# Presentation: 244587

## 				

FHWA Talking Freight Seminar Series
September 20, 2006

- FHWA Talking Freight Seminar Series
- September 20, 2006

**Southern Tier Extension Railroad Project**

## 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: 716-945-5301
- Fax: 716-945-5550
- Email:  _[tbarnes@southerntierwest.org](mailto:tbarnes@southerntierwest.org)_
- Web:  _[http://www.southerntierwest.org](http://www.southerntierwest.org/)_
- Web:  _[http://discoversouthwestny.com](http://discoversouthwestny.com/)_

**Southern Tier West region of New York State**

## Regional Railroad System

**Regional Railroad System**

## Regional Railroad System

**Southern Tier Extension Railroad**

**145 miles long, from Corry PA to Hornell NY**

## 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)
**=> Rural !**

## 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

## Traditional Wisdom

**Rural areas need good transportation access to urban markets.**

## Our Problem

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

## Project History

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

## Project History

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

## Mid 1990’s:  
=> Southern Tier West began negotiating with Conrail (purchase)  and subsequently with Norfolk Southern
Norfolk Southern’s Issues:  
=> Low shipping volume
=> High property taxes in NYS

**=> Southern Tier West began negotiating with Conrail (purchase)  and subsequently with Norfolk Southern**
_**Norfolk Southern’s Issues**_**:  **
**=> Low shipping volume**
**=> High property taxes in NYS**

**Project History**

## Project History

_**Late 1990’s**_**:**  **Southern Tier West became a party of record in the **_**Surface Transportation Board**_** (STB) hearings on the CSX / NS acquisition of Conrail’s assets**

## Project History

_**Southern Tier West’s 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**

## Project History

**Local Cost of Abatement?**
**=> $ 1.2 million per year**
**=> > 50% of annual budgets for many small jurisdictions**
**Presentations to:**
**=> 4 county legislatures**
**=> 25 municipal boards**
**=> 20 school district boards**
_**Unanimous approval**_** !**

##                   Project HistoryArrangement 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**

## Project History

_**June 1998**_**:  Agreement reached**
**=> just before the 1991 agreement was to expire**
**=> one month prior to the July 1998 STB merger decision**
**=> STB July 1998 decision memorialized our June 1998 Memorandum**

## Summer 2000:   NY State created a public authority to effect the sale/leaseback and abatement

=> The Chautauqua, Cattaraugus, Allegany and Steuben Southern Tier Extension Railroad Authority (STERA)
=> STERA has a 13 person board, 3 from each of the four New York counties and 1 from the Seneca Nation of Indians

**=> The Chautauqua, Cattaraugus, Allegany and Steuben Southern Tier Extension Railroad Authority (STERA)**
**=> STERA has a 13 person board, 3 from each of the four New York counties and 1 from the Seneca Nation of Indians**

**Project History**

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

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

**Project History**

## Project Focus Since 2001

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

## 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

## 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

## Southern Tier Extension Railroad ProjectTotal 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

## Washout - before

**Washout - before**

## Washout - after

**Washout - after**

## 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**

## Interim System Status (2003)

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

## 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**.

## 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

## 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

- 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

**Current (Phase 6) Rehab Project**

## 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.**

## 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

## 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.** **

## 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.**

## 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 EDD’s **

## 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**

## RESULT: A rural regional economy with transportation options - a future with rail service.

## Slide 38

## Southern Tier West Regional 
Planning and Development Board

Center for Regional Excellence
4039 Route 219, Suite 200
Salamanca, New York 14779
Telephone: 716-945-5301
Fax: 716-945-5550
Web:  http://www.southerntierwest.org

**Planning and Development Board**
- Center for Regional Excellence
- 4039 Route 219, Suite 200
- Salamanca, New York 14779
- Telephone: 716-945-5301
- Fax: 716-945-5550
- Web:  _http://www.southerntierwest.org_