CINCINNATI — While most people who follow trains and railroads realize that Cincinnati owns a railroad line, there is a good chance most local residents aren’t aware of what their city holds title to. The Cincinnati Southern Railroad, a 336-mile route connecting Cincinnati and Chattanooga, Tenn., was built by the city in the late 1870s. Originally leased and operated by the Cincinnati, New Orleans & Texas Pacific Railroad, then the Southern Railway, and currently Norfolk Southern; the 25-year lease expires this year. On Nov. 7, election day, Cincinnati voters will play a role in what happens next, and it may not be a clear-cut issue.
Norfolk Southern wants to buy the line and has offered $1.62 billion [see “Norfolk Southern to buy CNO&TP line from city of Cincinnati for $1.6 billion,” News Wire, Nov. 22, 2022]. However, an 1869 law requires any sale to be approved by Cincinnati voters [see “Cincinnati Southern sale to go to voters in November,” News Wire, July 14, 2023]. The initial lack of public knowledge made the issue appear as if it would pass with little opposition. The resulting sale proceeds, according to railway board trustees, would be put in a trust fund with the annual interest being used in support of infrastructure projects.
Now, however, a group called Derail the Sale has begun a grassroots campaign to persuade voters that Cincinnati should hold onto its tracks.
“We have a big hill to climb,” Abby Friend, the group’s leader, recently stated in an interview with WLWT-TV. “The 25-year lease is up this year. So, as the landlords of the railroad, we have the ability to raise the rent on Norfolk Southern.”
Friend feels the city would come out ahead by keeping the railroad and raising the rent. “If we’re playing Monopoly, you definitely don’t sell your most important asset, your most valuable asset,” she says.
Jan-Michele Kearney, Cincinnati’s vice mayor, who supports the sale, presented a different view in the WLWT interview. Kearney says the city and the railway board of trustees tried the raise-the-rent approach and it failed. “Norfolk Southern said we’re not going to do that, we’ll just buy it.”
A pro-sale ad campaign by the group Building Cincinnati’s Future points out to voters that selling the line presents the opportunity to “climb out of a $400 million infrastructure hole.” This would be done without any new taxes, says the group.
Derail the Sale has come up against another significant pro-sale group — the Cincinnati AFL-CIO Labor Council. The CLC, in a statement carried by the Cincinnati CityBeat, announced late this past week that it would be supporting the sale.
“After a great deal of internal discussion and debate, as well as numerous meetings between The City of Cincinnati and labor leadership, Cincinnati AFL-CIO Labor Council is supporting the sale of the CSR,” the release reads.
The CLC represents more than 40,000 workers in numerous trades, including boilermakers, bricklayers, firefighters, teachers, musicians, air traffic controllers and more. This was support Derail the Sale was counting on.
“At Derail the Sale, we are disappointed and surprised to learn of the close vote by the Cincinnati AFL-CIO Labor Council,” Friend told Cincinnati CityBeat. “But we are undeterred in our mission to stop the sale of the Cincinnati Southern Railway to Norfolk Southern. We have union workers on our side, including Railroad Workers United and many working Cincinnatians are with us as well.”
The Norfolk Southern derailment in East Palestine, Ohio, weighs on both sides of the sale argument.
“By selling the railroad we will get a $1.6 billion trust fund to shore up our basic services for generations and we also get the benefit of getting out of a rail industry that is under-regulated, under-managed, and risky,” Aftab Pureval, Cincinnati mayor told Cincinnati CityBeat. “Certainly, the environmental catastrophe that we’re seeing in East Palestine … no one here wants that and if we continue to hold on to this asset, we could be on the hook for liability if something like that happened here.”
For Friend, it’s a belief that the city is not trying hard enough to find alternative means to fund basic services, while still holding onto the only city-owned, interstate railroad in the U.S.
“They’re looking at our [railroad] as something we can just toss out the door instead of sitting down and finding creative solutions to some of our problems,” she said.
What happens next is up to Cincinnati voters on Nov. 7.
Key Reasons to Vote NO on Issue 22, sale of our railroad
1. The deal was hatched in secret, closed-door negotiations between Norfolk Southern and the CSR Board over some 18 months in brazen violation of the Open Meeting Act, and presented as a fait accompli last November with no public input. The Board settled a lawsuit charging it with violation of state law for $100,500 in August.
2. CSR Board reduced an upfront sale transaction fee from Norfolk Southern by $500,000, freeing those public funds for pro-sale propaganda, but was forced to return this attempted theft of public funds when it was revealed to these scoundrels that the city charter bans taxpayer monies from being used for political purposes.
3. Sale would forever eliminate any public control and oversight over the operations of Norfolk Southern, the reckless outfit that destroyed East Palestine.
4. Sale would forever remove the honorable and enviable distinction Cincinnati has of being the only municipality in the nation to own an interstate railway.
5. Prospects of huge financial gains for Cincinnati are sheer pie-the-sky speculations. In fact, given risky investments, the city may end up receiving nothing. The current lease guarantees $25 million annually to city coffers. The sale carries with it no such guaranteed income. As the saying goes, a bird in hand is worth two in the bush.
6. An alternative lease, one valued at $70-80 million per year, can and should be demanded from Norfolk Southern for its highly lucrative use of our railroad. It is time for our city representatives to stand up to these billionaire bullies and to negotiate a better lease!
7. Norfolk Southern utterly destroyed the health and wealth of East Palestine residents; many desperately want to move but cannot afford to do so. Justice demands they be fully compensated by Norfolk Southern. Voting NO on Issue 22 expresses our solidarity with the victimized population of East Palestine. Every yes vote is a kick in their teeth.
