CORP's Coos line closure...

Folks:

It is becoming increasingly expensive to maintain railroads and in many cases the alternative is for the states /shippers/ and railroad to cooperatively chip in to keep a line in operation. In several states the governing bodies have determined that the choice comes down to either helping refurbish the tracks or face abandonment of service and pay increasing highway maintenence costs for heavier trucks to replace the rail.

I can assure you that few in the railroad business whether Class 1 or shortline are making big profits operating railroads. I would hope that the UP in this case would contribute rehabilitation funds towards this line but I also believe the RA should have known this going into a lease/purchase of 120 miles of very, expensive, railroad to maintain.

The ideal shortline to invest in, is one 5-10 miles long with NO tunnels, bridges, interlockings/signals, few road crossings, few curves, a good connection with a Class1 outside of a major town and with plenty of industries and industrial growth opportunities. Anything other than this "ideal operation" is pretty much a crap shoot.

Unfortunately, most rail served industries are located in hard to reach locations which
often require expensive railroads to service them. This is one reason I no longer have a desire to manage/own a shortline... too many hassles and not enough money.

Just my 2 cents.

Barry,

Training new railroaders in Kansas

 

If the line to Coos Bay were one of these ideals you suggest, then Southern Pacific/UP would never have sold it off in the first place. Short llines and industrials always deal with the types of operations that are marginal.

Of course, if such a deep water Container port occurs, I think you could assume that CORP would lose control of the route pretty quickly as UP and BNSF fight over it.

 

FRA findings

KTVZ Channel 21 (Eugene OR):

http://www.ktvz.com/Global/story.asp?S=7376645&nav=menu578_1

Railroad said justified in closing Coos Bay line

Associated Press - November 17, 2007 8:35 PM ET

COOS BAY, Ore. (AP) -- The Federal Railroad Administration says the Central
Oregon and Pacific Railroad was justified in closing its Coos Bay rail line
this fall.

The inspection report was ordered by Oregon Congressman Peter DeFazio and
supports a private consulting firm's conclusions that three tunnels on the rail
line in the Florence- Mapleton area are unsafe.

The railroad closed the line in September following a July report based on
tunnel inspections in March.

But it was the 1-day's notice of the [closure] that has led to a lawsuit by the
Port of Coos Bay contending the railroad violated lease agreements for its use
of the Coos Bay Rail Bridge and the North Spit rail for not giving 180 days'
advance notice.

DeFazio said the railroad and its parent company, RailAmerica, should give up
ownership of the rail line. He opposes a company proposal for a public- private
partnership to spend more than $23 million for repairs.

 

This is an editorial from the Eugene Register-Guard.


<http://www.registerguard.com/csp/cms/sites/dt.cms.support.viewStory.cls?cid=23996&sid=1&fid=1>



Plan gets 'A' for audacity



Eugene Register-Guard editorial

Published: Nov 18, 2007 05:01:33AM



For sheer chutzpah, it's hard to beat the strategy of the Boca Raton, Fla., hedge
fund that owns the Central Oregon and Pacific Railroad's 120-mile short line between
Coquille and Eugene.



Earlier this year the fund, with billions in investments, acquired Rail America,
CORP's parent company. In September, CORP abruptly announced it was shutting down
the Coquille-Eugene line, giving its customers just one day's notice. The
explanation: The company could not afford the $7 million in repairs needed to
upgrade unsafe tunnels along the route.



Now, the company has proposed a plan to reopen the railroad, which provides critical
service to four major coastal employers. All that's required is that the Port of
Coos Bay, the companies that rely on the line to ship their goods, the state
Department of Transportation and the Union Pacific railroad all agree to help foot
the bill for the repairs. And, oh yes, the cost will include not only $7 million in
tunnel upgrades, but also $2.4 million for repairing railroad ties, $10.4 million
for bridge work and $3 million to fix drainage problems — a total of $23 million.
Then there's the little matter of the $10 million in state subsidies over five years
that the railroad company wants to defray the $1.5 million annually that it claims
it loses on the line. Plus it hopes to stuff another $2.5 million in its pockets in
the process.



The plan may set new standards for corporate arrogance. In exchange for a nominal
investment of $4.66 million, Rail America, and the hedge fund that owns it, would
have an upgraded rail line plus a nice wad of guaranteed state subsidies. Not a bad
position to be in when there's serious talk of a proposed shipping container port in
Coos Bay that could turn the reconditioned line into a highly lucrative asset.



U.S. Rep. Peter DeFazio is amply justified in calling the plan "outrageous" and
characterizing it as "a group of super-rich hedge fund managers who are trying to
extort the Port of Coos Bay and the people of Oregon." He's also right to point out
that the $23 million cost of repairing the rail line is "chump change" for the
company, especially given the line's potential future profitability.



The railroad company has given its prospective "partners" a month to decide if they
want to invest in this brazen scheme. There's no need to wait that long. They should
tell the railroad company and its hedge fund owners to take a hike, and the state
and port should initiate a "feeder line" application — a process through which an
outside buyer attempts to convince the federal Surface Transportation Board that a
railroad has either abandoned a line or allowed it to deteriorate to an
unsatisfactory level. If the state and port prevail, they would be able to buy the
line and contract with another railroad to provide service.



Rail America and its hedge fund owners have another option. They could withdraw
their insulting plan and make the investment necessary to resume safely operating
the short line that is vital to the continued operation of coastal employers and the
hundreds of men and women whose livelihoods depend on them.



Now, that would be a truly audacious act.

 

That line was theirs, not mine. I realize it probably looked like mine. My only text was at the beginning before the piece.

Adam

 

Got it... I thought that you thought it was mine.

I gotta get some more work done here... it's always the days before holidays that seem to explode around here. I am waiting for my computer to crunch some graphics so I can go onto the next drawing.

 

Oh yeah! Great! "Let the state buy the line and contract another railroad to run it" For a Loss! Yeah Right! Sounds expensive.(for me the tax payer) What's wrong with the initial proposal? Oh, I forgot.. This is Oregon.