Historical Background information

The Oklahoma Department of Transportation is poised to sell state-owned railroad tracks linking Sapulpa and Oklahoma City. According to many, if not most observers, a sale would likely deliver a lethal blow to prospects for restoring passenger rail between Oklahoma’s two largest cities.

The state acquired the 97.5 mile Sooner Sub line back in 1998 from the newly merged BNSF Railway. The massive conglomerate found little use for the route which had previously been a mainline of the Frisco Railroad.

eastern-flyer

Over the years, the track had been neglected to the point traffic was limited to 10 mph and it was in danger of being abandoned. Fortunately, state officials wisely stepped in and saved the day by purchasing this important asset.

Immediately after the purchase, the state leased the line to the newly created Stillwater Central Railroad. They were required by contract to rehabilitate the line.

Sixteen years later, Stillwater Central has done an exemplary job rehabilitating the line, adding value to it and all of the communities along it. According to reports, the company has paid the State of Oklahoma more than $1.1 million in lease revenue in the past two years alone. Their business model also resulted in the creation of 14 thriving new small businesses which have produced jobs in communities like Luther, Chandler, Stroud, Bristow and Sapulpa.

This success story has not gone unnoticed by the Warren Buffet-owned BNSF, which now wants to buy back what they were earlier prepared to abandon. It was at their urging that ODOT decided to explore the sale of the rail line, which eventually resulted in the recent request for proposals.

The BNSF interest is probably piqued by a massive new market for transporting thousands of carloads of Bakken field oil from North Dakota to Stroud, where tank cars are emptied into a pipeline for Cushing oil storage facilities. While ODOT may make a sizable profit on the sale, the line may be abandoned by BNSF once again if market conditions change, leaving the state financially unable to repurchase it at a crucial time.

Context of the issue before us

The Oklahoma Department of Transportation is challenged to control $1.5 billion in annual transportation spending, partially by leveraging long term freight and passenger rail investments to provide maximum efficiency and benefit to our taxpayers.

In states and communities from coast to coast, the old auto-centric paradigm is giving way to a more balanced and sustainable transportation system. At no time in state history have diversified transportation offerings become so critical to our future growth and prosperity. That said, there can be no denying that Oklahoma’s funding and investment in alternative forms of transportation has been woefully lacking. We are behind most all of our competitors, way behind.

Demographics are changing. Close to 20% of driving-age Oklahomans don’t hold driving licenses (Bureau of Transportation Statistics). Between 2006 and 2011, per capita vehicle miles traveled in Oklahoma fell by 8% and total VMTs fell by 3% (BTS). Young professionals are buying fewer cars, driving less, and choosing to live in walkable, urban areas with multiple transportation options.

The percentage of households without a car is increasing nationwide, even in auto-centric Oklahoma (University of Michigan Transportation Research Institute). People without vehicles still need the same access to employment, healthcare, government services, recreation and shopping as everyone else.

A New Transportation Age

We must recognize that America is entering a new mass transportation age and the Federal Highway Trust Fund is bankrupt. At the same time, Oklahoma City and Tulsa are emerging as true modern cities of the future with all of the transportation challenges that come with it. If we are going to keep up, we have to learn to move more people in fewer trips.

Planning initiatives in Oklahoma City and Tulsa, including MAPS III, PlaniTulsa and Fast Forward, all illustrated beyond any doubt that people in our urban centers expect, demand and deserve broader and better transportation options, including traditional buses, Bus Rapid Transit, Streetcars, light rail and commuter rail, all with quality public access.

When the Legislature approved Oklahoma taxpayer money for the Heartland Flyer in 1999, service from Tulsa to Oklahoma City was promised to follow within 10 years (Tulsa World). For 15 years, citizens in Eastern Oklahoma have been helping pay for Oklahoma City’s rail service, yet we still have none of our own.

We must not lose control of this strategic asset

Tulsa to OKC passenger rail service is much sought after by virtually everyone. The rail line between OKC and Tulsa is a strategic asset and a present and future lifeline to more modern and sustainable travel in the 21st Century. There is little argument that economic development is attracted to transportation corridors, and dependable high-frequency passenger service between Oklahoma’s two largest metropolitan areas would provide enormous financial benefits to both cities and all of the communities in between.

All Oklahomans want passenger rail service to return. Oklahoma City wants it. Tulsa wants it. Their suburbs want it. The communities along the line want it. The Federal Railroad Administration and US Department of Transportation want it. ODOT needs to listen to those they serve and make a decision that is in their interest, not be bent on making some executives of a huge out-of-state conglomerate happy.

Retaining ownership is the fiscally responsible and lowest risk option. By retaining state ownership, we Oklahomans will control our own destiny and keep our options open. The existing public private partnership has been highly successful. Under the current lease, a firm in the private sector has rehabilitated and added value to the tracks by investing millions of their own dollars.

