$1.5 Billion In Funding Approved for New Build Freight Railroad, Based On Study Performed By RLBA

What backers call the first greenfield freight railroad to be built in the United States since the late 1970’s has found $1.5 billion in funding, based on work that RLBA conducted.

The Unita Basin Railway project, as it is known, has been debated since the early 1980’s. “A few things are different this time in than in the past” said Michael McKee, Executive Director of Utah’s Seven County Infrastructure Coalition.

“The studies and work done in the past have all been helpful and informative and helped us get to this point. We’re further along in the process than we’ve been before.”

RLBA was engaged by the Seven County Infrastructure Coalition, an independent Utah political subdivision, to prepare a pre-feasibility level study or draft plan regarding the economics, commercial prospects, operations, operating and maintenance costs and engineering capital costs of a potential, new rail line connecting the Uintah Basin in northeast Utah with the national rail network at two, alternative, junctions in Colorado connecting with Union Pacific and BNSF. As part of its pre-feasibility study, RLBA:

1) Estimated demand over each of 20 years as manifest in carloads of commodities and products outbound from and inbound to the Uintah Basin by interviewing representatives of all potential customers of the prospective railroad;

2) Estimated all capital costs and continuing operating and maintenance costs incurred by the prospective, short line railroad to transport various commodities to/from the national rail system at two, Class I railroad junctions, as well as the cost to continue transporting said commodities to/from various, ultimate, rail origins and destinations across the country;

3) Identified the approximate location, need and cost of rail-related facilities, such as transload facilities, required or helpful to support the project;

4) Recommended an institutional business model for the project, including the construction of a revenue/cost model that included a 20-year forecast and

5) Conducted an alternatives analysis comparing the cost/benefit of transporting bulk commodities in and out of the Uintah Basin via the prospective railroad as compared with trucking said commodities to/from existing railheads. 

RLBA delivered an investment quality report to the client upon completion of the above tasks. Shortly after delivery, New York-based, Drexel Hamilton Infrastructure LP offered a reported $1.5 billion in design and construction costs through private financing. Drexel Hamilton, along with Rio Grande Pacific Corporation will build and operate the line through a joint venture pending approval by the Surface Transportation Board expected in 2020.

RLBA Assists In Acquisition of New Short Line Railroad

RailUSA LLC acquired the newly-christened, Florida Gulf & Atlantic Railroad (FG&A), from CSX Transportation in early June of 2019, after developing a business plan and bid in concert with RLBA.

Running roughly 430 miles along the panhandle of Florida linking Pensacola and Baldwin (23 miles west of Tallahassee) via Tallahassee, the FG&A has made news about its plans to actively grow its inherited customer base in that corridor, presenting a notably ‘can-do’ attitude.

In the words of its President, Charles “Hank” Hankerson, the FG&A believes that “there are industries, customers and prospects that want to get into the rail industry and if it requires us to put in a siding track, use existing infrastructure, do something differently, we’re extremely flexible to do that.”

That’s great news for local business in the Florida Panhandle. However, before new management could declare that they were open for business with notable enthusiasm, before the line was even theirs to manage, the team’s first move was reaching out to RLBA.

Deciding to buy a segment of a Class 1 Railway requires serious planning and due-diligence and those efforts must take place before the considerable process of completing the purchase transaction itself. RLBA helped with every one of these major, intermediate steps. On behalf of and in concert with the FG&A, RLBA managed the bid process in its entirety, including:

1) Developing a business plan to operate the Class I railroad as a standalone regional railroad, which stemmed from a detailed analysis of shippers, origin/destination pairs, crew bases, tonnage rating, and customer needs;

2) Determining the staffing required to operate, maintain, and manage the railroad;

3) Performing rail asset and rail corridor real estate valuation tasks to support both the formulation of the bid and to facilitate its financing;

4) Undertaking a waybill sample data exercise using a proprietary software to determine the average cost of the incumbent Class I railroad incurred in moving the existing freight, as well as determining the estimated rates that railroad charged the customers on the line;

5) Determining what rates the new short line railroad might be able to realistically charge the existing Class I railroad to take over service, including the anticipated revenue split of existing traffic, based upon the aforementioned waybill sample data analysis and

6) Synthesizing all of the findings into a bid package that ultimately was attractive enough to become the favored bidder for line while promising high enough returns to secure financing.

On the newly purchased line, the FG&A “will partner with new customers, and if it takes us to finance the infrastructure that needs to be put in, we have options. That’s what we look at first. We want to grow the business and maintain what we already have in place.”

