Archived Story

Our future may be down the tracks

Published 12:02am Sunday, August 21, 2011

Southwest Mississippi may soon have an opportunity, the once-in-a-lifetime variety, at its fingertips.

The key will be keeping eyes on the future and, literally, not running off the rails.

Our community needs to be “driving with our high beams on” — looking just beyond what we can clearly see coming down the tracks.

That kind of vision is critical as members of the Southwest Mississippi Regional Railroad Authority gear up to fight over the county’s lone railroad line.

Most local residents know the railroad’s background.

A firm with ties to a large railroad salvage company purchased the line two years ago. Although the company has said publicly that they have no intention of scrapping the line, their actions beg to differ.

The belief among many close to the situation is that the company’s goal is to drive away business with high prices, then petition to scrap it, making a hefty, quick profit.

In fact, Elevance Renewable Sciences’ contract to bring 150 new jobs to the area contains wording to seek help from Natchez Inc. and others to free up the stranglehold of the current railroad owners

To that end, Adams, Franklin and Lincoln counties formed the railroad authority earlier this year.

The new entity aims to resolve the issue either by working with the railroad owner to obtain more reasonable rates — which seems improbable — or by encouraging the Surface Transportation Board to force the sale of the railroad to someone with serious intent on operating it, not scrapping it.

The authority likely will soon take up the fight in a more formal, legal manner.

As it does, a couple of things need to be considered.

First, despite what the community’s perpetual naysayers will bark, the authority purchasing the railroad is not a crazy idea, and taxpayers would not be in jeopardy if they did.

Natchez Inc. Executive Director Chandler Russ said recently if such a purchase were to come to fruition, none of the counties who appointed members to the authority would be on the hook.

County taxpayers would be at no risk of absorbing the debt if the railroad were purchased and later went belly up.

Second, our region would be much better off if we actually owned the railroad, particularly if the railroad’s profitability can be increased.

Having the profits of the railroad stay in our region is much better for the area’s long-term growth than having profits funneled out-of-town.

It’s quite feasible for the railroad to become a huge cash generator, perhaps even capable of fully funding economic development entities in Adams, Franklin and Lincoln counties.

For an example of what can be done by wisely planting and fostering an opportunistic seed, look no further than the opposite corner of our state.

Tupelo’s success has been, in no small part, due to a generous gift of a profitable business to a community foundation years ago.

Could a profitable railroad, owned by the communities it serves, be the seed from which our community’s future grows?

In addition, think about how useful it would be for economic developers to have railroad pricing power in their toolkit.

If the railroad can be purchased and made profitable, our community should have the vision to purchase it and dedicate profits to be reinvested in Southwest Mississippi.

Do that, and our future could be as powerful and as unstoppable as a locomotive.

Kevin Cooper is publisher of The Natchez Democrat. He can be reached at 601-445-3539 or kevin.cooper@natchezdemocrat.com.

  • http://www.natchezdemocrat.com khakirat

    Theres no way that Adams county needs to buy into a railroad and get hooked into such a ridiculous situation. Who will have to pay it off if it does go belly up ?? (The Adams County Taxpayers). This is walking off a cliff for the railroad folks as Southern Pacific should buy into it but they have better sense at this time for there is no revenue to back it up!!! Let the industries coming in take care of this not the county just like turning on utilties.

  • Anonymous

    I like the concept of owning the railroad at no up front cost and no risk as this article implies, however, the financing part of this story is very unclear.  The money to purchase the railroad from current owners has to come from somewhere – so where is that?  I would assume you would borrow against the assets with the risk the lender is going to be left with a stale asset if default occurs?  If so, that would lead to a large down payment, or a very high financing rate, much as buying a house.  Full production revenues from Elevance is several years away and not yet proven income, thus little chance of that being a bargaining chip to the lender.  So, please enlighten us on this.

    While it is claimed the current owner is using extremely high usage fees to prompt abandonment, perhaps they are simply trying to recover some of the ownershiip /maintenance costs they have incurred for the past several years they have owned the rail?  If so, with increased Elevance revenues, they would begin to recover their sunk costs and possibly then begin to lower the usage fees as revenue increases?  Has anyone really sat down at a table and asked the current owners for a long range plan, using Elevance projections as a bargaining chip?  With the age of the railroad, I would think the maintenance would be best left to someone vested and experienced in the field rather than an upstart authority with good ideas but no experience.

    I hope this is not another smoking mirror opportunity being pushed without adequate disclosure such as the recreation complex that has not disclosed publicly the revenue/ operating expense projections for that facility.  We know the taxpayers will be on the hook there, I’m not sure we can avoid the same hook with the railroad venture.  I sure hope the next proposal is not to buy the MS river and charge barge fees for usage!

  • Anonymous

    One might also assume the current owners knew the future value of the line when they bought it for scrap.

  • Anonymous

    Future scrap value or operating revenue potential?  I agree the current owner probably bought it on a salvage premise at a low price which would make the salvage value higher than the purchase price and abandonment costs combined.  It would be interesting for someone in the know about the weight of the rail system for metal scrap value to determine the scrap potential less estimated abandonment costs and original purchase price plus a little interest on the invested money to see what their breakeven price is.  This is an exercise that Natchez Inc. and the Rail Authority should undertake before going further into this cauldron.  I would think the owner would be conducive to a reasonable profit to dispose of the asset rather than ride it down for abandonment and salvage.

  • Anonymous

    The owner bought it for scrap.

    Offer more than scrap value and he will sell.

    Talk is cheap. Walk the walk.

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