DEXTER — A Kennebec Superior Court justice has ruled in favor of Maine Central Railroad Co. in a case against the Town of Dexter. The court ruled that the railroad company should not have been taxed for the right-of-way land that it owns in that community.

At issue was the town’s contention that the railroad company has abandoned service on the rail line that runs through town. According to town officials, MCRR should lose its tax-exempt status because the line is no longer in use and the railroad company should be required to pay property taxes on the right-of-way land and equipment to the town.

In his judgment dated June 19, however, Justice Bruce Chandler stated that because the Interstate Commerce Commission has not officially designated the line in Dexter as an abandoned line, the line is exempt from taxation until a certificate of abandonment is issued by that federal agency.

Justice Chandler stated that the town was not empowered to determine if the line was abandoned, and that “the Interstate Commerce Commission has exclusive authority to make a determination regarding railroad abandonment.”

The justice also said that the town would have to refund to MCRR an amount of $14,000 that it paid to the town in 1989 for property taxes on the right-of-way land and equipment.

In justifying the town’s position to tax the company for this property, Dave Pearson, Dexter tax assessor, said that it was his belief and that of town lawyers that the railroad lost its tax-exempt status for the land because there was no longer rail traffic on the line and because the railroad had filed its intent with the Interstate Commerce Commission eventually to abandon the line.

State Law 36 MRSA 561, used by town officials in backing their assumption, states: “The buildings of every railroad corporation or association, whether within or without the located right of way, its land and fixtures outside of its located right of way, and so much of its located right of way over which all railroad service has been abandoned, are subject to taxation in the places in which the same are situated, as other property is taxes therein, and shall be regarded as nonresident property.”

The assessor sent MCRR a tax bill for property taxes for the right of way in 1988. MCRR paid the bill for 1988 but later took its case to the Dexter Board of Assessment Review and the state Board of Property Tax Review during the spring and summer of 1989. Both boards denied MCRR’s request for an abatement.

In December 1989, town officials learned that MCRR intended to take the town to court over the $14,000 that the company paid in property taxes to the town the year before. MCRR also expressed their intent to seek a declaratory judgment from the courts which would state that the land could not be taxed for the 1989 and 1990 years because the land and equipment was exempt from property taxation because it had not yet been abandoned. Town officials were served papers in December and the case was heard in Kennebec Superior Court in Augusta on April 4.

Pearson said he made the determination to tax the right-of-way land that the railroad owns in Dexter after he discovered the tax law which permits towns to levy such taxes if the railroad has abandoned service on that line. Pearson said that his reasoning was that there had been no train traffic on the line for more than four years and some parts of the track were paved over by highway crews.

Portions of the track bed have been washed away and are no longer intact for train service.

Pearson said this week that it would be up to the Dexter Town Council to decide if an appeal to the Kennebec County Superior Court verdict should be made. The council’s next meeting is July 5.