A bridge on the line - Date/Photographer unknown.

23 September 2013

CP Won't Allow Third-Party Operator

Chatham Ontario - The ongoing saga involving the CSX rail line has taken another twist, Chatham-Kent councillors heard on Monday.
 
Canadian Pacific, which has an agreement for the sale of fixtures such as rails and ties, recently notified the municipality that due to liability, it can't allow another operator to provide service on the railway.
 
Council approved a supplementary report asking that Chatham-Kent seek a buyer for its assets in the line.
 
The municipality owns WDC Rail, which was incorporated for tax and liability purposes.
 
After the meeting, Mayor Randy Hope said he was staying optimistic despite the 5 Oct 2013 deadline.
 
"Everything's a challenge, nothing ever went easy in the process," he said. "But we believe it's a challenge we will overcome.
 
"There is going to be a hiatus (in rail service). How long that period of time will be? I don't know."
 
The line stretches from Chatham to Wallaceburg. CSX Transportation notified the municipality in 2006 that it was discontinuing rail service, with council then making the decision to acquire the line for net salvage value.
 
In August, council approved that the purchase go through, with a total impact of $800,000, but with the municipality not commencing rail operations.
 
Last year, the municipality appealed the $6.48-million net salvage value set by the Canada Transportation Agency, calling the price too high. The municipality eventually entered into terms of settlement with CSX Transportation, with net salvage fixed at $4 million.
 
There is an agreement with CP for the sale of the fixtures, but not the land, working out to $3.2 million. The municipality was left with a commitment of $800,000, to be funded from existing resources.
 
Also on Monday, council approved a $1-million loan to WDC Rail in order to facilitate any transaction.
 
The money will fund the $800,000 purchase price, plus $200,000 for any costs incurred during the ongoing search for an operator.
 
Stuart McFadden, the municipality's deputy director of economic development, told council it may take some time for a deal to come together.
 
"If we can pull a rabbit out of the hat, that would be wonderful," he said. "I don't suggest we're going to do that."
 
He said there is a verbal agreement with CP, but nothing definitive as of yet concerning the time window the company would allow to sell its assets to an operator that would continue providing rail service.
 
The staff report stated there may be a situation where WDC Rail would continue to own the land, with another company acquiring CP's assets, stressing that flexibility is needed.
 
Other potential uses for the rail corridor have been suggested, including a recreational trail.
 
However, Hope is confident the line will eventually be used how it was intended.
 
"I truly believe that there will be operations," he said. "I believe it's a viable part of economic development. There's a lot of opportunity."
 
Trevor Terfloth

Vancouver Island
British Columbia
Canada