On 11/26/2022 at 9:05 PM, unusualfire said:

What would be worse? A train accident causing 100's million in damages? A bridge collapse? 

 

Selling would get rid of all the liabalities and maintance of the line.

There are certainly plusses and minuses for selling or keeping the line. The plan for reallocating it into a more liquid asset is a good plan though.  It would be a mistake if they were using the proceeds to plug budget holes or fix the pension or something along those lines. Keeping the funds reinvested in other assets is the best way to handle such a sale. Now, the biggest question is whether or not the price is reasonable or if it is too much of a discount. No matter what, the sale price is going to be discounted a bit from true market value if it were operated by a professional company in that business as they can get more economies of scale from it. That does not mean it is a bad deal though. Overall, I think it is probably a good deal even if they leave some money on the table. 

Tons of EV battery business is coming to the Cincinnati Southern RR whether or not we still own it.  

 

EV batteries are horrendously heavy.  The raw materials are going to come in by rail, then the finished batteries - which often weigh as much or more than a compact gasoline automobile - will be shipped to assembly plants by rail. 

 

Norfolk-Southern anticipates this boom and thinks we aren't going to notice.   

 

Look at where the battery plants are being built - in the Great Lakes Region and in the American South.  Already, tons of frames and finished cars travel back and forth on the Cincinnati Southern RR, so this development means increased freight traffic on the line. 

 

Edited November 30, 20222 yr by Lazarus

Cincinnati Southern Railway sale faces turbulence at Ohio statehouse

 

Legislation needed to allow the city to sell the Cincinnati Southern Railway for $1.6 billion could be held up because of opposition by a member of the Southwest Ohio delegation to the state Senate, the Business Courier has learned.

 

State Sen. Bill Blessing, R-Colerain Twp., is opposed to the legislation, and Senate President Matt Huffman, R-Lima, may not allow the bill to move through the legislature without Blessing's OK, according to sources. Huffman has control over what legislation moves through the Senate.

 

Blessing did not return numerous phone calls seeking comment. Blessing’s district includes West Price Hill, East Price Hill, Riverside and Sayler Park, as well as much of western, northern and eastern Hamilton County outside the city.

 

A Huffman spokesman described the situation as “still developing.”

 

More below:

https://www.bizjournals.com/cincinnati/news/2022/12/12/railroad-deal-statehouse-hurdles.html

 

I would be shocked if Blessing and Huffman get some campaign donations soon from Norfolk Southern to grease the wheels.

Quote

 

Lang, the bill’s primary sponsor, sees the legislation as in line with his beliefs about local governments focusing on core services – primarily public safety and infrastructure.

“I want to see all local governments focus only on their core competencies. Any chance a local government has to divest itself of something that’s not a core competency, I want to see them take that up. A city has no business being involved in a railroad. It’s very unusual. And (Cincinnati) has a way to exit this in a way that benefits the taxpayers,” said Lang, a former West Chester Township trustee.

 

 

The City of Cincinnati and the Southern RR Board are in no way "involved" in the operation of the railroad.  The city simply owns the land beneath the railroad and collects a land lease.  

 

It's like saying The University of Texas shouldn't be "involved" in the leasing of the Permian Basin to oil producers:

https://www.bloomberg.com/graphics/2022-harvard-university-of-texas-richest-college-oil-endowments/?leadSource=uverify wall

 

What's hilarious is that college endowments are legally allowed to invest in categories that are often off-limits to cities and public pension funds.  Stuff like...land leases. 

Is it just me or are or are others very concerned that if this deal goes thru and we end up selling the RR that a large portion of the sale will be used to fund renovations at Paycor Stadium, GABP, and potentially a new sports arena ? Its certainly not out of the question. I could see someone citing "recreation facilities" as being applicable.

"The money can only be used on “the rehabilitation, modernization or replacement of existing streets, bridges, municipal buildings, parks and green spaces, site improvements, recreation facilities, improvements for parking purposes, and any other public facilities owned by Cincinnati.."

