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Friday, November 13, 2009

Hopson speaks out in support of railway acquisition

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As steps proceed to finalize acquisition of the spur by Rusk County Rural Rail Transportation District from Union Pacific, District 11 state Rep. Chuck Hopson said he is behind the project, according to the Tyler, Texas, Morning Telegraph. And Sue Henderson, general manager of Henderson Economic Development Corp., declared the spur would aid future growth in the city.

"There are things I know that I can't always share. I'm actually working with three different companies right now (considering locating locally), all of which I have a nondisclosure agreement with. I'm not at liberty to give details, but if we are able to save this rail and the rail district brings in the short-line operator, we will be really rocking and rolling in Henderson," the HEDCO official told the city council."

The council approved HEDCO loaning the rail district $1.2 million from sales tax revenue to fund purchase and start-up costs for the freight spur. Earlier, the rail district and Union Pacific negotiated a purchase price of $1.12 million.

The rail district anticipates paying the loan off with revenue generated by operation of the spur and/or with grants it hopes to obtain.

Hopson said 50 percent of the state's entire population live along the Interstate 35 corridor stretching from Denton to Dallas-Fort Worth, San Antonio, Austin and Laredo. Another 25 percent live in Houston and the other 25 percent is spread across the rest of the state, the legislator said.

"At some point in time, all those cities with that rapid growth are going to run out of water," Hopson said. "East Texas has been blessed with a lot of water. A lot of the other cities in the state want this water. If we keep control of it, at some point in time manufacturing people that use water are going to have to come to us and say, 'Can we put manufacturing facilities in your area?'"

Having the ability to move goods by rail and on highways to where the majority of the state's population lives will mean a lot to East Texas, Hopson said.

Union Pacific stopped service on the spur in late August.

The spur, which runs to the Henderson Industrial Park, is a valuable piece of infrastructure, the HEDCO official said. If local entities had to build that stretch of rail, it would cost "in excess of $16 million," she said.

An agreement for HEDCO's $1.2 million loan to the rail district to purchase the spur and to fund track repairs and start-up costs provides a 36-month period in which the district will not be required to make monthly payments toward paying off the loan. That's to allow the district "to get on their feet," Henderson said.

The loan will then be amortized over 15 years. The rail district granted HEDCO first lien on the spur, its revenues, equipment and rights of way. The rail district's board has hired a short line operator for the spur, Blacklands Railroad headquartered in Sulphur Springs.

That line runs from Greenville to Commerce to Sulphur Springs to Mount Pleasant. Blacklands built up traffic on it from 450 rail cars in 1999 to more than 5,000 in 2008, Wayne Defebaugh, president/operations director and founder of the company, said.