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.