Title
Norfolk Southern Corridor Acquisition for CATS Red Line Commuter Rail Project
Action
Action:
A. Approve the purchase of approximately 22 miles of the O-Line railroad right-of-way, track improvements and other real property rights from Charlotte to the Mecklenburg County line, in the amount of $74,000,000,
B. Approve the purchase of approximately 1.6 acres of real property and any associated real property rights located near the Charlotte Gateway Station, in the amount of $17,000,000,
C. Authorize the City Manager, and/or his designee, to negotiate and execute all documents necessary to complete the purchases,
D. Authorize the City Manager to negotiate and execute the Comprehensive Rail Agreement,
E. Authorize the City Manager to negotiate and execute an escrow agreement for transitional self-insurance coverage in the amount of $10,000,000, and
F. Adopt a budget ordinance appropriating $101,000,000 from the Municipal Debt Service Fund to the General Capital Projects Fund.
Body
Staff Resource(s):
Brent Cagle, CATS
Kelly Goforth, CATS
Brad Thomas, City Attorney’s Office
Explanation
§ The City/Charlotte Area Transit System is proposing to acquire approximately 22 miles of Norfolk Southern right-of-way (the O-Line) from Uptown Charlotte to the Mecklenburg County line (Council districts 1, 2, 4), as well as additional Norfolk Southern property for the Red Line Gateway Station in Uptown Charlotte (Council district 2). This corridor preservation would allow for the Red Line commuter rail project to be implemented in the future.
§ The Red Line is part of the MTC’s adopted 2030 Transit System Plan and is included in CRTPO’s Comprehensive Transportation Plan. The Red Line is proposed to operate future commuter rail services along the existing Norfolk Southern O-Line, which would provide a regional connection between Uptown Charlotte and the northern towns.
§ This transaction will require four separate agreements:
- Purchase and Sale Agreement for the purchase of the O-Line corridor from Charlotte to the Mecklenburg County line
- Purchase and Sale Agreement for purchase of real property and land rights near the Charlotte Gateway Station
- Comprehensive Rail Agreement
- Escrow Agreement for transitional self-insurance coverage, while more permanent coverage is secured with a Third-Party Administrator of insurer. Funds may be disbursed from escrow account only upon joint written instructions provided by Norfolk Southern and the City.
§ Pending Council approval, the Agreements are anticipated to be executed by both parties with anticipated closing to occur on or before September 9, 2024.
Purchase and Sale Agreements:
§ The primary purchase consists of 22 miles of railroad right-of-way from Charlotte to the Mecklenburg County line, including track improvements. Norfolk Southern will retain a freight easement in the corridor. The second purchase consists of approximately 1.6 acres of real property for the Red Line Gateway Station, with real property rights in easement/right-of-way. The City and Norfolk Southern have reached agreement on terms of the respective Purchase and Sale Agreements.
§ The parties have agreed on final compensation amounts of:
- $74 million for approximately 22 miles of O-Line railroad right-of-way, track improvements and other real property rights, and
- $17 million for real property in fee simple and other land rights for the Red Line Gateway Station.
Key Terms for the Comprehensive Rail Agreement:
§ The Comprehensive Rail Agreement (CRA) defines the future rights to operate commuter rail and the terms with Norfolk Southern (NS) for shared use along the railroad corridor.
1. Term and Assignment of Agreement:
- 99-year term continuing thereafter until either party terminates, and
- City can/will assign agreement to a potential future Transit Agency.
2. Commuter Rail Service Rights:
- Up to 42 one-way trips per day,
- Additional service for events and holidays, which can be expanded or modified by the parties without unreasonably interference with freight service, and
- Transit Agency to have dispatching preference over freight operations to meet service schedule.
3. Freight Service Rights:
- NS to retain existing rights to operate freight service (including expansion, modification, or abandonment) and construct additional tracks; however, these improvements may not unreasonably interfere with commuter rail.
4. Compensation for Service Rights:
- NS to pay City/Transit Agency for right to operate freight service (freight easement fee) on O-Line corridor at $0.20 per car mile prior to commuter rail service and $0.45 per car mile after commuter rail service, with annual adjustments.
- Upon commencement of commuter rail service, the Transit Agency to pay NS for the right to operate commuter service (passenger rights fee) only on ½ mile segment owned by NS near the Gateway Station at $26.68 per train mile with annual adjustments.
5. Maintenance and Dispatching:
- Before commuter rail service, NS to maintain corridor and provide dispatching, and
- After commuter rail service, Transit Agency to maintain corridor. Transit Agency has option to provide dispatching itself or to contract with NS for dispatching.
6. Liability:
- If only freight trains are involved, NS is liable,
- If only commuter trains are involved, Transit Agency is liable,
- If both freight and commuter trains are involved:
§ Transit Agency is liable for damages to Transit Agency property, commuter rail passengers, employees, contractors, etc., and
§ NS is liable for damages to NS property, employees, contractors, etc.
- Exceptions to the above include:
§ Each party is liable for its sole negligence.
- City bears general premises liability for corridor, where movement of trains is not involved, and
- City only holds above liabilities until corridor and associated liabilities are transferred to a future Transit Agency.
7. Insurance:
- Before commuter rail service or transfer of corridor to a future Transit Agency, City to provide transitional self-coverage through an escrow account until coverage is provided by a Commercial General Liability (CGL) policy.
- After commuter rail service, Transit Agency to have liability insurance based on Federal requirements for passenger rail service.
8. Option to Extend into Iredell County:
- Includes an “option right” for future expansion into Iredell County as follows:
§ The option right can/will be assigned to Transit Agency and only exercised with approval by Iredell County and Mooresville,
§ Option includes either a purchase or an operating agreement and mutually agreed upon by NS:
− Purchase Option Price: $17.75 million, with annual adjustments, or
− Operating Agreement Option: Passenger Rights Fee at $26.68 per train mile with annual adjustments.
§ Timeframe to exercise option includes 3 years to determine purchase or operating agreement with 2 additional years to finalize purchase or operating agreement.
9. Improvements Necessary for Commuter Rail Operation:
- To commence commuter operations, the Red Line Commuter Rail Project shall:
§ Upgrade track for commuter service,
§ Build passing tracks necessary to maintain freight service with shared commuter service,
§ Restore diamond across the CSX tracks, and
§ Build an additional track for NS operations near the Red Line Gateway Station.
Fiscal Note
Funding: General Capital Investment Plan
Attachments
Attachment(s)
Map
Budget Ordinance