Friday, April 29, 2011
Track Deal Derailed
By Colleen Heild
Copyright © 2011 Albuquerque Journal
Journal Investigative Reporter
That's the decision from the state Department of Transportation, which notified BNSF Railway Co. this week that the state was terminating an agreement to buy 182 miles of unneeded northern New Mexico train track.
And Gov. Susana Martinez wants a $2.35 million refund.
In 2008, the administration of former Gov. Bill Richardson paid nearly $5 million for the track from Lamy, N.M., to the Colorado border. The segment is used only by Amtrak for twice-daily passenger service. BNSF stopped its freight service there several years ago.
The unneeded segment was part of a package deal that enabled the state to launch Richardson's Rail Runner Express commuter train service between Belen and Santa Fe.
But now the DOT says BNSF never formally closed on the deal to convey ownership of the northern track segment — which the Martinez administration says is a breach of the purchase agreement.
Besides, the state doesn't want the extra 182 miles of track.
"The governor believes that taxpayers are owed a significant amount of money and is seeking to recover funds that were sent to BNSF for a project that was never finalized," Martinez spokesman Scott Darnell said Thursday.
"Furthermore, acquiring the additional rail line would have saddled New Mexico taxpayers with a legacy project from the previous administration that would have cost millions of dollars to maintain from year to year with very little, if any, return on the investment."
In recent months, the Martinez administration and legislators realized the financial implications of taking ownership of the track: routine and capital maintenance costs of $8 million a year; and liability insurance of $500,000 annually as New Mexico becomes liable for crashes on the track and at grade crossings.
And those are just some of the known costs.
Meanwhile, state ownership could deprive three adjacent counties and school districts in Mora, Colfax and San Miguel counties of an estimated $750,000 annually in property taxes currently paid by BNSF, according to one estimate.
New Transportation Secretary Alvin Dominguez wrote a letter to BNSF on Monday saying his agency was "exercising its rights to terminate the agreement." He requested the $2.35 million refund, which he said was half of the "earnest money" paid.
The DOT is also seeking an additional $350,000 it contends was paid in excess of the amended purchase price.
Dominguez told the Journal in a statement Thursday that, if the deal went through, his agency would have to tap the state road fund, which "cannot withstand the burden of millions of dollars annually for maintenance of track that was never planned and will most likely not be used.
"When highway pavements across the state are continually falling behind in repair due to lack of funding, this unplanned expense is unconscionable," Dominguez's statement added.
According to DOT spokeswoman Manon Arnett, DOT officials can find no cost analysis or study from the previous administration that would have shown "due diligence" in determining maintenance costs for that part of the track.
Dominguez's letter comes after the governor met with BNSF Chief Executive Officer Matthew Rose and other company representatives last week.
BNSF spokesman Joseph Faust said in an email Thursday afternoon that he hadn't confirmed receipt of the DOT letter, and he added, "We expect to continue to work with the New Mexico DOT."
The DOT under Richardson originally hoped to lease track from BNSF for the Rail Runner line, but, after lengthy negotiations, ended up agreeing in 2005 to buy the track from Belen to the Colorado border in three phases.
DOT officials said back then that BNSF wouldn't sell the 99 miles of track to run the Rail Runner unless the state bought the extra segment from Lamy to Colorado.
Of the nearly $500 million spent to launch the Rail Runner, the state paid $75 million for the track.
But the potential costs associated with the northern stretch are significant, and the value of that segment is dubious.
A recent state analysis obtained by the Journal says the history of that section of rail "makes it very likely that there are areas of environmental contamination due to liquid and solid hazardous emissions associated with the operations, storage and maintenance and fueling of locomotives and freight train cars."
The curvature and grade of the existing rail line makes high-speed rail unlikely and obtaining federal funds for any additional passenger rail service seems doubtful, because the state would be competing with projects in more populated, urban areas, the analysis said.
Closing the deal on the extra track would also mean the state would inherit 212 train signals of various ages, some up to 100 years old.
"The cost to replace a signal system on this line would be approximately $50 million," the analysis said.