Re-elect Dan Lipinski Congressman

Why the Big Rail Work on 75th Street Will Have to Wait

05/04/2016

Crain's Chicago Business

No one said finding more than $1 billion to fix a South Side rail knot would be easy. Earlier this year, transportation officials and representatives from the biggest railroads in North America tried to figure out how to pay for about half of the work. They came up short.

During negotiations that kicked off in January, representatives from the Illinois Department of Transportation, the city and six railroads failed to agree on a financing package worth as much as $500 million that would pay for work related to what's called the 75th Street Corridor Improvement Project, according to a person familiar with the talks.

The general idea, this person said, was the Illinois Department of Transportation would seek $190 million to $200 million from the federal government, with the railroads and the state picking up the rest.

The state, of course, doesn't have its own transportation funding bill right now, leaving the freight companies—Union Pacific Railroad, CSX, BNSF Railway, Norfolk Southern Railway, Canadian Pacific Railway and Canadian National Railway—potentially looking at a $300 million bill between them. It was a big ask, with little time to make decisions before the application to the federal government was due, and a final agreement wasn't in the offing.

Norfolk, CSX and Union Pacific are said to have made another offer to transportation planners to salvage a deal, but the project was dead by then. Media representatives for the companies declined to comment or did not respond to messages.

“You couldn't say the railroads weren't engaged,” the person familiar with the talks said.

After the negotiations ended, the Illinois Department of Transportation submitted a grant application seeking $110 million in federal funds for three grade-separation developments.

HOW TO PAY FOR BIG-TICKET INFRASTRUCTURE

The 75th Street corridor projects—bringing new track, flyovers and other changes to a tangle of rail lines near 75th Street between roughly Halsted Street and Western Avenue—have been on the drawing board for a long time. Officials decided to try to find a way to pay for some of the work this year because money became available under a federal grant program created when President Barack Obama signed a big transportation infrastructure bill into law in 2015.

The breakdown of the talks for the South Side rail corridor raises questions about how such a big-ticket infrastructure project will get paid for, especially when both private freight railroads and Metra, the public commuter railroad, stand to benefit.

That makes it tricky to decide how much the public sector and private companies should pony up. Meanwhile, when the talks were going on earlier this year, freight companies were seeing shipments fall amid economic softness, cutting their appetite for high-priced capital investments.

Congressman Dan Lipinski, D-Chicago, said he was optimistic a deal for 75th Street would come together, describing the negotiations earlier this year as a “test run” that should prove “helpful for the next time” all parties try to figure out a funding package.

Lipinski, who's made it a point to focus on transportation and rail issues, added that those at the negotiating table didn't have a lot of time to figure out how to pay for the expensive project; the application they needed to send federal transportation department closed on April 14.

“The 75th Street (Corridor Improvement Project) is going to get done,” he said. “The fact that IDOT did not put in the application this time doesn't mean much of anything.”

The projects on 75th Street is the largest infrastructure development left to complete under the long-running rail Chicago Region Environmental and Transportation Efficiency program, a joint public-private effort better known by its acronym, Create.

IDOT spokesman Guy Tridgell declined to comment.

Of course, it may be that the 75th Street project, given its price tag, isn't worth the benefits the freight railroads would stand to gain from it.

Yet Ed Greenberg, a spokesman for the Association of American Railroads, a trade group in Washington, said the “freight rail industry remains firmly committed to the mission and goals of Create and staunchly supportive of the public-private partnership we have in place.” And Create, of course, includes the work on 75th Street.


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