County plan would use road-tax money to buy rail line BY VALERIE GIBBONS • vgibbons@visalia.gannett.com • August 23, 2008 Are 200 railway cars of frozen vegetables worth $1.2 million? The Tulare County Board of Supervisors seems to think so —and is continuing the fight to buy 30 miles of San Joaquin Valley Railroad track between Strathmore and Jovista for $1.2 million. It's far from a done deal. The company that owns the tracks, the San Joaquin Valley Railway, a subsidiary of the Florida-based RailAmerica Corporation, is angling to sell the tracks to A&K Railway Materials, Inc. for a reported $2 million. County officials are working to halt that sale because A&K is not in the shipping business. It specializes in selling railroad ties and other materials. The steel alone from the salvaged track segment could fetch as much as $1 million. "We're trying to save the tracks from here to the Port of Stockton," said Supervisor Allen Ishida. "This is only the first piece." Ishida said the tracks are an unused resource for county businesses — and a potential revenue stream for the county. His plan: Let the county borrow $2 million to $3 million from Measure R funds — the sales tax passed by the voters in 2006 to fix bad roads and for other transportation projects — and then turn the administration of the tracks over to the Tulare County Association of Governments. The agency would then find an "operator" who would manage the railroad. Once a railway operator is found, TCAG would act as a landlord, leasing the tracks while the operator pays a fee to the county. SJVR said in federal filings that the section of track loses $110,000 a year and it would take $1.3 million to rehabilitate the line. RailAmerica did not return repeated calls for comment. Right now the only traffic on the line comes from Lindsay's Tulare Frozen Foods, which uses the line to ship frozen vegetables to the East Coast. Saving money Use of the tracks saves the company $500,000 a year, county officials said. The company ships 50 million pounds of frozen vegetables by rail as far as Texas, Florida and New Jersey. "The reason why there's no traffic on the tracks is because they were told that the railroad would not be providing the service," Ishida said. He also blames a surcharge of $950 a car to ship along the line. But Britz Fertilizer, Tuff Stuff and Sierra Forest Products have all used the segment of track in the past and would like to return to using it, Ishida said. "We're in the process of forming a shippers association that would subsidize the running of the business," he said. Max Lee is one of those shippers. As the chief executive officer of Tuff Stuff, a recycled plastic containers manufacturer in Terra Bella, Lee was hoping to rehabilitate the railroad spur running behind the facility when he bought the property last year. Then he found out about the plans to abandon the track. "I'm not going to spend $110,000 to rehabilitate the line if they're going to rip it out," he said. Some of his heavier, bulkier products are well suited to rail, like the 100-pound stallmats he imports from Canada. "You can ship 450 units in a truck or 2,000 units in a traincar," he said. "Rail can carry about four times as much weight." SJVR has also filed papers with the federal Surface Transportation Board to abandon a 9.2-mile segment from Exeter to Strathmore. Preserving rail The county has pushed ahead aggressively to preserve the 30.5-mile segment, even hiring a attorney who specializes in railroad law to assist with the effort. They expect a decision from the federal Surface Transportation Board within the next two months. Even though the county may be expected to come up with the money to buy the track within the next few months, the details about how the county will pay for it —or who will manage it — still remain sketchy. While Ishida maintains the purchase price will be part of a $2 million to $3 million loan from Measure R funds, no provision to preserve the line was written into the measure's expenditure plan. Nor was it mentioned during the 2006 campaign to pass the measure. It squeaked by with a margin of 353 votes out of more than 67,000 cast. Light rail The plan does call for $10 million over the next several decades to buy rights-of-way for a potential light rail system in between Visalia and Tulare. Other funds are available for trails and mass transit. But no money has been set aside for railroad track preservation. TCAG's executive director, Ted Smalley, said the money could come from excess funds the agency has received from the half-cent sales tax so far. "We've received additional revenues," he said. "We're reviewing all of our options." While TCAG has received unexpected revenue from Measure R, last month Smalley publicly expressed concern about a reduction in transportation revenues from the state because of the ongoing budget crisis in Sacramento. Measure R's newly elected chairman David Harrald said he had not had a chance to review the plan with TCAG's staff. "My main concern would be making sure that all of the money would be repaid," he said. The