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Re: CORP And Track Leased From UP
Author: Shortline Sammie
Date: 07-19-2011 - 20:00
SP5103 Wrote:
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> Class 1 will often lease versus sell certain
> lines:
>
> 1. To retain control and limit access.
> 2. To provide the Class 1 with the option of
> providing service to important customers or viable
> portions of the line in case the shortline fails.
> 3. In some cases, to reduce the cost to the
> shortline.
>
> I know of some cases where the Class 1 "sold" a
> line to a shortline, but retained the underlying
> real estate or the track itself. Sometimes a line
> expected for eventual abandonment will be "sold",
> but the Class 1 retains an interest in the salvage
> value.
The Oregon Pacific (and predecessors East Portland Traction and Molalla Western) chose to buy rather than lease its operating properties. Our position is that if we are investing money in upgrading the track and structures we want to OWN the asset...same with lease/purchase on locomotives and equipment....if it is worth leasing it is worth taking care of in order to become an ASSET. The underlying real estate is either easement or a lease. The amount
of the lease varies depending on the traffic levels and due to STB regulations, has very little value so long as it is used for railroad purposes. Currently OPR does not pay for any property lease...traffic levels are much higher than the minimum required. We do, however, pay property tax to the counties through which we operate on the track and structures..although at a highly discounted rate.
Dick Samuels
www.oregonpacificrr.com
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> Class 1 will often lease versus sell certain
> lines:
>
> 1. To retain control and limit access.
> 2. To provide the Class 1 with the option of
> providing service to important customers or viable
> portions of the line in case the shortline fails.
> 3. In some cases, to reduce the cost to the
> shortline.
>
> I know of some cases where the Class 1 "sold" a
> line to a shortline, but retained the underlying
> real estate or the track itself. Sometimes a line
> expected for eventual abandonment will be "sold",
> but the Class 1 retains an interest in the salvage
> value.
The Oregon Pacific (and predecessors East Portland Traction and Molalla Western) chose to buy rather than lease its operating properties. Our position is that if we are investing money in upgrading the track and structures we want to OWN the asset...same with lease/purchase on locomotives and equipment....if it is worth leasing it is worth taking care of in order to become an ASSET. The underlying real estate is either easement or a lease. The amount
of the lease varies depending on the traffic levels and due to STB regulations, has very little value so long as it is used for railroad purposes. Currently OPR does not pay for any property lease...traffic levels are much higher than the minimum required. We do, however, pay property tax to the counties through which we operate on the track and structures..although at a highly discounted rate.
Dick Samuels
www.oregonpacificrr.com