 

Yeah no not unless the sales tax increase used to fund both stadiums is sunsetted.And it is still paying bonds off on both stadiums so not anytime this half century 

12 minutes ago, NsideProp said:

Is it just me or are or are others very concerned that if this deal goes thru and we end up selling the RR that a large portion of the sale will be used to fund renovations at Paycor Stadium, GABP, and potentially a new sports arena ? 

 

 

 

Remember around 2005~ when a new arena for the 2012 Olympics was going to be combined with the convention center expansion built over I-75 west of Central Ave.?  The bitch is back!

 

 

26 minutes ago, NsideProp said:

Is it just me or are or are others very concerned that if this deal goes thru and we end up selling the RR that a large portion of the sale will be used to fund renovations at Paycor Stadium, GABP, and potentially a new sports arena ? Its certainly not out of the question. I could see someone citing "recreation facilities" as being applicable.

"The money can only be used on “the rehabilitation, modernization or replacement of existing streets, bridges, municipal buildings, parks and green spaces, site improvements, recreation facilities, improvements for parking purposes, and any other public facilities owned by Cincinnati.."

 

That is not really a likely nor feasible option. IF, any money from this would go to upgrade Paycor, it would likely be confined to road and other infrastructure projects around the stadium, not the stadium itself. The sale of the Railroad is a city asset. The city does not own the stadium and does not have control of the stadium. THe County owns the stadium. The county does not get any funds from the sale of the railroad. These are city funds. 

Yea, I have zero concern about this going to stadiums. Not going to happen.

1 hour ago, Brutus_buckeye said:

That is not really a likely nor feasible option. IF, any money from this would go to upgrade Paycor, it would likely be confined to road and other infrastructure projects around the stadium, not the stadium itself. The sale of the Railroad is a city asset. The city does not own the stadium and does not have control of the stadium. THe County owns the stadium. The county does not get any funds from the sale of the railroad. These are city funds. 

Could these funds go towards caping Fort Washington Way?

2 minutes ago, Ucgrad2015 said:

Could these funds go towards caping Fort Washington Way?

Probably a better question for @thomasbw. My guess is no because the city does not own FWW and probably would not be responsible for maintaining it. Not sure how caps would play into that. 

 

Also, it would likely depend on how the trust fund for the proceeds is structured as to what would be an allowable distribution of funds. There is probably still a lot of balls in the area that would have to be decided before it is determined how to actually use the proceeds. 

16 hours ago, Brutus_buckeye said:

My guess is no because the city does not own FWW and probably would not be responsible for maintaining it. Not sure how caps would play into that. 

 

Also, it would likely depend on how the trust fund for the proceeds is structured as to what would be an allowable distribution of funds. There is probably still a lot of balls in the area that would have to be decided before it is determined how to actually use the proceeds. 

The city does not own FWW but it sounds like they will at least be a partial owner of the caps. The cost will be split 50/50 with the county but the city is the applicant for the federal planning grant. The air rights are also currently owned by ODOT so the city would have to pay them if they wanted to do anything other make a public asset like a park. This likely means that they could use the new investment fund to cover the city's portion of a local match for a federal grant, but not all of it.

The infrastructure fund will be restricted to existing infrastructure, that part is clear. We just don't know if something like this counts as existing since it could be said that they are improving infrastructure that does already exist.

Actually the city might still own the land under Fort Washington Way, since the city broke ground on the original expressway before passage of the 1956 Highway Bill.  

 

When the highway was rebuilt in the late 1990s, the City spent $15-20 million on aesthetic enhancements.  That included the textured walls, fake cable-stayed bridges, paver sidewalks, and double-row of trees on either side that have had mixed success.  

6 hours ago, Lazarus said:

Actually the city might still own the land under Fort Washington Way, since the city broke ground on the original expressway before passage of the 1956 Highway Bill.

