zugmann wrote: How is it true competition with the big hand of government giving them billions of dollars? Especially with questions on whether the capacity exists for payback. And there already are two lines into the PRB. Why a third one needs built with Uncle Sam's money is beyond me.
How is it true competition with the big hand of government giving them billions of dollars? Especially with questions on whether the capacity exists for payback. And there already are two lines into the PRB. Why a third one needs built with Uncle Sam's money is beyond me.
What part of your history lesson on railroad land grants didn't you understand? Both UP and BNSF exist today due to the massive land grants of the 1800's, land grants worth megatimes more than that measley $2.8 billion loan DM&E asked for.
Why are you bothered by DM&E's request for federal aid when you seem to have no such disdain for previous federal aid.
And why do we need a third line into the PRB? Quothe Boardman ".....to fulfill a need in the national transportation system....". Now, what's he talking about if not the very thing embodied by the DM&E project?
Frankly, we may need a fourth and fifth player into the PRB...............and a couple more players in Montana...........and a couple more players in Southern Idaho.........and a couple more players in South Dakota..........and a couple more players in North Dakota.........and a couple more players in Colorado.......and in Utah.........and in Nevada.......and California.......and Oregon......Washington.......Arizona.....New Mexico......etc.....etc.....etc.....
futuremodal wrote: Pray tell, why would you want our government to give free money to a giant bloated corporation, one that engages in monopolistic behaviour against domestic shippers? What's next, do we start giving small business development grants to Microsoft and GE?The same reason why you want the government to give free money to small corporations unable to pay back? The loan would end up being a grant soon enough. What I'm against is this argument that if they don't get a loan, they will fail. Well, guess what? Then they should fail. Cost of doing business.
futuremodal wrote: Pray tell, why would you want our government to give free money to a giant bloated corporation, one that engages in monopolistic behaviour against domestic shippers? What's next, do we start giving small business development grants to Microsoft and GE?
Pray tell, why would you want our government to give free money to a giant bloated corporation, one that engages in monopolistic behaviour against domestic shippers? What's next, do we start giving small business development grants to Microsoft and GE?
The same reason why you want the government to give free money to small corporations unable to pay back? The loan would end up being a grant soon enough. What I'm against is this argument that if they don't get a loan, they will fail. Well, guess what? Then they should fail. Cost of doing business.
The whole point of the FRA loan program is to aid smaller railroads who may not be able to secure the necessary private funding for capacity improvement projects. If the FRA rejects funding the very entities who need it, then there's no reason for the FRA loan program to begin with. End it, and fire the bureaucrats who run it, including Boardman.
Dan Metzger
ericboone wrote: MichaelSol wrote: zugmann wrote: What I'm against is this argument that if they don't get a loan, they will fail. Well, guess what? Then they should fail. Cost of doing business. What on earth ... a modern business that doesn't do business using loans and credit facilities would be ... unusual? Impossible?BNSF wouldn't be here today if it hadn't been able to get loans through its several years of negative cash flow. There is a big difference between private investors voluntarily risking their own money in the form of a loan to a risky business proposition verses the taxpayers being forced to take the risk.
MichaelSol wrote: zugmann wrote: What I'm against is this argument that if they don't get a loan, they will fail. Well, guess what? Then they should fail. Cost of doing business. What on earth ... a modern business that doesn't do business using loans and credit facilities would be ... unusual? Impossible?BNSF wouldn't be here today if it hadn't been able to get loans through its several years of negative cash flow.
zugmann wrote: What I'm against is this argument that if they don't get a loan, they will fail. Well, guess what? Then they should fail. Cost of doing business.
What on earth ... a modern business that doesn't do business using loans and credit facilities would be ... unusual? Impossible?
BNSF wouldn't be here today if it hadn't been able to get loans through its several years of negative cash flow.
There is a big difference between private investors voluntarily risking their own money in the form of a loan to a risky business proposition verses the taxpayers being forced to take the risk.
I understand the difference. Quite well.
I do see the pronouncement that "if they don't get a loan" ... they should fail as " a cost of doing business" as naive.
I am surprised now to see the idea that government's role is to make safe loans -- crowding out private investors who should make risky loans. Naturally, government funding of and loans for research, experimental technology, small businesses, etc., has long been predicated on the public benefits of just such "risk" taking. Indeed, it begs the question -- if the risk is "safe", then there is no need for FRA funding of anybody at anytime for any purpose.