That’s a commendable, growth-driven strategy, from a great team – a team that chose RLBA to help them make it all happen.

RLBA Provides Buy-Side Due Diligence in Short Line Holding Company Transaction

In April of this year, 3i Infrastructure PLC (3i) consummated a purchase of Regional Rail Holdings LLC (Regional Rail), a decision supported with buy-side work conducted by R.L. Banks & Associates, Inc. (RLBA).

Rob Collins, managing partner, 3i North American Infrastructure, said: “This is an exciting opportunity to partner with an established management team as we seek to put additional capital to work in North American rail infrastructure.”

RLBA was engaged by 3i Infrastructure to perform the necessary due diligence work associated with the then potential acquisition of Regional Rail. Comprising five, core, operating entities, Regional Rail represented a diverse and complicated set of assets, including 155 miles of track across three, separate railroads and multiple, disconnected track segments serving 70 customers. Further assets included a truck-to-train transload facility and, unusually, a national grade-crossing signal company, Diamondback Signal LLC.

To conduct the evaluation, RLBA: 1) reviewed historical revenue and expense performance against RLBA’s proprietary database of industry trends; 2) produced pro forma revenue and expense projections; 3) partook in interviews of the railroad’s management team and 4) conducted several on-site inspections to assess both commercial opportunities and the physical condition of the property.

As evidence of the typical care and expertise employed by RLBA in such potentially sensitive evaluations, all parties were very satisfied with the end result. Al Sauer, CEO of Regional Rail said at the time of sale that “[Regional Rail looks] forward to working with 3i as we continue to focus on servicing our existing customers, growing economic development in our local communities, and expanding into new regions through strategic partnerships and acquisitions. We see tremendous opportunity in the sector and are proud to have the support and asset management expertise of 3i behind us.“

RLBA is an industry leader in rail industry transaction evaluations and valuations, one of the most trusted and experienced names in rail consulting, having appraised more than $3 billion worth of rolling stock and tens of thousands of miles of railroad right-of-way and track assets as part of providing both buy-side and sell-side assistance.

RLBA Completes Multi-Year, Mutli-Disciplinary Project on behalf of GE Power in Schenectady, New York

R.L. Banks & Associates, Inc. (RLBA) recently completed a multi-year, multi-disciplinary study of the internal plant railroad used to service the GE Power facility at Schenectady, New York. RLBA was engaged by GE following interest its management had in increasing the maximum net rail load of its multi-axle flatcars from 800,000 lbs to 1,000,000 lbs and gauging how that weight increase might impact its track infrastructure. In response, RLBA: 1) undertook a detailed inspection and inventory of the entire GE Power rail assets; 2) provided a written report outlining infrastructure improvements, and estimated costs, to bring track into a state of good repair; 3) generated a written maintenance plan to keep the track in a state of good repair; 4) undertook surveying on-site to lay out a new turnaround facility; 5) provided conceptual engineering drawings of a new turnaround facility and 6) offered expert guidance on re-setting a continuously-welded rail curve at a proper rail neutral temperature. Shortly thereafter, GE engaged RLBA to manage a series of management tasks concerning returning its rail infrastructure and equipment to a state of good repair.

 

Regarding equipment, RLBA oversaw a detailed inspection of two 16 axle depressed center flatcars, each of 800,000 pound capacity. This included disassembling the flatcars down to the individual trucks to inspect key components and managing the procurement of new, custom-fabricated center bowls for replacement of those on the car. RLBA also worked with GE to petition the Federal Railroad Administration to enable one of the two railcars to operate beyond 50 years in age. That waiver was successfully granted in mid-2017, just as the railcar reached 50 years in age.

 

Furthermore, RLBA was engaged by GE Power to manage the rebuilding of two trucks of a General Electric 85 ton center cab diesel-electric locomotive No. 21, which is employed by GE Power to move loads around its Schenectady, New York, manufacturing facility. Working in connection with a local machine shop and a mechanical subconsultant, RLBA oversaw: 1) the transport of two spare, un-rebuilt trucks from GE Power to the machine shop; 2) complete disassembly and inspection of the spare trucks; 3) straightening of the truck frames, sandblasting of the truck frames and brake rigging, and painting of the equipment; 4) procurement of four rebuilt GE traction motors; 5) contract milling of the four wheelsets to return them to proper wheel profile; 6) complete rebuilding of the gearboxes; 7) swapping the spare trucks with the worn out trucks under No. 21; and 8) commissioning and testing of the trucks, tweaking as necessary to ensure reliable operation.