I stand corrected. FWW, including all of 2nd and the connecting streets, are parcels owned by the city. Almost all of 3rd is public RoW, except for the southern sidewalks.

I just looked on streetview and saw that there is only one row of trees on the south side - the double row is on the north side.  I remember the former city engineer John Dietrich mentioning that "they tried something and it didn't work" with the trees on the south side of FWW.  That was about ten years ago.  In the meantime, the trees along Third St. have started maturing.  I remember the double-row of trees on Jefferson Ave. was about that size the FWW trees are now around 1990, then they exploded in size.  Same with the Findlay Playground street trees.  At some point they go big-time.  But that's probably never going to happen for the Second St. trees.  

It ought to be mentioned that I suspect that the railroad sale might be motivated by work-from-home damaging earnings tax receipts and the city's sudden about-face with regards to the "Heimlich Maneuver" property tax cap.  

 

That was the voluntary property tax cap orchestrated by Phil Heimlich back in 1999 in anticipation of the 2000 revaluation of Hamilton County property.  Back then, buildings were being demo'd every day throughout the city, with hardly any new residential construction.  

 

Things have changed and now there is a market for rehabs and new construction in many areas of the city.  

Edited December 13, 20222 yr by Lazarus

Mayor Aftab Pureval vows to persist on Cincinnati Southern Railway sale despite statehouse holdup

 

Mayor Aftab Pureval said Cincinnati will continue to pursue state legislation needed to allow the city to sell the railroad it owns, despite major opposition by a key lawmaker from Southwest Ohio.

 

State Sen. Bill Blessing, R-Colerain Township, is blocking legislation needed to allow for the sale and the city’s plan to invest the $1.6 billion in proceeds. Southwest Ohio’s other state senators are sponsoring the bill, but Senate President Matt Huffman, R-Lima, has said the legislation needs Blessing’s blessing to go forward, at least at this point. As Senate president, Huffman has control over what legislation is ultimately called for a vote in that body.

 

“I wholeheartedly support the sale of the railroad because it is an intentional investment in the future of Cincinnati,” Pureval told the Business Courier. “It will enable us to more than double the amount of money we have on existing infrastructure which is a critical need across the city and will only get more difficult in the next five years. The state legislature has an important role to play, and it’s important for us to continue those conversations to advocate for this very clear win-win for the city.”

 

More below:

https://www.bizjournals.com/cincinnati/news/2022/12/14/pureval-vows-to-persist-railroad-sale.html

 

I think Blessing signs off but he will probably insist on more strings attached to the trust fund and limitations on how the city could use the proceeds of the fund or more importantly (which is probably the big thing) more restrictions on when the city could invade the principal on the fund (if ever).

1 hour ago, Brutus_buckeye said:

I think Blessing signs off but he will probably insist on more strings attached to the trust fund and limitations on how the city could use the proceeds of the fund or more importantly (which is probably the big thing) more restrictions on when the city could invade the principal on the fund (if ever).

Lets hope.  I sometimes wonder if he is opposed to this because of what it could do to help the city attract people to live in the city vs. say Colerain Twp where he is from. It'd be interesting to see if the nearby townships have seen any influx of poorer residents being pushed out of the city center. 

3 hours ago, TheCOV said:

Lets hope.  I sometimes wonder if he is opposed to this because of what it could do to help the city attract people to live in the city vs. say Colerain Twp where he is from. It'd be interesting to see if the nearby townships have seen any influx of poorer residents being pushed out of the city center. 

I do not think that is the case. I have spoken to him a number of times and he is supportive of city initiatives (not to the ends that a progressive living in the city would be but he is a regional player). If I had to guess, I would imagine his holdup is two fold. 
1) Is the city getting the best deal they can for selling such an important asset?  That is truly a question that could never be answered with certainty given the valuation process in fixed assets.

