The Napoleon, Defiance and Western Railway: A
Promising Model for Public Private Partnership
– Eric T. Neff, Planner/Special Projects, Ohio Rail Development Commission
– Jerry Hayes, Executive Director, Defiance County Economic Development
– Shane Cullen, Vice President of Transportation & Operations, Pioneer Railcorp
1
Today’s Agenda
• Introductions / Background
– Ohio Rail Development Commission (ORDC)
– Pioneer Railcorp and purchase of the Napoleon, Defiance and Western (ND&W)
– Defiance/Henry/Paulding Counties
• History of ND&W Line and Economic
Development Potential along line
• Public Private Partnership Investments /
Improvements since Pioneer Purchase of
ND&W Line
• Potential Public and Private Rail Infrastructure
ND&W Funding Sources
• Lessons Learned / Future Challenges
2
ORDC
WHO WE ARE
Mission
to plan, promote, and implement
the improved movement of
goods and people faster and safer
on a rail transportation network
connecting Ohio to the nation
and the world
Commission
15 Commissioners
18 staff
Created
in 1994 under Ohio Revised Code
Chapter 4981
3
OHIO REVISED CODE 4981.02
COMMISSION STRUCTURE
Seven Commissioners appointed by the Governor
• No more than four of the seven gubernatorial appointees shall be from
the same party
• Represent shippers, railroads, labor, manufacturing, engineering, public
finance
One appointed by the Ohio Senate President
One appointed by the Speaker of the Ohio House of Representatives
Directors of Transportation and Development are ex-officio members
Two non-voting members (Majority and Minority) from both the Ohio House of
Representatives and Ohio Senate
Commissioners are volunteers and do not receive pay or benefits
Commissioners serve staggered terms of six years
THE COMMISSION WAS DESIGNED TO BE NON-PARTISAN AND PROVIDE
CONSISTENCY ACROSS ADMINISTRATIONS.
4
ORDC
WHAT WE DO
Direct Freight Rail Project Assistance
Special Freight Projects
Grade Crossing Safety
5
ORDC
HOW WE DO IT
Flexibility
Broad statutory authority to participate
in projects with a rail nexus – much like a
local Port Authority or Community
Improvement Corporation
ORDC staff have extensive expertise in
administering a wide variety of funds
(federal, state, local, private) and can
work with multiple public + private
partners
Recent partners include
MPOs, developers, manufacturers,
logistics companies, port authorities,
railroads, cities + counties
6
ORDC
HOW WE DO IT
Perspective
The advantage of the Commission is
the consistency of programs, staff
and decision-making across
successive administrations and
General Assemblies
A Rail Specific Focus
7
DIRECT FREIGHT RAIL
ASSISTANCE
Rail Line Rehabilitation
Improves track speed, safety
+ reliability
Preserves rail service to
existing shippers
Opens rail service to new
shippers
Rail Access for Companies
Assists companies with new rail
and rail-related infrastructure
(sidings, switches, lead tracks)
Helps create and retain Ohio
jobs
Work jointly with JobsOhio, port
authorities, railroads and local
government
8
FINANCIAL ASSISTANCE
FOR FREIGHT RAIL INFRASTRUCTURE
Direct Assistance in the Form
of Loans and Grants
Funding Sources
• General Revenue Funds
• State Special Revenue Fund
• Administer Other Funds –
OPM (ARRA, Tiger, FRA, EDA,
etc.
ORDC = Gap Financing
• “Last Dollar In”
• “Bigger, Better, Faster”
9
2011 - 2012
FREIGHT RAIL PROJECTS
The 29 rail development projects
approved by the ORDC in the 20112012 fiscal years are expected to:
• Leverage $166.0 million in additional
capital investments
• Create an estimated 450 Ohio jobs
• Retained an estimated 600 Ohio jobs
• Generate an estimated 3,000
carloads of freight
• Total ORDC investment: $6.0 million
($4.2 million in grants + $1.8 million
in loans)
• $28 leveraged in added investment
for every $1 of ORDC investment
10
Pioneer RailCorp
• Pioneer Railcorp is a railroad holding
company that owns short line railroads and
several other railroad related businesses
including a railroad equipment company
and a contract switching services company.
• Railroad transportation is provided by the
Company’s wholly-owned short line
railroad subsidiaries (“Pioneer Lines".)
• Pioneer Lines rail system is primarily
devoted to carrying freight and currently
consists of 26 rail operations in 13 states
with over 600 miles of track serving over
100 customers.
11
12/28/2012
Pioneer Railcorp Purchases Line
from Maumee & Western RR
Mike Carr, President and CEO of Pioneer Railcorp, said, "We
have purchased this line with the knowledge that it is in dire
need of rehabilitation due to years of deferred maintenance.
