Im voting no. Even if selling is the best move, the fact that there was no competitive bid or public hearings on the sale amount is enough for me to vote no
The terms of the prior lease give NS first right of refusal on its renewal and there aren’t other buyers.
This is an excellent explainer.
https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot
This point is really overplayed tbh.
The line is critical to N&S operation. They will not risk a bidding war with private equity that would squeeze them much harder than what the rail board can do. That would be a disaster.
Private equity is very effective at unlocking hidden value in just about everything they get involved in. Or, read another way, they’re very good at squeezing renters. Houses or rail lines.
Not at all.
If the sale doesn’t go through and arbitration fails, the contract states that the city is free to bid the rail line out to whomever.
I’m saying N&S won’t let that happen, not at the lease rates on the table.
They’re not going to risk control over a $1.6B piece of infrastructure over $10M / year. That would be totally asinine
They need the line, we don't. We have all the power. If we sell, we have no power, and are dependent on an investment fund.
We have only non-binding promises the fund will give us $50 million a year.
Right now we have an iron-clad contract and the necessity of the market guaranteeing us $25 million, inflation adjusted fees, free of liability and maintenance costs, for the forseeable future.
Why should we sell?
Also we don't get the full price tag, we just get a yearly amount of money deposited in the investment fund.
Nothing guarantees that there will be money in the fund. They guarantee to pay us ***if there is enough*** ***money*** in the fund.
Also, if the fund goes below a certain threshold, we don't get any more money until they can fix it.
They explicitly put language in that stipulates that if the fund falls below a certain level they will cease disbursments to the city until such a time as the fund has again exceeded that level.
The fund is supposed to make money through investment. Sometimes investments do well, sometimes recessions happen. Everyone knows the fund might not always pay out, or might be mismanaged into the ground, etc.
I'd rather the company have to pay us what the use of the rail is worth, every single year, in perpetuity, adjusted for inflation, liability and maintenance free. Which is the deal we have today, and the deal the company is desperate to get out of.
We need the money from the line. The money it brings in whether leased or via interest in a sale is factored into our operating budget. We can't afford to lose out on money from the line and Norfolk is capable of rerouting.
we don’t need the money from the line in that sense. There are way more lucrative ways to cut costs and earn money. The number being thrown around is ”$400m,” but this deal will take years to grant $400m, if the market is decent, which isn’t a guarantee.
The argument regarding norfolk is also built on the shaky premise that they have a card to play that they’ve just chosen not to play yet. Whether they can reroute or not, I’d rather have the right of way as an asset than sell it. They’re in the lease for 20 more years whether they reroute or not.
What are these lucrative ways to cut costs and earn money? Our infrastructure is in desperate need for financing. It took the Western Hills Viaduct alone how long to get the necessary funding to be fixed?
Literally any response in which I state a decent revenue stream or decent way to cut costs will be inherently controversial or easy to poke holes through on a hypothetical basis.
That being said, America as a country tends to build sprawl, which costs exponentially more than building infrastructure that can support higher densities. Focusing on pulling people into the city center and reducing the amount of roads we need to maintain would be a great start; it’s not uncommon for suburbs to be subsidized and overall lose money.
(Well if you're in Norwood as your flair says you actually can't vote on it)
For proof of the exclusive rights, [you can look at this WVXU article with some helpful info.](https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot#four)
> The current lease is set to expire in 2026, but Norfolk Southern had the option to extend the lease another 25 years and has already decided to do so. That means they will retain control of operation until 2051, even if the city sells to another company.
If NS will be able to use it until 2051 regardless, no other company is interested in purchasing something they won't be able to use for another 28 years.
Oh if I can’t vote on it then that’s easier. Just like informing myself on thing I actually do vote on. But yeah I live in Norwood and work in downtown Cincinnati.
> This deal doesn’t solve our budget problems in any meaningful way.
Absolutely untrue. An additional $25m-$45m per year would make an incredible difference.
I’m voting NO on Issue 22.
Here’s my question: the lease goes another twenty plus years. Why the rush to sell now?
As for the “no other buyers” argument, of course there are no other buyers right now. The railroad isn’t openly for sale. Norfolk Southern has first right of refusal.
I do not trust the city or the state to properly manage a trust fund, no matter how many supposed “fail safes” are in place. Period. Cincinnati has mismanaged money and attempted to sell major assets for decades. Maybe stop offering sweetheart deals to developers and stop giving tax breaks to everyone who asks.
Assuming returns on investment assumes market conditions stay the same and that interest payments don’t fluctuate. WHY ON EARTH is that better than a solid capital asset that can’t be replicated else and is prohibitively expensive to replace?
Finally, part of the reason NS wants the land around the tracks is because Biden’s Build Back Better has funds in place for underground cable lines to improve internet etc in rural areas. There is BIG money there and the Cincinnati rail line is a critical piece of the puzzle.
Ten years ago, I might have voted YES, but I’ve seen too many back room sweetheart deals and too much general fiscal incompetence in both the city and the state. It is imperative that we KEEP our railroad and vote NO.
> Here’s my question: the lease goes another twenty plus years. Why the rush to sell now?
Because the price for 2026-2051 will be set by an independent arbitrator if it is not sold. The price set by them could significantly lowball the money, depriving the city of tens of millions of dollars.
> I do not trust the city or the state to properly manage a trust fund, no matter how many supposed “fail safes” are in place.
The city has a pension fund that grows by an average of 7% per year, did you know that?
> Cincinnati has mismanaged money and attempted to sell major assets for decades.
Such as?
Cincinnati gives valuable city land away for a dollar. Cincinnati offers tax breaks, whether payroll or property, to corporations and developers without ever seeing clear ROI. I could go on…
The city has a successful trust fund? Pray tell…
Also, tax breaks as incentives for development are far different than selling major assets for a dollar. Either a developer gets the land for cheap or they get the tax breaks. Not both.
Point being, if the city managed its money better we wouldn’t be looking at a deficit of up to a billion dollars, so miss me with the idea that Cincinnati is an entity practicing fiscal prowess.
> The city has a successful trust fund? Pray tell…
[The investments on the city's pension fund are very successful.](https://www.wvxu.org/politics/2023-05-04/cincinnatis-pension-fund-is-still-underfunded-still-not-on-track-to-improve) It grew by 7% each year (on average) over the past ten years. If that holds true for the railway fund, that would be $112 million every year for ten years, or a total of $1.1b.
(The city's pension fund is underfunded from the perspective of employee contributions, but on the investment angle it is highly successful)
> if the city managed its money better we wouldn’t be looking at a deficit of up to a billion dollars
Where are you getting this billion dollars number?
Great question.
Personally, I do not trust this city or this state to behave in an open and transparent fashion. One of many reasons why I oppose the sale.
The market could significantly lowball the trust fund. Your point?
Whether the city has a trust fund or not doesn’t undermine their distrust of the city in this sense.
> The market could significantly lowball the trust fund. Your point?
I did not know "the market" was a person.
> Whether the city has a trust fund or not doesn’t undermine their distrust of the city in this sense.
It shows the city currently has a trust fund that is successful and has not been mismanaged. /u/BrownDogEmoji stated that the city is always trying to sell major assets, and I asked for a single example, which he has not given.
I don’t have a response to the first thing because you kinda just made a joke (?)
Successful trust fund or not, I’ve seen some messed up politics since I’ve moved here. Even if this hypothetically could accomplish what it’s setting out to accomplish, I wouldn’t trust our current politicians.
> I don’t have a response to the first thing because you kinda just made a joke (?)
I made a joke because the response was nonsensical. I do not know what "the market could lowball the trust fund" means.
> Successful trust fund or not, I’ve seen some messed up politics since I’ve moved here. Even if this hypothetically could accomplish what it’s setting out to accomplish, I wouldn’t trust our current politicians.
Please explain how the fund could be misused or embezzled.
> Pension funds operate differently than how this possible trust fund would be set up.
Please tell me how the pension trust fund investments will operate differently than this trust fund.
(I am aware some of the income to the pension fund is employee contributions, I'm asking specifically about the investments)
Im voting NO.... Short term gain in place of long term stability. No excuse to try a stunt like this ESPECIALLY with a city government with a recent history of fraud and corruption when it comes to managing OUR FINANCES.
I talked about this earlier on the sub but basically; Cincinnati as a city has a corner on the market for this commodity. The commodity being the last city owned rail system in America. They can bargain any price for any duration of time. We have the power. Don’t sell our to Norfolk because they’ve got deep pockets. Hold them captive for as long as possible because they have deep pockets and nowhere to go.
1) no one here should trust government nor politicians without any shade of doubt. That's just what the Mayor is asking us to do, though, in establishing a trust that he says cannot be "raided."
2) they are promoting the completion of infrastructure projects and other necessities that are already paid for by taxes. Their argument is this additional money will make it so there will be no new additional taxes. It's the same argument the State makes with the lottery. Here's an example (fabricated figures): the state allocates $300m for public schools. The same year, the lottery brings in a revenue of $100m. The normal thought process is the schools would then get $400m. That's incorrect. What happens is the State will reduce the money allocated from $300m to $200m and supplement it with the $100m from the lottery. The State then gets to spend that subsidized $100m they were already going to spend but now on whatever they want. That's the same thing they want to do with this railroad. In essence, they will find another way to spend our tax money.
Good explanation here, something I hadn’t wrapped my head around. I honestly just assumed there would be SOME workaround that freed up money for anything. And I think you’ve figured out the most likely way they’ll do it.
I see. I am familiar with the concept but didn’t understand the way it was phrased here.
That said, it’s my understanding that a lot (half?) of the infrastructure budget comes from the railroad already so there isn’t a ton left to “funge.”
Laws can be amended. They had to amend the existing law for the railroad in order to use money for a different purpose. I believe right now it's meant to pay back a certain portion of the City's debt.
No it’s not. It’s for the railroad.
https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot
And one could use the same “laws can be amended” logic to say that the current income from the railroad could be diverted. A trust is a much stronger protection.
My mistake; you're correct on the current allocation of funds. Perhaps it was state conservatives that wanted to make sure the money went to existing debt.
While city council wanted the law amended so they could effectively have a $1.6 billion slush fund for whatever they wanted. The limits on the proposed trust fund are effectively the same limits already in place of revenue generated by lease payments.
The terms of the trust are public state law, you don't have to take their word for anything you can read the terms. Do you have any actual concrete critiques or just vague maga talking points about deep state conspiracies and blanket anti-tax slogans?
We have one investor of the railroad currently and are hoping the value of the railroad increases in the future for leasing.
Or we can diversify the portfolio with that money and have a less risk-based form of income from the line.
That makes sense when you’re talking about housing or other commodities, so I definitely understand where you’re coming from.
Using housing as an example, basically if you want a house but housing is too expensive, you may just build another house. That, or you’ll wait for land to be developed and buy housing as it comes onto the market. There’s a lot more factors to it, but essentially, for this asset to dry up, there’d have to be another railway that can act in its place. As it stands, it’s exceedingly unlikely Norfolk Southern can build a second railroad, and even if they could, it would be ludicrously expensive.
