Ohio lawmakers have reached an agreement to allow the proposed sale of the city-owned Cincinnati Southern Railway to move ahead. Voters could see the sale on the ballot as soon as November.
City officials hope to sell the CSR to Norfolk Southern for $1.62 billion and put the revenue into an investment account. The city would get payments from the interest revenue to use for maintaining existing infrastructure.
The CSR Board of Trustees made the sale contingent on a state law change specifying how the city could spend the revenue. Ohio Senate Republicans initially blocked that change earlier this month.
RELATED: Should Cincinnati sell the Southern Railway? Voters will decide
The change is part of the state transportation budget approved by the Ohio House, but Senate Republicans initially took it out. Sen. Bill Blessing of Colerain Township says the railroad sale became a bargaining chip between the two chambers.
"Basically, I was presented with an option: I could either just let it go as-is, or tweak it a little bit," Blessing said. "But either way, the enabling language was going through."
The additional regulations include:
- Allowing the sale to go on the ballot only once in 2023 or 2024. If it fails, state lawmakers would need to approve another attempt
- If the principal amount of the investment account decreases by 25% or more, payments to the city must be suspended until the fund reaches the previous level
- The ballot language must include the name of the buyer's parent company — in this case, Norfolk Southern.
Learn more about the regulations below.
Mayor Aftab Pureval declined an interview but said through a spokesperson he supports the amendments to the enabling language.
CSR Board President Paul Muething declined to answer several questions, saying the bill still needs a signature from Gov. Mike DeWine. Assuming that happens, Muething says the board will schedule a special meeting "as soon as possible."
"Until then, any answers would be premature," Muething said in a statement.Regulations for a sale
The actual sale would not require any changes to state law. The CSR's founding legislation, the Ferguson Act, requires the revenue of a sale to be used for debt service.
Under the current lease agreement, the city gets about $25 million a year that must be used to maintain current infrastructure. The CSR Board has no interest in selling if the revenue can't be restricted for the same use, meaning future councils couldn't use the funds for anything else.
RELATED: Safety regulations are the same regardless of who owns the Cincinnati Southern Railway
The tweaks include allowing the sale on only one ballot without going back to the state for approval again.
"The problem that I was trying to solve was, if this failed, do they continue going to the ballot every now and then until they get it?" Blessing said. "I thought that was kind of unfair."
The proposal could be on the ballot in the November 2023 general election, or the spring primary or fall general election in 2024. City officials and CSR board members previously indicated they plan to bring the measure to the ballot in November 2023.
The city predicts annual payments of between $50 million and $65 million a year, but officials say there will be a guaranteed minimum payment of at least $25 million (matching what the city gets each year under the current lease).
The enabling language the state legislature passed this week specifies voters must approve the method for determining that minimum payment.
RELATED: What is the Cincinnati Southern Railway worth? Documents show a wide range
One of the additions negotiated by Sen. Blessing says if principal amount of the investment account decreases by 25% or more, payments to the city must be suspended until the fund reaches the previous level.
"The idea being that if they were getting into trouble, it couldn't be spent down to zero — it has to stop and allow it to recover," Blessing said.
Another addition of Blessing's is that the ballot language must include the name of the buyer's parent company, Norfolk Southern.
"My concern was [the ballot] might say something like 'the current lessee' or something to that effect, avoiding some of the issues around where Norfolk Southern's public image is these days," Blessing said, referencing the derailment of a Norfolk Southern train in East Palestine, Ohio in February. "In defense of the proponents, they never had any intention of doing that, and I do believe them on that point."
Draft of ballot language
The language approved by state lawmakers includes an outline of ballot language for the sale. This is not necessarily the final version.
"Shall the ________ (name of railway board of trustees) be authorized to sell _______ (name and description of railway or portion of railway being sold) to an entity, the ultimate parent company of which is ________ (name of ultimate parent company) for a purchase price of ______ (amount proposed for the sale), to be paid in ____ (number of installments) installments during the years _____ (years in which an installment will be paid), with the moneys received to be deposited into a trust fund operated by _______ (railway board of trustees), with _______ (municipal corporation) as the sole beneficiary, the moneys to be annually disbursed to the municipal corporation in an amount no less than _____ (dollar amount) per year, for the purpose of the rehabilitation, modernization, or replacement of existing streets, bridges, municipal buildings, parks and green spaces, site improvements, recreation facilities, improvements for parking purposes, and any other public facilities owned by _____ (municipal corporation), and to pay for the costs of administering the trust fund?”