2) Will the principal be adequately protected (i.e. how easy or difficult will it be for the city to dip into the principal to pay for one time budget plugs or fund other initiatives that may be appealing to voters in the future)? Certainly, you want to make sure that the principal cannot be invaded very easily and there would be a lot of challenges in doing so, however, you would not want to set something up where it could never be invaded. If say 50 years down the line, such funding source is no longer adequate or there is such a severe problem that the only way out would be to invade the principal of such asset, it would make sense to do so under rare circumstances. The documents have to be somewhat flexible but can't be too flexible such that next term's council cant say they want to use $200 million of it to pay for low income housing construction or guaranteed college to city high school grads.

On 12/12/2022 at 3:53 PM, Brutus_buckeye said:

Probably a better question for @thomasbw. My guess is no because the city does not own FWW and probably would not be responsible for maintaining it. Not sure how caps would play into that. 

 

Also, it would likely depend on how the trust fund for the proceeds is structured as to what would be an allowable distribution of funds. There is probably still a lot of balls in the area that would have to be decided before it is determined how to actually use the proceeds. 

No, it's my understanding they would only go to maintain existing infrastructure; however, we were going to use other capital dollars to fix that infrastructure absent this deal, so it might 'free up' other funds that could be used in that manner. 

 

Capping FWW in the way they're proposing seems like a fine idea if the Feds are paying for it, but not the highest and best use of local resources. You could remove a few lanes of 2nd and 3rd and just build some shallow "retail caps" like they have on High St. in Columbus over 270 and get a better result for a lower price. 

 

The caps will be basically empty for 300+ days a year. Anyone who wants to use greenspace is going to do the extra two blocks down to Smale rather than sit between ten lanes of traffic. 

I like the small retail cap idea. If anything it cuts the noise down significantly. I agree that while parkland is nice, it is not essential with Smale down there. Why not make the FWW caps more income generating. 

Let's keep this on topic, please.

So basically Norfolk Southern offered the lease at 35.16 milion per year and the railroad board wanted 65 million per year with escalating yearly interest tied to the consumer index.Huge gap that would be headed to abritration if the sale at 1.62 billion falls through.Yearly revenue for the sale projects starting at 88 million with 56 million going to the city and the rest reinvested in the fund.Sale brings back the most for the city in any shape or form but at worst a lease starting at 45-50 million a year is solid for the city. 

56 minutes ago, ucnum1 said:

So basically Norfolk Southern offered the lease at 35.16 milion per year and the railroad board wanted 65 million per year with escalating yearly interest tied to the consumer index.Huge gap that would be headed to abritration if the sale at 1.62 billion falls through.Yearly revenue for the sale projects starting at 88 million with 56 million going to the city and the rest reinvested in the fund.Sale brings back the most for the city in any shape or form but at worst a lease starting at 45-50 million a year is solid for the city. 

I do not see the sale falling through. Blessing is likely using this to jockey for some type of concession or position. While it is a hot button issue for some, the good news about economic matters like this, is that unlike social issues, personal ideology does not stand in the way and everyone usually has their specific price to provide their blessing on the deal. There usually is always some type of additional concession that can be made (big or small) to keep the deal moving forward. 

I think the lease passing through the city voters is less than a coin toss scenario under the best of scenarios.At worst though starting at $50 million seems to be the lease floor a year.

1 hour ago, ucnum1 said:

So basically Norfolk Southern offered the lease at 35.16 milion per year and the railroad board wanted 65 million per year with escalating yearly interest tied to the consumer index.

 

This is how the previous lease was organized - the escalator based on federal numbers unrelated to N-S's actual use of the railroad.  That lease renegotiation followed the reconstruction of the railroad in the 1960s but before double-stacking and container shipping really took off.  

 

Now we're at the cusp of large-scale EV battery manufacturing throughout the Industrial Midwest and South.  The original L&N and the Cincinnati Southern will be the equivalent of I-65 and I-75 with respect to this huge new source of rail traffic.  

 

That's why they're bum-rushing the city.  They know damn well that the true scale of this will be clearer in 2026.  