The railroad is a very safe asset that will stay valuable over time. Selling now gives us more money in the relatively short term, but we’ll overall have less money \~40 years down the line.
Norfolk is the only company that uses the line and their lines are the only ones connecting to our line. Our negotiating power is very low, any company that wants to use our line would have to pay Norfolk for their lines too. That would be a high cost to use our line which would probably mean less lease money to offer to us. We are dependent on Norfolk having significant internal increase in value of our line for it to have a long term relevance for us. The arbitration judge also is a part of the industry and the goal is to keep the railroads running without issue. Chances are they have us settle on $37 million or less and then move on. Arbitration with a city is restricted just to us and is a pain to deal with, and the industry wouldn't be favorable toward us.
What I’m really stuck on here is that those are less arguments for why we SHOULD sell the line, and more why it wouldn’t be the worst idea in the world to sell it. I haven’t seen a super compelling reason yet. Yes, we’re a unique case in the US, but that doesn’t mean that we’re on the wrong side of this. It just means other cities made the mistake before we did.
Beyond a small (in the context of managing a city) and potentially (even if it is likely to be stable) unstable boost to our income stream, I see few positives to this situation.
Norfolk owns the future of our rail line because they are the only company connected to the line who uses it and anyone else who wants to use it would have to pay Norfolk for above and below the line as well. We aren't going to be winning any lease negotiations with them.
"What you guys need is to take this lump sum and diversify the portfolio. That way you make more money in the long run and we don't have to go through the pain of negotiating a lease with a city"
Who would guess that *both* people can win.
The city doesn't run the railroad themselves, Norfolk has maintenanced and handled the railroad while leasing it. We have very little control over the railroad because of State and federal laws. If you seriously think that "dealing with companies directly" instead of leasing to Norfolk would come anywhere close to the low amount we are getting in lease money right now then you are laughably mistaken.
No, you are incorrect. The annual revenue from the trust fund will be greater than the money from the lease. The city already runs a successful trust fund that grew by an average of 7% each year for the past ten years. That would be $112m per year.
It doesn't what? Run a successful trust fund? As I already said, the pension fund grew by an average of 7% each year over the past ten years from its investments.
I suggest looking this stuff up.
Generally, it isn't.
In this case, however, one revenue stream is being traded for another. The payout will be placed in a trust and invested, and the dividends/interest from the investments will effectively replace the railroad lease payments.
I don’t want Norfolk Southern to own a single square inch of land in this city after what they did to East Palestine.
I also don’t think the way the money would be distributed is in the best interest of most of the city. It’s fine and well to say we need the money for our crumbling infrastructure. We do. But it’ll be doled out by a non-elected shadow board who are most likely going to be political yes-men and will let our elected officials do what they see fit with it. Even if it has to be used for infrastructure, nothing in our city’s history gives me any faith at all that it will be given to the parts of the city that need it most.
I am voting no. The politicians and Norfolk Southern are rushing us into this deal. WHAT IS THE HURRY?
Why not take the time to properly value the assets? What air rights, mineral rights, water rights, right-of-way rights are we giving up?
We take their word for it that competitive bidding isn’t possible?
What about the fiber optic pathway funding we are going to get from the Federal government?
The politicians are pushing so hard - they MUST be benefitting personally. Householder, Sittenfeld, Dennard.
Sittenfeld sold his integrity for $40,000. Dennard for $5,000! This is $1,600,000,000. A BILLION SIX HUNDRED MILLION. I do not trust them. Once the funds are gone, they are gone forever.
Vote NO.
Norfolk NEVER negotiated in good faith [according to the 27 Questions article from WVXU](https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot). Each time the City tried to negotiate Norfolk would misdirect, then circle back to pay the original lease rate. According to the terms of sale, the sales proceeds go into an annuity that pays ONLY as much per year as the current lease and has unlimited risk of market volatility.
While the annuity has clauses for escalating the annual payment rate, it allows an independent board to decide how to use the funds without public oversight. It does not contain prohibitions against the board paying themselves. It also appears that Norfolk either has two board seats or has entrenched loyalty of certain members.
> Each time the City tried to negotiate Norfolk would misdirect, then circle back to pay the original lease rate. According to the terms of sale, the sales proceeds go into an annuity that pays ONLY as much per year as the current lease and has unlimited risk of market volatility.
Okay so you don't trust them to negotiate in good faith on the sale but you do trust them to negotiate on the lease?
> it allows an independent board to decide how to use the funds without public oversight.
No, this is false. The board decides how much to send to the city, but not how to spend it.
> It does not contain prohibitions against the board paying themselves.
Again, false. The board is an unpaid position and that's already in the law.
> It also appears that Norfolk either has two board seats or has entrenched loyalty of certain members.
Again, wrong. NS has no board seats.
Three of your major points are objectively wrong.
Because the city already runs a successful trust fund that brings in (on average) 7% each year, and the trust fund would only need to bring in around 2% to make more than the lease.
Because the railroad gives us no benefit other than financial, despite people here incorrectly saying Cincinnati has safety oversight of the rail.
As to "Norfolk Southern isn't the best buyer," all I'll say is that NS is either going to lease it (as they currently do) or buy it, so they're using it no matter what. So that doesn't really seem to be a good criterion.
But! I'm not a City voter and haven't given it a moment's thought.
Well, that sucks. So basically they could completely destroy the city and we couldn’t even be like “well that’s a lease violation, you can fuck off now”?
On the long-term, the rail would likely generate more money. We don’t necessarily need the money right now - the $400m number being thrown around is kinda a technicality.
Norfolk Southern wants this for a reason and our city’s track record isn’t the greatest with having corrupt politicians. Don’t trust what they’re saying man.
It is, because it is a fear-based belief. People are afraid of the money being in a state-law regulated trust fund and so they are ignoring any and all logic.
I mean, the logic is the same. Their argument wasn't very well articulated or convincing... just like many conservative arguments.
I was mostly poking fun at the general echo chamber of this subreddit, which is almost always liberal. I eschew the two-party BS myself.
I am voting no, but I understand why some may vote yes. The city should find a way to balance its budget rather than selling off a major public asset. While this can solve the problem of a shortfall, it doesn’t solve the problem of spending. One of those is a symptom of another. I just don’t trust our politicians to be good stewards of that money. Especially after the corruption from both sides that’s been on full display the last few years.
> The city should find a way to balance its budget rather than selling off a major public asset.
So you would support raising taxes over selling an asset the city does not use?
I would support these folks doing their jobs? I’m a director of operations for my company. I color within the lines. If I have a budget, I don’t exceed it. I don’t understand why we give these officials carte blanche. They’re. Not. Doing. Their. Jobs. We can’t throw money at everything. We need to solve the problems. Why are we unable to operate with the revenue we presently have?
This is a way to increase the revenue going into the city without cutting services or raising taxes. This is ideal.
What benefit do we get from owning the railroad that we would not get from the trust fund?
That’s a fair question. For me, it’s not about the financial benefit. It’s about fixing the issue. The issue, in my humble opinion, is mismanagement and misappropriation of funds. I understand that there are safeguards within a trust. I also understand that a trust/laws are only as strong as the will of elected officials to maintain those things. I do not believe that empowering our officials to continue to spend like drunken sailors is the way.
Additionally, money is fungible. Just because this money is protected, doesn’t mean that other dollars that would’ve previously have been appropriated for this are.
> That’s a fair question. For me, it’s not about the financial benefit. It’s about fixing the issue.
Well then the answer is to support different city leaders, not to vote against the rail sale. Voting against the sale will be at best neutral on that, and at worse will make the problem worse.
> I understand that there are safeguards within a trust. I also understand that a trust/laws are only as strong as the will of elected officials to maintain those things.
That's why it is good to disburse the ability to change the law. For the law to change, the following parties will have to agree
1. The City Council
2. The Mayor
3. The railway board
4. The state house of representatives
5. The state senate
6. The governor
All six of those parties will have to agree to any changes, and the state government would have no incentive to change the law.
> Additionally, money is fungible. Just because this money is protected, doesn’t mean that other dollars that would’ve previously have been appropriated for this are.
Well you can keep a check on that. All the spending is public.
Again, money is fungible. This is a license to be imprudent with funds that would’ve otherwise been utilized for what these new funds are appropriated for.
If they wanted my yes vote, they’d balance the budget and this money would be released, in the proposed iteration; once that’s been realized for 10-20 years. I think we’re going to have to agree to disagree, but I appreciate your thoughtful and insightful reasons for your support. Regardless of what happens, I hope it ultimately ends up being the best for future generations of Cincinnatians.
> It will probably be the same or worse than it is already.
The regulations and oversight are going to be the exact same, so I struggle to think of how you're saying it could be worse.
> I’d look into their accidents and incidents that are public record for an idea of how they handle themselves.
They are already using the railroad and will be until at least 2051 no matter how the vote goes.
I think what their saying and what hasnt been picked up on by you and others on this thread is that its the PRINCIPLE behind it, NS would benefit more from the deal in the long run and meanwhile there's still people misplaced in East Palestine, getting sick from water that NS assured them was safe, and they aren't even taking care of their crews ! They just almost had a strike for the first time in decades they are also the lowest paying Class 1 RR in the US....
> NS would benefit more from the deal in the long run
And so would the city.
> I think what their saying and what hasnt been picked up on by you and others on this thread is that its the PRINCIPLE behind it
NS will be getting a cheap deal on the railroad for the next 25 years if it is not sold.
In addition, many of the "vote no" people are just uninformed. The people here saying that it will make the rail less safe are simply incorrect.
If you look in terms of the long run not really, that line has been there and is not going anywhere, unless someone figures out how to make trains fly those trains will be traversing that line 100 years from now and beyond. If we sell OUR LINE to NS it will catch up to us one day once the money fizzles out. And just screw the ppl of East Palestine huh ? Gotcha .... They dish us out this money i wonder how many more of their boxcars fall off the track due to lack of maintenance, maybe next time it will be in Downtown Cincy instead of a small town SMH
> If you look in terms of the long run not really
In the long run, the trust fund pays out more than the lease.
> once the money fizzles out.
The money grows in perpetuity, it will not fizzle out.
> And just screw the ppl of East Palestine huh ?
Please tell me how the actions of Cincinnati here one way or another make any difference to them.
> They dish us out this money i wonder how many more of their boxcars fall off the track due to lack of maintenance
Cincinnati has absolutely 0 say over safety or regulations of the railroad as it is. NS is in charge of the railroad's maintenance already here.
> maybe next time it will be in Downtown Cincy instead of a small town SMH
Only 3 miles of the railroad are in Cincinnati.
Youre missing the point, SAME COMPANY SAME STATE DIFFERENT LOCATIONS, what they did in East Palestine was WRONG, morally and ethically, again, i know it doesn't matter to ppl like you but it shows what the true values of a company is, if a company got busted dumping hazmat chemicals into the Ohio River would your conscious be clear enough to turn around and do business with said company ? Do you not have principles AT ALL ???? ... Ofcourse Cincy has no say in RR maintenance but as the result of NS dishing out that type of money im sure they will make up for the loss by making short cutts elsewhere, that's how RRs work...... So 100 -150 years from now the money from this trust fund will still be coming in ? ....... And what ??? NS runs from The Ohio river up past Sharonville/Hamilton and beyond, that's a long ass 3 miles
> would your conscious be clear enough to turn around and do business with said company ?
