Starting a Railroad, Phase 1

[Anonymous]

I would suggest finding a small town with a lot of undeveloped land in a geographic location near a large city, but not too close, and close to a class 1 mainline. Then work with the local city council, and business organizations to put together a tax and capital plan that would be attractive to prospective companies to relocate to the area.

Identify available lands and with input from the city council, residents, local developers, develope a plan that can be presented to prospective companies. Such plans should take into account road access, sewer, water, nearby housing availability, phone and information service, as well as construction permitting and architectural theme. All of this has to be presented as a package, so a prospective company can see, number one, that everybody is on the same page, and that buying in will be a trouble free and positive experience.

What I am getting at is instead of trying to revive an old line, start from scratch, and develope an industrial short line serving a campus of businesses developed by yourself in conjunction with local interests and prospective companies. This will give you a maximum of traffic with a minimum of track and equipement, controlling your startup costs and having ready made costomers from day one.

I could be wrong, but is this what companies like RailAmerica does? Such a developement would be a win for the comunity, businesses, and the line serving them. Having a solid costomer base could then serve further developement in the future.

[Junctionfan]

I think that is a great idea. Know of any industries looking to expand?

[Anonymous]

you mentioned drainage and bridge condition.
what other environmental liabilities do you face? are there solvent/fuel plumes in the ground under any engine facilities? How about tie treatment facilities?

Also to the point: how much goodwill is there toward the railroad in the local community? (per a thread elsewhere, are there noise/traffic delay complaints? what will it cost to mitigate those?)

I don't recall any mention of the labor situation of your railroad; JunctionFan made a case for Canada, but what is the REALITY of relations between current management and the gangs that make the wheels roll and the track stay put?
More to the point, what attitude do they have toward their jobs and the likelyhood of a new management team?

[Junctionfan]

I have to ask, what kind of contract will our employees (I we are pretending the forum is members of the board and you (L.C) are the chairman)

What kind of benefits packages and health coverage are we going to give? What is our utility bills and our tax bills going to be like?

Do we have enough customers to make a profit and be able to offer our employees the basic wages to maintain an exceptable living?

[Anonymous]

The main selling points of my idea that have to be stressed to a prospective company are:

Tax breaks by the local government - this is your biggest stick, use it well.

Low financing rates from local sources - this is a win for a prospective company, and it keeps money from leaving town, a big win for local bank(s), who can then turn around and finance developement.

Costomized infrastructure - We'll build it to your specs! This is a powerfull incentive when combined with the other two. Rather than trying to comply with complicated permitting regulations and costs associated with developed communities to make some preexisting plant comply with needs, a prospective company can get a brand new facility with exactly what they need.

Quality of life - this is just as important as any of the "serious" considerations above. What kind of house can I afford if I live here vs. somewhere else? What kind of schooling for my kids? What kind of activities? hunting? fishing? sports?

So, what kind of industry should be lobbied? Hmmm good question, maybe not so much an industry but type of companies, how about frozen food distributors, or building supply distributors, or light manufacturers, importers of machinery or machine tool, or manufacturing supplies. A selection of companies whose proximity are beneficial to each other. That's pretty general, but without answering many other questions it is the most I could say.

I don't see why many towns in Canada don't already fit this bill.

[Junctionfan]

Because a lot of city council folk are thick in the head (at least in St.Catharines). They don't know jack about pretty much anything and the people are too apothetic to vote in someone with the right vision in everything and not just one thing.

Our mayor and some of the councilors are as stupid as they get. One day I will try to get in and show my city that we can do better. (opps-premature campaigning; aren't I)

[ericsp]

What happened to this?

[Anonymous]

QUOTE: Originally posted by ericsp

What happened to this?

I haven't had time to do any more exploration on traffic levels or customers beyond the Port of Gulfport and DuPont. I know of at least one sizeable lumber mill and a plywood mill that are on line also. Only way to get the rest of the detail is to visit and I just haven't had time to take it to that level yet. Perhaps that will be phase 2.

LC

[Anonymous]

QUOTE: Originally posted by crazytechie

you mentioned drainage and bridge condition.
what other environmental liabilities do you face? are there solvent/fuel plumes in the ground under any engine facilities? How about tie treatment facilities?

Also to the point: how much goodwill is there toward the railroad in the local community? (per a thread elsewhere, are there noise/traffic delay complaints? what will it cost to mitigate those?)

I don't recall any mention of the labor situation of your railroad; JunctionFan made a case for Canada, but what is the REALITY of relations between current management and the gangs that make the wheels roll and the track stay put?
More to the point, what attitude do they have toward their jobs and the likelyhood of a new management team?

I'll try to answer these one at a time:

1. We don't generally conduct environmental due diligence unless indicated. If there are old engine service facilities on line that are not in use we wold exclude them from the deal. There are no tie treatment facilities on this line.

2. No cost. We will assume goodwill in the community is neutral as it usually is. Our high quality short line service should help us convert customers, but it won't happen overnight. Figure 3-5 years.

3. Nonunion labor.

LC

[Junctionfan]

Have you reached a preliminary calculation of costs of employees plus operating costs versus revenue?

[Anonymous]

QUOTE: Originally posted by Junctionfan

I have to ask, what kind of contract will our employees (I we are pretending the forum is members of the board and you (L.C) are the chairman)

What kind of benefits packages and health coverage are we going to give? What is our utility bills and our tax bills going to be like?

Do we have enough customers to make a profit and be able to offer our employees the basic wages to maintain an exceptable living?

1. No contract. Employees will be non-union and will be paid a fair annual salary.

2. Benefits. We expect to pay employee medical complete coverage. 0% employee contribution. We will also pay employer share of Railroad Retirement Benefits.

3. Utility and tax bills should be fairly small. I would expect utility bills would be limited to office electric, gas and water and grade crossing equipment. Tax bills in Mississippi are quite inexpensive. I would anticipate less than $75,000 annually in property tax (Ad Valorem) for the entire RR.

4. Yes, there should be adequate traffic to support a lean short line.

LC

[Anonymous]

QUOTE: Originally posted by jruppert

I would suggest finding a small town with a lot of undeveloped land in a geographic location near a large city, but not too close, and close to a class 1 mainline. Then work with the local city council, and business organizations to put together a tax and capital plan that would be attractive to prospective companies to relocate to the area.

Identify available lands and with input from the city council, residents, local developers, develope a plan that can be presented to prospective companies. Such plans should take into account road access, sewer, water, nearby housing availability, phone and information service, as well as construction permitting and architectural theme. All of this has to be presented as a package, so a prospective company can see, number one, that everybody is on the same page, and that buying in will be a trouble free and positive experience.

What I am getting at is instead of trying to revive an old line, start from scratch, and develope an industrial short line serving a campus of businesses developed by yourself in conjunction with local interests and prospective companies. This will give you a maximum of traffic with a minimum of track and equipement, controlling your startup costs and having ready made costomers from day one.

I could be wrong, but is this what companies like RailAmerica does? Such a developement would be a win for the comunity, businesses, and the line serving them. Having a solid costomer base could then serve further developement in the future.

Nice suggestion. Problem is finding such a place and getting the financing to build. Frankly, if such a place exists no one has found it yet.

No, Rail America starts with old lines, the same as other short lines.

LC

[Anonymous]

QUOTE: Originally posted by Junctionfan

Have you reached a preliminary calculation of costs of employees plus operating costs versus revenue?

No. WIthout traffic figures and a proposed tariff, it isn't possible.

LC