8. “The Cincinnati Railway has proven to be the City’s greatest money maker. Its return in investment, dollar for dollar, is unmatched. ‘Cincinnati citizens may well be glad that voters in 1896 rejected the idea of selling the Cincinnati Southern. The railroad that resulted from the city’s far-seeing enterprise almost a century ago has already returned its cost several times over in cash rentals. It is and will be the source of a large and steady income for the city.’” (SCO case 2023-0185, p.7, citing a 1977 Memorandum by the CSR).
Don’t kill the goose that lays the golden egg.
I’m not going to waste my time here — but what you allege as “scare tactics” by the mayor, you respond to with … scare tactics. 1) Regarding East Palestine, first, it was a terrible accident. A car with a bad wheel bearing derailed at the worst possible place and time. Like if a truck going 60 mph on I-75 lost a wheel and created a monumental pileup and fire in downtown Cincy. Norfolk Southern did not decide one day to “victimize” E. Palestine with a derailment. My heart goes out to the residents, but EP will recover as long as city/state officials stay diligent and make sure NS pulls every last spec of polluted dirt out of there. Please shut down the histrionics, Mr. Lange.
2) If any money manager – whether govt or private enterprise – cannot take $1.6B and beat the income Cincy gets on the lease, then Cincy is dealing with fools. Think about it: a paltry 5 percent return on $1.6B would garner $80 million/year. FIVE percent. You’re not going to get close to that in a new lease.
Wouldn’t be surprised that the “Derail The Sale” is somehow being supported by people or groups associated with CSX. CSX is the only big competitor in the Cincinnati/Louisville to Chattanooga market and I think they wouldn’t mind making it more expensive to compete in this market. This NS route roughly handles 12% of the companies total Traffic volume.
NS really can’t route traffic from the Midwest to southeast any other way. The only other 2 options are round-about. Either ship everything east to West Virginia then south thru the mountains or get Trackage rights on CN south to Tennessee, acquire a short line the would need to be upgraded to the line to Memphis. Any way you cut it it’s longer by several hundred miles.
I don’t think NS has a really better way yo get to Chattanooga from Chicago/Midwest. They could route through Sandusky, Columbus, Bristol. But part of that is already service challenged and the southern end of that very slow going. I reference again when the NS lease on the North Carolina Railroad came up for renewal. NS said if they didn’t get the terms they wanted they would reroute the traffic. North Carolina stood its ground because there was no real good reroute.
It’s hilarious that all of you are speculating about something you don’t know the details of. And then you go off on anti-government screeds about things that are completely unrelated.
I have no opinion one way or another whether Cincinnati should sell its railroad. It’s not mine, and I don’t live there. But I do know that this is not remotely similar to Chicago’s stupid parking meter deal.
Maybe they live in Cincy and *do* know what is happening?
That “trust” fund will be gone in 10 years. Just too tempting. They will use it as collateral against bond borrowing, just like the USG uses the Social Security “Trust” fund and the Highway “Trust” Fund to prop up Treasuries. They are both near the tank because the revenue goes out the door to pay interest on the government debt. Just you wait.
Politicians are the most untrustworthy when it comes to keeping their hands off money.
No matter how the trust fund is set up the city will suffer in the long run.
1. Does the fund always have the $1.6B? If so the the city just gets $48 – 80 million in perpetuity. What happens once inflation sets in? In a few years not too much.
2. How long in installments to get the $1.6B?
3. If that $400M gets spent quickly then $1.2B left.
5. Any new lease can certainly have some inflation metrics/
The old adage says, “A bird in the hand is worth two in the bush.”
Keeping the railroad generates a continuous stream of income. Selling it yields a one-time payment to a “trust fund” that will be frittered away. “Trust” me, after 38 years in municipal government management, I’ve seen almost all of the ways to skirt around monetary “safeguards.”
In this day and age, very few people understand the value of holding an asset. It’s all immediate gratification.
The scare tactic of a major derailment is a red herring. A derailment could occur even after the sale.
This is reminiscent of the Chicago selling/leasing it’s parking meters and the Skyway toll road to private businesses. Both new owners immediately raised parking rates and tolls. Both have already recovered their initial purchase costs and are now receiving whopping revenue on basically fire sale purchases. The city tried and failed to unwind the deals and the sale proceeds are now pretty much gone.
Why do City’s alway have poor management? They couldn’t get into higher office, I assume.
It’s not just cities. It’s all levels of government that are for the most part incompetent and even corrupt in some instances. (Think New York and New Jersey.) One need look no further than Amtrak, a defacto government organization, that is nothing more than a third world transportation mess in most instances. It continues to collect taxpayer money year after year and does not provide service. It has deteriorated into uselessness. Take a look at “train orders” today for a story on the supposed restart of the Adirondack to Montreal and the candidates expecting to get to Albany on time to take the BAR exam and their 6-hour late departure from Penn Station and dealing with the Moynihan gate dragons. In any private organization, Brightline for example, this would not be tolerated but in Amtrak it goes on day after day with no consequences. As the poster on “train orders” says, all Amtrak wants is ribbon cuttings, state money (and I might add, diversity and environmental awards). Until the general public gets fed up enough nothing will change. I don’t expect this to happen in the foreseeable future. Remember, elections have consequences.
Why, because people elect them, that’s why.
If I’m a city voter, I’d get all the money I could out of selling the railroad and begone with it.
I agree with Charles. If they think they are going to keep the rails, raise the rent and think that Norfolk Southern is going to play that game? I don’t see that happening. I’m sure it’s an important route but I’m also sure they’d be willing to go another way. Even if it adds travel time.
I agree also, government has no business being in business.