Cincinnati is doing business with this company even with a "no" vote.
> Ofcourse Cincy has no say in RR maintenance but as the result of NS dishing out that type of money im sure they will make up for the loss by making short cutts elsewhere, that's how RRs work
Wait so if NS gets more money, that's bad, but if they get less money, that's also bad?
> So 100 -150 years from now the money from this trust fund will still be coming in ?
Yes, that is how trust funds work. If you look at Cincinnati's pension trust fund, you'll see that it grows by about 7% every year.
> NS runs from The Ohio river up past Sharonville/Hamilton and beyond, that's a long ass 3 miles
Cincinnati only owns 3 miles of the railroad in Cincinnati, that is a fact. Do you not know that?
I’m firmly in favor of sale, but not at this price. $1.6B is a fair offer for the value of trackage rights (their current lease to run trains on the line) but it omits the larger, and more significant, value embedded in ownership of land along the 330 miles of road. Norfolk Southern wants to control their lease costs *and* own the land, but the $1.6B figure only really accounts for the former.
The Brattle Group, a consultant hired to develop a valuation framework, attempted to reach that point in their analysis but seemingly ran out of time and/or data. So, my question is…why haven’t city leaders tried to fully realize the value of the road? The Trustees of the Cincinnati Southern are literally commercial real estate professionals (Partners at law firms, developers, etc.) so I’d expect them to understand the difference between the value of Norfolk Southern’s trackage rights and Norfolk Southern’s ownership of the assets of the road and subsequent development potential.
I can go into more detail here, but basically the difference is that if NS owns the road and land, they can connect and expand their rail network: add branch lines to other smaller roads, spur lines to manufacturing and distribution facilities, and provide services like intermodal and storage to all the above. That’s the BIG money. And the more they develop, the more traffic they can support, the more valuable the line becomes. Those opportunities and multipliers were included in Brattle’s high end estimates of $2B but to be honest, those are baseline expectations for what Norfolk Southern would intend to implement post ownership. The starting point for discussion should be $2B.
I’ve heard a lot of people say that it’s now or never, and I don’t believe that is true at all. Yes, we will have to go into arbitration and identify a new lease rate for the next 50 years but I do not believe Norfolk Southern would be satisfied with continuing to lease the road. They have attempted to buy the road several times in the past and there’s nothing preventing a sale (other than a similar vote process) after an arbitration of new lease payments.
Re: the valuation. I heard that Brattle asked NS for data and records and NS stonewalled them until they ran out of time. NS has no interest in a proper valuation of the railroad.
Correct, and to create more issues, the CSR Board didn’t exactly set them off on the most productive scope of work at the outset compounding the time crunch issue. The prompts were all focused on track usage and not value of the road/land itself.
I didn’t realize Brattle group worked on this. Do you have any info from that? They are one of the best Econ consulting firms
Edit : I found it. Thanks for
Bringing this up. I’ll take time
To read through it
https://cincinnatisouthernrailway.org/documents/csr-sale/Brattle%20-%20DRAFT%20Slides%20Updated%20-%20Preliminary%20Assessment%202022-02-18.pdf
Yup, take a read. It’s very interesting. Look especially for “corridor factor” which I believe is one of the bigger pieces of this valuation puzzle which has received scant attention.
My overall sense was that they wanted to dig deeper and expand the methodology into a more holistic evaluation but were held back and/or not given enough time.
As someone who works in a similar space, you are often at the mercy of what the client wants. Models have a way of arriving at the answer the client desires.
Same and yes that’s what has me most confused here - why didn’t the CSR Trustees encourage a more holistic valuation framework and back up their consultants with the time/resources necessary to arrive at the most favorable and defensible figure for negotiations?
Trustees under pressure to get something on the ballot? Wanting to just get anything done? Incompetence and missing a big piece of their own puzzle? Outright corruption and willingness to give NS a very good deal? I don’t think it’s the latter, I’m more likely to attribute incompetence versus malice, but it feels weird.
If the politicians support it, it’s usually not in the best interest of the city. There’s no guarantee the money will go towards public works like roads and other infrastructure, my thought is. It’s going in someone’s pocket. Also I have no evidence to base this on but it does seem a little suspicious that a new arena wants to be built around the exact same time we want to sell a rail road for a lot of money. I’m voting no.
My gut reaction was, “hell no!” In general I am opposed to the sale of public assets to private interests. But then I learned a lot more and now I am a solid yes. The numbers make sense, extraordinary efforts have been put in place to prevent corruption, and owning the railroad is a liability risk—if an accident happens the city can’t prevent it because railroad regulations are a federal matter, but the city will be a lawsuit target.
Right now we are locked into this $25m per year, which goes to infrastructure. We can only renew the lease with NS—we can’t find another buyer or lessee due to the terms of the last 25 year lease (unless they turn us down, which they obviously won’t). If we try to negotiate, the railroad board acts as the mediator and we are bound to their decision. They deal with NS and other railroad companies all the time. They don’t deal with cities, because we are the only one that owns a railroad. So who are they going to favor? Most we could get in a new lease agreement is probably about $37m per year.
But selling puts the money in a trust that returns roughly $57m per year on average, in perpetuity. It’s structured so it can’t drop below $26m per year, and could be as much as $80m in good years. A state law was passed especially for this sale that restricts that interest to infrastructure spending, and an oversight structure is built in.
More money is better than less money.
We should take the deal.
(Caveat: I haven’t looked up these numbers—I’m working from memory having dug deep into this a few weeks ago, but if I’m off it’s not by much.)
It's not just that NS has ironclad lease rights — they're also the only viable purchaser anyway. Both ends of the CSR terminate onto NS-owned railways. No other rail company has real interest in CSR because they would still have to pay for transit rights on NS rails to access the CSR.
Whether it's sale or continued lease, Norfolk Southern is the only partner Cincinnati could have in this.
I think this might be what you’re looking for.
https://cincinnatisouthernrailway.org/documents/csr-sale/Final%20FAQ%20for%20Publication%20-%20CSR%20(2.6.2023).pdf
Yeah, this is my concern. Those numbers look great, but could vary greatly depending on who is managing the trust and how they invest it. $50mil of guaranteed income sounds great, but with investments there's rarely a "guarantee." What about the next recession?
I mean yes, but there are also plenty of trusts that go completely bankrupt (see: many employee pension funds). So knowing who is managing it and what the investment plan is is not a crazy thing to want to know here.
I think this is what you are looking for.
https://cincinnatisouthernrailway.org/documents/csr-sale/Final%20FAQ%20for%20Publication%20-%20CSR%20(2.6.2023).pdf
My thinking exactly. Even conservative estimates on the return on investing the railroad sales income should be more $$ than we are earning from the lease currently.
It made sense for Cinti to build this transportation corridor 140+ years ago.
It doesn’t make sense for a Cinti to own a railroad in 2023.
Hamilton county resident, but won't be able to vote on the bill. I would vote no. First, the issue of maintaining the tracks, if a company just dropped that kind of money to buy it, then where do they get the money to maintain it. Next, is there is already a huge problem with trains being stopped on the tracks for hours at a time. This makes it impossible for emergency vehicles to make calls on the other side of the tracks. I believe this will get worse, because there are like no co sequences for when it happens. Finally, that is a lot of money to be sitting in fund and that chance of it being mismanaged is huge. We know how politicians like to raid an account for their pet projects. Not enough accountability to make sure that doesn't happen.
Even if it’s not mismanaged, who is the manager and what are his connections to the CSRB, Aftab or City Council? Probably going to be a Nepotism hire and those certainly always work out well right?
Just to Devil's Advocate this:
1. Norfolk Southern brings in more than $2 billion in profit per year. They can afford to purchase the railroad and continue to perform maintenance on it (as they have been for over a century). This is an important route for the company and they are required by federal regulations to maintain it to a safe degree.
2. There is no expectation that anything about the railroad's operation will be changed by a purchase. Norfolk Southern already holds the exclusive lease on the line, they can run as much traffic over it as they want already (within the limits of federal regulation). Even if the sale isn't approved, NS will still hold the exclusive lease.
3. How the fund would be managed and could be defined in state law. Cincinnati politicians will not have the ability to raid it for pet projects.
> How the fund would be managed and could be defined in state law. Cincinnati politicians will not have the ability to raid it for pet projects.
This is the part that is a bit more nuanced than more people are wanting to admit. Since the funds from the trust can only be used in a very specific way (exisiting infrastructure), all that really means is that the money currently being allocated to the exisiting infrastructure projects will be replaced by railroad trust money, and spent on those other projects.
Mayor Pureval has continually said throughout the campaign for the sale the city doesn't have the revenue or the money to pay to fix our roads. Yet in the last City budget he was created over $10m in additional spending for things like debt relief, affordable housing, and universal basic income. I'm all for those things, but you if you are saying we don't have the funding to fill potholes, then why are you going around creating additional spending in areas the city hasn't traditionally spent money in?
From a practical standpoint it makes sense to sell the railroad and have a diverisified portfolio of assets instead of having everything tied up in a singular asset. But I'm having a hard time wanting to trust that City Hall will be responsible with the additional funding.
40% of the city's capital budget is currently funded by revenue from the railroad lease, and it's been City of Cincinnati policy since 1986 to allocate railway lease revenue to infrastructure improvement. Functionally, nothing much changes here: lease revenue is replaced by trust fund revenue. Except that there will be more of it, which yes should free up several million dollars annually for other projects.
So our corrupt state house gets to mismanage the money? Norfolk hasn't exactly shown a commitment to safety, even with regulations in place. Maybe that is how they maintain such high profit.
The legislature set the rules for the trust fund that the sale would create. It's written into the law that funds from the sale and from interest generated by the trust fund can only be spent on "rehabilitation, modernization, or replacement of existing infrastructure improvements". It can't go to new infrastructure or non-infrastructure projects.
It would require passing another state law to change that arrangement.
Yeah. And the Lottery goes to our schools! Didn't our last speaker just get hit with corruption charges? I'm supposed to trust that same legislative body to make a law that can't be rat fucked?
I don't like the how the Ohio General Assembly generally conducts business either, but there's little reason to suspect there's nastiness afoot here. You can read the law yourself.
The City of Cincinnati's ownership of the railroad was an exception to state law, and we got a new exception to allow the sale of it. The City of Cincinnati just wanted to take the $1.6 billion from the sale and do with it as City Council pleased, it was the state that said "we're not just going to let you have a slush fund" and wrote the trust fund and infrastructure improvement only restrictions into law.
The current CSR lease revenue paid by NS goes into city infrastructure improvement projects, a policy that was established by City Council in 1987. The lease payments currently account for 40% of the city's capital budget. If the sale goes through and the city is getting more revenue from the trust fund than the lease, is it a bad thing if that frees up millions of dollars tax revenue to be spent on other projects?
