Railroad accepts buy offer

  By Thomas Wilson

twilson@starhq.com
  The parent company of East Tennessee Railway (ETRY) has accepted the city and county governments' offer to purchase a 10-mile stretch of rail line for future use.
  County Mayor Dale Fair and City Manager Charles Stahl confirmed Tuesday that an offer made by the two governments to purchase the 10-mile rail line from Rail Management and Consulting Corporation (RMC) had been accepted by the company's ownership.
   "He has set some conditions," Fair said speaking of RMC owner Earl Durden.
  The government made a purchase proposal to RMC in November to purchase the real estate, train track and various track usage components of the rail line extending from milepost 1 in Johnson City to milepost 11 in east Elizabethton.
  Stahl said the conditions set forth by RMC are peculiar to the railroad industry, centering on maintenance of the track and existing usage agreements with rail transportation companies. He was optimistic the conditional acceptance of RMC would become fully acceptable to the city after a review by a railroad industry consulting firm that conducted a rail line acquisition study for the city earlier this year.
  "I think we need to examine what those conditions are," said Stahl. "On the surface those terms and conditions seem to be minor, but we want to have a full understanding of what those conditions may be."
  The East Tennessee Railroad Authority, a public entity operated by the city and county governments, would purchase the rail line. The purchase does not include buying locomotives, rail cars or placing railroad operations with the local governments.
  The two governments commissioned a rail line acquisition study by the Shenandoah Northern Company of Knoxville. The acquisition study outlined how the governments' purchase of the rail line would require an operating lease, a track use rights agreement, a track maintenance agreement and other agreements regulated by the Federal Railroad Administration and Tennessee Department of Transportation.
  The study, which was completed in June, estimated the net liquidation value of the rail line at $797,000.
   Fair declined to reveal the amount of the purchase offer made to RMC but said the offer was "considerably less" than the liquidation value amount.
  Fair said the RMC response had been forwarded to Shenandoah Northern for review of the conditions. He said he and Stahl hoped to meet with a Shenandoah representative on Friday to discuss the conditions further.
  "We are interested in saving the rail line," Fair said.
  The purchase of the rail line would be subject to approval by the Carter County Commission and Elizabethton City Council.
  East Tennessee Railway is one of 14 short line railways owned by RMC. ETRY interchanges with CSX Transportation and Norfolk Southern in Johnson City. The railroad effectively ceased rail transportation service to Elizabethton last year shortly after all but one area shipper ended using rail service.
   The acquisition study found ETRY's rail operations in Johnson City remained profitable and business had been growing since 2003 when CSX Transportation granted the railway operating rights to all CSX shippers in the Johnson City switching limits.
  If the railroad authority acquires the property the rail line's future use has already become the subject of debate around the community.
   The acquisition study mentions a proposal by the Watauga chapter of the National Railway Historical Society to operate a passenger excursion service between Elizabethton and Johnson City. The society has operated passenger excursions in cooperation with Amtrak, Norfolk Southern Railway, CSX Transportation, and ETRY in past years, according to the plan.
  The "rails to trails" plan could convert the existing rail line into a walking trail molded like the Virginia Creeper Trail in Abingdon, Va., where a railroad line once extended into Southwest Virginia. Another contingent of citizens has sought to create a passenger train excursion that would use the rail line as a draw for tourism.
  Acquiring the rail line would retain the existing railway connection to Johnson City's larger railway system if manufacturing or other industries that located to Elizabethton needed rail transportation.
   Fair said the city and county sought to purchase the rail line for the future benefit of the community regardless of its ultimate use. He also pointed to a recent announcement that the Alcoa Extrusions property would be auctioned in January. The plant was once serviced by ETRY's rail transport and could be again given the right buyer, Fair said. In additional to Alcoa's future use he noted that Blossman Gas had indicated to him they strongly advocated having rail service restored to service their deliveries.
  "We want the real estate company to put in the auction information that the plant is serviced by rail transportation," Fair said. "If we can get a couple more, we can get it back.
  "Then the excursion trains would be the icing on the cake."