WASHINGTON — Norfolk Southern yesterday sought regulatory approval for its acquisition of the Cincinnati Southern Railway, the municipally owned railroad that forms the 338.2-mile Chattanooga-Cincinnati backbone of NS’s key corridor linking Chicago with Atlanta and the Southeast.
NS asked the Surface Transportation Board to approve the $1.62 billion acquisition as a minor transaction. Norfolk Southern subsidiary Cincinnati, New Orleans & Texas Pacific has leased and operated the line since 1881.
No operational changes would come to the route as a result of the transaction, which is subject to the approval of Cincinnati voters and the STB. NS and Cincinnati officials announced the deal last year.
The NS regulatory filing, which was posted to the STB website today, gives a snapshot of the traffic that moved over the line between Dec. 20, 2022, and Jan. 25, 2023. The line hosted an average of 16.2 general merchandise trains per day, along with 8.4 intermodal trains, and eight or so coal, grain, fuel, and other bulk trains. On average, 40 trains per day, including locals, operate on all or a portion of the line.
The Ohio legislature agreed earlier this year to allow the proceeds of the sale to be put toward current infrastructure needs in Cincinnati, rather than toward paying off debt. The city wants to put the proceeds into a trust fund that would be devoted to improving streets, bridges, and parks.
The city’s voters must still approve the sale, which is backed by the mayor. The Cincinnati Southern board of directors is expected to decide this month when the matter will be placed on the ballot.
Under the current lease that was set to expire in 2026, NS pays the city around $25 million annually. Negotiations over renewal of the lease began in 2021, as required, and resulted in the sale agreement.
NS officials say it’s always better to own critical rail lines than to lease them due to the uncertainty around future lease costs. As part of the transaction, NS will own 9,500 acres of land that the railroad is built upon.
If the people of Cincinnati were smart, they would vote “NO” on selling it to the NS. Lots of money will be lost, and the taxes of the city will probably have to be raised to cover losses.
Whether STB says “yes” the voters must still approve and who knows how that will play/pay out?
Hopefully approval is denied. NS owns too much as is.
Southern Railway operated the line for a zillion years. It’s a core part of NS, has been since long before NS existed.
That long??
The sale price is equivalent to 64.8 years of income at the current rate of lease payments. Any bets on how quickly that “Trust Fund” will be depleted? I’m going with 12 years. Anyone else?
I’ll take the under, Ruppert.