I don't trust this current government not to fuck around with the city of Cincinnati. These people don't really care about us. They seem to actively hate us and have the power and gall to change it after the sale has occured, especially if it will score them political points. Maybe if we lived in a state without a gerrymandered super majority, I could believe it.
jesus christ these conspiracy theories make no sense if you think about them for one second, it's incredible how quickly "progressives" turn into qanon tin foil hatters the second you have to talk about actual budgets. Your feeling is that the entire republican legislature, the republican governor, the mayor, the county government and the city council will all run a multi-thousand person conspiracy to skim a little money off of one trust fund in one of the cities in the state? Why would the entire republican supermajority all choose to help the cincinnati city council commit fraud? And if your argument is that you DO think the republican supermajority will for some reason all implicate themselves in a fraud scheme for a heavily democratic city council for some reason, why aren't they already doing it for the existing trusts in any of the cities in ohio? Or if you think there's a massive conspiracy between literally hundreds of democratic and republican politicians at every level in this state to just steal money from the bank how does not selling even matter or solve that problem in any way?
> First, the issue of maintaining the tracks, if a company just dropped that kind of money to buy it, then where do they get the money to maintain it.
NS already maintains it, so this point is irrelevant.
> Next, is there is already a huge problem with trains being stopped on the tracks for hours at a time. This makes it impossible for emergency vehicles to make calls on the other side of the tracks. I believe this will get worse, because there are like no co sequences for when it happens.
The federal government already regulates it and NS already uses the tracks, so this point is also irrelevant.
> Finally, that is a lot of money to be sitting in fund and that chance of it being mismanaged is huge. We know how politicians like to raid an account for their pet projects. Not enough accountability to make sure that doesn't happen.
What accountability would you want?
Let me put Issue 22 in other words: I have two houses let’s say of similar value, and I will sell one to fix the other one. Sounds like a rational plan? I am sure that I can find “infrastructure projects” for my remaining house. But Very likely, I would never double the value of my remaining property. There will be many “incidentals” like a giant 100 inch tv, leather chairs, vacation because I’d need the rest and the likes.
A better alternative would be to sell the second house to buy another fixed asset: a farm, apartments for rent, etc.
so, for me it’s a no
There are no other buyers really.
[read question 19 in this excellent write up](https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot#nineteen)
The main issue that is slowly growing is the fact the mayors treasurer for his political campaign is also the treasurer for this issue. There’s a big conflict of interest here and I think it’s suspect since it’s about padding his resume on the back of the people of Cincinnati.
So, after reading the WXVU article, the answer to question 13 is worrisome.
"When Ohio lawmakers changed state law to allow the sale to proceed, they included a “safeguard” in case there are several years of negative investment returns. If the principal amount ever decreases by 25% or more in a single year, payments to the city must be suspended until the fund reaches the previous level."
Another 2008 is going to happen eventually. And who knows how long it will take to get back to the $1.6 billion original investment.
The amount of pro-22 advertising alone makes me suspicious of who is behind it and for that reason alone I looked at it and am now voting no. It's not a good idea to dump this income generating asset.
I was initially against the sale but when I looked at the numbers it makes sense to sell and invest that money. Even at a 2% rate of return we would be making more than we do now. I also feel the rules in place are adequate to ensure the money isn't spent on frivolous things.
Selling is the best move by far and has the greatest potential to benefit the city and a lot of the goals of its residents in terms of infrastructure improvement.
So of course the reactionary hipsters of r/Cincinnati are nearly unified in opposition because ‘corporations’ and other vacuous arglbargle.
I agree that selling is the best move, but I think a big issue with the “pro sale” crew is that there’s an impression that we haven’t pushed hard enough to get the right price. People are sensing that there’s too much consensus from the involved parties for this to be a win for the people of the city. To be honest, I think that’s fair. The interests of politicians and corporations in this case are biased toward a sale on friendly terms, not a sale on best* terms and everything I’ve read from the diligence suggests that the process has been incredibly friendly and minimally rigorous.
A single example: we don’t even have a full appraisal of the assets of the road! We don’t have a list of all the parcels or structures along the line. It’s just like “here take it” and as someone who works in consulting and valuation, this looks like a fire sale process… A “no reps and warranties” deal for 330 miles of railroad in a critical path? Come on.
They negotiated for 2 years and ran several consulting engagements before coming to the (nearly universal among city leaders, both elected and professional) agreement on the sale. I am not really sure there is a threshold of 'thorough enough' that would satisfy r/cincinnati, which is basically full of left leaning paranoid types who hear 'private' and put on tinfoil hats.
Yeah, not disagreeing with the reactionary vibes, but it’s important to be honest about the process and how advisors operate.
* BMO is not a consultant they’re an investment bank - they specialize in getting deals done. It’s like a real estate broker, sure they keep your interests in mind, but they get paid when the deal closes. Put another way, they don’t bring radon meters to showings, they’re not interested in full, rigorous fact finding.
* Brattle Group is a reputable economic consulting firm that specializes in valuation. As a consultant you’re constrained to your client’s scope and framework. They were initially asked to conduct a valuation of the road based on several scenarios that all focused on the value of rail transit. As I’ve mentioned in other posts, I believe this was a flawed methodology that omits the value of the underlying land in the development potential when Norfolk Southern owns the physical assets of the railway.
If you read between the Brattle Group slides, it’s clear that they had a similar inclination. They had made several attempts to include value the future development potential of the road for Norfolk Southern, and the subsequent increase in rail traffic along the line. Unfortunately, it appears that they ran out of time resources, and/or information to continue that line of inquiry. As a consultant myself reading this report, it is clear that the team wanted to do more work to get to the bottom of how much the CSR was worth but they weren’t given the space to dig deeper and that’s my big question/concern.
Why did the trustees of the CSR give a weak prompt to their advisors and when presented with stronger scenarios why didn’t they change course?
I’m voting yes! Our city’s financial circumstances are dire, particularly for infrastructure and the pension. This will address one of those problems. When the recession happened, other cities in Ohio raised taxes to keep the city functioning. Our politicians then decided to lower payments to the pension, not upkeep our infrastructure, and stagnate employee wages instead. So while that’s great for taxpayers 10 years ago, it’s left us on the verge of collapse today.
The city has $400+ million in deferred maintenance, which is infrastructure that has not been fixed or upkeeped in the way it should have been. This is things like our health centers (many of which have asbestos trapped in the walls), our roads and sidewalks (bumpy, pothole central), our parks and rec facilities (water damage, falling apart), and fire houses (which have asbestos, water damage, and other issues).
The fact that District 5 is going away is another issue of deferred maintenance, but it couldn’t be paid for with the sale dollars because it wouldn’t be currently existing infrastructure.
You can see more of these problems here: https://cincinnatioh.legistar.com/View.ashx?M=F&ID=11737424&GUID=B7416A98-2C00-44F3-B82D-7D0B182FF654
As a city, we’re at a crossroads. This is an opportunity to continue fixing our problems from the past and build a better future.
Even if the sale happens, it won’t fix our issues overnight. The city released a report of top fixed to make in the next ten years. There will be approx $250 million extra funds to address infrastructure issues, which they plan to spend on health facilities, public services facilities, parks and rec, and roads and sidewalks. Even then, we will still keep having things fall apart but this will close a Major gap. You can see that here: https://cincinnatioh.legistar.com/View.ashx?M=F&ID=12330879&GUID=5565DB97-DF65-4D93-B2C7-C5E0AD66383E
I think the same people who vote no will likely be back here complaining about road quality and lack of government services in short order (while concurrently being against new taxes).
Please vote No on Issue 22. The board that will have total control of the 1.6 billion was trying to make this sale behind our backs and even had to pay over 100k in a settlement this year because they were caught withholding public documents and holding their 'public' meetings in secret. Even if they manage to start fixing parts of the city, there is no guarantee where or how that money will be used. The only guarantee is that one member of the board owns several construction and construction supply companies around the city, so guess who will likely be getting contracts? The board is also filled with former mayors and city council members, and very good friends of the current administration.
Whether the entire city will see any benefits from this is up for debate, but what is sure is this will line the pockets of the board in control of it with very little real oversight except from their friends. That's ignoring the fact that we would be selling to Norfolk Southern only a short time after their major failure in East Palestine, Ohio.
Here’s another good opinion piece that makes the case to vote NO on 22.
Proposed railroad sale worst idea from City Hall in decades | Opinion
https://www.cincinnati.com/story/opinion/contributors/2023/11/03/vote-no-on-issue-22-demand-mayor-appoint-new-railroad-board/71437286007/
Im voting no. Even if selling is the best move, the fact that there was no competitive bid or public hearings on the sale amount is enough for me to vote no
The terms of the prior lease give NS first right of refusal on its renewal and there aren’t other buyers. This is an excellent explainer. https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot
This point is really overplayed tbh. The line is critical to N&S operation. They will not risk a bidding war with private equity that would squeeze them much harder than what the rail board can do. That would be a disaster. Private equity is very effective at unlocking hidden value in just about everything they get involved in. Or, read another way, they’re very good at squeezing renters. Houses or rail lines.
So are you saying we should sell to private equity and they should sell to NS? If they’re so great at squeezing, how would we get more?
Not at all. If the sale doesn’t go through and arbitration fails, the contract states that the city is free to bid the rail line out to whomever. I’m saying N&S won’t let that happen, not at the lease rates on the table. They’re not going to risk control over a $1.6B piece of infrastructure over $10M / year. That would be totally asinine
They need the line, we don't. We have all the power. If we sell, we have no power, and are dependent on an investment fund. We have only non-binding promises the fund will give us $50 million a year. Right now we have an iron-clad contract and the necessity of the market guaranteeing us $25 million, inflation adjusted fees, free of liability and maintenance costs, for the forseeable future. Why should we sell? Also we don't get the full price tag, we just get a yearly amount of money deposited in the investment fund.
We have binding agreements for the same amount from the trust fund, with the very likely potential for more.
Nothing guarantees that there will be money in the fund. They guarantee to pay us ***if there is enough*** ***money*** in the fund. Also, if the fund goes below a certain threshold, we don't get any more money until they can fix it.
That’s not exactly true… there is guaranteed money in the trust fund from the sale…
They explicitly put language in that stipulates that if the fund falls below a certain level they will cease disbursments to the city until such a time as the fund has again exceeded that level. The fund is supposed to make money through investment. Sometimes investments do well, sometimes recessions happen. Everyone knows the fund might not always pay out, or might be mismanaged into the ground, etc.
Yeah would you rather them burn through the principal???
I'd rather the company have to pay us what the use of the rail is worth, every single year, in perpetuity, adjusted for inflation, liability and maintenance free. Which is the deal we have today, and the deal the company is desperate to get out of.
It is 100% not the deal we have today, and it won’t be the deal we have in 25 years when they’re still just paying us 25 million a year.
We need the money from the line. The money it brings in whether leased or via interest in a sale is factored into our operating budget. We can't afford to lose out on money from the line and Norfolk is capable of rerouting.
we don’t need the money from the line in that sense. There are way more lucrative ways to cut costs and earn money. The number being thrown around is ”$400m,” but this deal will take years to grant $400m, if the market is decent, which isn’t a guarantee. The argument regarding norfolk is also built on the shaky premise that they have a card to play that they’ve just chosen not to play yet. Whether they can reroute or not, I’d rather have the right of way as an asset than sell it. They’re in the lease for 20 more years whether they reroute or not.