 

Regarding infrastructure, RLBA’s recommendations regarding repair of a welded rail curve as well as removal of vestigial rail structures were followed by the GE rail contractor. These corrections minimized risk and ongoing maintenance to the operation of the railroad. In addition, GE followed RLBA’s recommendation to re-install a “Wye” track, something that would increase the operational flexibility of the railroad and decrease premature wear of GE’s equipment.

RLBA Successfully Manages Over-the-Road Transport and Logistics of Two Subway Cars

R.L. Banks & Associates, Inc. (RLBA) was retained by the Loudoun County Department of Transportation and Capital Infrastructure (Loudoun County) to assist in the planning, procurement and execution of an over-the-road movement of two donated WMATA railcars from the Washington, D.C. Metrorail system to the Loudoun County Fire and Rescue Training Facility in Leesburg, Virginia. The railcars were successfully installed at that training facility earlier this Spring.

“We were honored to have the opportunity to assist Loudoun County with the development of this unique, and important, training facility,” said RLBA Principal Consultant Davidson Ward. “I am proud that our work with the County, as well as with WMATA, helped facilitate the safe installation of these 70,000 pound railcars.”

RLBA completed the work in multiple tasks: 1) move planning, in which RLBA negotiated with seven different government entities and completed mapping and route planning to gauge the best route to move the railcars over-the-road; 2) preparing the technical aspects of a Request for Proposals (RFP) for Loudoun County to move the railcar and assisting in the selection process and 3) project management, wherein it provided the selected contractor with all applicable contracts and reports generated in Task 1, as well as stationing staff members on-site at all times to ensure the move was completed safely and efficiently.

“The logistics and planning associated with over-the-road railcar movement is a unique skillset that our Firm is excited to be able to provide,” explained RLBA President, Charlie Banks. “Not only did this work include logistics and move planning, but it also required public sector solicitation, procurement review, and multi-year project management. In the end, it showcases the breadth of experience our Firm has to offer.”

RLBA Completes Regulatory Review of Shortline Railroad

On May 19, RLBA completed a federal regulatory review of Howard Energy Partners’ (HEP) G.T. Logistics (GTL) rail facility in Port Arthur, TX. HEP purchased GTL two years ago and was unfamiliar with regulations in the rail space but was familiar with federal oversight from their experience in the oil and gas industry. After visits from the Federal Railroad Administration and internal concerns regarding the loading, unloading, and handling of hazardous materials in unit tank car trains, HEP determined a full regulatory compliance review was needed. RLBA conducted an on-site review of all documentation to ensure compliance with FRA, PHMSA, TSA and OSHA regulations where applicable as well as determining if filing with the STB as a railroad would be beneficial. During the on-site review, RLBA interviewed key members of HEP and GTL’s management to gauge an understanding of the operations occurring at the facility and the team’s knowledge of rail operations. RLBA also audited for compliance with plans submitted to the FRA and advised on deficiency’s in those plans.

Virginia Railway Express Turns to RLBA’s Railroad Operations Simulation Team to Provide Capacity Analysis

RLBA was engaged by Northern Virginia’s commuter rail service, Virginia Railway Express (VRE), to develop a rail network simulation model depicting VRE’s existing operation. RLBA railroad operations experts employed Rail Traffic Controller (RTC©), the gold standard of rail network simulation applications, to evaluate VRE, Amtrak, CSX and Norfolk Southern (NS) train performance under eight VRE service plan alternatives which considered increased VRE train frequency, extension of service to Gainesville and Haymarket, VA and alternative locations of maintenance and storage facilities. Constraints upon the existing network’s capacity, such as single-track territory and single-platform passenger stations, were identified and infrastructure remedies were recommended. RLBA’s work served as the basis of regular dialogue among VRE staff and the consulting team to shape early prioritization of service plan alternatives presented to and discussed with the general public as well as advancement to a formal alternatives analysis.

Construction of the VRE RTC network model involved detailed reproduction of the actual infrastructure and operating conditions on four separate railroads: VRE, Amtrak, Norfolk Southern and CSX Transportation. That level of detail was necessary to ensure that the model reflected the real-world railroad and, therefore, was credible in the eyes of VRE’s host railroads. The completed network simulations model features the complex interlockings located at the south end of Washington Union Station and south of Alexandria, VA at the junctions of the CSX and NS freight mainlines. Real-world VRE, Amtrak, CSX and NS train consists and passing times were collected by RLBA staff viewing hundreds of hours of video supplied by VRE from station security cameras. Such real-world data enabled RLBA to “construct” those trains in the RTC train file and create simulations which accurately reflected train operations.

