Railroad leased out

And another move is being considered

By DAVID HULSE

WASHINGTON, DC — The Central New York Railroad (CNYR) Corporation has signed a $1 a year, 20-year lease, ostensibly to operate a freight line on the Norfolk-Southern’s Southern Tier Line between Port Jervis and Binghamton.

But lease documents submitted to the federal Surface Transportation Board indicate that CNYR President Gerard McKenna wants to “convey the line to a government entity” to obtain a property tax abatement. The Norfolk-Southern lease document stipulates that both rail companies will entertain the conveyance, should it be deemed in the best interests of both. Norfolk-Southern would retain a lease-back agreement for track rights as the property owner, after any conveyance.

The government entity was not named and no CNYR spokesperson was available at press time. The National Park Service manages 75 miles of riverfront along the rail line, but Upper Delaware Superintendent David Forney said he had no knowledge of, or role in, the lease agreement.

Philadelphia attorney Eric M. Hocky, who handled the filing for CNYR, said he could not comment on the particulars.

Other terms of the lease indicate that CNYR is anticipating a rapid move, as the lease provides an out if CNYR fails to win a 50-percent reduction of existing property taxes, or if the sale and lease-back agreement has not been consummated by February 28, 2005.

The lease, which became effective on December 31, grants 123.1 miles of track between Port Jervis (milepost 89.9) and Binghamton (milepost 213.0).

CNYR is responsible for all maintenance. The agreement stipulates that CNYR will provide solely local freight service. With the bankruptcy of the Narrowsburg Lumber Company, Cochecton Mills is the line’s only remaining freight customer.

The lease provides an exception for “excursion, dinner and entertainment,” trains, but requires a $100 million liability insurance policy on any such use.

Norfolk-Southern will retain “overhead trackage” rights, meaning CNYR may not serve Norfolk-Southern customers. Also, the New York Susquehanna and Western Railroad will continue to retain trackage rights, which extend beyond Port Jervis south to Warwick.

Norfolk-Southern is allowing the CNYR to remove lineside signals with Federal Railroad Administration approval and Norfolk Southern is also allowing CNYR to remove the second main track, between mileposts 178 and 190.

Norfolk Southern acquired the Southern Tier Line from Conrail in 1999. The original line was built by the Erie Railroad in 1850s.

CNYR has corporate offices in Lake Nancy, NY.