Wednesday, February 17, 2010

Ottawa agrees to put up funds for beleaguered Huron Central

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The Canadian federal government has said it will fund its share of infrastructure improvements needed for Huron Central Rail if the Province of Ontario signs a Canada-Ontario Provincial-Territorial Base Fund Agreement, The Sault Star reports.

A letter penned by John Baird, the federal Minister of Transport, Infrastructure and Communities, says the Infrastructure Stimulus Fund is no longer able to make new commitments, but the federal government will support the shortline rail project if an agreement, under negotiation with the province since 2008, is signed. The agreement would free up C$175 million of infrastructure dollars to the province and must be matched by the Ontario government dollar for dollar.

Ontario is the only province that has not signed an agreement with the federal government for its share of the money.

The Provincial-Territorial Base Fund was established to provide each province and territory with predictable federal funding of C$25 million per year over seven years. Under the plan, each province submits an annual capital plan with a list of initiatives for federal cost sharing and each contributes 50 percent of the eligible costs.

Last week, the Sault and area working committee, whose task it is to try to save the rail line and get various agreements in place, said the higher levels of government need to fund the project within four to six weeks or the rail line will cease to exist by the end of summer. Time is of the essence so that materials can be ordered and the infrastructure improvements can begin, Fratesi said.

While the city had originally submitted two funding applications -- one under the Infrastructure Stimulus Fund for C$12.1 million and one under the Build Canada Major Communities Fund for C$33 million (or less what was received under the ISF), Fratesi said stakeholders don't care where the money comes from as long as both governments are involved.

Sault MPP David Orazietti said the province remains committed to funding the necessary infrastructure improvements to the rail line between Sault Ste. Marie and Sudbury. Orazietti said the funding application has been filed through an application to the Build Canada Major Communities Fund. He said, ultimately, it would be Ontario's Ministry of Energy and Infrastructure Brad Duguid's decision where the province's share of the funding will come from.

"We remain committed to making an investment to Huron Central Rail line so that businesses and communities that rely on the line can do so for many years to come," Orazietti said.

He said he's pleased the federal government is also willing to fund the project.

"We need to move as quickly as possible," to get that funding, Orazietti said. He said the province is reviewing the Provincial-Territorial Base Fund Agreement to ensure the province's interests are protected.

"From what I see here, we have a few options on the table where the funding can come from and I'm optimistic that (the province and the federal government) can reach an agreement in the necessary timeframe," Orazietti said.

Sault MP Tony Martin said he was pleased to see the federal government's commitment to the project, although he had been told earlier that it was already there.

"We will continue to monitor this and write more letters to the federal government urging them to sign an agreement quickly to get these funds rolling and the material that Huron Central Rail needs to complete the improvements ordered," Martin said.

One outstanding issue is the need for a business plan by Huron Central Rail. Fratesi said the plan is currently being put together and won't be a factor in completing a deal.

Mayor John Rowswell noted that the urgency isn't just to save the rail line but the region's economy. "Without the railroad the potential growth or the stabilization of the region won't occur," he said.

Last year, Huron Central Rail announced that it would stop running the line between the Sault and Sudbury, citing the need for major infrastructure improvements in order to return to profitability. A one-year operational agreement was struck with Huron Central, which expires in August if infrastructure funding doesn't come through to allow the Montreal-based company to continue its operations.

The funding, and an agreement with CP Railway, which leases the track, will see Huron Central continue the operations for the long term. The framework for the agreement was developed between the stakeholders, including communities along the route, shippers and the operator.

Huron Central, which has leased the rail line for more than a decade since 1997, has said it has lost money over the past four years, including C$2.1 million in 2008. FedNor and NOHFC injected an immediate C$3 million for track improvement and stakeholders provided freight volume guarantees to keep Huron Central on line for a year while a long-term solution is negotiated.

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