Re: Santa Cruz Branch Line -- Sales Price -- I don't understand
Author: Dragoman
Date: 02-19-2010 - 18:13
What baffles me is, how can UP and/or the STB conclude that a line that has few prospects, loses money operationally, has high maintenance costs, etc., etc., -- i.e., is little more than a money pit -- can possibly be worth $10-19 million! A narrow otherwise-undevelopable strip of land can't be worth near that much, even after spending the money to pull up tracks, tear down bridges and trestles, etc. I would think that a normal, eceonomic analysis should indicate that the net FMV is -0- or less, with the actual liabilities (operations at a loss, maintenance, insurance etc.) and potential liabilities (someone falling of a trestle, train derailment due to deferred maintenance, etc.) exceeding any asset value.
In other words, in the "real" (non-railroad) world, a corporation would be eager to give away such a losing asset, just to get out from under the liabilities. So, why is it different here?