Eastern Railroad Discussion > NS Wants to Buy the Cincinnati-Chattanooga Line

 Norfolk Southern wants to buy the tracks it now leases from the City of Cincinnati between the Queen City and Chattanooga, Tennessee.
The railroad pays $26 million annually for the 336-mile route popularly known for its Rat Hole Division south of Danville, Kentucky, due to its numerous tunnels.
NS has offered the city $1.6 billion for the line. The proposal will be discussed during a meeting to be held Nov. 21 at Cincinnati Union Terminal.
The lease on the line runs through Dec. 31, 2026, with NS having an option to extend it for another 25 years.

The prospect of the city selling the line to NS, which is formally known as the Cincinnati Southern Railway, has been subject to discussions for several years.
A news report indicated that under the latest sale proposal, the annual payments NS makes to the city would more than double, to about $56 million.
Any sale of the line would need to be approved by voters and the Ohio General Assembly.

The route is the only municipally owned interstate railroad. It opened in 1869 and has been leased since 1881 to a subsidiary company of the Southern Railway known as the Cincinnati, New Orleans & Texas Pacific.
The City of Cincinnati uses the lease payments it receives from NS to help pay for infrastructure projects. From the akronrrblog

That is a sizeable chunk of change to Cincnnati.  Are they responsible to maintain it?  Got to be complex legalaggreement.

Cincinnati has an exceptional history of poor decision making. Look no farther than the unfinished subway, light rail, or the sports stadiums. Money will be spent in no time.

61 years to pay off the sale price at the current rate. Not considering at least two renegotiations that would have to occur in that time. The city could keep the line for another 100 years and easily double the income for no cost to the city. Short sited to go for the payout.

The City of Cincinnati owns track in KY and TN? That's odd

Why the Ohio General Assembly?  The city owns it.

eastpenn23 Wrote:
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> The City of Cincinnati owns track in KY and TN?
> That's odd

They built it, so yes, they own it all the way to Chattanooga.

eastpenn23 Wrote:
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> The City of Cincinnati owns track in KY and TN?
> That's odd

Cincinnati is odd...

WKRP still on the air?

Out 

callum_out Wrote:
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> WKRP still on the air?
>
> Out 

As God is my witness, I thought Turkeys could fly 

Tominde Wrote:
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> That is a sizeable chunk of change to Cincnnati. 
> Are they responsible to maintain it?  Got to be
> complex legalaggreement.

No - all NS's problem.  The original lease is ususally credited as the "grandfather" of the modern day Triple Net Lease. 

City would be foolish to kill this golden goose, which is why it likely will happen. 
 



Edited 1 time(s). Last edit at 11/20/22 15:56 by scraphauler.

santafedan Wrote:
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> Why the Ohio General Assembly?  The city owns it.

Because under the Ohio Constitution, the City could not loan money or issue bonds to a private company to build the railroad, so the Furgeson Act of 1869  created a law that allowed the City to circumvent the constitution and build their own railroad with public money.  That laws required voter approval (which must be a ballot item on a regularly scheduled election, not a special election) AND Ohio General Assembly approval to sell the line.



Edited 1 time(s). Last edit at 11/20/22 15:57 by scraphauler.

howeld Wrote:
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> Cincinnati has an exceptional history of poor
> decision making. Look no farther than the
> unfinished subway, light rail, or the sports
> stadiums. Money will be spent in no time.
>
> 61 years to pay off the sale price at the current
> rate. Not considering at least two renegotiations
> that would have to occur in that time. The city
> could keep the line for another 100 years and
> easily double the income for no cost to the city.
> Short sited to go for the payout.


Cincinnati city government and poor choices on spending money is not unique to Cincinnati. It pervades government at all levels.

Posted from Android

If Cincinnati's ownership of this line is a good thing, then socialism can't be the bad thing that so many claim it is.

RuleG Wrote:
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> If Cincinnati's ownership of this line is a good
> thing, then socialism can't be the bad thing that
> so many claim it is.

So true!  If the city really wants to maximize it's revenue stream vs. realizing a one time gain, they should auction off access slots to all comers, just as many cities do with airport gates.

Dave

Welllll, the only problem with that idea is that NS and RJ Corman are the only RRs that connect to it. 

DavidP Wrote:
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> RuleG Wrote:
> --------------------------------------------------
> -----
> > If Cincinnati's ownership of this line is a
> good
> > thing, then socialism can't be the bad thing
> that
> > so many claim it is.
>
> So true!  If the city really wants to maximize
> it's revenue stream vs. realizing a one time gain,
> they should auction off access slots to all
> comers, just as many cities do with airport
> gates.
>
> Dave

Hello Les!

PWM

RuleG Wrote:
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> If Cincinnati's ownership of this line is a good
> thing, then socialism can't be the bad thing that
> so many claim it is.

No one said it was a good thing for anyone but the city government itself. They'll blow it sooner or later anyway.

Posted from Android

Mojacket Wrote:
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> Welllll, the only problem with that idea is that
> NS and RJ Corman are the only RRs that connect to
> it. 

And CSXT, CIND, IORY in Cincinnati, CSXT in Knoxville and Chattanooga, etc., but your point stands - there really isn't anyone else in a position to bid on it, even if that is possible anyway under lease terms and Ohio law (which I don't think it is).  So idea of someone else bidding on it to run up price or swooping in and stealing it from NS is simply railfan fantasy.  

Mayor John Cranley started the push to sell the railroad - Mayor Aftab Pureval has taken the baton and ran with it.  The city claims that they will have a $430 million shortfall in maintenance to aging city infrastructure (roads, parks, utilities, fire stations, etc) over the next five years.  Mayor Pureval (D) has political aspirations well beyond the mayorship of Cincinnati.  As a 36 year old in 2018, he ran campaign to try to take the House seat occupied by long time Congressman Chabot (R), loosing 46/52,  In 2021, he smoked fellow democrat David Mann in the mayoral election, taking 2/3 of the vote (Cincinnati has a weird 3 party political system - the top two vote getters from the primary compete in general election, regardless of political affiliation).  Fixing the crumbling city would be a HUGE feather in his cap and propel his Senate and White House aspirations significantly, regardless to what it might mean 20-30 years down the road.  What can you do for me RIGHT NOW.  So I suspect good old Aftab will push HARD to get this done.  And since the mayor sets the Cincinnati Southern boards, you know that there will be little to no descent among those board members, regardless of their background. 

The question I have is what's in it for NS? In an industry obsessed with short term gains, what does buying it do for today if the purchase payments are going to be far higher than the lease price? Long term it may make sense, but since when is anyone in the railroad business thinking long term?

Posted from iPhone

That is an interesting thought to open the railroad to other players.

Gotta read the lease to see what it says about exclusivity.

Posted from Android