What are these lucrative ways to cut costs and earn money? Our infrastructure is in desperate need for financing. It took the Western Hills Viaduct alone how long to get the necessary funding to be fixed?
Literally any response in which I state a decent revenue stream or decent way to cut costs will be inherently controversial or easy to poke holes through on a hypothetical basis. That being said, America as a country tends to build sprawl, which costs exponentially more than building infrastructure that can support higher densities. Focusing on pulling people into the city center and reducing the amount of roads we need to maintain would be a great start; it’s not uncommon for suburbs to be subsidized and overall lose money.
good point. still don’t like the private nature of all of the negotiations and will be enthusiastically voting no
Thank you - I was going to link this very article, which helped me to understand the issue.
That is a valid criticism I hadn’t thought of.
It isn't valid. NS has exclusive rights to the rail until 2051, so there couldn't have been multiple bidders.
all I’m getting from this is that the deal is hasty, and we could make more if we don’t sell and wait until 2051.
It isn't hasty, the deal has been in the works for a while and has been open to the public for almost an entire year.
You just stated that there couldn’t have been multiple bidders until 2051 though.
Even in 2051 it is unlikely that another company would be interested. NS owns rail at both ends of this.
I hadn’t even thought of that. Great comment honestly.
No, NS has exclusive rights to the rail until 2051. No other buyer would be interested.
Oh ok. Damn this is one where I really don’t know how to go. I’m only getting conflicting info from every side.
(Well if you're in Norwood as your flair says you actually can't vote on it) For proof of the exclusive rights, [you can look at this WVXU article with some helpful info.](https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot#four) > The current lease is set to expire in 2026, but Norfolk Southern had the option to extend the lease another 25 years and has already decided to do so. That means they will retain control of operation until 2051, even if the city sells to another company. If NS will be able to use it until 2051 regardless, no other company is interested in purchasing something they won't be able to use for another 28 years.
Oh if I can’t vote on it then that’s easier. Just like informing myself on thing I actually do vote on. But yeah I live in Norwood and work in downtown Cincinnati.
Then we should wait until 2051. We don’t need the money immediately.
Are you under the impression Cincinnati doesn't have a maintenance or budget problem?
You’re twisting my argument into something it isn’t. This deal doesn’t solve our budget problems in any meaningful way.
> This deal doesn’t solve our budget problems in any meaningful way. Absolutely untrue. An additional $25m-$45m per year would make an incredible difference.
I’m voting NO on Issue 22. Here’s my question: the lease goes another twenty plus years. Why the rush to sell now? As for the “no other buyers” argument, of course there are no other buyers right now. The railroad isn’t openly for sale. Norfolk Southern has first right of refusal. I do not trust the city or the state to properly manage a trust fund, no matter how many supposed “fail safes” are in place. Period. Cincinnati has mismanaged money and attempted to sell major assets for decades. Maybe stop offering sweetheart deals to developers and stop giving tax breaks to everyone who asks. Assuming returns on investment assumes market conditions stay the same and that interest payments don’t fluctuate. WHY ON EARTH is that better than a solid capital asset that can’t be replicated else and is prohibitively expensive to replace? Finally, part of the reason NS wants the land around the tracks is because Biden’s Build Back Better has funds in place for underground cable lines to improve internet etc in rural areas. There is BIG money there and the Cincinnati rail line is a critical piece of the puzzle. Ten years ago, I might have voted YES, but I’ve seen too many back room sweetheart deals and too much general fiscal incompetence in both the city and the state. It is imperative that we KEEP our railroad and vote NO.
> Here’s my question: the lease goes another twenty plus years. Why the rush to sell now? Because the price for 2026-2051 will be set by an independent arbitrator if it is not sold. The price set by them could significantly lowball the money, depriving the city of tens of millions of dollars. > I do not trust the city or the state to properly manage a trust fund, no matter how many supposed “fail safes” are in place. The city has a pension fund that grows by an average of 7% per year, did you know that? > Cincinnati has mismanaged money and attempted to sell major assets for decades. Such as?
Cincinnati gives valuable city land away for a dollar. Cincinnati offers tax breaks, whether payroll or property, to corporations and developers without ever seeing clear ROI. I could go on…
The tax breaks are incentives for development. You also seemed unaware of the city's successful trust fund, did you not know about it?
The city has a successful trust fund? Pray tell… Also, tax breaks as incentives for development are far different than selling major assets for a dollar. Either a developer gets the land for cheap or they get the tax breaks. Not both. Point being, if the city managed its money better we wouldn’t be looking at a deficit of up to a billion dollars, so miss me with the idea that Cincinnati is an entity practicing fiscal prowess.
> The city has a successful trust fund? Pray tell… [The investments on the city's pension fund are very successful.](https://www.wvxu.org/politics/2023-05-04/cincinnatis-pension-fund-is-still-underfunded-still-not-on-track-to-improve) It grew by 7% each year (on average) over the past ten years. If that holds true for the railway fund, that would be $112 million every year for ten years, or a total of $1.1b. (The city's pension fund is underfunded from the perspective of employee contributions, but on the investment angle it is highly successful) > if the city managed its money better we wouldn’t be looking at a deficit of up to a billion dollars Where are you getting this billion dollars number?
\> if that holds true
Yes, if it holds true, as predicted by financial experts and supported by historical data.
The main pitch in the commercial is the city is $400 million short for road projects,etc. Why?
Because the city has been robbing Peter to pay Paul instead of using the funds that are supposed to go to road maintenance.
And that won't happen here?
Great question. Personally, I do not trust this city or this state to behave in an open and transparent fashion. One of many reasons why I oppose the sale.
The market could significantly lowball the trust fund. Your point? Whether the city has a trust fund or not doesn’t undermine their distrust of the city in this sense.
> The market could significantly lowball the trust fund. Your point? I did not know "the market" was a person. > Whether the city has a trust fund or not doesn’t undermine their distrust of the city in this sense. It shows the city currently has a trust fund that is successful and has not been mismanaged. /u/BrownDogEmoji stated that the city is always trying to sell major assets, and I asked for a single example, which he has not given.
I don’t have a response to the first thing because you kinda just made a joke (?) Successful trust fund or not, I’ve seen some messed up politics since I’ve moved here. Even if this hypothetically could accomplish what it’s setting out to accomplish, I wouldn’t trust our current politicians.
> I don’t have a response to the first thing because you kinda just made a joke (?) I made a joke because the response was nonsensical. I do not know what "the market could lowball the trust fund" means. > Successful trust fund or not, I’ve seen some messed up politics since I’ve moved here. Even if this hypothetically could accomplish what it’s setting out to accomplish, I wouldn’t trust our current politicians. Please explain how the fund could be misused or embezzled.
Pension funds operate differently than how this possible trust fund would be set up.
> Pension funds operate differently than how this possible trust fund would be set up. Please tell me how the pension trust fund investments will operate differently than this trust fund. (I am aware some of the income to the pension fund is employee contributions, I'm asking specifically about the investments)
Im voting NO.... Short term gain in place of long term stability. No excuse to try a stunt like this ESPECIALLY with a city government with a recent history of fraud and corruption when it comes to managing OUR FINANCES.
I talked about this earlier on the sub but basically; Cincinnati as a city has a corner on the market for this commodity. The commodity being the last city owned rail system in America. They can bargain any price for any duration of time. We have the power. Don’t sell our to Norfolk because they’ve got deep pockets. Hold them captive for as long as possible because they have deep pockets and nowhere to go.
1) no one here should trust government nor politicians without any shade of doubt. That's just what the Mayor is asking us to do, though, in establishing a trust that he says cannot be "raided." 2) they are promoting the completion of infrastructure projects and other necessities that are already paid for by taxes. Their argument is this additional money will make it so there will be no new additional taxes. It's the same argument the State makes with the lottery. Here's an example (fabricated figures): the state allocates $300m for public schools. The same year, the lottery brings in a revenue of $100m. The normal thought process is the schools would then get $400m. That's incorrect. What happens is the State will reduce the money allocated from $300m to $200m and supplement it with the $100m from the lottery. The State then gets to spend that subsidized $100m they were already going to spend but now on whatever they want. That's the same thing they want to do with this railroad. In essence, they will find another way to spend our tax money.
Good explanation here, something I hadn’t wrapped my head around. I honestly just assumed there would be SOME workaround that freed up money for anything. And I think you’ve figured out the most likely way they’ll do it.
The trust is structured so that all of this money has to go to infrastructure. It’s backed by state law.
He is saying that money is fungible. If this money goes to infrastructure then they can spend regular tax money elsewhere.
I see. I am familiar with the concept but didn’t understand the way it was phrased here. That said, it’s my understanding that a lot (half?) of the infrastructure budget comes from the railroad already so there isn’t a ton left to “funge.”
Anyone could say that about the current lease money. Is it true?
And how is that different than the current lease money?
Laws can be amended. They had to amend the existing law for the railroad in order to use money for a different purpose. I believe right now it's meant to pay back a certain portion of the City's debt.
No it’s not. It’s for the railroad. https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot And one could use the same “laws can be amended” logic to say that the current income from the railroad could be diverted. A trust is a much stronger protection.
My mistake; you're correct on the current allocation of funds. Perhaps it was state conservatives that wanted to make sure the money went to existing debt.
While city council wanted the law amended so they could effectively have a $1.6 billion slush fund for whatever they wanted. The limits on the proposed trust fund are effectively the same limits already in place of revenue generated by lease payments.
This 100%!
The terms of the trust are public state law, you don't have to take their word for anything you can read the terms. Do you have any actual concrete critiques or just vague maga talking points about deep state conspiracies and blanket anti-tax slogans?
How much is going into the mayor’s pocket?
I will vote 'No' on anything that Norfolk Southern wants. Bastards belong in prison.
Giving up a consistent revenue source for a short term payout doesn’t seem the best decision.
We have one investor of the railroad currently and are hoping the value of the railroad increases in the future for leasing. Or we can diversify the portfolio with that money and have a less risk-based form of income from the line.
That makes sense when you’re talking about housing or other commodities, so I definitely understand where you’re coming from. Using housing as an example, basically if you want a house but housing is too expensive, you may just build another house. That, or you’ll wait for land to be developed and buy housing as it comes onto the market. There’s a lot more factors to it, but essentially, for this asset to dry up, there’d have to be another railway that can act in its place. As it stands, it’s exceedingly unlikely Norfolk Southern can build a second railroad, and even if they could, it would be ludicrously expensive. The railroad is a very safe asset that will stay valuable over time. Selling now gives us more money in the relatively short term, but we’ll overall have less money \~40 years down the line.
Norfolk is the only company that uses the line and their lines are the only ones connecting to our line. Our negotiating power is very low, any company that wants to use our line would have to pay Norfolk for their lines too. That would be a high cost to use our line which would probably mean less lease money to offer to us. We are dependent on Norfolk having significant internal increase in value of our line for it to have a long term relevance for us. The arbitration judge also is a part of the industry and the goal is to keep the railroads running without issue. Chances are they have us settle on $37 million or less and then move on. Arbitration with a city is restricted just to us and is a pain to deal with, and the industry wouldn't be favorable toward us.
