FHWA Talking Freight Seminar Series

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Southern Tier Extension Railroad Project

• FHWA Talking Freight Seminar Series
• September 20, 2006

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Thomas M. Barnes,Senior Regional Economic
Development Coordinator

• Southern Tier West Regional Planning and
  Development Board
• Center for Regional Excellence
• 4039 Route 219, Suite 200
• Salamanca, New York 14779
• Telephone [phone]
• Fax [phone]
• Email tbarnes_at_southerntierwest.org
• Web http//www.southerntierwest.org
• Web http//discoversouthwestny.com

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Southern Tier West region of New York State

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Regional Railroad System
Regional Railroad System
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Regional Railroad System
Southern Tier Extension Railroad
145 miles long, from Corry PA to Hornell NY
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Regional Description

• Population 587,000 (6 counties)
• Total size of region 6,500 square miles
• Average county size 1,080 square miles
• Population per sq. mile 90/square mile
• Largest urban areas served
• Jamestown (35,000), Olean (15,000)
• gt Rural !

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Regional Description

• Primary Manufacturing Clusters agriculture,
  automobile components, ceramics, chemical,
  extraction, food products, forest products, metal
  fabrication, plastics, power systems, services
  clusters
• Highway Distances to Metro Areas
• Buffalo 1-2
• Cleveland / Pittsburgh / Toronto 3 hours
• NYC 6-8 hours

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Traditional Wisdom

• Rural areas need good transportation access to
  urban markets.

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Our Problem

• Our primary regional railroad
• 75 mile-per-hour former East-West mainline
  connecting the Port of NY and Chicago
• 1980s - 1990s 95 miles out of its 145 miles
  were out-of-service
• 1990s 25 years of deferred maintenance
• Redundant to the Conrail system
• Was expected to be formally abandoned and
  salvaged in 1998

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Project History

• 1986 Southern Tier West began working on rail
  retention project
• 1991 Conrail / NYS DOT agreement required
  service only until 1998

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Project History

• Early 1990s NYS DOT gives Southern Tier West
  its rights to negotiate with Conrail
• Early 1990s Federally-funded (ARC) expert
  analysis of the line
• gt We learned that the railroad line could be
  revived and restored as an economically viable
  functioning mainline

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Project History

• Mid 1990s
• gt Southern Tier West began negotiating with
  Conrail (purchase) and subsequently with Norfolk
  Southern
• Norfolk Southerns Issues
• gt Low shipping volume
• gt High property taxes in NYS

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Project History

• Late 1990s Southern Tier West became a party
  of record in the Surface Transportation Board
  (STB) hearings on the CSX / NS acquisition of
  Conrails assets

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Project History

• Southern Tier Wests strategy
• Get Norfolk Southern to agree to continue to
  provide service and maintenance
• Provide a 10 year abatement of county, town and
  school district real property taxes
• Work to rehab the line and reinstate service,
  building local and mainline (through) traffic

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Project History

• Local Cost of Abatement?
• gt 1.2 million per year
• gt gt 50 of annual budgets for many small
  jurisdictions
• Presentations to
• gt 4 county legislatures
• gt 25 municipal boards
• gt 20 school district boards
• Unanimous approval !

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Project HistoryArrangement is
similar to an industrial revenue bond
relationship

• Norfolk Southern sold the real estate to a
  tax-abating entity (to be created)
• Leaseback to Norfolk Southern for a 10 year
  period (no real estate taxes)
• Ownership reverts back to Norfolk Southern at the
  end of 10 years
• PILOT in the last 3 years, graduating to 100
  taxes at the end

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Project History

• June 1998 Agreement reached
• gt just before the 1991 agreement was to expire
• gt one month prior to the July 1998 STB merger
  decision
• gt STB July 1998 decision memorialized our June
  1998 Memorandum

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Project History

• Summer 2000 NY State created a public
  authority to effect the sale/leaseback and
  abatement
• gt The Chautauqua, Cattaraugus, Allegany and
  Steuben Southern Tier Extension Railroad
  Authority (STERA)
• gt STERA has a 13 person board, 3 from each of
  the four New York counties and 1 from the Seneca
  Nation of Indians

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Project History

• February 2001
• gt property transfer and leaseback
• gt Norfolk Southern subleased line to the
  operator Western New York and Pennsylvania
  Railroad Company (WNYP)
• gt WNYP became a partner to STERA
• gt Southern Tier West provides administrative and
  staff services to STERA on a contract basis

