Consultant: Tulare County rail line could earn 39-percent profit PDF Print E-mail
Friday, September 03, 2010

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.


 

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