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RCED-83-61 1 (1982-11-24)

handle is hein.gao/gaobabmsm0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 e. Gone RESOURCES. COMMUNITY. t e 'c$ AND ECONOMIC DEVELOPMENT -77a t C n REL ASE B-209962 tij C otticO o -NOVEMBER 24,1982 The Honorable Howard M. Metzenbaum United States Senate Dear Senator Metzenbaum: 120089 Subject: Valuation of the Alaska Railroad (GAO/RCED-83-61) On July 29, 1982, you asked us to prepare a report on the market value of Alaska Railroad assets proposed to be transferred at no cost to the State of Alaska under provisions of S. 1500, 97th Congress, first session. In subsequent discussions with your office, we narrowed the request to (1) determining the land value, especially the value of timber and mineral rights, on the Railroad's 38,000 acres and (2) identifying existing contracts, and contracts under negotiation, that might affect the Railroad's future profitability. We agreed that (1) we would rely on exist- ing land valuations and information on timber and mineral rights that were readily available from Federal, State, and private sources and (2) the report would contain no conclusions or recom- mendations. Also, your office requested that we not obtain comments on this report from the Federal Railroad Administration, Department of Transportation. On November 15, 1982, we briefed your office on our review results. We explained that although we could not find a well- documented estimate of the value of Railroad lands, three valua- tions of Railroad lands exist. These range between $180 million and $307 million, but each is highly qualified. The three valua- tions and the results of our other inquiries are summarized below. --On October 8, 1982, the Railroad valued its 38,000 acres at about $232 million based on liquidation value--the highest price the property may bring in the market under certain criteria--and the assumption that the Railroad holds a clear title to all its lands. However, because rail use may not bring the highest price for the land, this value has little relationship to market values for an ongoing concern. Also, the Railroad does not appear to hold clear title to all its lands. --In February 1981 the Railroad calculated the estimated market value of its lands at $180 million based on the 1979 value of private lands at each location along the (343769) q4o j

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