purchase price may not also be the only expense associated with buying the rail line. Ishida bristled when asked about the $110,000 operating deficit and the $1.3 million repair bill for the tracks, saying those questions missed the point. "TCAG can't absorb any operational costs," he said. "It's not the intent of the county to go into running a railroad." The tracks would cost $30 million, or $1 million a mile to replace, he said. "The point is that we're saving railroad access for the eastern side of the county." tracks while the operator pays a fee to the county. SJVR said in federal filings that the section of track loses $110,000 a year and it would take $1.3 million to rehabilitate the line. RailAmerica did not return repeated calls for comment. Right now the only traffic on the line comes from Lindsay's Tulare Frozen Foods, which uses the line to ship frozen vegetables to the East Coast. -------------------------------- The San Joaquin Valley Railroad line looking south at Avenue 200 along Orange Belt Drive in Strathmore. (PHOTOS BY STEVE R. FUJIMOTO) SAN JOAQUIN VALLEY RAILROAD FACTS What: Little-used rail line from Jovista, west of Richgrove near the Kern County line, to Strathmore Owned by: San Joaquin Valley Railroad/RailAmerica Costs associated with operation: RailAmerica claimed the section left them $110,000-a-year in the red and would cost $1.3 million to refurbish. Length: 30.5 miles County's bid: $1.2 million Projected source of money for the purchase: Measure R sales tax funds Number of customers for the line: 1 — Tulare Frozen Foods with 150-200 railcars a year. Source: Federal Surface Transportation Board filings and the Tulare County Association of Governments Some of the San Joaquin Valley Railroad line is in need of repairs. (STEVE R. FUJIMOTO) The San Joaquin Valley Railroad line south of Strathmore. (STEVE R. FUJIMOTO)
opinion Buying rail line makes no sense January 15, 2009 Tulare County's Board of Supervisors has yet to make a decent case for saving 30 miles of defunct railroad track in the southern part of the county. Unless they can, the supervisors ought to abandon their crusade to save these tracks at taxpayer expense. This is a county that has abandoned roads and other facilities that it could not maintain. The county also appealed to taxpayers for an increase in the local sales tax to fund transportation projects, because the county doesn't have enough money to build new roads or maintain the ones it has. Now the county intends to buy a railroad right-of-way that is not being used and use the money from the sales tax. We consider that breaking faith with voters, who were told that Measure R money would be used to maintain and build roads and for public transportation projects. Supervisor Allen Ishida has traveled to Washington, D.C., at taxpayer expense to lobby federal officials charged with oversight of the nation's railroads. Ishida will plead with them to leave 30 miles of track from Strathmore to Jovista intact. Then supervisors hope to convince the Tulare County Association of Governments to dedicate between $1.2 million and $2 million toward buying the track. The county figures that the investment is guaranteed, because even if the railroad never runs on that line again, the rails can be sold for scrap to recoup the purchase price. That might be so, but the county has still not shown any cohesive business plan for this to make any sense. The railroad tracks are now being used by one business to ship produce south and then east. Even if it were restored, it would be used by, at most, a handful of businesses that would essentially be subsidized by taxpayers. The rail line has no value as a passenger line. Considering the amount of development in that area of the county, it would have no potential as a light-rail line. County supervisors have put forth only one argument to justify the salvation of this rail line: It would be much more expensive to build another one if this one is torn out. The problem is that there seems to be no demand to have a rail line there in the first place. If this is such a viable business venture, then let private investment take over and buy the rail line as an investment. That is exactly the problem: It is not a viable business investment. The county will simply be investing public funds in a marginal project that benefits only a few businesses. Even figuring in the employees of those businesses, it does not justify the investment. The businesses who have used this rail line in the past have obviously found other transportation options or they have gone out of business. Tulare County is closing health clinics. It is preparing to lay off employees. Officials have threatened the loss of hundreds of public safety personnel if the state ends its contribution to Williamson Act assistance. Yet the county continues to pursue the purchase of a relic without showing how that expense will serve taxpayers. Supervisors still haven't convinced us that it's prudent for them to be in the railroad business. They ought to drop it before it becomes a colossal train wreck.