So why is the program there at all?
futuremodal wrote:No, what I favor is the feds reintroducing a semblance of competition back into the Western US railroad scene by giving startup aid to ambitious entities like DM&E, so that they too can share in the sumptuous banquet of PRB coal transportation. There's plenty of that (PRB coal hauling contracts) to go around. And who are you to say they will or won't be around in 20 years? For all we know UP or BNSF might not be around in 20 years.
No, what I favor is the feds reintroducing a semblance of competition back into the Western US railroad scene by giving startup aid to ambitious entities like DM&E, so that they too can share in the sumptuous banquet of PRB coal transportation. There's plenty of that (PRB coal hauling contracts) to go around. And who are you to say they will or won't be around in 20 years? For all we know UP or BNSF might not be around in 20 years.
futuremodal wrote:Pray tell, why would you want our government to give free money to a giant bloated corporation, one that engages in monopolistic behaviour against domestic shippers? What's next, do we start giving small business development grants to Microsoft and GE?BTW - parts of the DM&E have been around for 100+ years. So are you saying you're in favor of giving DM&E the $2.8 billion loan because they meet that old age criteria?
BTW - parts of the DM&E have been around for 100+ years. So are you saying you're in favor of giving DM&E the $2.8 billion loan because they meet that old age criteria?
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
From the FRA Press Release: The bold empathsis is mine. Some questions as well..probably due to ignorance on my part or the vagueness of the release. I would love to see the ruling.
"He said he was concerned by several factors, including the DM&E's current highly leveraged financial position; the size of the loan relative to the limited scale of existing DM&E operations; and the possibility that the railroad may not be able to ship the projected amounts of coal needed to generate enough revenue to pay back the loan."
The wording seems to be counterintuitive by implicating that by "existing" criteria of size assumes that the extension is for all purposes erased from the evaluation which I thought was the point of this exercise. By "may not be able to ship" implys either capacity issues or lack of contracts in hand which would seem to indicate utilities would sign on the line prior to construction..sort of a self referential logic..." may" seems to indicate uncertainity as to the veracity of this logic. Are these projections of the market?
In addition, Boardman cited concerns that the application did not sufficiently address how the railroad would handle potential cost overruns and schedule delays with the Powder River Basin construction project.
I cannot imagine there was no contingency fund or standard AIA type documents and wording
Nothing is more fairly distributed than common sense: no one thinks he needs more of it than he already has.
Datafever wrote: ...Boardman also said he was ready to certify that the loan would be used economically and efficiently, and that the application met the 25-year repayment limit. ... He would not certify that the loan "can be reasonably repaid" with collateral and credit risk premiums.
...Boardman also said he was ready to certify that the loan would be used economically and efficiently, and that the application met the 25-year repayment limit.
... He would not certify that the loan "can be reasonably repaid" with collateral and credit risk premiums.
While there seems to be some contradiction here, in general the FRA might be questioned on why any government loan would ever be necessary for a private railroad project under any circumstances if the repayment risk were determined to be "low", since that is the criteria that also suggests that private financing would/should be available?
What's the point of FRA loans?
But Boardman sided with the DM&E, and made no mention of Rochester's concerns. He said the project "would significantly enhance public safety by improving DM&E's tracks, in particular," and that adverse environmental impacts were mitigated under the federal environmental impact statement provided with the application.
Further, the project would alleviate rail capacity problems in shipping Powder River Basin coal, and "fulfill a need in the national transportation system," he said.
So much for the footing of The Rochester Coalition's main foundational argument...it's also to my way of viewing this situation, that the safety et al issues were, in fact, red herrings and the counterintutive logic of their objections over safety were, as I suspected, fear inducing agitprop to create a favorable audience and a misdirection of attention...I am happy to see that this blatant misuse of the public's ears, have.. to use a bad pun, derailed...
I wish DM&E the best of luck with venture capitalists on Wall Street...at least they will get a hearing based on facts not lies.
Post-Bulletin - Minnesota/DC / March 5, 2007
The rejection letter sent to the Dakota, Minnesota & Eastern railroad this week reveals the company met four of the five criteria required to win the $2.3 billion construction loan it sought from the Railroad Rehabilitation and Improvement Financing program.
Joseph H. Boardman, administrator of the Federal Railroad Administration, wrote that he was able to certify in writing, as required by law, that the railroad's project met the intended purpose of the program and that sufficient present and probable future rail service demand existed.
Boardman also said he was ready to certify that the loan would be used economically and efficiently, and that the application met the 25-year repayment limit.