The track is a proven economic development driver

Fourteen thriving new businesses have been created along the corridor, and the State of Oklahoma earns a very handsome return on investment, including hundreds of thousands of dollars annually in lease payments. These small businesses who have located along the rail line are concerned that an interstate shipping business model would be disruptive and detrimental to their companies and the communities they serve.

If the State of Oklahoma sells the Sooner Sub, we will no longer be able to protect and foster small business development in the corridor or insure the development of passenger rail. By retaining ownership, we can leverage this public/private partnership to help foster a more balanced and sustainable transportation system for our citizens.

Consideration of a sale now is very poorly timed for multiple reasons. First, the State of Oklahoma recently negotiated a lease extension on the Sooner Sub until the beginning of 2018. Any buyer would be subject to the terms of that lease, so it would seem unlikely any substantial new discretionary investments in this asset would be made until then, especially if the current leaseholder is not the successful bidder.

Second, ODOT is conducting a federally funded study to examine the feasibility of passenger rail service between Tulsa and Oklahoma City. Although officials say the study will not be terminated if a sale of the Sooner Subdivision Rail Line is finalized, selling the tracks before the study is completed violates smart planning principles.

Third, it is highly unlikely that the value of this line will diminish over time; quite the contrary, it is positioned to become even more valuable as its condition continues to improve, even if high-speed rail were to eventually be developed along a different route. With the oil storage facility in Cushing continuing to grow and new small businesses prospering in the small communities along the Sooner Sub, the future growth prospects are filled with promise.

Fourth, while cash generated from such a sale might provide a temporary infusion of capital, it would eliminate a reliable, long-term income stream. It would also do precious little to stem the persisting tide of the state’s mounting road and bridge repair needs. We can only do that by diversifying our transportation system and providing more public transit options.

There is overwhelming opposition to a sale from all sectors

The number of concerned citizens and elected officials opposing this sale has been well documented and highly publicized. City Councils in Tulsa, Oklahoma City, Sapulpa, Bristow, Norman and others have all unanimously passed resolutions opposing the sale. Cherokee Nation Chief Bill John Baker also sent Governor Fallin a letter pleading with her to step in and stop this sale.

It can be argued that no other statewide issue in recent times has elicited a more unified voice of opposition than this one. Some Chambers of Commerce and hundreds and hundreds of citizens have also voiced their objections to the sale, and more and more are coming forward each day. Almost no one outside of ODOT and the bidders has publically called for the state to sell this strategic asset. Even those who have indicated ODOT should have the option to sell maintain that the establishment of passenger service would be a very good thing.

The National Association of Railway Passengers has also come out against the sale. The group has no financial stake in the outcome and is only interested in preserving passenger rail service. The group has found the sale of the Sooner Sub to be extremely detrimental to passenger rail (Texas Railroad Advocates; NARP)

There is no mandate to sell the Sooner Sub. In spite of how some have interpreted it, Oklahoma State statute merely allows the Department of Transportation the option to sell rail assets if it’s in the best interest of the state; it does not mandate a sale. While ODOT assures us a buyer would be required to make passenger rail an option, there is no mandatory clause at either the federal or state level to require it. With that in mind, it is difficult if not impossible to determine how an outright sale will provide betterment to anyone other than the successful out-of-state bidder.

Increased freight traffic will hamper development of passenger service

There seems to be little argument that a sale would likely result in increased bulk interstate freight traffic at the expense of developing passenger service. Most knowledgeable rail observers agree that if BNSF Railway buys the line, Amtrak will be the only railroad that will be able to meet their Class I standards and pay the access fees necessary to provide passenger service.

In order to make that economically feasible, it would likely require an annual state subsidy similar to the $2.6 million a year used to help fund the Heartland Flyer. Even if the state agreed to that additional subsidy, which is extremely doubtful, it would almost assuredly result in only one daily trip between the two cities, hardly what is needed to establish profitable ridership numbers and support.

So the question remains, given ODOT’s stated mission: “…to provide a safe, economical and effective transportation network for the people, commerce and communities of Oklahoma, ” whose interests would be served by a sale of the line, a private for-profit business, or the “citizens, commerce and communities of Oklahoma?”

ODOT has a statutory requirement to develop passenger rail service.

(O.S. 66-321 and O.S. 66-323) Our Department of Transportation has had an obligation to help develop passenger rail service between Oklahoma and Tulsa counties since 1996. Studies were performed in 1983, 1994, 1996, 2001, and 2002 for this corridor.

O.S. 66-321, The Oklahoma Tourism and Passenger Rail Act requires, by definition (O.S. 66-323) that the Department of Transportation [ODOT] (O.S. 66-323(1)) “do all things necessary to restore passenger rail.” Passenger rail is defined as (O.S. 66-323(6)) “linking stations in Oklahoma and Tulsa counties.”

In 1998 the State of Oklahoma indicated a goal of the State’s acquisition of the Sooner Sub was to allow for the establishment of regular and continuing passenger service for the public.

