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Rail District gets support from Union Pacific for rail line plans

Friday, May 18, 2012 by Kimberly Reeves

The Lone Star Rail District produced a letter of support from Union Pacific at Thursday afternoon’s Travis County Commissioners Court meeting, a strong assurance that the long-awaited rail line might actually come to fruition if funding is secured.


One of the two big hurdles, as Chair Sid Covington has acknowledged, is the cooperation of Union Pacific. The Lone Star Rail commuter rail line route, from Georgetown south to San Antonio, is based on the use of Union Pacific’s line down the middle of MoPac Boulevard. Even those within Union Pacific have expressed skepticism that the deal was in the works.


However, the letter, signed by Jerry Wilmeth, Union Pacific’s general manager of network infrastructure and dated May 16, notes a cooperative relationship between UP and the rail district on its Austin-San Antonio corridor project “for several years” and stressed careful study for a “workable conclusion.”


“The Railroad has signed agreements with the District and the State of Texas stating a willingness to relocate freight operations onto a new corridor east of Interstate 35 if operational and commercial considerations can be satisfied,” Wilmeth wrote. “We believe that both Union Pacific and the District have made substantial progress toward addressing those issues and anticipate that an eventual agreement will result in the ability of the District to provide passenger rail service and relocation of through freight service in the Austin-San Antonio Corridor provided the District can obtain the necessary funding.”

And that, of course, is the second hurdle. The Lone Star Rail District is a plan without a taxing district. At a Thursday afternoon work session with Commissioners Court, Operations Director Joseph Black and Knudson Senior Planning Director Joe Lessard made the pitch for tax increment financing districts around the five stations in Travis County. City, county and even the community college district would be asked to participate in the plans across the various jurisdictions.


The process for putting the pieces in place for the 117-mile commuter rail line is a long one and it’s one that requires much to fall into place in the next three to five years, Lessard acknowledged. To address some of the concerns of Travis County, the rail district has suggested the county be able to “rake back” any revenue in the TIF if the district doesn’t start to use it within six years.


“That way, we’re not going to be sitting on a large accumulation of funds, not ready to implement a project yet,” Lessard said. “If we haven’t started our capital construction funding, or we haven’t come to you with a plan showing why we would need an extension to that six-year period, then you would have the ability to come to us and say, ‘Look, anything over six years, we want to rake back and use in the general fund.’”


If the Union Pacific right of way is a tough sell, then a financing plan is even tougher. The TIFs are only one part of a complex financial picture and would be devoted solely to operations. The TIFs, which would skim incremental revenue in a half-mile radius around the rail stations, would be used to fund maintenance and operations of the commuter rail line.


The operation and maintenance expenditures are divided equally among three groups of stakeholders: Austin and Travis County; San Antonio and Bexar County; and the other small cities along the line. The projected initial limited service level is expected to cost $31.2 million per year, up to $69.6 million a year when the line is fully operational. 


As both Black and Commissioner Ron Davis noted, putting a clock on the use of the TIF funds puts the rail line into gear. The rail operators either secure the funding to construct the rail line or lose local support altogether.


“In the first few years, there isn’t going to be a lot of money in the TIF. If you know TIFs, they start real small, and they build over time,” Lessard said. “We think this is an important security blanket for you to have, knowing what our long term relationship going forward.”


Construction funds would be a separate plan with a completely different mix of funds. Proceeds from an agreement with Union Pacific would be used to pay for the rail line to the east of the existing UP corridor, Black said.


Asked by County Judge Sam Biscoe who would cover any excess costs – would the TIFs cover construction if funding fell short – Black assured him the operation of the rail system would be adjusted first to live within the funding the rail district is capable of raising. Operations will be contained within funding raised.


The Lone Star Rail District has asked Travis County to begin the drafting of an interlocal agreement on May 29. County Judge Sam Biscoe noted, a bit wryly, that little business is conducted on the day of a county election. The date to discuss specifics of the agreement was pushed off to early June.

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