It was on the fifth criteria, that the loan was of low risk to the government, that Boardman rejected the loan. He would not certify that the loan "can be reasonably repaid" with collateral and credit risk premiums.
Full story here
dsktc wrote: Conservative pundit Robert Novak addresses the FRA decision in his column in today's Washington Post:"The Federal Railroad Administration handed a rare victory to the American taxpayer last week by denying a questionable $2.3 billion loan application by the Dakota, Minnesota and Eastern (DM&E) Railroad. What makes this news of special interest is the paramount role Sen. John Thune (R-S.D.) played in boosting the loan. Here is a cautionary tale of political life in Washington and how it corrupts."http://www.washingtonpost.com/wp-dyn/content/article/2007/03/04/AR2007030401050.htmlDave
Conservative pundit Robert Novak addresses the FRA decision in his column in today's Washington Post:
"The Federal Railroad Administration handed a rare victory to the American taxpayer last week by denying a questionable $2.3 billion loan application by the Dakota, Minnesota and Eastern (DM&E) Railroad. What makes this news of special interest is the paramount role Sen. John Thune (R-S.D.) played in boosting the loan. Here is a cautionary tale of political life in Washington and how it corrupts."
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/04/AR2007030401050.html
Dave
Careful there, I would hardly call Robert Novak a conservative. It would be interesting to hear how denial of a loan that would have to be paid back is a victory to the taxpayer when tens of billions are granted to airlines and highways with no hope of ever recouping the money. If there was ever a time where the government could help out the economy it was this. This money was not a grant, but a loan. It would have to be paid back, and if it was defaulted on the taxpayer would have the railroad as collateral. To me that makes a whole lot more sense than mindless expansion of highways everywhere that only translates into more congestion and inefficieny.
RRKen wrote: Hating Union Pacific or BNSF is not any reason for lending the DM&E money. If we the public can be convinced that DM&E could actually pay off the FRA loan, not to mention the investors, then I have no issue with it. But a total of $6 billion is a lot to pay back, based upon what they (DM&E) projected in traffic. Consider also, with that amount of debt, how can their rates be any better than UP or BNSF's?Again I say, if this had been such a hot prospect, we would not even be having this discussion as investors would be jumping at the chance. But thus is not the case. Instead they went to the U.S. Government.
Hating Union Pacific or BNSF is not any reason for lending the DM&E money. If we the public can be convinced that DM&E could actually pay off the FRA loan, not to mention the investors, then I have no issue with it. But a total of $6 billion is a lot to pay back, based upon what they (DM&E) projected in traffic. Consider also, with that amount of debt, how can their rates be any better than UP or BNSF's?
Again I say, if this had been such a hot prospect, we would not even be having this discussion as investors would be jumping at the chance. But thus is not the case. Instead they went to the U.S. Government.
So you think the entire DM&E loan justification was based on "hating" UP and BNSF?
FYI - no one "hates" UP and BNSF. I personally detest the creation and federal defense of large oligarchies - this goes back to the 1990's and the horrid mistake made by Linda Morgan et al in allowing the mega-mergers of the 1990's, mergers that still may violate the competitive caveats of the Stagger's Act. The STB/FRA et al are supposed to be representing the public interest as it relates to railroads, not the railroads themselves.
And in this case, the public interest is manifested in the ideals of reintroducing intramodal competition among the railroads, and in expanding badly needed capacity for the service of domestic rail shipping interests, including PRB coal.
Clearly, the FRA has failed the public interest.
A reflection, perhaps more pointed, regarding the oliarchy referred to by futuremodal, that was posted by a nameless fellow on a blog. Anyone remember Ex Senator Dayton's apt remark?,"The Mayo Clinic is worth a he__l of alot more than the entire state of South Dakota..." Maybe this can be calulated to influence as well as cash deposits.
"This isn't about destroying the Mayo Clinic. BN is the heir of the Great Northern Railroad, yet another blue-blood Minnesota family product, hence, its OK for them to barrell through the metro. DM&E is no worse than any other railroad, they're just not a member of the club. Heaven forbid a company not founded by 19th century robber barons dare to try to do business in Minnesota, or, as I call it, the People's Republic to the East...."
One has to wonder by moving abit forward in time and for the sake of discussion, let's make a critical assumption, let's suppose the DM&E's quest for funding from private sources is successful, then what would be the tact of The Mayo Oliarchs once one of their two prong strategic fronts falls off the "to do" list? Ante up the fear factor a notch? Probably....put the squeeze on the precariously waffling aforementioned politician? Probably....Get to the WSJ editorial staff with agitprop press releases...Probably....The DM&E needs a good press flak...PR firm and turn the propaganda tide against the vested interests of very big fish in a very small pond.
zugmann wrote: So your answer is to favor a few small, struggling railroads that probably won't be around in 20 years and won't make good use of the money?
