Freight service to resume on P&N Railroad

Patriot Rail is on board to operate the restored Piedmont & Northern rail corridor in Gaston County, N.C., for at least five years, according to an agreement signed last week with the N.C. Department of Transportation, the Gaston Gazette reports. The Boca-Raton, Fla.-based short line and regional railroad company should restore freight service in the next 45 days on four miles of track upgraded in late 2009 between Gastonia and Ranlo. Another nine miles of the state-owned P&N corridor from Ranlo to Mount Holly should be upgraded by spring 2011.

While some have
questioned the potential for the P&N to spur economic development and job
creation, Wayne August, director of corporate development for Patriot Rail,
said, "Things look very positive. We’ve been up there the last couple of months
shaking the trees and kicking the tires. We’re still in the process of working
things out with several customers."

Patriot Rail will be
responsible for operating, maintaining and marketing rail service on the
P&N and will pay the state a base rent plus a percentage of rail revenue.

Once the company receives
clearance from the U.S. Surface Transportation Board and the Federal Railroad
Administration, August said Patriot Rail would move locomotives to Gaston
County.

Built in 1911, the
P&N once provided freight and passenger service between Gastonia and
Charlotte, but it was idled in the late 1980s. The state purchased the track in
1991 to preserve it for future transportation needs. Once upgrades are complete
the P&N will connect with two Class 1 carriers – Norfolk Southern in
Gastonia and CSX Transportation in Mount Holly.

NCDOT Rail Division
Director Pat Simmons said the agreement with Patriot Rail gives the state "great
confidence" that the public’s $5-million in-vestment to upgrade the P&N
will result in rail customers, job growth and new shipping opportunities in
Gaston County.

The agreement with
Patriot Rail does not include any passenger service to Charlotte, but does not
rule it out. As long as it does not interfere with existing freight service,
the agreement leaves open the possibility of future commuter rail – a
proposition that has the support of several Gaston County leaders. August said
the company is examining the potential for a transload facility that would
allow Patriot Rail to load and unload tractor-trailers from truck to rail and
visa versa for customers that do not operate a site on the railroad.

Patriot Rail is required
to maintain the track to at least the FRA Class 2 condition. The company will only
operate on a small portion of the Belmont Spur north of Belmont Abbey. The
state is still examining the feasibility of restoring the remainder of the 1.5-mile
spur into downtown Belmont.

According to the
agreement, the state is prepared to restore the Belmont Spur to Woodlawn
Avenue, if a potential customer, Carus Phosphates Inc., decides "to expand
their facility and commits to build an industrial track."

The storage of empty rail
cars on the P&N – which some officials with Gaston County and Belmont Abbey
specifically opposed – is not prohibited by the agreement, but would require
state approval.

The agreement has an
initial term of five years, but includes three renewable options of five years
each. Patriot Rail has agreed to pay the greater of two monthly fees or a 5
percent cut of the company’s line-haul revenue. The rental fee starts at $1,000
a month and increases to $2,500 when the entire line is upgraded.

To compensate the public
for its investment and reduced short-term maintenance costs, Patriot Rail also
agreed to pay a second monthly fee of $1,500 starting with the second year of
service. The fee would decrease to $1,000 if Patriot Rail exercises a second
five-year option. After 10 years of ser-vice, that fee would be eliminated.

Simmons said
transportation officials tried to craft terms that struck a balance between the
need to recoup the public’s investment in the railroad and a desire to assist
the development of a successful short line operation in Gaston County.

The state could not find
that balance in last year’s negotiations with Bill Gray of Carolina Central
Railway, who revived local interest in the P&N three years ago. The NCDOT
terminated negotiations with Gray in November and put out a new request for
bids in January. Gray has said the state’s lease proposal last year was
unreasonable, but transportation officials say they offered favorable terms to
Gray.

In May, the state
selected Patriot Rail over four competing bids, which included interim operator
Carolina Coastal Railway and a second proposal from Gray.

Patriot Rail owns and
operates six shortline freight railroads with 331 total rail miles in eight
states. The company’s management team, led by Gary O. Marino, former chairman
and chief executive of RailAmerica Inc., collectively possess more than 300
years of railroad experience on railroads in the United States, Canada,
Australia, Chile and Argentina, according to the company.