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Cincinnati Southern Railway board members decide when $1.6 billion sale will go before voters [1]
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Date: 2023-07-13
CINCINNATI (WXIX) - The Cincinnati Southern Railway Board of Trustees at a special meeting on Thursday voted unanimously place the railway sale to Norfolk Southern on the Nov. 7 ballot.
If voters reject the sale, the CSR Board or Norfolk Southern have 30 days to terminate the sale agreement, after which a lease extension would go to arbitration. If neither party terminates the agreement, they are obligated to work cooperatively to seek another change to Ohio law allowing them to go back to Cincinnati voters a second time, which is prohibited as of the March passage of Ohio’s 2023/24 transportation bill.
Norfolk Southern still has to get approval from the Surface Transportation Board for the sale. The review is underway, and a decision will be issued by Sept. 21.
The freight giant wants to buy the CSR for more than $1.6 billion. It can avoid an inflation adjustment that would increase the sale price by around $24 million if Cincinnati voters approve the sale in November and the STB gives the greenlight by Dec. 31, 2023.
The CSR Board has set the minimum annual amount it will send the city if the sale goes through in 2024 at $26.5 million. The minimum is indexed to an inflation metric.
Conservative estimates place the City’s real estimated annual windfall at around $60 million, more than double what it currently receives.
Board members prepared a statement that reads in part:
“The primary job of the CSR Board of Trustees is to manage the Cincinnati Southern Railroad as an asset for the benefit of a single beneficiary - the City of Cincinnati. We have concluded, after considering the advice of outside experts, that selling SR for $1.6 billion to create a trust fund of professionally managed financial assets will likely more than double what the City might have received from future railroad lease payments. In 2024 alone, lease proceeds are projected at approximately $26.5 million. Potential trust fund earnings of 5.5% (a conservative estimate on a $1.6 billion portfolio would be $88 million. After reinvesting 2% ($32 million) into the trust fund to ensure its continued growth, the remaining 3.5% ($56 million) would be available for improvements to City of Cincinnati existing infrastructure and SR operations. We and our advisors find this scenario reasonable, prudent and responsible.
“We have also concluded that the sooner the voters of Cincinnati consider the sale of CSR, the sooner the sale proceeds can be invested in a trust fund to begin generating earnings to improve existing infrastructure. This November is the first available opportunity for the voters of Cincinnati to vote to sell the railroad.
“In the City of Cincinnati’s recently approved budget, the funding gap for existing infrastructure was identified as nearly $400 million - and growing. From facilities for the Park Board, Cincinnati Recreation Center, Health Department and other public services to improvements needed for streets, bridges, sidewalks, pedestrian safety, traffic signals, streetlights and neighborhood gateways and more, the citywide need is at historic levels.
We take seriously our charge to manage this historic asset in the best interest of the City of Cincinnati. We express our appreciation to the Mayor and City Council, to the Ohio Legislature and especially the Hamilton County delegation and to the Governor of Ohio for their support of this important and historic issue.”
TIMELINE
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[1] Url:
https://www.fox19.com/2023/07/13/cincinnati-southern-railway-board-members-decide-when-sale-will-go-before-voters/
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