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Cincinnati Southern Railway sale stalls after lawmakers strip legislation of necessary elements

Cincinnati Southern Railway
Posted at 4:36 PM, Mar 15, 2023
and last updated 2023-03-15 23:37:56-04

CINCINNATI — The elements needed for the proposed sale of the Cincinnati Southern Railway are being removed from that state's transportation budget, meaning the city-owned railway cannot be sold to Norfolk Southern at this time.

Trustees voted unanimously in November 2022 to sell the Cincinnati Southern Railway to Norfolk Southern for around $1.6 billion, but that deal could not be done without changes to state law. The law demands the funds be spent paying off debts, but trustees wanted to put the money into an infrastructure trust for existing maintenance on streets, bridges, parks and more.

House Bill 23 originally included language that would allow the money to be used for infrastructure maintenance, but Cincinnati Mayor Aftab Pureval said the bill is expected to be passed in the coming weeks without those changes.

"It shouldn't be buried in a multi-billion dollar transportation bill," said former Cincinnati councilman Kevin Flynn. "I'm cautiously happy that they've stripped that out."

Flynn hasn't shied away from voicing opposition to the sale. He feels the sale isn't in the city's best interest.

Cincinnati is the only municipality in the U.S. to own an interstate railroad. It has been leased by Norfolk Southern since 1981.

In 1987, the city renegotiated the terms of the lease for more annual income. That agreement was for $11 million a year with the opportunity for yearly increases. From 2003 to 2008, the Southern Railway Note Proceeds totaled $95.5 million.

At this time, the city receives about $25 million annually from Norfolk Southern for its lease, which is set to expire in 2026.

"It's been a great producing asset," Flynn said. "The railroad is probably a better, safer bet than taking the sale proceeds and investing it in the stock market."

RELATED | Cincinnati-owned railway could be sold after trustees vote in favor of proposal

Pureval said the sale is a "top priority" that will "improve the lives of Cincinnatians."

"I’m committed to working alongside the General Assembly to pass the required legislation that allows the referendum for voters to decide," Pureval said in a statement. "There has never been a more important time for our city to get out of the rail business. Selling now gives us local control over our assets in an investment trust for generations to come. No longer would our future be tied to the unpredictable and risky rail industry."

Flynn also raised concern over the writing in the House's passed version of the bill worrying it didn't specify what would qualify as "capital projects".

"It's easy to see the project of the day become what this money gets spent on and we continue to ignore our true existing assets that are deteriorating," he said.

The sale to Norfolk Southern has brought about some questions in recent months after a toxic train derailment in East Palestine. The state is currently suing the company to make sure it pays for the cleanup and environmental damage the derailment caused. Another Norfolk Southern train also derailed in Springfield earlier this month.

"Personally, I do not believe it would be in our best interest to work with an organization like this until more research has been done how these events unfolded, how damaging the environment the quality of living is," said Jack Cunningham, a Cincinnati resident who spoke during a committee meeting in February.

The railway runs from Cincinnati to Chattanooga, TN, stretching 336 miles through Kentucky and Tennessee. The last rail spike was driven in on Dec. 10, 1879, and the first route from Cincinnati to Chattanooga was completed just one year later in 1880.

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