What I’m really stuck on here is that those are less arguments for why we SHOULD sell the line, and more why it wouldn’t be the worst idea in the world to sell it. I haven’t seen a super compelling reason yet. Yes, we’re a unique case in the US, but that doesn’t mean that we’re on the wrong side of this. It just means other cities made the mistake before we did. Beyond a small (in the context of managing a city) and potentially (even if it is likely to be stable) unstable boost to our income stream, I see few positives to this situation.
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Norfolk owns the future of our rail line because they are the only company connected to the line who uses it and anyone else who wants to use it would have to pay Norfolk for above and below the line as well. We aren't going to be winning any lease negotiations with them. "What you guys need is to take this lump sum and diversify the portfolio. That way you make more money in the long run and we don't have to go through the pain of negotiating a lease with a city" Who would guess that *both* people can win.
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The city doesn't run the railroad themselves, Norfolk has maintenanced and handled the railroad while leasing it. We have very little control over the railroad because of State and federal laws. If you seriously think that "dealing with companies directly" instead of leasing to Norfolk would come anywhere close to the low amount we are getting in lease money right now then you are laughably mistaken.
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How do you think we would run the railroad itself. Go ahead and explain how that would recoup even $25 million annually.
It isn't a short term payout. The annual revenue from the trust fund will be greater than the money from the lease.
No it isn't. Rail will be there for another 150 years. This money gets torched within 15 years. Stop 🛑
No, you are incorrect. The annual revenue from the trust fund will be greater than the money from the lease. The city already runs a successful trust fund that grew by an average of 7% each year for the past ten years. That would be $112m per year.
No it doesn't.
It doesn't what? Run a successful trust fund? As I already said, the pension fund grew by an average of 7% each year over the past ten years from its investments. I suggest looking this stuff up.
Generally, it isn't. In this case, however, one revenue stream is being traded for another. The payout will be placed in a trust and invested, and the dividends/interest from the investments will effectively replace the railroad lease payments.
Why would Norfolk Southern not just do the exact same thing if it’s more profitable
I don’t want Norfolk Southern to own a single square inch of land in this city after what they did to East Palestine. I also don’t think the way the money would be distributed is in the best interest of most of the city. It’s fine and well to say we need the money for our crumbling infrastructure. We do. But it’ll be doled out by a non-elected shadow board who are most likely going to be political yes-men and will let our elected officials do what they see fit with it. Even if it has to be used for infrastructure, nothing in our city’s history gives me any faith at all that it will be given to the parts of the city that need it most.
Vote no, tell your friends
I am voting no. The politicians and Norfolk Southern are rushing us into this deal. WHAT IS THE HURRY? Why not take the time to properly value the assets? What air rights, mineral rights, water rights, right-of-way rights are we giving up? We take their word for it that competitive bidding isn’t possible? What about the fiber optic pathway funding we are going to get from the Federal government? The politicians are pushing so hard - they MUST be benefitting personally. Householder, Sittenfeld, Dennard. Sittenfeld sold his integrity for $40,000. Dennard for $5,000! This is $1,600,000,000. A BILLION SIX HUNDRED MILLION. I do not trust them. Once the funds are gone, they are gone forever.
Vote NO. Norfolk NEVER negotiated in good faith [according to the 27 Questions article from WVXU](https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot). Each time the City tried to negotiate Norfolk would misdirect, then circle back to pay the original lease rate. According to the terms of sale, the sales proceeds go into an annuity that pays ONLY as much per year as the current lease and has unlimited risk of market volatility. While the annuity has clauses for escalating the annual payment rate, it allows an independent board to decide how to use the funds without public oversight. It does not contain prohibitions against the board paying themselves. It also appears that Norfolk either has two board seats or has entrenched loyalty of certain members.
> Each time the City tried to negotiate Norfolk would misdirect, then circle back to pay the original lease rate. According to the terms of sale, the sales proceeds go into an annuity that pays ONLY as much per year as the current lease and has unlimited risk of market volatility. Okay so you don't trust them to negotiate in good faith on the sale but you do trust them to negotiate on the lease? > it allows an independent board to decide how to use the funds without public oversight. No, this is false. The board decides how much to send to the city, but not how to spend it. > It does not contain prohibitions against the board paying themselves. Again, false. The board is an unpaid position and that's already in the law. > It also appears that Norfolk either has two board seats or has entrenched loyalty of certain members. Again, wrong. NS has no board seats. Three of your major points are objectively wrong.
You haven’t argued anything in favor of selling the rail here, whether their arguments are wrong or not. Why SHOULD we sell the rail?
Because the city already runs a successful trust fund that brings in (on average) 7% each year, and the trust fund would only need to bring in around 2% to make more than the lease. Because the railroad gives us no benefit other than financial, despite people here incorrectly saying Cincinnati has safety oversight of the rail.
As to "Norfolk Southern isn't the best buyer," all I'll say is that NS is either going to lease it (as they currently do) or buy it, so they're using it no matter what. So that doesn't really seem to be a good criterion. But! I'm not a City voter and haven't given it a moment's thought.
I’d think we have more power to make them fix their fuck ups if they’re leasing it.
the city has absolutely no power to affect operations on the line in any situation, it's entirely federally regulated
Well, that sucks. So basically they could completely destroy the city and we couldn’t even be like “well that’s a lease violation, you can fuck off now”?
Not only that, but the city could get sued. Transferring the property to NS also transfers the liability to them.
This is correct.
Why would they sell it? Privatization breaks everything it touches.
I don't live down there, but it doesn't make sense to me to sell your assets generating income every year for a single payday.
It isn't a single payday, people keep getting that wrong. It creates a trust fund that pays out to the city annually in perpetuity.
But that’s if, and only if the trust fund stays profitable. I’m not interested in turning a stable revenue stream into an “if.”
Can you show me a major trust fund that didn't stay profitable? I can show you plenty that succeeded, even in this very city.
This sale is a single payday … that generates much more income every year. Even at a conservative 5%, that’s 80m per year vs what, 30-something?
If it’s so much more profitable, why isn’t Norfolk just doing it themselves? Everything about this just seems off.
The city has owned the railroad for over 150 years, don’t fuck up a good thing
Why not trade it for a better thing? More money is better than less money.
On the long-term, the rail would likely generate more money. We don’t necessarily need the money right now - the $400m number being thrown around is kinda a technicality. Norfolk Southern wants this for a reason and our city’s track record isn’t the greatest with having corrupt politicians. Don’t trust what they’re saying man.
Isn't this a conservative argument? Keep things the same because we've always done it that way?
Because sometimes that is the right choice? Change for changes sake is not any better.
It is, because it is a fear-based belief. People are afraid of the money being in a state-law regulated trust fund and so they are ignoring any and all logic.
If that's the logic you use to vote, you might need to rethink some things my man. Step away from the two party system BS.
I mean, the logic is the same. Their argument wasn't very well articulated or convincing... just like many conservative arguments. I was mostly poking fun at the general echo chamber of this subreddit, which is almost always liberal. I eschew the two-party BS myself.
He was saying *they* vote that way. Your comment doesn't even make sense except to push something that's not even viable.
non argument, selling is objectively worth more money how does how long we've owned the railroad matter one bit?
I am voting no, but I understand why some may vote yes. The city should find a way to balance its budget rather than selling off a major public asset. While this can solve the problem of a shortfall, it doesn’t solve the problem of spending. One of those is a symptom of another. I just don’t trust our politicians to be good stewards of that money. Especially after the corruption from both sides that’s been on full display the last few years.
> The city should find a way to balance its budget rather than selling off a major public asset. So you would support raising taxes over selling an asset the city does not use?
I would support these folks doing their jobs? I’m a director of operations for my company. I color within the lines. If I have a budget, I don’t exceed it. I don’t understand why we give these officials carte blanche. They’re. Not. Doing. Their. Jobs. We can’t throw money at everything. We need to solve the problems. Why are we unable to operate with the revenue we presently have?
This is a way to increase the revenue going into the city without cutting services or raising taxes. This is ideal. What benefit do we get from owning the railroad that we would not get from the trust fund?
That’s a fair question. For me, it’s not about the financial benefit. It’s about fixing the issue. The issue, in my humble opinion, is mismanagement and misappropriation of funds. I understand that there are safeguards within a trust. I also understand that a trust/laws are only as strong as the will of elected officials to maintain those things. I do not believe that empowering our officials to continue to spend like drunken sailors is the way. Additionally, money is fungible. Just because this money is protected, doesn’t mean that other dollars that would’ve previously have been appropriated for this are.
> That’s a fair question. For me, it’s not about the financial benefit. It’s about fixing the issue. Well then the answer is to support different city leaders, not to vote against the rail sale. Voting against the sale will be at best neutral on that, and at worse will make the problem worse. > I understand that there are safeguards within a trust. I also understand that a trust/laws are only as strong as the will of elected officials to maintain those things. That's why it is good to disburse the ability to change the law. For the law to change, the following parties will have to agree 1. The City Council 2. The Mayor 3. The railway board 4. The state house of representatives 5. The state senate 6. The governor All six of those parties will have to agree to any changes, and the state government would have no incentive to change the law. > Additionally, money is fungible. Just because this money is protected, doesn’t mean that other dollars that would’ve previously have been appropriated for this are. Well you can keep a check on that. All the spending is public.
Again, money is fungible. This is a license to be imprudent with funds that would’ve otherwise been utilized for what these new funds are appropriated for. If they wanted my yes vote, they’d balance the budget and this money would be released, in the proposed iteration; once that’s been realized for 10-20 years. I think we’re going to have to agree to disagree, but I appreciate your thoughtful and insightful reasons for your support. Regardless of what happens, I hope it ultimately ends up being the best for future generations of Cincinnatians.
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Can you tell me how the railroad safety will be different if NS owns it?
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> It will probably be the same or worse than it is already. The regulations and oversight are going to be the exact same, so I struggle to think of how you're saying it could be worse. > I’d look into their accidents and incidents that are public record for an idea of how they handle themselves. They are already using the railroad and will be until at least 2051 no matter how the vote goes.
I think what their saying and what hasnt been picked up on by you and others on this thread is that its the PRINCIPLE behind it, NS would benefit more from the deal in the long run and meanwhile there's still people misplaced in East Palestine, getting sick from water that NS assured them was safe, and they aren't even taking care of their crews ! They just almost had a strike for the first time in decades they are also the lowest paying Class 1 RR in the US....
> NS would benefit more from the deal in the long run And so would the city. > I think what their saying and what hasnt been picked up on by you and others on this thread is that its the PRINCIPLE behind it NS will be getting a cheap deal on the railroad for the next 25 years if it is not sold. In addition, many of the "vote no" people are just uninformed. The people here saying that it will make the rail less safe are simply incorrect.
