trainlawyer says

Remember that the really successful tourist lines are not in the railroad business - they are in the entertainment business and the railroad is simply a means to provide that entertainment. GME


You got that right! This is what nearly everyone forgets. They get so wrapped up in themselves they loose sight of the goal.

Perhaps there is hope yet. I note that there is interest in making the right-of-way into a trail. Is it possible the trail people could pay off the debt and put in a trail next to the track allowing both to operate? The slow speed of the tourist train and any freight train would pose little risk to trail users. Trail people are adept at getting local support and funding from higher levels of government unlike rail groups who usually turn off potential supporters by their insular attitude and behavior. Might be the only hope.

It's my opinion, from several rides over the line and many other chases--and which can be examined for a second opinion by anyone looking with Google or Bing Aerial Views--that the right-of-way is barely wide enough to even hold the track, let alone a high-capacity freight car or a rail trail. There are spots at a couple locations where interference from adjacent roads would make this a non-starter from the get-go. Look hard enough, and you'll find a spot where the road and track criss-cross one another like a helix three times in the space of a quarter mile! (When this line is described as "Fiddletown & Copperopolis" or "Toonerville-Trolley-like," we're NOT kidding by any means!!)

The difference with lines like the Western Md. Scenic and the New Freedom-York Rail Heritage Trail is that in these instances the right-of-way originally held a double-tracked (for the most part) main line, allowing (with some compromises) a track where one track was and a trail where the other track used to be. That's not the case with the Stewartstown.

Exactly how well a rail-trail would go with the adjacent developments and communities in York County is anyone's guess--nice, rural, historic trail versus NIMBY-ism.

NIMBY-ism literally! There's at least one spot where the railroad runs between a house and its garage! And several spots where the line goes next to the home's front porch or back porch. All of which have helped to make the Stewartstown an interesting little railroad.

Anyone can petition the STB to remove a carrier's operating authority at any time for any cause. Such proceedings are rare and seldom successful, for the reasons carefully articulated in the Board's decision.

In the case of the Stewartstown RR, the Estate was unable to collect on a debt owed, which in turn will likely lead to foreclosure and involuntary bankruptcy. By federal law, railroad bankruptcies are handled under Chapter 11, which presumes there is a viable business that can be continued. Chapter 11 requires appointment of a trustee and is intended to preserve assets, continue operations, and reorganize finances. A chapter 11 bankruptcy can go on for years and the trustee's fees and expenses can consume much of the asset value, leaving little or nothing for the creditor.

With a successful adverse abandonment decision, the Stewartstown is effectively no longer considered a "railroad" and the Estate can foreclose through a Chapter 7 petition that would liquidate the assets. This would move much quicker and be more likely to net the estate the full amount due.

As for a trail, Pennsylvania law requires an abandoned right-of-way first be offered for sale to the local municipalities, to the extent that the railroad has fee title. Municipalities have sixty days to make a purchase offer.

Alan Maples

The above dissertation by Brother Maples leads to the next question:

Has the York County Rail Trail Authority (don't get excited--it's a volunteer organization: http://www.yorkcountytrails.org/ ) and/or the County government expressed ANY interest in acquiring the right-of-way for what would seem to be a quite natural extension of the current York-Cockeysville interstate bike trail?

I can see several possible scenarios, from "we don't have the money" to "we can't interfere in a private financial matter" to "the railroad won't talk to us because we want a trail and not a railroad" to "there's a legal issue that makes it impossible in the case of that particular right-of-way" to "we're trying to make that happen"...............

Why would it make any sense as a trail?

There's already one of those right there, right next to it (well, at the end).

I'd imagine the only people interested would be people bored of the existing trail, which I can't imagine amounts to a whole lot of people.

As sad as it makes me to see it abandoned, sometimes things just don't make sense to exist any more.

Aren't railroads normally under Chapter 77 of the Bankruptcy Code? The lower numbered Chapters being for ordinary corporations and individuals?

Unless an Appeals Court rules otherwise, as of December 16th, the Stewartstown will no longer be a Common Carrier railroad. It will be a corporation which happens to own tracks and rail equipment.

That being the case either a Chapter 7 Liquidation or a Chapter 11 Reorganization is appropriate.

Before anyone gets their hopes up of a lease to another Common Carrier, I believe that an application from any existing Common Carrier, not just one created by the Twit of Towson or one of his minions, would be rejected out of hand unless it included actual business commitments (signed, enforceable contracts with specific amounts and the only contingency being the refusal of the Board to grant the new operator the necessary authority) sufficient to pay the debt and continue the operation.

GME

11 USC 101 (44) The term "railroad" means common carrier by railroad engaged in the transportation of individuals or property or owner of trackage facilities leased by such a common carrier. [Emphasis added]

And the legislative notes therefor -

The definition of "railroad" in paragraph (33) is derived from section 77 of the Bankruptcy Act [section 205 of former title 11].A railroad is a common carrier by railroad engaged in the transportation of individuals or property, or an owner of trackage facilities leased by such a common carrier. The effect of the definition and the use of the term in section 109(d) is to eliminate the limitation now found in section 77 of the Bankruptcy Act that only railroads engaged in interstate commerce may proceed under the railroad reorganization provisions. The limitation may have been inserted because of a doubt that the commerce power could not reach intrastate railroads.