Our objective is to rehabilitate the line in order to provide
consistent freight rail service to all current and potential
shippers utilizing the line. We also plan to restore two
sections of track - from Napoleon to Liberty Center and west
of Defiance to Cecil - that would offer all shippers on the line
connections to multiple Class 1 carriers for more competitive
access to the North American rail system. We intend to
explore all options available to complete these objectives as
quickly and efficiently as possible."
12
Progress since
Acquisition
Since Acquisition Date 12/28/13:
•
•
•
•
•
•
11K+ Ties
1500+ Gauge Rods
134+ Rails
Signal Work (Note DOT and Local Cooperation)
6 Locomotives
Various Contractors & RR Labor
13
Pioneer RailCorp
Economic Climate of NW Ohio
• Local Involvement & Desire
• Shipper Interest & Potential
• Under Marketed – Benefit of Dual Connection RR,
Reliable Service (100 cars on RR on date of transfer –
NDW delivered)
• Location – Within our Regional Preference
Benefits Brought to Ohio
• Retain RR – Viable RR (Transportation System –
Congestion Issues)
• NDW – 9 Employees, Contractors, Local Vendors (Fuel,
Supplies, Hotels, Etc.)
• Reputable/Reliable/Stable Operator
14
Pioneer RailCorp
Goals:
•
•
•
•
•
•
•
Switching Safety & Efficiency
Dual Connections
Track (Ties, Cross Level, Rail)
18-20 Car Trains (Currently 7-8)
10 MPH
286K Ability 80lb - ???
Double Traffic/Shippers
15
Henry County
•
•
•
•
Named for: Patrick Henry, American Patriot, Statesman and Orator
2012 Population: 28,045
Land Area: 416.5 square miles
County Seat: Napoleon City
Major Employers
• Alex Products
• Campbell Soup Co – Served by the ND&W (via Cloverleaf)
• Carson Industries
• Silgan Holdings, Inc
• Tenneco Inc
16
Defiance County
•
•
•
•
Named for: Fort Defiance
2012 Population: 38,677
Land Area: 411.2 square miles
County Seat: Defiance City
Major Employers
• Defiance Metal Products Co
• Defiance Regional Medical Center
• General Motors Company
• Johns Manville Corp – Served by the ND&W
• Parker Hannifin Corp
17
Paulding County
•
•
•
•
Named for: Captain John Paulding, Revolutionary War
2012 Population: 19,295
Land Area: 416.3 square miles
County Seat: Paulding Village
Major Employers
• Alex Products Inc
• Cooper Farms Inc
• H E Orr Co.
• LaFarge SA – Served by the ND&W
• Spartech Corp
18
History of ND&W Line
The current ND&W was once part
of the Wabash Railroad, a Class I
railroad that operated in the midcentral United States.
• The Wabash's major freight
traffic advantage was the direct
line from Kansas City to
Detroit, without going through
St. Louis or Chicago.
• The railroad originally went to
Toledo. Now that that section
of the line is a walking trail.
• The remaining rail has had
little, if any, substantive
maintenance done in decades
by a succession of owners.
19
Condition of Line in late 2012
The ND&W inherited significant
deferred maintenance problems
along with the problems of
operating heavy freight mostly on
light, 80 lb. rail, and operating on
sections of track in an area formerly
called the Black Swamp.
The cost of the rehabilitation the rail
line represents a significant expense
that the ND&W will not be able to recoup for years to come, which
jeopardizes the ND&W’s ability to
continue providing improved rail
service to its customers.
20
Current and Potential
Shipper Use
Johns Manville (Defiance), Systech/Lafarge (Paulding), and
Cloverleaf (Napoleon) are three of the largest shippers on the
line relying on rail traffic for raw material production inputs.
• Cloverleaf is the largest shipper on the line with the
majority of the inbound rail freight being bulk tomato paste
from California going to the nearby Campbell’s production
facility.
• Johns Manville is the 2nd largest shipper on the line with
inbound rail freight consisting of soda ash from Wyoming,
silica (sand) from Illinois, and borates from California.
• Lafarge is the 3rd largest shipper on the line with inbound
waste oil rail freight from a variety of sources that used in
the production of cement.
• There are a number of formerly served facilities (primarily
grain silos and agri-businesses) on the line that are possible
returning rail users.
21
… and there is A LOT of potential
• The ND&W is strategically located along US 24 on the “Fort to Port” highway
which connects Fort Wayne with Toledo. The Ohio Department of
Transportation recently completed the process of making the Ohio portion of
US 24 a four-lane highway.
