Flawed Rail Contract

Flawed Rail Contract

The proposed contract with Progressive Rail, being promoted by the Regional Transportation Commission’s staff, follows the failed contract with Iowa Pacific containing similar terms. We provide an analysis of the poor financial terms for taxpayers, but other terms are also important for the public to understand, since most are not familiar with the current failed contract with Iowa Pacific. Numbers at the beginning of each contract point relate to the specific paragraph number in the proposed contract [PDF].

Rail Car Storage on the North Coast

§2.5.1 Railway has the right to store 100 rail cars on the North Coast between Davenport and Laguna Rd within the Coast Dairies State Park and Wilder Ranch State Park. Although there is a 2-month time limit for specific cars, there is no overall limit, meaning that rail cars could be present at all times, as they are now present in Harkins Slough. 

Prioritizes Freight Service over Passenger Rail and the Trail

§2.1, §2.4.1b Prioritizes freight service.  The clause “the Transportation Service will not materially conflict with, and will be subject and subordinate to Freight Service” makes clear that Transportation Service is at risk since it will have to be designed to have no impact on freight service.

§3.1 Other projects like the trail must not materially interfere with Railway’s rights and operations or freight service rights and obligations. 

§6.1.1 Implies that the RTC can adjust the railroad as needed for a project such as the Trail. But the phrase “subject to Railway’s rights under this agreement” and §6.1.2 appears to remove that flexibility.

Significant Impacts on Neighborhoods

§5.2.2 Absolves the railway of any obligation to correct graffiti. Graffiti is an almost certain problem that will blight our coastline and natural areas.

§6.3 Indicates that facilities will be built on the west side of Santa Cruz for train maintenance (just west of Swift St. by Kelly’s Bakery). It removes any ambiguity that the Railway intends to run freight through the west side of Santa Cruz, and intends to add significant industrial facilities for maintenance operations there (that would not likely be subject to city planning laws). This could have significant noise, visual, odor and other impacts.

§7.1.2 Gives the Railway the option to create “lay down” areas which they can use to temporarily store shipped materials that are being transferred to/from a train. The storage areas would be adjacent to the tracks and could be located in neighborhoods, or anywhere else convenient for the shipper and Railway.

Severely Limits Local Control of the Corridor for At Least a Decade

§2.3 This clause, which is referenced throughout the contract, significantly limits the SCCRTC's rights.

§2.4.1 Contract language for “failure to act” within 120 days means approval (problematic for slow-moving government body), and RTC Commission may make requests, but has no actual authority over transportation service.

§ Railway can make changes that must be acted on within 60 days or they’re deemed approved.

§ All other uses of rail are subordinate to Railway and can’t “materially conflict with” Railway operations.

Bypasses the Outcome of the Unified Corridor Investment Study

§5.1 How can the RTC agree to make multi-million dollar investments in track upgrades for freight service before the UCIS has determined that this is our community’s priority, which is part of legal language of Measure D? This giveaway to Progressive Rail makes no financial sense. It is like a building owner spending millions to upgrade a space which will never return the investment.

§8.2.3 Require the RTC to pay $300,000 if the result of the UCIS determines freight service should not be implemented between mile marker 0 and 7. The RTC is proposing we sign a contract for six months before the completion of the UCIS.  Essentially, we are giving away $300,000 of the public’s money if the UCIS determines that rail is not the best use of the corridor.

§1.16 Says the UCIS is complete when presented to the RTC, not when the Commissioners approve it. Aside from the fact that the study should be considered complete only after the Commissioners accept it, this starts the clock for §8.2.4, which creates unrealistic pressure on the RTC.

Restricts current access to rail corridor by community

§17 This section (and others) limit community access to the rail corridor in general. Current ad hoc trails on the west side and elsewhere would likely become off-limits until the proposed trail in each section is completed. Since the agreement restricts how the RTC can develop the corridor, this could lead to long-term loss of access, since freight operations could limit the Commission’s ability to construct a trail due to section §3.1. In particular, the heavily used recreational sections of coastal trail north of Wilder Ranch would lose access.

Insufficiently Protects the RTC (and Our Community)

§27.2 Presumes the RTC and Railway are on equal footing with regard to legal expertise in drafting a rail service operation contract—this is not the case. The previous failed contract with Iowa Pacific, upon which this proposed contract is based, should be enough learning for the RTC to know that it has little expertise in contracting with or managing a rail operator.

Our Community Will Continue to be Directed by Proposition 116

§8.5 Shows the ongoing concern the RTC has re Prop 116 funds and its determination to be bound by rail requirements, despite the California Transportation Commission’s (CTC) stated desire to provide our community with flexibility in determining the best use of the corridor. To increase our options, the RTC should petition the CTC to permit a transportation-focused trail as an alternative to a rail operation.