I could easily make the same argument about half or more of the trails, rail or otherwise, in the United States. Does anyone ever NEED a trail, even in Britain where rambling is still a national pastime? Of course not, at least not in an age of motor vehicles and aircraft. Is it nice? It certainly can be.

Right off the top of my head, I can rattle off a bunch of rail trails and other trails that make no economic sense as a footpath or transportation resource whatsoever (ISTEA, TEA-21, and whatnot notwithstanding), yet are popular with its users and supporters, the opinions or desires of adjacent property owners notwithstanding in many instances. And I've even ridden on/hiked on a lot of them, including the Appalachian Trail and the York-New Freedom-Cockeysville trail, and a couple former trolley rights-of-way.

As it happens, the Stewartstown RR traverses (or at least used to traverse) some pretty nice scenic rural Americana, a kind of Americana that is rapidly being annihilated (especially in York County) by suburbia, exburbia, and what are commonly being called "McMansions." If one considers the Northern Central "main line" trail rural, the Stewartstown is the "branch line" to "middle of nowhere" by comparison. Its trackage more closely resembles a rural trolley or interurban right-of-way than any freight railroad.

I often have the same feeling about the economic value of a trail. However there is a number which we generally do not factor in as it involves attempting to measure the non-happening of an event. There is a public cost associated with vehicle-pedestrian and vehicle-bicycle collisions which, depending on the methodology used and the source of the data, averages in the millions of dollars per event. This includes the obvious of Police Fire and EMS and also includes the cost of the medical care and litigation. (Even if the care is fully insured those dollars are expended and cannot be used elsewhere). As a very conservative figure every cyclist or pedestrian on a trail who would have been hit had he been using the highway is over $1,000,000.00 on the plus side of the ledger for that trail.

As a society we have come to depend too much on our automobiles for locomotion and I believe that this is at least partially responsible for the increase in childhood obesity, not to mention oil prices, balance of trade problems and air quality.

If the railroad has to go in the end, a trail will preserve the historic significance and frankly I think the walk will be good for many of you.

(Sidenote - If the weather cooperates on Thursday part of the ritual will be several generations taking a ride along the Delaware and Raritan Canal. What will make this truly interesting is that we may be setting up a laptop in the middle of nowhere to get in on the call from Granddaughter Number Two who is on a frigate somewhere.)

If anybody out there is willing and able to write a cheque for the filing and legal fees before Monday (plan on $7,500) and escrow $400,000 I may be able to direct you to a practitioner who will do the filing. Even though I am not (and will not be) representing any one in this I would be remiss having said what I just said if I did not further state that in my best professional judgement the investment would not be recouped other than in good will.

GME

I will gladly defer to others more knowledgeable on the subject, but I believe railroad reorganization is now Subchapter IV of Chapter 11 of the bankruptcy code. It would appear to be a moot point as Stewartstown's designation as a "railroad" will likely cease in the near future, as Trainlawyer has stated.

The real lesson here is to be wary of callable debt; for whatever reason, George Hart apparently did not intend for his generousity towards the little Stewartstown Railroad to continue beyond his lifetime. Refinancing of business debt is routine but all the collateral in the world will not do you much good in the absence of a reliable income stream.

Alan Maples

A loan was given in kind to help the railroad, although it needs to be paid back the estate lawyers do not have the same character as the original "loaner". This a "lawyer" thing going on.

The value of the railroad is far more than the money owed, the estate is showing no care for the railroad except for the money.

From a fiduciary standpoint, the estate (more accurately, its intended heirs) have no obligation to show one iota of care for the railroad. Put another way: Suppose your fairly well-to-do uncle left an estate to you and your siblings (or to the local animal shelter or a church or to the American Cancer Society). Are you in a position to wave your hand and just dismiss a potential $350,000 or so of that estate out of the kindness of your heart? I'm sure as heck not. And I don't care how big the Bucks County Historical Society or any endowment it may have is, $350K is still (for the time being) a lot of money.

The ONLY reason we even have, or have ever had, a prayer of arguing this intended foreclosure is because the intended heir, the Bucks County Historical Society, can possibly be cajoled, persuaded, guilt-tripped, or bullied into "doing the right thing" and dismissing a debt strictly for the sake of historic preservation, which is at least purportedly their mission even if the railroad isn't in Bucks County. It hasn't worked so far.

As much as I like the folks trying to save that charming little time capsule, two facts remain: There exists some reason that Hart did not, himself, dictate that the debt be forgiven in his will; and the surviving operation of the railroad has failed, apparently repeatedly, to transform itself into an entity that Hart or his heirs, and/or the local and/or regional government feels willing to sympathize with to the extent of financial support. We seem to forget that the only reason the railroad still exists is apparently that $350K loan. That never should have been needed. All Hart did was, in effect, prolong the life of an already-terminal patient in hopes a cure could be found. It wasn't.

Blaming lawyers is unproductive. Like the recent Hostess bakery shutdown, there's plenty of blame, and inflamed emotional reaction and angst, to go around. Pointing fingers at each other doesn't save you from the sinking ship, and now the lifeboat is floating away empty.....

Can the Estate of Geo. Hart, which is the one litigating, legally give Bucks County Historical Society the debt instead of the money, even if the Society is willing? Some accounts say that Mr. Hart's will specifically says that his Estate is to collect the debt and the proceeds are to be given to the Bucks County Historical Society.