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  #1  
Old Posted Nov 22, 2022, 7:43 PM
jmecklenborg jmecklenborg is offline
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City of Cincinnati intends to sell Southern RR for $1.6 billion

The City of Cincinnati has entered into an agreement to sell the 337-mile railroad it built in the 1870s to Norfolk-Southern for $1.6 billion:
https://www.wsj.com/articles/norfolk...=hp_lista_pos3

This is a crazy moment in U.S. history as one of the great anomalies in municipal and railroad history is about to vanish. It would be like if the Green Bay Packers were sold by their namesake city to typical scumbag owners and the team up and moved to Milwaukee.

The railroad's lease didn't pay the City of Cincinnati very well for its first 100 years. Everything changed around 1987 when the City was awarded a large payout and much higher annual payments. Currently the City is earning about $25 million annually. The sale would place $1.6 billion in a trust fund.

The sale is contingent on a public vote. Already, the who's-who of local agitators have taken shots, and lawsuits are imminent. Opponents are already suspicious of the issue being placed on a special ballot or at least the spring 2023 primary ballot, which nobody pays attention to.
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Old Posted Dec 15, 2022, 9:48 PM
jmecklenborg jmecklenborg is offline
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Lots of details in this article - unfortunately it will be behind a paywall for most of you.

It's interesting to see that when and if the sale fails, resolution of the matter will move to an arbitration process.

The sale is still dependent upon passage of an Act by the Ohio General Assembly, plus approval of the Cincinnati electorate.



https://www.bizjournals.com/cincinna...n-railway.html


The Business Courier has obtained letters between Norfolk Southern and the railway board and its representatives over an 18-month period detailing their offers and counteroffers, a process that resulted in the trustees agreeing to sell the railroad for $1.6 billion.

[...]


While the city and Norfolk Southern were able to agree on a sale price, the correspondence show a wide gap between them on the starting lease price – $65 million for the city, $35.16 million for the railroad. If the sale fails, the negotiation is likely headed for arbitrators and a convoluted process to determine what the final lease price would be.

In order for the sale to go through, the Ohio General Assembly must approve legislation, city voters must agree to the sale and federal regulators must give their OK. The deal has faced early turbulence in the General Assembly.

The city completed the 337-mile railroad, which runs to Chattanooga, Tenn., in 1880 as an economic development tool and way to provide a key north-south rail line. It is used to ship freight today. The railroad is operated under a lease agreement with Norfolk Southern, which leases the railroad from the city.


Last edited by jmecklenborg; Dec 15, 2022 at 10:19 PM.
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  #3  
Old Posted Dec 15, 2022, 10:17 PM
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Keep us in the loop please.
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  #4  
Old Posted Dec 15, 2022, 10:36 PM
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Please let the sale fail so that Amtrak can get a lease to run trains between Cincinnati and Chattanooga
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Old Posted Dec 15, 2022, 10:42 PM
3rd&Brown 3rd&Brown is offline
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So interesting.
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  #6  
Old Posted Dec 16, 2022, 3:36 PM
jmecklenborg jmecklenborg is offline
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Quote:
Originally Posted by Randomguy34 View Post
Please let the sale fail so that Amtrak can get a lease to run trains between Cincinnati and Chattanooga
...and don't forget that downtown Chattanooga sits about 5 miles from the Georgia border, and there have been plans since the 1990s to build high speed passenger rail between it and Atlanta.

For context, here is a map of the railroad soon after its completion:


What's interesting about the strategy back in the 1860s and 70s is that they choose to build directly between Lexington, KY and Chattanooga, through the rough topography of the heavily forested Cumberland Plateau. The alternative was to build a shorter railroad from Lexington to the completed railroads in Knoxville, through similarly difficult terrain, but that would have added significant overall distance to reach southern farmland and a port on the Gulf of Mexico.

FFWD to the 1960s, and I-75 was built between Lexington and Knoxville, not Lexington and Chattanooga. Incredibly, modern machinery made it possible to deflect to Knoxville with a distance penalty of just 15 additional miles. If you are familiar with I-75 in Kentucky, it blasts straight through the rolling terrain. Obviously, the climb up Jellico Mountain is a big, old-fashioned climb, but aside from that, the expressway is pretty tame.