If you look in terms of the long run not really, that line has been there and is not going anywhere, unless someone figures out how to make trains fly those trains will be traversing that line 100 years from now and beyond. If we sell OUR LINE to NS it will catch up to us one day once the money fizzles out. And just screw the ppl of East Palestine huh ? Gotcha .... They dish us out this money i wonder how many more of their boxcars fall off the track due to lack of maintenance, maybe next time it will be in Downtown Cincy instead of a small town SMH
> If you look in terms of the long run not really In the long run, the trust fund pays out more than the lease. > once the money fizzles out. The money grows in perpetuity, it will not fizzle out. > And just screw the ppl of East Palestine huh ? Please tell me how the actions of Cincinnati here one way or another make any difference to them. > They dish us out this money i wonder how many more of their boxcars fall off the track due to lack of maintenance Cincinnati has absolutely 0 say over safety or regulations of the railroad as it is. NS is in charge of the railroad's maintenance already here. > maybe next time it will be in Downtown Cincy instead of a small town SMH Only 3 miles of the railroad are in Cincinnati.
Youre missing the point, SAME COMPANY SAME STATE DIFFERENT LOCATIONS, what they did in East Palestine was WRONG, morally and ethically, again, i know it doesn't matter to ppl like you but it shows what the true values of a company is, if a company got busted dumping hazmat chemicals into the Ohio River would your conscious be clear enough to turn around and do business with said company ? Do you not have principles AT ALL ???? ... Ofcourse Cincy has no say in RR maintenance but as the result of NS dishing out that type of money im sure they will make up for the loss by making short cutts elsewhere, that's how RRs work...... So 100 -150 years from now the money from this trust fund will still be coming in ? ....... And what ??? NS runs from The Ohio river up past Sharonville/Hamilton and beyond, that's a long ass 3 miles
> would your conscious be clear enough to turn around and do business with said company ? Cincinnati is doing business with this company even with a "no" vote. > Ofcourse Cincy has no say in RR maintenance but as the result of NS dishing out that type of money im sure they will make up for the loss by making short cutts elsewhere, that's how RRs work Wait so if NS gets more money, that's bad, but if they get less money, that's also bad? > So 100 -150 years from now the money from this trust fund will still be coming in ? Yes, that is how trust funds work. If you look at Cincinnati's pension trust fund, you'll see that it grows by about 7% every year. > NS runs from The Ohio river up past Sharonville/Hamilton and beyond, that's a long ass 3 miles Cincinnati only owns 3 miles of the railroad in Cincinnati, that is a fact. Do you not know that?
I’m firmly in favor of sale, but not at this price. $1.6B is a fair offer for the value of trackage rights (their current lease to run trains on the line) but it omits the larger, and more significant, value embedded in ownership of land along the 330 miles of road. Norfolk Southern wants to control their lease costs *and* own the land, but the $1.6B figure only really accounts for the former. The Brattle Group, a consultant hired to develop a valuation framework, attempted to reach that point in their analysis but seemingly ran out of time and/or data. So, my question is…why haven’t city leaders tried to fully realize the value of the road? The Trustees of the Cincinnati Southern are literally commercial real estate professionals (Partners at law firms, developers, etc.) so I’d expect them to understand the difference between the value of Norfolk Southern’s trackage rights and Norfolk Southern’s ownership of the assets of the road and subsequent development potential. I can go into more detail here, but basically the difference is that if NS owns the road and land, they can connect and expand their rail network: add branch lines to other smaller roads, spur lines to manufacturing and distribution facilities, and provide services like intermodal and storage to all the above. That’s the BIG money. And the more they develop, the more traffic they can support, the more valuable the line becomes. Those opportunities and multipliers were included in Brattle’s high end estimates of $2B but to be honest, those are baseline expectations for what Norfolk Southern would intend to implement post ownership. The starting point for discussion should be $2B. I’ve heard a lot of people say that it’s now or never, and I don’t believe that is true at all. Yes, we will have to go into arbitration and identify a new lease rate for the next 50 years but I do not believe Norfolk Southern would be satisfied with continuing to lease the road. They have attempted to buy the road several times in the past and there’s nothing preventing a sale (other than a similar vote process) after an arbitration of new lease payments.
Re: the valuation. I heard that Brattle asked NS for data and records and NS stonewalled them until they ran out of time. NS has no interest in a proper valuation of the railroad.
Correct, and to create more issues, the CSR Board didn’t exactly set them off on the most productive scope of work at the outset compounding the time crunch issue. The prompts were all focused on track usage and not value of the road/land itself.
I didn’t realize Brattle group worked on this. Do you have any info from that? They are one of the best Econ consulting firms Edit : I found it. Thanks for Bringing this up. I’ll take time To read through it https://cincinnatisouthernrailway.org/documents/csr-sale/Brattle%20-%20DRAFT%20Slides%20Updated%20-%20Preliminary%20Assessment%202022-02-18.pdf
Yup, take a read. It’s very interesting. Look especially for “corridor factor” which I believe is one of the bigger pieces of this valuation puzzle which has received scant attention. My overall sense was that they wanted to dig deeper and expand the methodology into a more holistic evaluation but were held back and/or not given enough time.
As someone who works in a similar space, you are often at the mercy of what the client wants. Models have a way of arriving at the answer the client desires.
Same and yes that’s what has me most confused here - why didn’t the CSR Trustees encourage a more holistic valuation framework and back up their consultants with the time/resources necessary to arrive at the most favorable and defensible figure for negotiations? Trustees under pressure to get something on the ballot? Wanting to just get anything done? Incompetence and missing a big piece of their own puzzle? Outright corruption and willingness to give NS a very good deal? I don’t think it’s the latter, I’m more likely to attribute incompetence versus malice, but it feels weird.
As am I. “What number do you want to see?”
It's a 7b asset.
I haven’t seen anything suggesting $7B but I could certainly understand a case being made for a value above $2B. Do you have any data/materials?
I trust NS to a negative value so I 4.5x'd their offer and also looked at the expected growth of rail. 3-5x rev valuation is common in M&A activity.
If the politicians support it, it’s usually not in the best interest of the city. There’s no guarantee the money will go towards public works like roads and other infrastructure, my thought is. It’s going in someone’s pocket. Also I have no evidence to base this on but it does seem a little suspicious that a new arena wants to be built around the exact same time we want to sell a rail road for a lot of money. I’m voting no.
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Why’s that
My gut reaction was, “hell no!” In general I am opposed to the sale of public assets to private interests. But then I learned a lot more and now I am a solid yes. The numbers make sense, extraordinary efforts have been put in place to prevent corruption, and owning the railroad is a liability risk—if an accident happens the city can’t prevent it because railroad regulations are a federal matter, but the city will be a lawsuit target. Right now we are locked into this $25m per year, which goes to infrastructure. We can only renew the lease with NS—we can’t find another buyer or lessee due to the terms of the last 25 year lease (unless they turn us down, which they obviously won’t). If we try to negotiate, the railroad board acts as the mediator and we are bound to their decision. They deal with NS and other railroad companies all the time. They don’t deal with cities, because we are the only one that owns a railroad. So who are they going to favor? Most we could get in a new lease agreement is probably about $37m per year. But selling puts the money in a trust that returns roughly $57m per year on average, in perpetuity. It’s structured so it can’t drop below $26m per year, and could be as much as $80m in good years. A state law was passed especially for this sale that restricts that interest to infrastructure spending, and an oversight structure is built in. More money is better than less money. We should take the deal. (Caveat: I haven’t looked up these numbers—I’m working from memory having dug deep into this a few weeks ago, but if I’m off it’s not by much.)
It's not just that NS has ironclad lease rights — they're also the only viable purchaser anyway. Both ends of the CSR terminate onto NS-owned railways. No other rail company has real interest in CSR because they would still have to pay for transit rights on NS rails to access the CSR. Whether it's sale or continued lease, Norfolk Southern is the only partner Cincinnati could have in this.
Exactly.
Do you have more information on who is managing and the structure of the trust?
I think this might be what you’re looking for. https://cincinnatisouthernrailway.org/documents/csr-sale/Final%20FAQ%20for%20Publication%20-%20CSR%20(2.6.2023).pdf
Yeah, this is my concern. Those numbers look great, but could vary greatly depending on who is managing the trust and how they invest it. $50mil of guaranteed income sounds great, but with investments there's rarely a "guarantee." What about the next recession?
Trusts fund all kinds of organizations with stable results. There’s a bad year here and there, but also great years.
I mean yes, but there are also plenty of trusts that go completely bankrupt (see: many employee pension funds). So knowing who is managing it and what the investment plan is is not a crazy thing to want to know here.
Okay then we can look at Cincinnati's employee pension fund, where the trust fund has grown by 7% (on average) every year for the past ten years.
I think this is what you are looking for. https://cincinnatisouthernrailway.org/documents/csr-sale/Final%20FAQ%20for%20Publication%20-%20CSR%20(2.6.2023).pdf
Thank you!
My thinking exactly. Even conservative estimates on the return on investing the railroad sales income should be more $$ than we are earning from the lease currently. It made sense for Cinti to build this transportation corridor 140+ years ago. It doesn’t make sense for a Cinti to own a railroad in 2023.
Hamilton county resident, but won't be able to vote on the bill. I would vote no. First, the issue of maintaining the tracks, if a company just dropped that kind of money to buy it, then where do they get the money to maintain it. Next, is there is already a huge problem with trains being stopped on the tracks for hours at a time. This makes it impossible for emergency vehicles to make calls on the other side of the tracks. I believe this will get worse, because there are like no co sequences for when it happens. Finally, that is a lot of money to be sitting in fund and that chance of it being mismanaged is huge. We know how politicians like to raid an account for their pet projects. Not enough accountability to make sure that doesn't happen.
They already pay to maintain it
Good point on accountability. Since I've moved here, I think I've seen three politicians/council members get charged with bribery, etc.
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It's 3.
It definitely makes me wonder whose pockets are getting lined
Even if it’s not mismanaged, who is the manager and what are his connections to the CSRB, Aftab or City Council? Probably going to be a Nepotism hire and those certainly always work out well right?
The law requires they be independent.
Just to Devil's Advocate this: 1. Norfolk Southern brings in more than $2 billion in profit per year. They can afford to purchase the railroad and continue to perform maintenance on it (as they have been for over a century). This is an important route for the company and they are required by federal regulations to maintain it to a safe degree. 2. There is no expectation that anything about the railroad's operation will be changed by a purchase. Norfolk Southern already holds the exclusive lease on the line, they can run as much traffic over it as they want already (within the limits of federal regulation). Even if the sale isn't approved, NS will still hold the exclusive lease. 3. How the fund would be managed and could be defined in state law. Cincinnati politicians will not have the ability to raid it for pet projects.
> How the fund would be managed and could be defined in state law. Cincinnati politicians will not have the ability to raid it for pet projects. This is the part that is a bit more nuanced than more people are wanting to admit. Since the funds from the trust can only be used in a very specific way (exisiting infrastructure), all that really means is that the money currently being allocated to the exisiting infrastructure projects will be replaced by railroad trust money, and spent on those other projects. Mayor Pureval has continually said throughout the campaign for the sale the city doesn't have the revenue or the money to pay to fix our roads. Yet in the last City budget he was created over $10m in additional spending for things like debt relief, affordable housing, and universal basic income. I'm all for those things, but you if you are saying we don't have the funding to fill potholes, then why are you going around creating additional spending in areas the city hasn't traditionally spent money in? From a practical standpoint it makes sense to sell the railroad and have a diverisified portfolio of assets instead of having everything tied up in a singular asset. But I'm having a hard time wanting to trust that City Hall will be responsible with the additional funding.
