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Port authority hopes to be charmed by new buyer for railroad

April 17, 2012
By TOM GIAMBRONI - Staff Writer ( , Morning Journal News

EAST LIVERPOOL - The Columbiana County Port Authority has found another potential buyer for its railroad for what they hope is the last time.

The port authority board approved a letter of intent at Monday's meeting to sell the former Youngstown & Southern Railroad to an environmental and energy services company by the name of Tervita for $2.9 million, with $1.7 million going to pay off loans related to the purchase and upgrade of the rail line.

"This represents, hopefully, the culmination of our efforts to get this railroad back into private hands," said port authority CEO Tracy Drake.

Tervita is the fourth company to agree to purchase and operate the rail line since it was acquired by the port authority in 2000. The first operator filed for bankruptcy in 2004, while the second company pulled out in 2006 before a deal was completed.

A lease/purchase agreement was then reached with Eastern States Railroad, a spinoff company created by Total Waste Logistics to transport demolition debris to its landfill in Negley. Eastern States failed to close on the deal by the 2009 deadline as the landfill business plummeted due to the recession, leaving the port authority to make the various loan payments.

As recently as November, the port authority had been working on a new deal that would have resulted in Total Waste Logistics purchasing the railroad, but the deal instead morphed into one with Tervita, a Canadian-based company that provides environmental and energy services to various industries, including the shale gas industry. The shale gas boom underway in the region is the reason for the company's interest in acquiring the railroad.

"This is a significant agreement for Tervita, as it's the first rail transportation in our U.S. operations and will give our customers the opportunity to get their jobs done more efficiently, safer and with less impact to the environment," said Phil Vogel, president of Tervita's U.S. operations, according to a company news release.

Under the terms of the letter of intent, the port authority is to be paid by July 16, with $150,000 to be received immediately upon execution of the letter of intent. Of the $2.9 million, Drake said $1.2 million will go to the Ohio Rail Development Commission to pay off a loan obtained from the agency and $500,000 to pay off a bank loan.

As part of the deal the Ohio Rail Development Commission will forgive $1 million in penalties owed by the port authority for falling behind on payments to the agency after Eastern States failed to follow through with its planned purchase.

Drake indicated the port authority will have lost $1 million-plus from the deal when you include legal fees. "Overall, we're taking a bit of haircut on the deal, but we were able to preserve a railroad," he said.

Drake expects Tervita will also acquire the Negley landfill or a major interest in the facility.

The 36-mile rail line extends from Boardman to Darlington, Pa., with the majority of it in Columbiana County. Drake believes within two years the railroad will be experiencing 1970s level of 7,000-plus rail cars of traffic annually.



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