For the Cincinnati Southern RR to serve as a modern passenger line connecting Ohio and Atlanta, they'd need to build a new passenger railroad bypass in the windiest 20~ mile stretch south of Danville, KY. This would avoid conflicts with freight trains and enable passenger trains to maintain a much higher speed than what's possible on the hilliest part of the line.

Last edited by jmecklenborg; Dec 16, 2022 at 8:15 PM.
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  #7  
Old Posted Dec 22, 2022, 9:05 PM
jmecklenborg jmecklenborg is offline
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Wow - read that diss of Louisville, halfway down:
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  #8  
Old Posted Feb 7, 2023, 6:31 PM
jmecklenborg jmecklenborg is offline
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I wish that I could copy & past this entire article, since it's quite interesting. How do you value something with no comparable sales? It turns out that N-S and an outside consultant used two alternate routes owned by Norfolk Southern to help value the Cincinnati-owned railroad. The curious detail is that one of them has been unused since the mid-1990s (Cincinnati to Portsmouth, OH). This means that Norfolk-Southern has kept this railroad around but unused for nearly 30 years in anticipation of these negotiations!

If you have a subscription to Business Journals, you will be able to read this:
https://www.bizjournals.com/cincinna...ue-varies.html

Here is the article's most interesting passage:
Quote:
How much would it cost for Norfolk Southern to reroute the railway traffic to other lines at the lowest possible expense?
For example, if Norfolk Southern used tracks that started in the Chicago area and winded through Illinois, a sliver of Kentucky and Tennessee before reaching Georgia, that would add 90 miles to the trip. The costs of securing the rights to use it would make the Cincinnati Southern Railway worth $1.35 billion to $1.63 billion to Norfolk Southern.

If Norfolk Southern used a route that would add 290 miles to the trip and ran through Ohio, along the border of West Virginia and Kentucky, Virginia and into Tennessee before reaching Georgia, it would make the Cincinnati Southern worth $1.6 billion to $2 billion to Norfolk Southern.

A third route would require reactivating a track between the region and Portsmouth known as “the Peavine Route,” which is presently out of service. It would add 260 miles to the journey, making the Cincinnati Southern Railway worth $1.5 billion to $1.9 billion.
Here is the abandoned Peavine line:
https://railfandepot.com/product/nor...vine-volume-1/

Last edited by jmecklenborg; Feb 7, 2023 at 9:26 PM.
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  #9  
Old Posted Feb 7, 2023, 9:08 PM
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This is indeed a fascinating look into the US railroad industry.

About the "Peavine Route" - I thought abandoned railroads are supposed to revert to the state (if fee-simple ROW) or adjacent landowners (if the ROW is an easement). In the Chicago area, several railroad segments are kept in private hands by running a short excursion train or hi-rail truck once per year. This lets them claim the railroad is still "active" and lets them vest their rights.
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  #10  
Old Posted Feb 7, 2023, 9:43 PM
jmecklenborg jmecklenborg is offline
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Quote:
Originally Posted by ardecila View Post
This is indeed a fascinating look into the US railroad industry.

About the "Peavine Route" - I thought abandoned railroads are supposed to revert to the state (if fee-simple ROW) or adjacent landowners (if the ROW is an easement). In the Chicago area, several railroad segments are kept in private hands by running a short excursion train or hi-rail truck once per year. This lets them claim the railroad is still "active" and lets them vest their rights.
I'm not sure.

This quarry is the last customer on the line:
https://www.google.com/maps/place/Pe...16zL20vMHlzZDI

There used to be a pile of gravel dumped on the tracks a half mile east of teh quarry to mark the end of the functional part of the line. It used to be visible on Google Earth but now I'm not seeing it.

Here is the physical severance of the east end of the line in Portsmouth, OH:
https://www.google.com/maps/place/Pe...16zL20vMHlzZDI

A recent wrinkle in the history of this semi-abandoned line was the 2022 announcement that Purina will be investing $500 million into a pair of pet food factories on this line. One of the two will be served by rail. So a small amount of new rail traffic is coming to the line, but not enough to motivate reactivation of the dead part of the line.

https://www.bizjournals.com/cincinna...ood-plant.html
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