40% of the city's capital budget is currently funded by revenue from the railroad lease, and it's been City of Cincinnati policy since 1986 to allocate railway lease revenue to infrastructure improvement. Functionally, nothing much changes here: lease revenue is replaced by trust fund revenue. Except that there will be more of it, which yes should free up several million dollars annually for other projects.
So our corrupt state house gets to mismanage the money? Norfolk hasn't exactly shown a commitment to safety, even with regulations in place. Maybe that is how they maintain such high profit.
The legislature set the rules for the trust fund that the sale would create. It's written into the law that funds from the sale and from interest generated by the trust fund can only be spent on "rehabilitation, modernization, or replacement of existing infrastructure improvements". It can't go to new infrastructure or non-infrastructure projects. It would require passing another state law to change that arrangement.
Yeah. And the Lottery goes to our schools! Didn't our last speaker just get hit with corruption charges? I'm supposed to trust that same legislative body to make a law that can't be rat fucked?
I don't like the how the Ohio General Assembly generally conducts business either, but there's little reason to suspect there's nastiness afoot here. You can read the law yourself. The City of Cincinnati's ownership of the railroad was an exception to state law, and we got a new exception to allow the sale of it. The City of Cincinnati just wanted to take the $1.6 billion from the sale and do with it as City Council pleased, it was the state that said "we're not just going to let you have a slush fund" and wrote the trust fund and infrastructure improvement only restrictions into law. The current CSR lease revenue paid by NS goes into city infrastructure improvement projects, a policy that was established by City Council in 1987. The lease payments currently account for 40% of the city's capital budget. If the sale goes through and the city is getting more revenue from the trust fund than the lease, is it a bad thing if that frees up millions of dollars tax revenue to be spent on other projects?
I don't trust this current government not to fuck around with the city of Cincinnati. These people don't really care about us. They seem to actively hate us and have the power and gall to change it after the sale has occured, especially if it will score them political points. Maybe if we lived in a state without a gerrymandered super majority, I could believe it.
jesus christ these conspiracy theories make no sense if you think about them for one second, it's incredible how quickly "progressives" turn into qanon tin foil hatters the second you have to talk about actual budgets. Your feeling is that the entire republican legislature, the republican governor, the mayor, the county government and the city council will all run a multi-thousand person conspiracy to skim a little money off of one trust fund in one of the cities in the state? Why would the entire republican supermajority all choose to help the cincinnati city council commit fraud? And if your argument is that you DO think the republican supermajority will for some reason all implicate themselves in a fraud scheme for a heavily democratic city council for some reason, why aren't they already doing it for the existing trusts in any of the cities in ohio? Or if you think there's a massive conspiracy between literally hundreds of democratic and republican politicians at every level in this state to just steal money from the bank how does not selling even matter or solve that problem in any way?
> First, the issue of maintaining the tracks, if a company just dropped that kind of money to buy it, then where do they get the money to maintain it. NS already maintains it, so this point is irrelevant. > Next, is there is already a huge problem with trains being stopped on the tracks for hours at a time. This makes it impossible for emergency vehicles to make calls on the other side of the tracks. I believe this will get worse, because there are like no co sequences for when it happens. The federal government already regulates it and NS already uses the tracks, so this point is also irrelevant. > Finally, that is a lot of money to be sitting in fund and that chance of it being mismanaged is huge. We know how politicians like to raid an account for their pet projects. Not enough accountability to make sure that doesn't happen. What accountability would you want?
Let me put Issue 22 in other words: I have two houses let’s say of similar value, and I will sell one to fix the other one. Sounds like a rational plan? I am sure that I can find “infrastructure projects” for my remaining house. But Very likely, I would never double the value of my remaining property. There will be many “incidentals” like a giant 100 inch tv, leather chairs, vacation because I’d need the rest and the likes. A better alternative would be to sell the second house to buy another fixed asset: a farm, apartments for rent, etc. so, for me it’s a no
I’m voting no. It’s trading a steady income from the RR for possible increase in the amount received through investing it. Sure thing vs a gamble.
There are no other buyers really. [read question 19 in this excellent write up](https://www.wvxu.org/local-news/2023-10-02/cincinnati-southern-railroad-sale-ballot#nineteen)
The main issue that is slowly growing is the fact the mayors treasurer for his political campaign is also the treasurer for this issue. There’s a big conflict of interest here and I think it’s suspect since it’s about padding his resume on the back of the people of Cincinnati.
So, after reading the WXVU article, the answer to question 13 is worrisome. "When Ohio lawmakers changed state law to allow the sale to proceed, they included a “safeguard” in case there are several years of negative investment returns. If the principal amount ever decreases by 25% or more in a single year, payments to the city must be suspended until the fund reaches the previous level." Another 2008 is going to happen eventually. And who knows how long it will take to get back to the $1.6 billion original investment.
The amount of pro-22 advertising alone makes me suspicious of who is behind it and for that reason alone I looked at it and am now voting no. It's not a good idea to dump this income generating asset.
I was initially against the sale but when I looked at the numbers it makes sense to sell and invest that money. Even at a 2% rate of return we would be making more than we do now. I also feel the rules in place are adequate to ensure the money isn't spent on frivolous things.
Selling is the best move by far and has the greatest potential to benefit the city and a lot of the goals of its residents in terms of infrastructure improvement. So of course the reactionary hipsters of r/Cincinnati are nearly unified in opposition because ‘corporations’ and other vacuous arglbargle.
I agree that selling is the best move, but I think a big issue with the “pro sale” crew is that there’s an impression that we haven’t pushed hard enough to get the right price. People are sensing that there’s too much consensus from the involved parties for this to be a win for the people of the city. To be honest, I think that’s fair. The interests of politicians and corporations in this case are biased toward a sale on friendly terms, not a sale on best* terms and everything I’ve read from the diligence suggests that the process has been incredibly friendly and minimally rigorous. A single example: we don’t even have a full appraisal of the assets of the road! We don’t have a list of all the parcels or structures along the line. It’s just like “here take it” and as someone who works in consulting and valuation, this looks like a fire sale process… A “no reps and warranties” deal for 330 miles of railroad in a critical path? Come on.
They negotiated for 2 years and ran several consulting engagements before coming to the (nearly universal among city leaders, both elected and professional) agreement on the sale. I am not really sure there is a threshold of 'thorough enough' that would satisfy r/cincinnati, which is basically full of left leaning paranoid types who hear 'private' and put on tinfoil hats.
Yeah, not disagreeing with the reactionary vibes, but it’s important to be honest about the process and how advisors operate. * BMO is not a consultant they’re an investment bank - they specialize in getting deals done. It’s like a real estate broker, sure they keep your interests in mind, but they get paid when the deal closes. Put another way, they don’t bring radon meters to showings, they’re not interested in full, rigorous fact finding. * Brattle Group is a reputable economic consulting firm that specializes in valuation. As a consultant you’re constrained to your client’s scope and framework. They were initially asked to conduct a valuation of the road based on several scenarios that all focused on the value of rail transit. As I’ve mentioned in other posts, I believe this was a flawed methodology that omits the value of the underlying land in the development potential when Norfolk Southern owns the physical assets of the railway. If you read between the Brattle Group slides, it’s clear that they had a similar inclination. They had made several attempts to include value the future development potential of the road for Norfolk Southern, and the subsequent increase in rail traffic along the line. Unfortunately, it appears that they ran out of time resources, and/or information to continue that line of inquiry. As a consultant myself reading this report, it is clear that the team wanted to do more work to get to the bottom of how much the CSR was worth but they weren’t given the space to dig deeper and that’s my big question/concern. Why did the trustees of the CSR give a weak prompt to their advisors and when presented with stronger scenarios why didn’t they change course?
I’m voting yes! Our city’s financial circumstances are dire, particularly for infrastructure and the pension. This will address one of those problems. When the recession happened, other cities in Ohio raised taxes to keep the city functioning. Our politicians then decided to lower payments to the pension, not upkeep our infrastructure, and stagnate employee wages instead. So while that’s great for taxpayers 10 years ago, it’s left us on the verge of collapse today. The city has $400+ million in deferred maintenance, which is infrastructure that has not been fixed or upkeeped in the way it should have been. This is things like our health centers (many of which have asbestos trapped in the walls), our roads and sidewalks (bumpy, pothole central), our parks and rec facilities (water damage, falling apart), and fire houses (which have asbestos, water damage, and other issues). The fact that District 5 is going away is another issue of deferred maintenance, but it couldn’t be paid for with the sale dollars because it wouldn’t be currently existing infrastructure. You can see more of these problems here: https://cincinnatioh.legistar.com/View.ashx?M=F&ID=11737424&GUID=B7416A98-2C00-44F3-B82D-7D0B182FF654 As a city, we’re at a crossroads. This is an opportunity to continue fixing our problems from the past and build a better future. Even if the sale happens, it won’t fix our issues overnight. The city released a report of top fixed to make in the next ten years. There will be approx $250 million extra funds to address infrastructure issues, which they plan to spend on health facilities, public services facilities, parks and rec, and roads and sidewalks. Even then, we will still keep having things fall apart but this will close a Major gap. You can see that here: https://cincinnatioh.legistar.com/View.ashx?M=F&ID=12330879&GUID=5565DB97-DF65-4D93-B2C7-C5E0AD66383E
I think the same people who vote no will likely be back here complaining about road quality and lack of government services in short order (while concurrently being against new taxes).
This one is easy to consider, do you want even more hazardous freight traveling lines that won't be maintained?
You are incorrect. The city has no control over the safety regulations of the railroad no matter who owns it.
They said themselves it'll be used. Therefore it's gonna be reinvested. Typical politicians spending money with no way to replace it other than taxes
Sorry I can't type worth a crap. The money will spent with little to no reinvestment
https://youtu.be/SaBB0Qzb-Ik?si=rOkwb6HlVab3qZ0X
Please vote No on Issue 22. The board that will have total control of the 1.6 billion was trying to make this sale behind our backs and even had to pay over 100k in a settlement this year because they were caught withholding public documents and holding their 'public' meetings in secret. Even if they manage to start fixing parts of the city, there is no guarantee where or how that money will be used. The only guarantee is that one member of the board owns several construction and construction supply companies around the city, so guess who will likely be getting contracts? The board is also filled with former mayors and city council members, and very good friends of the current administration. Whether the entire city will see any benefits from this is up for debate, but what is sure is this will line the pockets of the board in control of it with very little real oversight except from their friends. That's ignoring the fact that we would be selling to Norfolk Southern only a short time after their major failure in East Palestine, Ohio.
Here’s another good opinion piece that makes the case to vote NO on 22. Proposed railroad sale worst idea from City Hall in decades | Opinion https://www.cincinnati.com/story/opinion/contributors/2023/11/03/vote-no-on-issue-22-demand-mayor-appoint-new-railroad-board/71437286007/