an understanding, the railroad did run its passenger service during the Winter Festival in February 2020.

“A reading of our (April 28) email makes it clear that Reading & Northern made no new demands,” Michel said. “In fact the beginning and ending of the email made clear that we looked forward to resuming passenger rail service to Jim Thorpe. The email made clear that we, out of good faith, resumed trains for Winter Fest even though the council had yet to act.”

The borough said it has drafted an ordinance that would exempt the railroad from paying an amusement tax. In its email to the borough, Reading and Northern asked for language in the ordinance to be tweaked to make it properly reflect the status of its railroads.

“Basically, we needed additional clarification because our services are not fixed and regulated by the Public Utilities Commission and Federal Railroad Administration, but rather our operations and facilities are regulated,” Michel said in the email. “This is an important distinction under the law. The changes we proposed would have modified the description of the class of excluded businesses, but would not have singled out our railroads.”

Different view

As of Friday, council said its efforts to bring the railroad back have not succeeded.

“They have told us they will not return,” council said in its news release. “Although we have not given up hope the railroad may return in the future, this is the decision of the railroad.”

Railroad officials, however, see it differently.

“The facts are Reading & Northern is not responsible for any of these actions,” Michel said in his statement Monday. “It was the council that decided to sue us, after many years of inaction, without any effort to talk to us. It was the council that decided not to issue a joint press release in the winter when we thought we had reached an understanding. It was the council that decided not to consider minor suggested changes to the proposed ordinance language with us before acting on it. And now it is the council that has decided to issue a press release suggesting the matter is beyond resolution without even talking to us.”

According to Jim Thorpe’s council, when a meeting was held in late January 2020, the railroad said it would continue passenger service in the borough under three conditions. The conditions were that the railroad would not make any contribution to the borough toward the amusement tax or any similar contribution; that the borough amend its ordinance to exempt the railroad from the amusement tax; and that the borough agree not to reinstitute the lawsuit against the railroad.

“The borough received input from the Jim Thorpe Tourism Agency and from several businesses, and decided to accept the terms of the railroad,” council said. “Based on this, the railroad did run its passenger service during the Winter Festival in February 2020. Since that time, the borough drafted an ordinance to exempt the railroad from the amusement tax and advised the railroad it would not refile the lawsuit. Council was criticized by some residents for this stance, but felt it was best for the good of the town to have the railroad return.”

Michel said the all the railroad has ever asked for is an ordinance that clearly protects the railroad, and an agreement with council that there will be no lawsuit filed against the railroad for back amusement taxes.

“We do not know why the borough council has chosen at this time to declare the matter closed, but in doing so it does a grave disservice to its constituents and visitors who look forward to riding the trains once the current health crises has passed,” Michel said. “For our part we are getting our equipment ready to provide train service to any and all communities that welcome us.”

Times News file photo