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 Post subject: Track Use Agreements
PostPosted: Thu Apr 27, 2017 10:02 pm 

Joined: Thu Oct 08, 2015 11:54 am
Posts: 842
Location: New Franklin, OH
An interesting opportunity has come up. Do any of your organizations have a track use agreement in place with another railroad? For example, XYZ Railroad wants to, in effect, lease a portion of your track for their use as needed. If so, how is the agreement structured and what, may I ask, is the going rate?

Thanks,

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Eric Schlentner
Orrville Railroad Heritage Society
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 Post subject: Re: Track Use Agreements
PostPosted: Thu Apr 27, 2017 11:48 pm 

Joined: Sun Aug 22, 2004 1:51 pm
Posts: 9704
Location: Somewhere east of Prescott, AZ along the old Santa Fe "Prescott & Eastern"
The Central Pa. Chapter NRHS owns 1.68 miles of ex-Reading main line track past and south of its White Deer, Pa. depot museum, which ended up being leased to one prospective operator of a proposed industrial park to the north (who dealt with a different entity for the track north of the station). The entire line has now been restored for operation, but is not officially seeing service yet, and is apparently under the aegis of the Union County Industrial Railroad, a SEDA-COG contracted operation. As far as I know, the Chapter still owns its track even though it doesn't look like it now.

I can provide a contact and introduction if needed.


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 Post subject: Re: Track Use Agreements
PostPosted: Fri Apr 28, 2017 10:57 am 

Joined: Thu Oct 08, 2015 11:54 am
Posts: 842
Location: New Franklin, OH
ADMIV,

If it's possible to provide contact info, we'd appreciate it. I have no clue what's reasonable and customary for both parties. We're looking for advice and definitely pitfalls to avoid.

A little more info.... We won't be leasing the track to an operator for traditional trackage or haulage rights per se. The RR wants to use the lead into our property to help expedite the switching of an adjacent customer. We'd be looking at an expensive track upgrade (currently all excepted), the consideration of possible limitations to our use of that portion of track and the division of liabilities. And it's got to either put something in our pocket or at least be a long term benefit or, better yet, both. Otherwise it's all a why-bother.

Thanks

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Eric Schlentner
Orrville Railroad Heritage Society
Car Knocker, Gandy Dancer & Hog Jockey
https://orrvillerailroad.com


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 Post subject: Re: Track Use Agreements
PostPosted: Fri Apr 28, 2017 3:49 pm 

Joined: Mon Jan 12, 2009 9:37 pm
Posts: 166
"We'd be looking at an expensive track upgrade (currently all excepted),..."

Start with having them do the necessary track work. If they want it that much they will readily agree to this. Otherwise, walk away.

RLK


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 Post subject: Re: Track Use Agreements
PostPosted: Fri Apr 28, 2017 5:57 pm 

Joined: Sat Oct 17, 2015 5:55 pm
Posts: 1182
R.L.Kennedy wrote:
"We'd be looking at an expensive track upgrade (currently all excepted),..."

Start with having them do the necessary track work. If they want it that much they will readily agree to this. Otherwise, walk away.

RLK


I second RLK, "If you fix up the track we have many revenue moves that will more than make up for your out of pocket cost" should be on the list of the most popular lies of all time, along with "I'll pay you back on Friday" and "the check is in the mail" (and several I can't post on a public board). Railroads large and small have been bitten in the butt by this promise. If they pay for the work, do the work, if not, goodbye.


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 Post subject: Re: Track Use Agreements
PostPosted: Fri Apr 28, 2017 6:45 pm 

Joined: Thu Oct 08, 2015 11:54 am
Posts: 842
Location: New Franklin, OH
RLK & PMC,

Also agree on that part of it. Being a small organization, I don't see us spending the bucks upgrading that section of track to Class 1 for somebody else to use and not getting close to an adequate return on our investment with lease payments alone.

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Eric Schlentner
Orrville Railroad Heritage Society
Car Knocker, Gandy Dancer & Hog Jockey
https://orrvillerailroad.com


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 Post subject: Re: Track Use Agreements
PostPosted: Fri Apr 28, 2017 7:30 pm 

Joined: Sat Aug 21, 2004 10:52 pm
Posts: 914
Hi,

Two items come to mind.

1) The EBT narrow gauge railroad was approached to lease to the (now defunct) Mt Union Connecting Railroad. Basically, the MUCRR was to upgrade and maintain all the SG track the EBT dual gauge had in the yards. They could not remove the narrow gauge rail but did not have to maintain it. It was interesting to watch the photos of the EBT dual gauge mainline in the woods become a workable railroad. A car repair facility that was planned never materialized and the EBT got a cleared track for a short distance for the SG.

