Cincinnati city officials have stalled its attempt to sell a city-owned rail line to Norfolk Southern, the same company that caused the toxic disaster in East Palestine last month.
The elements required for the proposed sale of the Cincinnati Southern Railway are no longer included in the state’s transportation budget, hence Norfolk Southern cannot currently purchase the city-owned railroad.
City leaders announced a plan to sell the rail line to Chattanooga, Tennessee, at the end of last year to Norfolk Southern for $1.6 billion. However, that deal could not be done without changes to state law.
The Ferguson Act, which governs the city-owned railroad, currently mandates that the city use all sales proceeds to settle debts. The Cincinnati Southern Railway Board wants the Ferguson Act to say that the city can spend the money on current infrastructure projects instead.
Earlier this month, the Ohio House approved the $12.6 billion transportation budget with the board’s request; however, modifications made by Senate Republicans would rescind that and keep the law as it is. So long as the money went toward paying off debt, Cincinnati could still sell the railroad.
“Removing debt service safeguards in exchange for broad unspecified potential capital projects creates concerns regarding risk, dwindling reserves to pay for debt service, and the possibility of leaving taxpayers with the bill,” Senate GOP spokesman John Fortney told The Ohio Star.
City officials expect lawmakers to pass the budget, now under consideration, and for the governor to sign it into law in the coming week without the necessary changes that would permit the sale to go forward to a vote of the people this November.
According to Cincinnati Mayor Aftab Pureval, the sale is a “top priority” that will “improve the lives of Cincinnatians.”
“I’m committed to working alongside the General Assembly to pass the required legislation that allows the referendum for voters to decide. There has never been a more important time for our city to get out of the rail business. Selling now gives us local control over our assets in an investment trust for generations to come. No longer would our future be tied to the unpredictable and risky rail industry,” Pureval said in a statement.
Following a hazardous train disaster in East Palestine, council members have raised concerns regarding the sale to Norfolk Southern. The state is currently suing the company to ensure it pays for the cleanup and environmental damage caused by the derailment. Earlier this month, another Norfolk Southern train also derailed in Springfield, and a Norfolk Southern conductor died due to a train collision with a dump truck in Cleveland.
Liz Keating, the only Republican on the city council questioned if the city should halt the sale in the wake of the incident.
“Given the issues going on in East Palestine, is the sale, the purchase of this railroad, still a top priority? Does (Norfolk Southern) have all the resources available to continue on with this sale?” Keating said.
Democratic council member Mark Jeffreys has also been vocal with questions about the sale, saying he wants more information about the deal before endorsing it.
“We need to make sure that it’s safe, whether it’s sold or it’s leased,” Jefferys said.
Cincinnati is the only municipality in the U.S. to own an interstate railroad. Norfolk Southern has leased it since 1981.
The city revised the lease’s conditions in 1987 to increase the annual revenue. That deal called for $11 million annually with the possibility of regular increases. The Southern Railway Note Proceeds reached $95.5 million from 2003 to 2008.
Presently, Norfolk Southern is responsible for paying Cincinnati around $25 million a year for the lease. That deal expires in 2026, leading city and railroad officials to negotiate the outright sale of the asset.
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Hannah Poling is a lead reporter at The Ohio Star and The Star News Network. Follow Hannah on Twitter @HannahPoling1. Email tips to [email protected]
Photo “Northfolk Southern Train” by Jim Bauer. CC BY-ND 2.0.