In today's depressed metal market, I do not see where RailAmerica figures the rail and other stuff is worth 1 million. The only steel that is number 1 is the rail. The rest is just junk with little or no value. I think the county need to put RailAmerica on the spot and make them prove the line is worth a million bucks. Shannon
[FONT=Arial, Helvetica, sans-serif]RAIL MEETING IN DC [/FONT][FONT=Arial, Helvetica, sans-serif]Rail Abandonment Appeal Eyed[/FONT] By Miles ShuperFollowing a meeting with federal rail regulators in Washington, D.C, Tulare County officials this week were considering asking reconsideration of a ruling allowing the San Joaquin Valley Railroad to abandon a 30-mile segment from Lindsay to the Kern County line. However, the clock is ticking on getting a deal done. Tulare County Rail Committee Chairman Tom Sparks says SJVR appears to be going ahead with its destruction of the 30-mile segment despite the plunging scrap steel prices, and could possibly begin ripping out the line in early March. With the exception of required approval from the State Historical Preservation Office which determines if any historic artifacts or structures are along the route, SJVR seems to have met abandonment requirements. County Supervisor Allen Ishida, Sparks and Tulare County Association of Governments (TCAG) Executive Director Ted Smalley each said their meeting with staff of the federal Surface Transportation Board (STB) and other politicians were encouraging. Sparks expects this week's TCAG board to approve asking the STB to take another look at its approval of last year's abandonment approval and possibly reconsidering the $3.3 million value the STB placed on the 30-mile segment, a price based mainly on scrap iron prices which have plummeted since that decision. County Supervisors may consider filing the appeal at their Jan. 27 meeting. Ishida said prior to the trip the focus would be to express dissatisfaction with the STB rail abandonment process, especially tight timelines and deadlines. “We don't feel we got our money's worth for the $22,000 we spent to oppose the abandonment petition,” Ishida said. He said the cost of filing for reconsideration would be minimal, according to STB regulations. The county may also consider asking for a STB ruling to delay any ripping out of the track on the Lindsay-to-Jovista line. While these issues are ongoing, the county has been talking with Union Pacific Railroad for the potential sale of the rail right-of-way on which SJVR runs. In addition, Patriot Railroad, a fast-growing short-line company, has expressed a strong interest in buying the 30-mile segment and possibly other SJVR segments. There are several plans being considered involving the potential purchase by the county in conjunction with a joint venture with Patriot Rail. County officials contend that rail service is crucial for more effective and cost-efficient transportation, as well as an effective way to drastically cut Valley air pollution. Rail service also is important in attracting new industrial and commercial businesses or expanding it, they say. Meanwhile, SJVC officials have indicated they will ask the STB to reconsider its bid to abandon a nine-mile segment linking Lindsay and Exeter, in addition to a new request to abandon another segment linking Exeter and Dinuba. Sparks, Ishida and Smalley each said they had heard that rumor for some time but recently were told of the plan by SJVR officials. The rail company has contended that the line is too costly to operate, a matter which the county disputes based on studies by a rail consultant and others which say SJVR used misleading and incomplete financial information. In addition, the county, which has been waging a concerted effort to maintain and expand rail freight service, contends SJVR discourages business on those segments by adding surcharges and other hurdles to support its contention that the lines are not financially viable. Sparks said the county rail committee is scheduling meetings with existing and potential shippers, especially in southern Tulare County, to generate additional rail use. Sparks said the several factors appear to favor a STB reconsideration of its decision, including the apparent devaluation of the rail segment, the failure of a reported sale agreement between SJVC and a salvage company, and other issues. Tulare County had offered to pay $1.2 million for the segment but the STB rejected it based on a sale offer by a salvage company. The county, through a hired counsel, had expressed the validity of the sale offer by the salvage company and now that it didn't meet the deadline requirements opens the door even wider for STB's reconsideration. Sparks says the Washington trip provided the STB staff with its initial “first hand look at Tulare County's rail issues” which don't always come through in reports and documents. Sparks said SJVR appears to be going ahead with its potential scrapping of the 30-mile segment, despite the plunging scrap steel prices and could possibly begin ripping out the line in early March. With the exception of required approval from the State Historical Preservation Office, which determines if any historic artifacts or structures are along the route, SJVR seems to have met abandonment requirements. The above story is the property of The Valley Voice Newspaper
more Rail line is vital to Tulare County BY ALLEN ISHIDA • March 13, 2009 There has been recent misinformation in the media about the involvement of the Tulare County Board of Supervisors and the Tulare County Association of Governments regarding the purchase of the San Joaquin Valley Rail Line's assets. The Tulare County Board of Supervisors and TCAG are not currently negotiating with San Joaquin Rail Road or Rail America to purchase any portion of their rail lines within Tulare County. Tulare County did attempt to purchase the 30-mile section between Jovista and Strathmore when SJVRR filed to abandon and scrap this rail section. Tulare County was unsuccessful, and SJVRR accepted another offer which was approximately three times what the county offered. The successful bidder is a company known to be in the salvage business. We have since learned the successful bidder did not purchase the subject rail line. I believe this sale was not completed because the value of scrap steel declined more than 30 percent after the offer was made. The appraiser Tulare County hired to evaluate the 30-mile section indicated in his report it would cost $48 million to replace the subject rail line if the ties and rail were removed. We were also advised by others that it would be extremely difficult and