# Presentation: 890773

## Shellpot Bridge Agreement: A Case for Public-Private Cooperation

- A web presentation by Michael Kirkpatrick, Planner III, Delaware Dept. of Transportation

## 	The 115-year old Shellpot railroad swing bridge was out of commission– leaving a major gap in Delaware’s rail system.

	Delaware and the Norfolk Southern needed to cooperate on a solution to put it back to work. 

- 	Delaware and the Norfolk Southern needed to cooperate on a solution to put it back to work.

- The Problem

## Shellpot Bridge – built by Penn. RR in 1888

Diverted freight and express around Wilmington Station

Served industries on east and south sides of Wilmington

- Diverted freight and express around Wilmington Station
- Served industries on east and south sides of Wilmington

## Wilmington, Delaware

## 1995 – Conrail takes bridge out of service

Cost to repair estimated at over $10 million

Conrail business strategy works against Shellpot

- Cost to repair estimated at over $10 million
- Conrail business strategy works against Shellpot

- Shellpot piers slowly sinking into the Christina River mud

## Slide 6

## 	
Edgemoor Yard ‘stranded’

Re-routing and/or loss of traffic from SB NEC

Loss of ‘general merchandise’ train pick-ups

Degraded service into Port of Wilmington and points south

Freight forced through passenger station    

- Edgemoor Yard ‘stranded’
- Re-routing and/or loss of traffic from SB NEC
- Loss of ‘general merchandise’ train pick-ups
- Degraded service into Port of Wilmington and points south
- Freight forced through passenger station

- Closing: The Effects

## June 1999 – Norfolk Southern took over Conrail’s Delaware assets

NS had different business strategy than Conrail

NS focused on increasing north-south movements into lucrative Northeastern market

Purchase of Conrail left NS cash-starved and with limited capital available	

- NS had different business strategy than Conrail
- NS focused on increasing north-south movements into lucrative Northeastern market
- Purchase of Conrail left NS cash-starved and with limited capital available

- The Players

## DelDOT created Freight Rail Plan in 1999

Goals include increasing rail mode share and protecting access to state network - restoration of Shellpot route was an important strategy

DelDOT had financial resources

Public-private partnership with for-profit company was ‘dark’ territory 

- Goals include increasing rail mode share and protecting access to state network - restoration of Shellpot route was an important strategy
- DelDOT had financial resources
- Public-private partnership with for-profit company was ‘dark’ territory

- The Players

## Slide 10

## Issues included:

Justifying investment in for-profit company venture

Developing a mechanism to partner with private company

How to share risks & rewards

- Justifying investment in for-profit company venture
- Developing a mechanism to partner with private company
- How to share risks & rewards

## Solution: 

Part grant-part loan

Sliding-scale payback mechanism

Incentive-based program that shares benefits

- Part grant-part loan
- Sliding-scale payback mechanism
- Incentive-based program that shares benefits

## The agreement:

$13 million total cost

$5 million grant

$9 million loan

Minimum annual payback

Sliding per-car tariff: $35-$5 – based upon traffic volume thresholds

- $13 million total cost
- $5 million grant
- $9 million loan
- Minimum annual payback
- Sliding per-car tariff: $35-$5 – based upon traffic volume thresholds

## Results? 

Less than one year of data

Upward trend in car counts during the first year

NS reports new business due to line opening

Edgemoor Yard using available capacity

- Less than one year of data
- Upward trend in car counts during the first year
- NS reports new business due to line opening
- Edgemoor Yard using available capacity

## Lessons learned:

Good way to leverage State funds against RR needs

Not a universal solution

Flexibility is important

- Good way to leverage State funds against RR needs
- Not a universal solution
- Flexibility is important