 

 

 

 

 

1 hour ago, ucnum1 said:

I think the lease passing through the city voters is less than a coin toss scenario under the best of scenarios.At worst though starting at $50 million seems to be the lease floor a year.

I think you are right regarding the lease floor. Also, though, N&S is not going to do a deal where they cannot make money. The question to ask though is what is the risk of continued ownership vs what is the benefit of continued ownership? Certainly, the long term income stream of continued ownership is a big benefit, and I do not doubt a renegotiated lease should be above the $50 million a year thresh hold. it is a little disingenuous to say that they are taking the old asset at $25 million and being able to sell it and now will receive $50+ million a year from the fund. If they are getting $50+ million a year, chances are the asset in a renegotiated lease would yield $60-75 million range if the city held onto it. Clearly N&S as an expert operator of the railroad could get additional benefits from owning it vs the city continuing in their ownership. So N&S could effectively create a yield worth $100 million a year by their ownership of the line, maybe.. At minimum, it would safe to assume that an illiquid asset such as a railroad is going to throw off more money in the short term than say the $50 million annuity that the proceeds from the sale of the line would generate investing in liquid assets.

 

I still lean toward taking the deal though. From a risk standpoint, the short term presents many advantages toward holding the asset and capitalizing on the benefit of increased rail transit along the line. However, will that remain true for the long term? That is obviously a question that cannot be answered. My take is that governments and cities should not hold their capital in illiquid and long term fixed assets such as this because they do not present the flexibility if the market turns. At the same time, they are giving up some potential return for having the flexibility and creating liquidity in the asset holdings, but from a government standpoint, that is a prudent move. 

Norfolk Southern, Cincinnati Southern Railway board started far apart on $1.6B deal

 

When trustees overseeing the Cincinnati Southern Railway and representatives of Norfolk Southern began negotiating a new lease at the end of 2020, they had vastly different ideas of what the Cincinnati-to-Chattanooga railroad was worth, both in terms of lease payments and an outright sale.

 

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.

 

The railway board, which was appointed by then-Mayor John Cranley, opened negotiations in late 2020 trying to secure a new lease term at a much higher annual payment – $65 million per year, increasing annually based on the consumer price index for urban wage earners, a slightly more generous escalator than is used under the present lease.

 

The city also proposed it receive a portion of non-freight rail revenue, whether it came from passenger or commuter operations and “longitudinal occupancies on the right of way,” meaning money from fiber optics or other installations beneath it.

 

The city currently gets about $25 million per year. Under the proposed plan to invest the $1.6 billion and deliver 5.5% annual returns, the sale proceeds will earn $88 million per year, with the city receiving $56 million and the remainder reinvested. The returns would be used by the city to fix, maintain or replace its existing infrastructure, including streets, bridges, buildings, parks, recreation facilities and other infrastructure. Mayor Aftab Pureval said the city intends to grow the trust fund.

 

More below:

https://www.bizjournals.com/cincinnati/news/2022/12/15/behind-the-deal-cincinnati-southern-railway.html

 

 

Quote

The deal also includes 21 miles of right-of-way at the east end of the Peavine rail line that runs between Cincinnati and Portsmouth that the state can use to build a multi-use trail.

 

What?

 

This is 25+ miles east of Cincinnati.  The line is still used as far as this quarry:

https://www.google.com/maps/place/Peebles,+OH+45660/@38.9490872,-83.3615097,1496m/data=!3m1!1e3!4m5!3m4!1s0x8846c56515f947a5:0x2382599a051b7610!8m2!3d38.9489593!4d-83.4057458

 

 

 

5 hours ago, Lazarus said:

 

 

What?

 

This is 25+ miles east of Cincinnati.  The line is still used as far as this quarry:

https://www.google.com/maps/place/Peebles,+OH+45660/@38.9490872,-83.3615097,1496m/data=!3m1!1e3!4m5!3m4!1s0x8846c56515f947a5:0x2382599a051b7610!8m2!3d38.9489593!4d-83.4057458

 

 

 

I don't understand this either. I was under the impression that the Peavine has gotten busier the last few years.

