Consultant: Tulare County rail line could earn 39-percent profit

DRAFT PRESS RELEASE Profit margins for a short-haul rail line along the eastern edge of the county could be as high as 39 percent with the right service and marketing, according to a railroad consultant hired by the Tulare County, Calif., Association of Governments, the Visalia Times-Delta reports.

Such success would come
at a price, however: Safety upgrades along the existing route are expected to cost
$13 million to $37 million.

In a meeting in Tulare,
Gary Hunter, a Reno-based railroad consultant, unveiled a draft business plan
he says would result in hefty profits for the line’s operators – if a buyer can
be found.

"The last thing I
want to see is a railroad line get pulled up if it can be saved," Hunter
said.

The TCAG-paid consultant
said he identified 10 businesses that might ship on the line if service were
improved and the cost of shipping reduced. They include Svenhard’s Swedish Bakery
in Exeter, a Walmart distribution center in Porterville, Porterville Rock and
Recycle, Britz-Simplot’s Delano location and Sierra Forest Products in Terra
Bella, Hunter said.

Three companies currently
use the line to ship products. None is located south of Lindsay.

The consultant blamed
tepid business along the line on surcharges and deteriorating service. Hunter, though,
said that with the right marketing and service, business on the railroad could
increase from 3,800 cars a year to as many as 13,690.

"Those are the kinds
of numbers we could have if we moved forward," he said. "There are
long-term implications of not having rail transportation available in this
area."

Officials have been
trying for two years to save a little-used section of track owned by the San Joaquin
Valley Railway between Strathmore and Jovista. Negotiators have been trying
since last fall to find a middle ground between the county’s offer of $1.2
million and RailAmerica’s asking price of $3.8 million.

Now RailAmerica officials
are eyeing two more segments for abandonment, which would leave nearly 70 miles
of track from Jovista to Dinuba without service. Hunter said his analysis
showed RailAmerica could earn $3.9 million by liquidating the line.

Money to preserve the
line has been set aside in a special fund of Measure R money. TCAG oversees revenue
from the county’s half-cent sales tax.

Although a majority of
the member cities approved the use of Measure R funds for the line in concept, the
actual purchase would have to go before another vote.

TCAG officials have spent
more than $200,000 on consultants, travel and lobbying to keep the rail line from
being abandoned. This year’s expenses total $143,113, though the agency’s
actual expenses probably are higher, as the records provided did not include
bills from the agency’s Washington, D.C., lobbying firm, Alcalde & Faye, or
complete expenses connected with a lobbying trip to Capitol Hill this winter.

The biggest expense –
$95,000 – went toward Hunter’s business plan.