2) The Middletown and Hummelstown railroad (ex-Reading I think) is a lightly built short line.

When I rode, there was a quarry next to the tracks. I asked a crewman about it, apparently in the early 1990s, the quarry wanted to ship out by rail. They approached the M&H about it. The M&H basically said the did not want the traffic. They could not afford the track improvements and they were not sure the alley/street running in Hummelstown would allow large hopper cars. Additionally, a new diesel would have been needed. The length of operation for the quarry was no more than break even for the M&H. The quarry choose to use dump trucks instead of upgrade the track itself.

I hope this helps.

Doug vV


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 Post subject: Re: Track Use Agreements
PostPosted: Fri Apr 28, 2017 9:55 pm 

Joined: Sun Aug 22, 2004 5:55 pm
Posts: 780
Location: Warren, PA
Give us a call here at Stone Consulting - www.stoneconsulting.com - as we've been involved in a lot of these over the years.

But, unless there's some pretty clear benefits for the railroad owner, political pressure or public environment, or predecessor agreements that can be unearthed, "No" is an answer, or "Yes" with a liability insurance limit dictated that is effectively "no".

It can be a rather complex situation, shortline and regional and class-1's negotiate them all the time with each other for freight movements, but on the railroad preservation side with passengers involved, an entirely different issue for all. The bigger the railroad your're working with, the higher the liability exposure gets. With more specific information about what and where you're trying to do this, more can be said.


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 Post subject: Re: Track Use Agreements
PostPosted: Sat Apr 29, 2017 2:16 pm 

Joined: Thu Oct 08, 2015 11:54 am
Posts: 842
Location: New Franklin, OH
Without having to post a diagram or name names (some of you readers will figure it out), here's a bit more info: We're talking only 200 - 500 ft. of track. In general, this is solely for the benefit of a Class 1 railroad to increase efficiency in switching their customer adjacent to our equipment storage facility. Swapping out empties for delivered loads. Nothing hazardous that I know of. This could be 5 to 7 days a week.

I'm smart enough to know that I'm not smart enough but after careful consideration, as I see it:

1. I understand that FRA requires Class 1 track minimum for the common carrier running on a plant railroad which would define our property. Since ORHS is currently OK with excepted track in our facility, the RR should be responsible for any track upgrade necessary and the maintenance since it is almost all to their benefit. It's highly unlikely we'll be shipping cars in and out on a regular basis. We would provide a derail at the end of the leased portion to protect our equipment.

2. So far as the division of liability goes, simply put, if the RR causes damage or injury on the leased portion or other property, that'll be on their dime. Same would go for us. Nothing shared.

3. We would have to specify that the RR can't park cars there for other than the switching maneuvers so as not to block us in and foul access to the rest of our trackage.

I don't think those requirements are unreasonable. We'd have our lawyers and insurers review any proposed agreement but railroading is not the lawyer's specialty.

At this point, I have no clue as to what a reasonable lease payment would be or other caveats to look out for. We're a small non-profit with a squeaky-tight budget and we can't afford to shoot ourselves in the foot. Not even a graze. If it won't work for us, then we'll take a pass.

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Eric Schlentner
Orrville Railroad Heritage Society
Car Knocker, Gandy Dancer & Hog Jockey
https://orrvillerailroad.com


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 Post subject: Re: Track Use Agreements
PostPosted: Sat Apr 29, 2017 6:33 pm 

Joined: Mon Jan 12, 2009 9:37 pm
Posts: 166
"At this point, I have no clue as to what a reasonable lease payment would be or other caveats to look out for. "

Ask the Class 1 what their offer is. It is up to them to make an offer first, not for you to say. I think they will make you a good offer if it aids them in their switching and reducing crew time etc.

Eons ago track leases for storing rolling stock on old yard tracks was $1 per foot per month. Check if there is a modern rate. Tank car storage currently is running about $3-5 per car per day. (confirm this) So you could maybe charge that rate times how many "cars" this track of yours will "hold".

As for other caveats I suggest giving consideration to creating a separate company for this piece of track. That way no matter what happens it will limit your liability. May not be necessary if the Class 1 offers (in writing) to hold your outfit harmless for their actions.

RLK


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 Post subject: Re: Track Use Agreements
PostPosted: Sun Apr 30, 2017 7:22 am 

Joined: Sun Aug 22, 2004 7:19 am
Posts: 5836
Location: southeastern USA
Also be aware that any agreement on paper may well be not worth the cost of the paper it is printed on, especially if you lack the resources to enforce it. Perhaps Mr Wilkins can expand on this,.......