 

Wasn't having a connection to that line part of the reason Purina decided to build their new plant where they did?

1 hour ago, Cincy_Travels said:

Wasn't having a connection to that line part of the reason Purina decided to build their new plant where they did?

 

Yeah, but they're never going to restore the connection to Portsmouth.  They'll get their shipments of grain (or whatever dog/cat food is made out of) out of the CSX and N-S yards in Cincinnati. 

 

It just seems like they trotted this out as an opportunity to rid the company of ownership of a section of line that they want nothing to do with.  A passenger rail connection between Cincinnati and Ohio University in Athens would use this line.  Unfortunately our state government has no interest in bolstering the university and the livability of Eastern Ohio with a daily passenger train. 

 

 

 

 

Because they are completely beholden to the automotive industry. 

10 hours ago, Lazarus said:

 

Yeah, but they're never going to restore the connection to Portsmouth.  They'll get their shipments of grain (or whatever dog/cat food is made out of) out of the CSX and N-S yards in Cincinnati. 

 

It just seems like they trotted this out as an opportunity to rid the company of ownership of a section of line that they want nothing to do with.  A passenger rail connection between Cincinnati and Ohio University in Athens would use this line.  Unfortunately our state government has no interest in bolstering the university and the livability of Eastern Ohio with a daily passenger train. 

 

 

 

 

I'm aware. Peebles is my hometown and I go out there on a regular basis. I would love for the line to have passenger service. Peebles was founded because of the rail line so it would be great for the historic connection. 

 

From what I've heard, the bridges in the section between Peebles and Portsmouth are falling apart.

The Peavine is operated by the Cincinnati East Terminal railroad which interchanges with NS. Using that line for commuter operations would be easy since the CET doesn’t have a ton of traffic. Even a daily grain train to Purina could be run at night. 
 

When I lived in SLC, we lived right next to the TRAX red line that got freight traffic three times a week at midnight 

 

Little snob:

Does the City own any chunks of land along the railroad right of way between here and Chattanooga? Are there any stretches where the right of way is significantly wider than what is required for the railroad tracks? 

MY VIEW: Cincinnati railroad sale a 'remarkable and historic opportunity'

 

I am honored to serve as president of the Cincinnati Southern Railway (CSR) Board of Trustees with Paul Sylvester (a 39-year board member), Charlie Luken and Mark Mallory (former Cincinnati mayors) and Amy Murray (a former Cincinnati City Council member). We proudly serve as volunteers in this role.

 

There is a clear business case for selling the CSR, a 337-mile, 9,500-acre asset between Cincinnati and Chattanooga. We welcome this opportunity to make that case for you.

 

Importantly, only the citizens of Cincinnati can vote to sell the railroad. Our primary job is make sure the CSR provides the greatest long-term value to Cincinnati. That is precisely why we are recommending the sale of CSR, but only under certain conditions.

 

Before discussing the conditions we have imposed for the sale of the railroad, here is why selling rather than leasing it, as provided in the November 21, 2022, sale agreement we executed with Norfolk Southern (NS), is a remarkable and historic opportunity.

 

More below:

https://www.bizjournals.com/cincinnati/news/2023/02/06/my-view-railroad-sale-historic-opportunity.html

Cincinnati Southern Railway's potential value varies widely, according to analyses

 

How much is the Cincinnati Southern Railway worth?

 

It depends on who you ask and how they approached the question, according to hundreds of pages of documents released by the city in response to public records requests. The analyses attempted to examine that issue as the board that oversees the city-owned railway negotiated a sale with its current tenant, Norfolk Southern.

 

Three analyses, two commissioned by the railway board and one by Norfolk Southern, produced a range from $616 million to $2.46 billion.

 

If voters approve the sale in November, the city will receive $1.6 billion for the 337-mile railroad, which the city completed in 1880 as an economic development tool and way to establish a key north-south railroad from Cincinnati to Chattanooga, Tenn.