possibly impossible to replace the line, because once it was removed it would trigger an environmental review required by the state of California and the federal government. The Tulare County Association of Governments became involved with the SJVRR during the abandonment process to protect the existing right-of-way through the "Rails to Trails Program." Using the required public process, the Tulare County Transportation Authority (comprised of eight city-elected representatives and five county supervisors) amended the Measure R expenditure plan, to include the purchase of "railroad right of ways" as an approved use of the 14 percent of Measure R funds set aside for "transit, bike/pedestrian and environmental projects" or non-road projects. The Union Pacific Railroad owns the right-of-way. Currently Measure R money can only be spent to buy rail right-of-ways. Currently Measure R funds cannot be used to buy rails, ties or operate a railroad. During the process of negotiating with SJVRR we learned that Santa Cruz and Modoc counties were in the process of buying railroads in their respective counties. The TCAG Rail Committee visited Ventura County, which has successfully purchased a local rail line. Many other local governments nation-wide are actively seeking to preserve short haul rail service. The TCAG Rail Committee has learned the following: Rail users on the subject 30-mile section of rail have been discouraged from using rail service because the SJVRR placed a $650 per rail car surcharge. The Union Pacific Railroad is implementing a plan to discontinue service to customers who aren't able to ship or receive 100 or more cars at one time. TCAG Rail Committee found there is very little rail service off the Union Pacific or BNSF main lines. We want local shippers to have access to the rail main lines Many other California counties currently receive or have received significant rail funding and financing from the federal government. There is a growing demand by manufacturers for rail service. After a meeting with representatives of Rail America, SJVRR and the TCAG Rail Committee, the committee members were left with the following impressions: SJVRR intended to re-file its intent to abandon Strathmore to Exeter. SJVRR would probably seek to abandon the line from Exeter to Dinuba. SJVRR would probably seek abandonment from Dinuba into Fresno County. It is very obvious to the TCAG Rail Committee the 30-mile stretch from Jovista to Strathmore is a critical link to the economic and air quality future of the entire San Joaquin Valley. We were approached by some Kern County rail users who are interested in re-establishing the rail link into Bakersfield. The Kern County Council of Governments recognized the value of reconnecting Bakersfield to the existing SJVRR line and assigned one of their staff to help us research the value of keeping and expanding the SJVRR line. The Kern County COG produced a report outlining the benefits of establishing a rail link from the Port of Oakland to Kern County using the existing SJVRR rail alignment. This report indicates approximately 400 trucks and trailers a day could be removed from valley roads. That would have a significant impact on our air quality. The rail line is extremely important to the future of moving freight, improving air quality and reducing truck traffic on Highway 99. The eight counties also produce $24 billion in agricultural goods — farm production that could in many cases be shipped by rail. The ability to move less than 100 cars at a time will give manufacturing companies an added incentive to locate in the Central Valley. Moving freight by rail is 10 times more energy efficient than using trucks. The San Joaquin Policy Committee adopted three main points to lobby the State of California and the Federal Government during "Valley One Voice Trips" to Sacramento and Washington, D.C. Improve freight movement on valley roads and to widen Highway 99 to six lanes to decrease congestion, help freight movement and promote cleaner air. Preserve and expand short haul rail in the San Joaquin Valley as a public/private partnership. Last month we lobbied the federal government to include our issues with funding in the new transportation bill which is currently being written. Our elected officials in Sacramento and Washington DC were impressed that our eight counties were in agreement with our top transportation requests. The "TCAG One Voice Trip" during the first week in February also carried the same message in addition to specific Tulare County road projects to our elected officials and staff members in Washington, D.C. The reason we are pursuing a public/private partnership for the existing rail line is that private railroad companies are not responsive to their customers or government agencies. It took Congressman Devin Nunes' intervention to get SJVRR to return phone calls and to arrange a meeting. Phase One of the Valley Rail Project is preserving the existing rail from Jovista to Fresno and expanding service to Bakersfield. The Tulare County Association of Governments, the Kern County COG and Fresno County COG are drafting a joint powers agreement to encourage more rail freight movement between our counties. The three counties are also seeking a private rail road operator to form a public/private partnership. Hopefully, I have explained why preserving and expanding rail service is of regional significance. The rail issue is much larger than the 30 miles of track from Strathmore to Jovista. If you would like more information, please contact me at 636-5000. Allen Ishida represents District 1 (Exeter, Lindsay, Three Rivers) on the Tulare County Board of Supervisors and is a member of the Tulare County Association of Governments Rail Committee.
We don't speak the same language Just read the comments by Allen Ishida of Tulare County, and the statement that "Union Pacific is planning to "discontinue service to customers who aren't able to ship or receive 100 or more cars at one time" defies logic, unless you are talking about grain or coal shippers-receivers. Yes, railroads for years have been trying to reach the 100 car level for unit trains, and yes, the car every couple of months shipper is being discouraged if it has a turnout off the main line. But, I guarantee that any class one would fawn all over a company that shipped or received 30 cars a day of profitable traffic, and would make sure someone was regularly contacting anyone shipping more that a few cars a day. I spent four decades in railroad marketing, and at times railroaders seem to speak their own language. Politicians do too, with forked tongue.
