Cincinnati's Railroad

[Ulrich]

I'm referring, of course, to the Cincinnati, New Orleans, and Texas Pacific, operated by Norfolk Southern but owned by the city of Cincinnati. How is revenue apportioned? Given that this is one of Norfolk Southern's busiest trunk lines, it must generate quite a nice return for Cincinnati.  When the "rathole" portion was upgraded in the early 60s who paid for that..Southern?..Cincinnati?  or maybe both?

[Paul_D_North_Jr]

As a start, see the several posts on the bottom half of page 2 of this thread here regarding towns that built tracks to themselves:

http://cs.trains.com/trn/f/111/p/153564/1697992.aspx#1697992 

See also the following:

http://en.wikipedia.org/wiki/Cincinnati,_New_Orleans_and_Texas_Pacific_Railway 

http://www.cincinnatisouthernrailway.org/ 

and especially: http://www.cincinnatisouthernrailway.org/public-information/index.php 

and http://www.cincinnatisouthernrailway.org/documents/2011-CSR-Audit.pdf 

Finally, some interesting photos of the old tunnels are here:  http://intoruin.wordpress.com/tag/cnotp/ 

- Paul North. 

[Ulrich]

Thanks Paul, that will make for some interesting reading over the next few days.

[Rader Sidetrack]

Ulrich

I'm referring, of course, to the Cincinnati, New Orleans, and Texas Pacific, operated by Norfolk Southern but owned by the city of Cincinnati. How is revenue apportioned? 

The CNO&TP is leased to NS.

 The CNO&TP's lease of the Cincinnati Southern Railway is currently set to expire in 2026, with an option for a 25 year renewal.^[1] The agreement is governed by the Trustees of the Cincinnati Southern Railway, who are appointed by the Mayor of the City of Cincinnati.^[2][3]

http://en.wikipedia.org/wiki/Cincinnati,_New_Orleans_and_Texas_Pacific_Railway

[samuelpc]

There is also this short  vidio clip that is on You Tube that give a short history the railroad

http://www.youtube.com/watch?v=6aGZNOjmuvQ

[MP173]

I took a quick look at my Moody's 1972 Transportation Manual and also the sites Paul linked.  Here is a summary.

In 1869 the voters of Cincinnati authorized the building of the railroad.  Construction began in Dec, 1873 and was completed Oct 12, 1881.  It was then leased to the Cincinnati, New Orleans & Texas Pacific Rw for 25 years.  Muni bonds were issued in 1880 for $14,932,000 (Moodys). 

I checked the inflation calculator online and it only goes back to 1913.  The value of $14,932, 000 in 1913 in today's dollars is $346 million.  There are 32 missing years.  I am not going to checkout historical inflation for that era but let's assume 3% and apply the rule of 72.  Thus, doubling of value every 24 years...32 years = 2.33 x value or a present value of $806 million.  Remember this is for the BONDS.

$806 million divided by 335 miles = $2.4 million per mile.  This calculation may or may not be pertenant, but it was fun...

The yearly lease to CNOTP was $800,000 per year or a 5.3% yield.

Over the years the lease has been modified.  In 1927 a 99 year lease was signed with CNOTP with a 25 year option for renewal.  In 1946 the lease was $1,250,000 per year with 6% of net profits for the railroad.

In 1961 the rental agreement was amended as the city issued bonds for the improvement of the railroad.  This was commonly known as "Daylighting of the Rathole" and there was a big article in Trains back in the 1960s.  The lease was modified to $1,750,000 plus $26,000 per year escalator.  In 1987 it was renegotiated to $11,000,000 per year plus escalator.

In 2011 the City was paid $19,709,868 plus $100,000 of trustee expenses. 

Just to note, the 1961 fee of $1750,000 translates to a 2011 amount of  $13.1 million.  So, NS has been willing to renegotiate above the agreed upon legal document.

This is one heck of a railroad.  I spent one morning back in 2004 at High Bridge, Ky where the railroad crosses what i think is the Kentucky River.  What a setting. 

Ed

[Ulrich]

Great summation.  This story is also a good example of government entrepreneurship. Apparently the Ohio constitution forbade Cincinnati from participating in any joint stock venture to build a railroad, so they went ahead and built the road themselves.