 

Mayor Aftab Pureval, along with the railway trustees and five former mayors, announced the planned sale on Nov. 21, 2022, about four years before the current lease expires. It requires changes to state law governing the railroad, approval from federal regulators and majority support from Cincinnati voters.

 

“This is, without a doubt, a great deal for the taxpayers,” said Pureval, a Democrat. “It’s within the range of all the evaluations except for two – and it’s above those valuations.”

 

More below:

https://www.bizjournals.com/cincinnati/news/2023/02/06/cincinnati-southern-railway-value-varies.html

 

19 hours ago, ColDayMan said:

Cincinnati Southern Railway's potential value varies widely, according to analyses

 

“This is, without a doubt, a great deal for the taxpayers,” said Pureval, a Democrat. “It’s within the range of all the evaluations except for two – and it’s above those valuations.”

 

 

 

Does the deal include paternity tests?

 

 

 

 

 

Interesting that N-S has been holding onto the Peavine this entire time as a way to value the Cincinnati Southern as an alternative to its restoration.  

20 hours ago, ColDayMan said:

Cincinnati Southern Railway's potential value varies widely, according to analyses

 

How much is the Cincinnati Southern Railway worth?

 

It depends on who you ask and how they approached the question, according to hundreds of pages of documents released by the city in response to public records requests. The analyses attempted to examine that issue as the board that oversees the city-owned railway negotiated a sale with its current tenant, Norfolk Southern.

 

Three analyses, two commissioned by the railway board and one by Norfolk Southern, produced a range from $616 million to $2.46 billion.

 

If voters approve the sale in November, the city will receive $1.6 billion for the 337-mile railroad, which the city completed in 1880 as an economic development tool and way to establish a key north-south railroad from Cincinnati to Chattanooga, Tenn.

 

Mayor Aftab Pureval, along with the railway trustees and five former mayors, announced the planned sale on Nov. 21, 2022, about four years before the current lease expires. It requires changes to state law governing the railroad, approval from federal regulators and majority support from Cincinnati voters.

 

“This is, without a doubt, a great deal for the taxpayers,” said Pureval, a Democrat. “It’s within the range of all the evaluations except for two – and it’s above those valuations.”

 

More below:

https://www.bizjournals.com/cincinnati/news/2023/02/06/cincinnati-southern-railway-value-varies.html

 

them putting 661 million as the bottom of the range is legit laughable. its based on the 2009 purchase offer by norfolk southern indexed to inflation, and there is no way that can be seen as a realistic valuation as even then the og 500 million was seen as a laughable purchase price offer. 

 

also fails to mention the 37.3 million per year lease offer. 

 

still very much against the sale of the railroad rn. 

21 minutes ago, stashua123 said:

still very much against the sale of the railroad rn. 

 

I think the business/political aim is to further reduce the city earnings tax by removing the .1% that was added for capital expenses back in 1987 or 1988.  This would mean a total reduction of the earnings tax from the 2.1% that existed for decades back to the 1.7% it was at in the early 1970s, prior to the formation of Metro and its .3% earnings tax.  

 

Current earning taxes in the region:

 

Columbus 2.5%

Dayton 2.25%

Norwood 2.0%

Blue Ash 1.25%

Mason 1.12%

 

Covington 2.45%

Newport 2.5%

 

 

 

 

 

 

I really hate this quote from Paul Muething in his opinion letter: "Ensure that trust fund earnings could only be used to “rehabilitate, modernize, or replace existing infrastructure” and could never be used for the construction of new infrastructure improvements."

 

So if we can't use it to extend the streetcar, build caps over FWW, build bike infrastructure or improve streetscapes and pedestrian safety... it's just going to be used for rehabbing roads. 

Is the railroad worth more than 1.65 billion? Yes, most likely. But you need to leave some skin on the bone for N-S to make it worth their while. If N-S runs the line properly, they could squeeze the value to get to 2.4 billion

 

Are there a ton of buyers for such an asset? Not really, they are few and far between, and N-S could decide to use another line leaving the Cincinnati line to find a new lessee. 