So your answer is to favor a few small, struggling railroads that probably won't be around in 20 years and won't make good use of the money?
How does that make any more sense than funding a railroad that has been here for 100 years +?
ericboone wrote: futuremodal wrote:DM&E just needs to go back to the FRA and apply for a grant, rather than a loan. Then we'll see just what kind of excuse the oligarchy prostitutes at the FRA will use to reject that request. Hey what's a little more corporate welfare going to hurt? It's just the taxpayer's money. Do they think they can spend it better than we all knowing politicians and government bureaucrats?
futuremodal wrote:DM&E just needs to go back to the FRA and apply for a grant, rather than a loan. Then we'll see just what kind of excuse the oligarchy prostitutes at the FRA will use to reject that request.
Hey what's a little more corporate welfare going to hurt? It's just the taxpayer's money. Do they think they can spend it better than we all knowing politicians and government bureaucrats?
It gets back to the philosophy of why we have government influence in a free market society. The purpose of government oversight in a free market economy is to ensure and even nurture a healthy competitive market environment. It is not to favor a few oligarchs by subsequently discriminating against up and coming enterprises.
It does no one any good for oversight agencies such as the FRA to just give money away to a few large powerful Class I's, and then turn around and deny a loan to a Class I wannabe. If anything, the FRA should be giving the grants to the up and comers like DM&E, and should restrict aid to the Class I's in the form of loans only. If the Class I's want government money, let them start paying into a user fee system from which most of those funds can be drawn. You know, like truckers and barge operators do.
I wonder what would happen if all the grants given away to the Class I's over the last decade were retroactively repackaged as loans?
To my knowledge, DM&E (and their parent company Cedar American Rail Holdings) is privately held, and their financial condition is not public.
The proposed expansion plan can be found here
Datafever wrote:The DM&E once hoped to be hauling 100 tons of coal a year by 2007.
The DM&E once hoped to be hauling 100 tons of coal a year by 2007.
Hey Carl, can you misroute a coal car up to Mankato so they can meet that goal?
Brian (IA) http://blhanel.rrpicturearchives.net.
MINNEAPOLIS - Washington turned down the Dakota, Minnesota & Eastern railroad's request for a loan for the biggest U.S. rail expansion in decades. Will Wall Street be kinder?
DM&E chief Kevin Schieffer says the railroad needed investors for the $6 billion project even before the Federal Railroad Administration turned down its request for a $2.3 billion loan last week. Now it just needs more. He said it has hired Citigroup and Merrill Lynch to advise it.
"I've been awfully busy since Monday," Schieffer said, though he declined to talk in detail about the railroad's prospects for finding new investors.
"I don't think the fundamentals of it have changed from a structure standpoint," he said. He said he expects some combination of borrowing and equity in the privately held company.
"They have the environmental approvals, all they need is the money," said Frank Wilner, a railroad economist and spokesman for the United Transportation Union.
It's been almost 10 years since the DM&E, a regional carrier with an east-west line across Minnesota and South Dakota, said it wanted to add 260 miles of new track to extend its line into Wyoming coal country. The idea is to create a shorter, cheaper route out of Wyoming's Powder River Basin than the Burlington Northern Santa Fe Corp. or Union Pacific Corp. offered.
The DM&E once hoped to be hauling 100 tons of coal a year by 2007. But getting environmental and regulatory approvals has proven tougher than it expected.
DM&E's search for investors comes at a good time. Railroad valuations are up (Burlington Northern and Union Pacific shares are both close to five-year highs) and there is a lot of private investment money looking for deals. On the other hand, the Federal Railroad Administrator Joseph H. Boardman said in rejecting the DM&E loan that "there remained too high a risk" it wouldn't be repaid - not exactly a "buy" rating for private investors.
futuremodal wrote: For what it's worth, if any of you would like to make a...."donation" ....to the Mayo Clinik, here's a link for you to express your opinion.....https://forms.mayoforms.org/forms/up/mc447301.cfmEnjoy!
For what it's worth, if any of you would like to make a...."donation" ....to the Mayo Clinik, here's a link for you to express your opinion.....
https://forms.mayoforms.org/forms/up/mc447301.cfm
Enjoy!
To Support the DM&E's efforts go to http://www.gotrac.org/index.cfm?page=253
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