Endorsed by the Cincinnati Enquirer: “Voters should move full steam ahead by approving the sale.“ Read the Article

Q: Why didn’t I know about the Cincinnati Southern Railway before?

  • It’s a unique asset. In fact, Cincinnati is the only city in America that still owns an interstate railway.
  • The Cincinnati Southern Railway is a freight railroad that runs over 300 miles, all the way to Chattanooga, TN. Only 3 miles of the railway are in Cincinnati.
  • Since it was constructed in the 1800s, it has been leased and independently operated by Norfolk Southern and its entities. 
  • The City of Cincinnati is not involved in the operation of the Cincinnati Southern Railway and as a result, no city employees work for the railway. So, many citizens may not have heard about the railway until the recent attention it’s attracted.

Q: If the rail is sold, will Cincinnatians lose control of revenue it generates?

  • The changes made this summer to the Ferguson Act require that the money from the sale be put into a trust that is solely used to fund infrastructure improvements. 
  • By expert and conservative estimates, placing the $1.6 billion in sale proceeds in a professionally managed trust will provide more than double annually what is gained currently through the lease agreement, and this sum will continue to grow in perpetuity. This means more money for the City that will be spent improving roads, parks, fire services, and water treatment systems. 
  • The CSR Board of Trustees is tasked with establishing and managing this fund, but as for the day-to-day financial management of the money, they will be hiring independent financial advisors. The financial advisor will be selected if the sale is approved by voters in November, though the Board has already received proposals from potential firms.
  • The requirement that the sale proceeds be used to fund infrastructure improvements is largely similar to how CSR funds have been used by the City for decades. Since 1987, the revenue generated by leasing the CSR to Norfolk Southern has been required to be used to fund infrastructure improvement. 

Q: By selling the railway, is the City giving up its ability to improve safety and regulate the railroad company who uses it?

  • Currently, the City has no maintenance or operational oversight of the railway despite owning the asset. Only the federal government has the ability to regulate railway operators
    • The Federal Railroad Administration (FRA) is the primary agency responsible for regulating and overseeing railroad safety, with the authority to hold railroad companies liable for accidents, crashes, and spills involving trains. 
    • The agency sets safety standards, conducts inspections, and enforces regulations to ensure the safe operation of railroads.
  • By selling the railway to the company that has owned and operated it since it was built, the city will no longer carry the risks associated with owning a railway following the sale.
    • If an accident were to occur on the railroad while Cincinnati still owns it, the city could face class action lawsuits for negligence or damages, potentially bankrupting a City that is already facing dire budgetary conditions.  
    • The City has to manage the long-term risks of owning a railway, particularly in the age of rapidly advancing technology. This is not a liability we can continue to hold on to. 
    • Owning a 300-mile railroad is not the same as owning a parking lot or office building. There are financial and legal risks to the city. The reality is that the City is not ideally equipped to have a stake in an asset that is as complex to manage as a railroad, especially given its lack of ability to regulate itor affect change in its operations. 
  • There is a reason this is the last municipality-owned interstate railway in the country. It’s just not smart business. 
  • Not selling the railroad is a liability to the City of Cincinnati and its citizens.

Q: Why didn’t the CSR Board negotiate a higher lease? Couldn’t the CSR Board consider other lessees or buyers for the railroad who might pay more?

  • The CSR Board explored all options for the lease, sale, and management of the Cincinnati Southern Railway, in keeping with its duty to deliver the greatest possible value for the railway to benefit the citizens of Cincinnati.
  • The CSR Board consulted multiple independent experts to compare the values of a sale of the railway against continued leasing.There were several important factors to take into account: 
    • Norfolk Southern and its employees have been operating the Cincinnati Southern Railway for virtually the entire lifespan of the railroad through lease agreements with the City of Cincinnati. Norfolk Southern’s current lease expires in 2026, and in 2021 Norfolk Southern executed the option in their contract to extend their lease for 25 years. In other words, the railway has always been operated by Norfolk Southern, and they have the right to continue operating the CSR for the foreseeable future. The CSR Board was not able to see if other railway companies might be interested in leasing or buying the CSR. 
    • Valuation processes are complicated and reflect a range of important considerations: Technology, including transportation technology, is changing rapidly. Railways require significant capital to maintain and update. There are few possible alternative buyers, in part due to the exclusivity aspect of NS’s long-standing lease agreement.
  • In the attend, the numbers and expert evaluations were clear. Selling the CSR provides greater value to Cincinnati now and in the future versus continuing to lease it.
    • Renegotiating the lease will not be nearly as profitable as selling the railroad. In 2024, a continued lease is expected to bring in $25.5 million, while the sale will bring in $57.1 million.
    • In 2066, projected earnings from a trust fund started in 2024 with $1.6 billion would be $131.2 million. That’s 123.8% more than that year’s hypothetical lease payment. 

Q: Why were discussions by the CSR Board to sell the railroad secretive, and held behind closed doors? Why isn’t the Board more transparent with information?

Q: How can we trust that city government officials, with their history of backroom deals and pet projects, will manage this amount of money in a responsible way?  

  • The changes made this summer to the Ferguson Act require that the money from the sale be put into a trust that is solely used to fund infrastructure improvements. 
  • The railway trust fund will be used to address a backlog of infrastructure improvements needed, which includes bringing recreation centers up to safety codes, repairing crumbling streets, updating fire stations, and fixing failing ventilation systems at community health centers—projects that impact our lives every day. 
  • This applies not only to the $1.6 billion principal but also to the earnings accrued through investing in the trust fund. 
  • In other words, a voter who does not trust the government to make appropriate budget allocations should support this strictly defined and managed infrastructure improvement fund—regulated by Ohio law.
  • The proceeds must also be spent in accordance with the Ferguson Act, which protects the assets from pet projects and political whims.