 

Could they find a new lessee? Sure, CSX or one of the few other remaining carriers could lease the line, but there is no guarantee they would pay a premium for it. If N-S is no longer a bidder to lease the line, there is one less bidder in a market with few potential options. It is not like new railroad companies are popping up on the horizon and the railroad business is not a market that is ripe for new entrants. without N-S you have fewer bidders competing against each other which could drive the value down. 

 

Could the city squeeze an extra $10-20 million out of the deal if they really pressed the matter? Sure, possibly. But that that amount is minutiae in the big picture.  People can always nitpick over the numbers to death but the bigger picture is what should be more important. 

 

While I am not in favor of selling assets, in this case, I think it makes sense. You are taking a city asset that is not in the key line of business for running a city, an asset that is non-fungible and an asset that is illiquid. You are converting it into a liquid asset that throws off a return and provides easier ability for a city to properly manage the asset.  I think in the grand picture, the deal is not a bad one and offers many advantages. 

 

 

 

 

 

14 minutes ago, ucgrady said:

So if we can't use it to extend the streetcar, build caps over FWW, build bike infrastructure or improve streetscapes and pedestrian safety... it's just going to be used for rehabbing roads. 

 

They'll shift the current unrestricted funds that are directed toward capital toward new projects.  

 

I believe that the .1% earnings tax from the late 80s is restricted to capital and might be restricted to very similar terms.  

 

As November approaches, we might see the revocation of this tax as the Leave campaign's carrot.  It would be something the Remain side has no answer for. 

 

Also, Hamilton County's property will be reassessed this year, meaning almost everyone will experience a significant property tax hike.  That fear will be stacked onto Leave.    

 

 

22 minutes ago, ucgrady said:

I really hate this quote from Paul Muething in his opinion letter: "Ensure that trust fund earnings could only be used to “rehabilitate, modernize, or replace existing infrastructure” and could never be used for the construction of new infrastructure improvements."

 

So if we can't use it to extend the streetcar, build caps over FWW, build bike infrastructure or improve streetscapes and pedestrian safety... it's just going to be used for rehabbing roads. 

At the end of the day, all the money the city brings in is just one giant bucket. Who cares if the $60 million is allocated only to fix roads and existing streets. 1) it would be nice not to worry as much about road funding and how to fix the streets anyway and 2) more importantly, that $60 million that is allocated specifically to the roads does not need to come from other allocation buckets for the city. So in this case, if the city would otherwise contribute $30 million of additional capital into road repair after accounting for the existing income from the lease, now the city is free to spend that money elsewhere as they see fit, like extending the streetcar. So really it is a big nothing. 

58 minutes ago, ucgrady said:

I really hate this quote from Paul Muething in his opinion letter: "Ensure that trust fund earnings could only be used to “rehabilitate, modernize, or replace existing infrastructure” and could never be used for the construction of new infrastructure improvements."

 

So if we can't use it to extend the streetcar, build caps over FWW, build bike infrastructure or improve streetscapes and pedestrian safety... it's just going to be used for rehabbing roads. 

 

A couple things. I think it is actually good that it is earmarked for existing infrastructure. We are a city of 300,000 but built for 500,000+. We don't need new roads. We need to do a better job maintaining the ones that we have. The second thing is that I don't think it's true that you couldn't use it to cap FWW, build bike lanes, or improve streetscapes and pedestrian safety. These would all just fall under the category of improving an existing asset. Adding bumpouts to Hamilton Avenue is not an infrastructure expansion, rather it is a modernization and enhancement of the existing roadway. The argument may be more tenuous, but I think you can make the same case for the streetcar expansion. Laying more track would just be a modernization and enhancement of the current streetcar. Lastly, as others have pointed out, you can just move other funds around anyway, so it's kind of a moot point.