• There are many industrial development sites with more than 1300 acres
available along the ND&W served on one side by US 24 and on the other by the
ND&W.
• The ND&W serves two large industrial parks at Napoleon, two large
industrial parks in Defiance, and smaller industrial parks in Antwerp and
Woodburn, Indiana just over the Ohio border. The map on the next slide
shows the development sites available along ND&W including the Defiance
area dual-served “CSX Mega Site” with more than 1000 acres available for
development.
22
Development Sites along the
ND&W
23
Past ORDC Assistance
To the Line
ORDC Project - I: In 2004, ORDC approved a $168,405 grant matched
by a MAW investment of $45,054 to repair several portions of the MAW
line.
ORDC Project - II: Again in 2004, the line from just east of Napoleon to
Liberty Center had been out of service but the MAW put it back in
service with the help of a $206,000 loan ORDC.
ORDC Project - III: In 2005 ORDC provided a $120,000 grant for work
to several of the worst parts of the MAW track between Defiance and
the outskirts of Napoleon for rail ties between Cecil and and the
Indiana State Line.
ORDC Project - IV: In 2008, ORDC approved a $150,000 grant to pay
50% of the costs to upgrade select tracks in the MAW’s main yard in
Defiance.
ORDC Project - V: In 2008, ORDC approved a $150,000 grant to repair
track between MP 45.5 to 46.65, and to repair drainage at MP 49.7 to
MP 49.95 two other segments of track between the CSX interchange in
Defiance and the rail users in Napoleon and Liberty Center.
- limited number of small-scope/emergency projects -
24
With New Ownership Came
New Opportunities…
…and the ND&W was ready for some long deferred maintenance and
rehabilitation.
25
Phase I (FY2013) Sidings and
Track Rehabilitation
Project Description
• Rail Sidings in Cecil and Napoleon
• Track Rehabilitation on closed middle section
Project Costs
• ORDC Grant
• NDW Funds
$450,000
$290,000
Project Benefits
• Rail Sidings in Cecil and Napoleon resulting in
improved service to customers and improved
safety.
• Track Rehabilitation on closed middle section
resulting in new CSX service on Eastern
Section and new NS Service on Western
Section
26
Phase II (FY2014) Defiance Yard
and Track Rehabilitation
Project Description
• Defiance Yard Rehabilitation
• Track Rehabilitation on high use track sections
Project Costs
• ORDC Grant
• NDW Funds*
* Loan from ORDC
$450,000
$1,000,000
Project Benefits
• Track Rehabilitation on high use track sections
and to rebuild the Defiance Yard resulting in
improved service to customers and improved
safety.
• The projects will minimize potential for
derailments, which leads to perceived
unreliability of the line, which this line
desperately needs to prove, its reliability.
27
State & Local Funding Sources
• ORDC Grants / Loans
• ODOT Office of Jobs & Commerce
• Local Programs / Transportation Alternatives
Program (TAP)
• State Infrastructure Bank (SIB)
• Community Development Block Grant Programs
(CDGB)
• Project underway in nearby Ohio county
using CDBG funds designating the rail road
as an eligible public utility
• Ohio Enterprise Bond Fund Program (OEBF) / 166
Direct Loan Program
• Roadwork Development (629)
• Henry, Defiance, and Paulding Counties Funds
(limited)
• ??
28
Federal Funding Sources
• Economic Development Administration (EDA)
• U.S. DEPARTMENT OF TRANSPORTATION – TIGER GRANTS
• Unsuccessful application made in 2009
• FEDERAL RAILROAD ADMINISTRATION - Railroad
Rehabilitation and Improvement Financing Loan (RRIF)
• ORDC is currently serving as a financial advisor on a
RRIF loan with another Ohio Short Line Railroad
• ?
29
Lessons Learned and
Future Challenges
• Local, State, and Federal Funding is LIMITED….
• Challenge of using a number of funding sources for what is a Privately
owned transportation resource
• Many potential sources of funding including Transportation
Alternatives Program (TAP), State Infrastructure Bank (SIB) ,
Community Development Block Grant Programs (CDGB) require
Public Ownership. The ORDC and Ohio railroads have had recent
success getting CDBG*, EDA, TAP funds but the railroads were
publically owned but privately operated.
• * again - project in nearby Ohio county using CDBG funds
designating the rail road as an eligible public utility
• Railroads, while a vital part of the transportation infrastructure, most often
are not high profile like road and bridge projects.
30
The Napoleon, Defiance and Western Railway: A
Promising Model for Public Private Partnership
QUESTIONS?
31