For 18 Years ODOT has failed to deliver even a hint of passenger service

If the Oklahoma Department of Transportation was truly committed to passenger rail service between OKC and Tulsa, they would have attempted to negotiate an agreement with Watco, the current lessee, requiring them to provide it before a recent lease extension was signed.

If they could not even make that kind of deal when we own the tracks, how in the world would anyone expect them to deliver passenger rail service if we sell the tracks to a purchaser whose business model favors freight over passengers?

It was recently revealed that ODOT may have been misrepresenting the feasibility of passenger rail service between Tulsa and Oklahoma City since it purchased the line in 1998. Since that time, ODOT has claimed rail service would have to terminate in Sapulpa because BNSF owns the portion of the line between Sapulpa and Tulsa, therefore making passenger rail service unattractive to potential customers. Only within the past month have passenger rail advocates been made aware that the state has had a license to permit passenger service on the line from Sapulpa to Tulsa since the Sooner Sub was purchased 1998. Former Tulsa City Councilor Rick Westcott, who served on the City of Tulsa’s passenger rail task force, revealed the misinformation during a TV newcast carried on KTUL.

Even now, ODOT continues to distort the facts on its website for the Tulsa-Oklahoma City Rail Corridor Investment Plan. Read the FAQs and answers: Why can’t we have service between Tulsa and Oklahoma City right now? A rail line already exists and it would make sense to use that line.

There is no evidence that a sale will help establish passenger service

If it cannot be conclusively demonstrated that a sale would positively advance the goal of establishing passenger service, a sale would shortchange the traveling public, be a betrayal of the public trust, an insult to Oklahoman taxpayers, and a violation of the rights and expectations of the small businesses (both rail carriers/rail customers) along the corridor.

Retain ownership of the Sooner Sub and we can have passenger rail service now! Wouldn’t we all like to see high-speed passenger rail between Oklahoma City and Tulsa? Of course we would, and someday it might very well happen, but not without considerable planning and very calculated decision making.

To be eligible and seriously considered for federally funded mass transit grants like high-speed rail in Oklahoma, we need to have our ducks in a row. That is why ODOT’s 2009 $2 billion High-Speed project request was not even referred for technical evaluation by the Federal Railroad Administration’s (FRA) High-Speed Intercity Passenger Rail (HSIPR) program staff. We simply were not ready and the funding went to projects in Missouri and Illinois.

When the Feds dole out millions for transit projects, they want to partner with states that have done their homework, invested in substantial planning and have some skin in the game. In the case of passenger rail, ridership studies are expected but real ridership numbers likely have much greater impact.

According to some passenger rail advocates, there are numerous examples of high speed rail projects that began in more traditional passenger rail corridors. They started modestly, utilizing existing track resources that were often times less than desirable, built trust and ridership numbers and then passengers automatically began to demand faster and faster speeds. It has happened all over the country, from Virginia to Oregon.

In fact, a successful railroad company with a strong track record in the private sector has been proposing for over two years to provide regular passenger service on the Sooner Sub at no cost to the State of Oklahoma. Curiously and somewhat disrespectfully, ODOT officials have continually ignored these proposals from Iowa Pacific Holdings, the most recent of which was dated February 18th of 2014.

The fact remains, we do not have to wait for high-speed rail in Oklahoma. Iowa Pacific Holdings is qualified, willing and capable of establishing frequent, round trip passenger rail service between Tulsa and Oklahoma City within a few months of signing an agreement. The sensible thing to do would be to take them up on it before they change their mind.

Don’t forget, the Tulsa-OKC corridor could also help provide a future link between Oklahoma and Kansas City, St. Louis, Chicago and beyond. It would advance the United States Department of Transportation’s and Federal Railroad Administration’s high speed rail plans (USDOT FRA; Amtrak). This Sooner Sub is an important link between the South Central corridor and the rest of the nation’s rail network.

A look back, a look forward

As the Governor’s Cabinet Secretaries and Transportation Commission Members consider their decision on the Sale/No Sale, it might be wise to reflect. In 1998, state officials were presented with a choice: let a key rail corridor go by the wayside forever, or invest $5 million to preserve it.

The rail line had been badly neglected, was in terrible disrepair and in danger of being completely abandoned if not dismembered and buried. There were few customers and only one courageous company with any interest in operating the line. Quite unceremoniously, those officials made a decision that has stood the test of time. Sixteen years later, we celebrate that decision and honor those who made it. They had the foresight and the vision to recognize the potential of this asset whose value has arguably increased ten- to twenty-fold or even more since then.

Our public servants have a fiduciary duty to preserve and protect the public interest. Governors will come and go, unimaginative transportation department bureaucrats will come, and go and freight rail operator’s business models will change and adapt to the times. Those who are charged with making this critical decision need to consider how their decision will stand up in 2030, sixteen years from now. Will the Sooner Sub be an energized and vital link connecting our two major cities, moving both passengers and freight? Or will it once again be threatened with abandonment by corporate interests who no longer have a need for it?

by Bill Leighty and Daniel Jeffries

 

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