The Daily Item, Sunbury, PA

Union County

April 9, 2014

Bidding info being drafted for rail line operations

— LEWISBURG — The bidding war for a multi-year contract beginning in 2017 to operate 200 miles of railway owned by eight central Pennsylvania counties — including Montour, Northumberland and Union — is set to begin in earnest this summer. But only after the final draft of a request-for-proposals document is presented to and approved by the SEDA-Council of Governments’ Joint Rail Authority’s board of commissioners.

A draft of the RFP was completed in late March. It will be shown to the board during the rail authority’s May meeting, said Jeff Stover, authority executive director.

The line is operated by the North Shore Railroad Co. now.

The language contained in the request-for-proposals document was “worked on by our staff and by our consultant, Dan Mazur,” Stover said. Mazur is a retired vice president of Norfolk Southern who lives in the Harrisburg area.

The North Shore Railroad operates five short lines: the Juniata Valley Railroad, Lycoming Valley Railroad, Nittany & Bald Eagle Railroad, North Shore Railroad and Shamokin Valley Railroad. The company also operates the Union County Industrial Railroad, serving portions of Northumberland and Union counties.

While the authority’s contract with the North Shore Railroad does not expire until 2017, Stover said it will take at least a year for the new operator to understand the organization’s practices.

The contract could be a lucrative one for the rail authority as the short lines run in areas populated with companies involved in Marcellus Shale-rich territories.

According to its 2007 contract, the JRA receives a 10 percent operating fee from North Shore’s gross revenue. That cut funds the JRA and is applied to capital projects such as track repairs.

In February, North Shore reported gross freight revenues of $918,935 and $23,327 in car storage revenues. From those revenue streams, the authority was paid 10 percent, or $91,893, of gross revenues, and 25 percent, or $5,831, of car storage revenues.

Stover and other JRA officials said they are creating a request for proposals that would “hopefully attract a company that has strong experience running an operation like ours,” he said.

“We have no intention of selling the lines. No way,” he added.

Stover could not estimate the overall value of JRA’s holdings.

“Sixty million, $80 million, I don’t know,” he said.

Once requests for proposals are released, “We’ll look to see who puts in bids, and we’ll narrow things down to a few qualified operators,” Stover said.

The new operator likely will be picked by 2016 because, Stover said, it will take time for the new company to understand JRA’s “best practices and fit in seamlessly with our current operation.”

“We want a good business partner and someone that has the financial wherewithal. They will have to submit an annual audit of their finances,” he said.

The authority will consider only proposals from those with experience operating short lines similar to those in this region.

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