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Project Focus Since 2001

• Rehabilitation of railroad line
• Assistance to potential shippers
• Intermodal facility project planning (commences
  late 2006)

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Rehab Funding Issue

• Rail freight volumes are insufficient to fund
  borrowing for rehabilitation.
• This has prompted a strategy of reliance on
  grants and private investment to advance line
  rehab needs, on a critical needs basis as funds
  become available

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Rehab Description

• 6 rehab phases since 2001, beginning with
  engineering phase
• Construction phases included welded rail
  replacement, crop and weld, grade crossing
  repair, tie replacement, ballast, signal repair
  and replacement, bridge repair, washout repair,
  other flood damage repair and mitigation,
  surfacing

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Southern Tier Extension Railroad ProjectTotal
Rehab Investment to Date

• FHWA 900,000
• US DOC EDA 3,056,000
• FEMA 221,000
• NYS DOT 8,930,000
• Penn DOT 7,610,000
• Local communities 7,200,000
• Counties
  294,000
• WNYP 10,000,000
• Total to date 38,211,000
• Property taxes abated

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Washout - before
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Washout - after
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Interim Project Results (2003)

• Some sections of line opened for service for the
  first time in over 10 years
• Some local companies return to shipping by rail,
  gradual return to rail
• Inquiries fielded for building sites and built
  facilities with rail access
• Highway carriers become more competitive

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Interim System Status (2003)

• Northwest PA Railroad Authority transferred
  ownership of Corry PA to Meadville PA to WNYP
• gt A 175 mile long railroad line
• gt a single railroad operator (WNYP)
• gt interconnections with Norfolk Southern at both
  Meadville PA and Hornell NY
• Result Upon completion of rehab, ready for
  re-establishment of mainline through traffic

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Interim System Status (2006)

• Traffic
• 2001 Less than 75 carloads per year on only 50
  miles of rail
• 2006 54,000 carloads annually on 175 miles of
  rail.

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Current (Phase 6) Rehab Project

• Project Description replacement of 15 miles of
  welded rail, 15,000 ties and ballast replacement,
  grade crossing repair, surfacing, crop and weld
• Timetable August 2006 to April 2007

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Current (Phase 6) Rehab Project

• Project funding
• NYS DOT Bond 2,000,000
• NYS DOT Appropriation 230,000
• Safetea-Lu 900,000
• NYS DOT Multimodal 3,600,000
• WNYP (private equity) 801.889
• Total Project 7,531,889

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Southern Tier Extension Railroad Project

• All 6 phases of investment will be completed, in
  place and operational by spring 2007.
• These figures do not include additional
  investment by the participating shipping
  companies (shipping docks, sidings, etc.).
• We anticipate undertaking an additional 15
  million of rehab between 2007 2009, source
  mixed private/public funding.

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Next Phase Intermodal Study Project

• Sponsor Southern Tier West Regional Planning
  and Development Board
• Project Description evaluate and select site
  for construction of intermodal facility and
  adjacent business park
• Timetable September 2006 to Spring 2007
• Project Funding
• NYS DOT 100,000
• US DOC EDA 100,000
• WNYP 25,000 (in kind)
• Total 225,000

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Keys to Success

• Key 1 Recognition of the primacy of the
  regional railroad freight transportation system
  to the rural economy.
• Key 2 Willingness of localities, counties, and
  two states to see regionalism as essential to
  accomplishing a major project, when a focus on
  local parochial interests would have sunk the
  entire initiative.

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Keys to Success

• Key 3 The existence of a regional
  project-savvy organization that could lead a long
  term project planning and implementation process.
  
• Key 4 Partnerships.

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Partnerships

• Federal-State (ARC / EDA / FHWA / FEMA / NYS DOT
  / PennDOT)
• Multi-state two states (NYS DOT /Penn DOT)
• Public/private sector partnership with Norfolk
  Southern Corporation and the Western NY and PA
  Railroad
• Seneca Nation of Indians
• Multi-regional 3 EDDs

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Partnerships

• Local public 6 counties, 25 municipalities, 20
  school districts
• A regional public authority (STERA)
• Local economic development organizations and
  agencies
• Dozens of shipping companies

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RESULT A rural regional economy with
transportation options - a future with rail
service.
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• Southern Tier West Regional
• Planning and Development Board
• Center for Regional Excellence
• 4039 Route 219, Suite 200
• Salamanca, New York 14779
• Telephone [phone]
• Fax [phone]
• Web http//www.southerntierwest.org