RLBA’s experience with RTC simulations is extensive, modeling both freight and passenger railroad simulations since 1994, with RTC simulations performed on networks of up to 2,200 miles of railroad over which more than 3,100 train were dispatched. RLBA’s experience in RTC simulations incudes successfully simulating coal and bulk movement on five of the largest railroads operating in North America. Several final reports delivered to the client.

RLBA Completes Three Quiet Zone Studies in 2016 for Public and Private Sector Clients

As freight train volumes continue to grow on railroads across the country, applications submitted to the Federal Railroad Administration (FRA) for the establishment of Quiet Zones – stretches of railroads over which trains receive special permission not to blow horns at highway/railroad grade crossings –continue to increase as well. RLBA remains a leading national provider of Quiet Zone feasibility studies for both public and private entities across the United States. In 2016, RLBA completing three such assignments for the Town of Atherton, CA, the City of Garden City, GA and Oak Tree Development Group.

All three assignments began with an on-site inspection of applicable grade crossings to enabled RLBA to determine the condition of the existing infrastructure and to evaluate the potential improvements required to meet Federal Quiet Zone regulations. Additionally, in each assignment, RLBA utilized the FRA Quiet Zone Calculator to determine the least cost necessary to establish each Quiet Zone, in accordance with the minimum infrastructure requirements needed at each of the observed grade crossings. Finally, RLBA presented each client with an explanation of the steps involved in the qualification process, along with a preliminary estimation of costs to meet minimum initial requirements and a final report on RLBA’s findings and conclusions.

California Short Lines Take RLBA’s Advice, Agree to New Plan to Restore Service to the Desert Line

In early June of 2016 the Pacific Imperial Railroad (PIR) and Baja California Railroad (BJRR) formally agreed to a subleasing agreement in which BJRR would restore and operate PIR’s section of the long-dormant Desert Line. The Desert Line, which is owned by the San Diego Metropolitan Transit System (MTS), is leased to the Pacific Imperial Railroad between Plaster City, CA and the international boarder at Division, CA. Once in Mexico, the remainder of the railroad to Tijuana is operated by BJRR. The sublease agreement is the culmination of over a year’s worth of negotiation between the two railroads and MTS.

As part of these on-going negotiations, RLBA was engaged by MTS to facilitate the exchange of ideas and to recommend interchange and operating agreements between the two railroads. Due the extreme environment in which the rail line is located, RLBA quickly determined that the successful reactivation of the railroad required close cooperation between the two railroads beyond typical short line partnerships. To that end, several RLBA staff members spent a week on site in San Diego to meet with PIR, BJRR and MTS managements, as well as to conduct a physical inspection of the railroad. After evaluating the information gathered during the week in San Diego, the RLBA staff combined its extensive knowledge of the railroad industry and the circumstances on the ground in the subject territory to produce recommendations jointly to PIR, BJRR and MTS as to how the Desert Line could be operated most successfully.

In a detailed final report, RLBA made the strong recommendation that a PIR sublease of the line to BJRR would create the most efficient operation possible. RLBA also suggested that as part of the sublease, BJRR take on most, if not all, of the rehabilitation work on the line. Prior to RLBA’s recommendation, neither railroad nor MTS had considered such an arrangement, instead favoring a more traditional interchange arrangement. After reviewing the RLBA report and engaging in several follow-on discussions, all parties came to understand both the serious issues of implementing a traditional interchange agreement between the two railroads, as well as the numerous advantages of RLBA’s sublease recommendation. All three parties have since come to a formal agreement closely based on RLBA’s recommendation, resolving several years of contract disputes and achieving a significant milestone for the Desert Line.

R.J. Corman Railroad Group Commences Operations on Carolina Rail Line Valued by RLBA

On April 1 of 2016 RJ Corman Railroad Group, a leading short line railroad operator in the U.S., formally began operations of the former Carolina Southern rail line in North and South Carolina. The restoration of operations is the culmination of nearly two years’ worth of effort by local community leaders to save the rail line. As part of the these efforts, RLBA was engaged by a consortium of local North and South Carolina economic development interests to value the  out of service rail line. RLBA inspected the line and produced a net liquidation valuation of the railroad. The RLBA valuation was then used as a starting point for negotiations with the then-owner of the railroad, who lacked the resources to bring the line back to service. These negotiations resulted in RJ Corman Railroad Group successfully acquiring the line and restoring rail service to the area.