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DEAR V&S - YOU HAVE A PROBLEM
Posted Wednesday, May 28 2014 at 1700 h MDT
As expected, V&S applied to abandon the east end of the Towner Line in mid-May. That's no surprise - V&S has a history of buying up rail lines to scrap them out, and is strongly affiliated with A&K Railroad Materials.
Probably what they didn't expect (nor did I) is [this very detailed comment] from the Professional Land Surveyors of Colorado, Inc, filed today (Wednesday, 28 May 2014). Basically PLSC points out four serious deficiencies in V&S's abandonment application:
- Evidence that over half the line is on federal land grants for the RoW, contrary to V&S's filing that claims none is on federal grants
- Evidence that there are 10+ state land grants tied to the federal grants
- The omission of Otero County from any notifications, despite the fact the line passes through the county for roughly 1/5 of a mile
- A&K/V&S's poor track record of legal compliance in other abandonments - the Trinidad Railway, the Aspen Branch, and something in Prowers County from 1993.
The document is an absolutely fascinating read. I strongly suggest reading it yourself, and passing it along to anyone may be interested in what's in store for the Towner Line. - NDHolmes
CHAI TRUST LLC ACQUIRES 80% STAKE IN IPH
Posted Wednesday, May 28 2014 at 1648 h MDT
Sam Zell's Chai Trust, LLC and Equity Group Investments, has or will shortly acquire an 80% stake in Iowa Pacific Holdings, LLC. The other 20% will remain with some of the current IPH owners. For those who are scratching your head and thinking you accidentally pulled up CNBC instead of DRGW.Net, this matters because IPH is the corporate parent of the San Luis & Rio Grande, current operators of the ex-DRGW La Veta Pass line, as well as the branches to Antonito and South Fork. The deal was first announced in late April, so I'm a little behind in getting this post up.
For those who don't recognize the name, it's understandable. Sam Zell is a Chicago billionaire with a history of buying up distressed companies at bargain prices and turning them around for a substantial gain at sale time. A majority of his empire has been built on real estate. (That said, his last major buy, Tribune Corp, has gone seriously sideways with plummeting newspaper profits and the inability to sell the Cubs and Wrigley Field without some nasty tax implications.)
The STB notice of exemption for Chai acquiring a controlling share in IPH can be found [here].
Other railroads controlled by IPH include the Austin & Northwestern, the Chicago Terminal Railroad, the Mount Hood Railroad, the Saratoga & North Creek, the West Texas & Lubbock, the Massachusetts Coastal Railroad, and the Santa Cruz and Monterrey Bay Railway. IPH also has the operating contract on the Texas State Railroad between Rusk and Palestine, TX.
I have no inside information. What follows is commentary from an outside observer of the industry.
Given Zell's history as a turnaround artist and his now very large stake in the company, I would expect to see changes in the operations. Zell's pattern is to buy, fix up the company, and then make his money by getting out. That means making the properties very attractive to the next buyer, which typically involves shoring up the bottom line. I'd expect an all out hunt for efficiencies, optimizations, and a general shedding of unprofitable things. This general business improvement will almost certainly take a hard look at weird power (E/F units, the SNC's BL2, etc.), the glut of unused passenger cars on the property, unused track (Monte Vista to South Fork comes to mind) and some or all of the passenger operations.
Like I said, though, I know no inside knowledge. These are just guesses.
Short version from the railfan pulpit: If you want to ride on an IPH railroad, go get your butt in a seat soon. The future is uncertain. - NDHolmes
SLIDE IN GORE CYN - AMTRAK DETOURS VIA WY
Posted Wednesday, May 14 2014 at 0223 h MDT
By the sounds of reports on Trainorders and elsewhere, there's been a significant slide in Gore Canyon. Given the recent moisture and temperature swings its not surprising. Welcome to spring in the Rockies! Amtrak went via Wyoming this morning and is rumored to go that way again tomorrow.
Wish I knew more, but as I'm posting this from The Hague (on holiday - no, I'm not on trial on crimes against humanity...) I can't just call up the usual sources. - NDHolmes
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