Panel: Public-private investment in short lines can boost Texas economy

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Left to right, Paul Treangen, David Arganbright, Jeff Van Schaick, and Ken Lucht discuss freight railroading at the conference on Friday morning.
Hayley Enoch
DALLAS – The economy of Texas stands to significantly benefit from public-private partnerships investing in shortline railroads. That revelation comes from a panel at the Southwestern Rail Conference in Dallas this week that included Paul Treangen, CEO of TNW Corp.; Jeff Van Schaick, vice president of governmental affairs for Genesee & Wyoming; Ken Lucht, director of governmental affairs for Watco; and David Arganbright, vice president of government affairs for OmniTrax.

“We’re trying to get people to wrap their heads around the fact that we aren’t a special interest group,” Arganbright says. “We are a means to build the economy and invest in communities. Investing in short lines is a huge multiplier of every tax dollar spent.”

Forty-one shortline railroads operate in Texas. They compose 20 percent of the total rail miles in the state. Most of these companies were formed after the Staggers Act allowed Class I railroads to divest spurs and branch lines that failed to turn a profit.

In the past decade, though, the growth of the Texas economy and the relocation of many corporations from out-of-state have given many formerly unprofitable shortline routes a renewed opportunity to become financially viable. However, many of the railroads never turned enough of a profit to perform major repairs on the tracks that would be needed before they could handle a significant uptick in traffic.

More companies showing interested in establishing operations in Texas might do so if the rail infrastructure was there, but shortline railroad owners and operators can not upgrade the tracks until they have greater cash flow. Omnitrax gave the example of the Central Texas & Colorado River Railway, formerly the Heart of Texas Railroad. New businesses built up in the region have created an new reserve of potential customers, but necessary track repairs to the tune of an estimated $25 million dollars have held back any meaningful economic development.

Situations like that, that, the panel members agreed, are ideal venues for state-level grants to help the Texas economy continue to grow. However, the state of Texas has funds allocated specifically to fund rail expansion and rehabilitation programs. Thirty-three other states either provide money to rail directly, or allow rail projects to compete for transportation-oriented grants and funds.

“If we wait until the time is right, until the state government is perfectly receptive, we’ll never get anything done,” Van Schaick says. “We can begin the education about why short line investment is necessary now.”

Many state, such as Wisconsin, provide funds both to repair existing tracks and structures and to reactivate routes that have been abandoned. The state administers two such programs, the Freight Rail Preservation Program and Freight Rail Infrastructure Improvement Program. Watco used FRPP funds to rehabilitate 10 miles of abandoned tracks between Madison and the village of Oregon to Class 2 standards and now operates up to five trains a week over the routing serving a concrete plant.

The panel members agreed that arguing for public-private rail investment is an uphill battle – Texas does not have a record of being particularly friendly to rail infrastructure. Watco's Lucht says that opening up a relationship with state departments of transportation still has benefits, even if they have no funds to allocate. Members of those organizations can still lend their expertise to short lines applying for TIGER grants and other federal money.

For more information on the annual conference, go to texasrailadvocates.org.

NEWSWIRETrains News Wire

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