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Santayana: "He who does not remember the past is condemned to repeat it."
Corollary: "He who does is doomed to watch those who don't repeat it anyway."


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 Post subject: Re: Track Use Agreements
PostPosted: Sun Apr 30, 2017 1:41 pm 
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Joined: Sun Jun 27, 2010 12:24 am
Posts: 294
Location: H2O-town, CT
Preface: I'm not expert on this at all.

I just want to put forth my opinion. Basically what I understand is they will be using part of your track as a 'stub' to aid in switching. I don't see this as a big funds coming in for this "lease" as they aren't really running on your line in the normal sense. My feeling is I would have them maintain the first 1000' feel of track so they can use it. I say 1000 as it's a good round number and you said they may need 500 but this gives a cushion and will allow you to get some upgraded track work done at no cost. Secondly if you are paying to keep an active switch to thier mainline maybe have that cost removed as they are now using it too and will save you some money. Maybe leave it at that or just have a flat monthly fee tacked on too, keep it simple for both parties. My .02


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 Post subject: Re: Track Use Agreements
PostPosted: Mon May 01, 2017 9:30 am 

Joined: Thu Oct 08, 2015 11:54 am
Posts: 842
Location: New Franklin, OH
MEC - You're correct in how they want to use it. We're aware that this won't be a big income stream. 500' is all they're asking for - enough for 3 or 4 jumbo covered hoppers and a little cushion. Any further in and we're into some switches that I doubt they'd have an interest in upgrading. We want to work with them as we have a very good relationship with them. We also want to make sure we don't get stuck with some provision that could cost us dearly.

All - Thanks for your suggestions. They've prompted us for some other things to consider.

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Eric Schlentner
Orrville Railroad Heritage Society
Car Knocker, Gandy Dancer & Hog Jockey
https://orrvillerailroad.com


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 Post subject: Re: Track Use Agreements
PostPosted: Tue May 02, 2017 9:37 pm 

Joined: Sat Apr 15, 2006 9:55 pm
Posts: 267
Location: San Diego area
Jayrod: I'm no expert, but I don't believe that upgrading excepted track to Class 1 is absolutely necessary. No passengers can be hauled on excepted track, there are limits to the number of haz mat cars in a train running on excepted track, and max speed is 10 mph. From what you've said, none of those restrictions would impact the use you describe. Now, depending on what the actual condition of your track is, if the Class 1 suddenly starts running really heavy cars on and off your track, they could really make it unusable. Maybe in the agreement say that the lease is for track "as is," and any damage to the track and the equipment they are switching is their responsibility. They put a big hopper or two on the ground, I'm sure they will want to upgrade the track on their own. Maybe put in a restriction that no haz mat loads are to be switched. Then get a certificate of insurance that names your organization as a named insured.


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 Post subject: Re: Track Use Agreements
PostPosted: Wed May 03, 2017 8:18 pm 

Joined: Thu Nov 22, 2007 5:46 am
Posts: 2570
Location: S.F. Bay Area
No, the frieght RR doesn't need to upgrade you to Class 1, but they probably will want to. Derailments are costly for them.

A much bigger deal is what this will do to *your* FRA classification. Consider the General Railroad System of Transportation, the network in which any person can routinely ship a freight car for pay. (not including private industrial spurs). Also where passengers ride for actual transportation (i.e. not tourist excursions). If your track is part of the General System, all the FRA regulations apply to you except 227, 238 and 239. That is certainly not you... yet.

If none of the following are true:

    You cross a public highway at grade (or overcross it)
    You operate within 30' abreast of an active railroad
    You cross or overcross an active railroad
    You overcross a navigable waterway, or cross or overcross an airport runway or taxiway

If none are true, then nothing you do can possibly affect anything the Department of Transportation regulates. Your operation is insular, for all practical purposes behind your fence, and FRA will leave you alone until you steam a steam locomotive. (however the state amusement park regulators may consider FRA's abdication to be license to stick their nose in your biznicks).

If any of those things are true, you are Not Insular But Not In The General System, or NIBNIGS. Not really, nobody calls it that, they call it "FRA Lite". A few of the FRA regulations apply to you. And that's enough to keep the state regulators totally out, which is good news on the whole.

Here's the problem.

When you allow a freight railroad to operate on your line, you must structure it correctly - typically as a lease which is exclusive. Otherwise you can change your status from the safe comfortable Insular or FRA-Lite, into General System. Now you need a full-time staff to do paperwork.

Those weren't the gory details. The gory details are buried deep inside 49 CFR 209, Appendix A. Here is the relevant section as of 5 years ago.
viewtopic.php?f=1&t=32680


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