Cincinnati voters will decide in November whether the city can sell the Cincinnati Southern Railway to Norfolk Southern for $1.6 billion.
The CSR is the only municipally-owned railroad in the country. The Board of Trustees that manages the railway voted Thursday to put the proposal on the Nov. 7 ballot.
"I think this is a good transaction for the citizens of Cincinnati," said Board President Paul Muething. "My thinking is, there’s been enough discussion, enough press about this matter; I think it makes sense to take it to the voters now."
State lawmakers limited the election options to this November, or the primary or general election next year. If voters oppose the measure, the Board could not put it on the ballot again without going back to state lawmakers for another state law change.
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A letter from a Norfolk Southern executive to the Board of Trustees dated July 10 expressed a "very strong preference" for the ballot measure to be on the November 2023 ballot. Senior Vice President and Chief Strategy Officer Michael McClellan requests a closing date of March 15, 2024, if the referendum passes.
"If the referendum fails, this early November date will allow the parties time to identify next steps, including any measures associated with the existing lease," McClellan wrote.
The sale needs approval from Cincinnati voters to go through. If approved, the $1.6 billion would be put into a new investment account, with earned interest going back to the city to maintain infrastructure.
"Instead of having all of our financial future with one company, we would be able to diversify it," said Board Member Amy Murray. "I think the sooner we do that, the better and the safer it will be for the city."
The city currently gets about $25 million a year by leasing the CSR to Norfolk Southern. The board (and the experts it hired for analysis) estimates the city would get at least $56 million a year on earned interest from the sale revenue.
The cost to complete all the city's deferred maintenance projects is estimated at between $400 million and $500 million over the next few years. The annual capital budget averages about $60 million.
Board Member Paul Sylvester said his first thought was to wait until next year because of the highly publicized Norfolk Southern trail derailment in East Palestine, Ohio, this year.
"I think people are now asking the question, why should the city of Cincinnati be associated with with Norfolk Southern, and take whatever risks, be they small or large, that might come with owning a commercial enterprise that, at least on a couple of occasions, has things go wrong?" Sylvester said.
Voter turnout is typically low for an election without any federal races, but turnout will likely be higher this November because of the statewide ballot measure on abortion. This is also an election year for Cincinnati City Council.
What happens next?
Cincinnati City Council must approve the ballot language and send it to the Hamilton County Board of Elections. This step is "ministerial," meaning council has no discretion over whether to approve the ballot language or not.
Council's step in the process needs to be done at least 90 days before the election. Because of the summer council calendar, council will need to approve the language at its meeting Aug. 2 in order to appear on the November ballot.
The sale is also subject to approval from the federal Surface Transportation Board, which evaluates if the sale will have any "anticompetitive effects."
The STB will review the application, according to a May 31 decision, "to make certain that it does not substantially lessen competition, create a monopoly, or restrain trade, and that any anticompetitive effects are outweighed by the public interest."
Anyone in opposition had until June 30 to submit comments, protests and any other evidence; Norfolk Southern now has until July 28 to respond. The STB will make a final decision by Sept. 11.
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What will voters see on the ballot?
"Shall the Cincinnati Southern Railway Board of Trustees be authorized to sell the Cincinnati Southern Railway to an entity, the ultimate parent company of which is Norfolk Southern Corporation, for a purchase price of $1,600,000,000, to be paid in a single installment during the year 2024, with the moneys received to be deposited into a trust fund operated by the Cincinnati Southern Railway Board of Trustees, with the City of Cincinnati as the sole beneficiary, the moneys to be annually disbursed to the municipal corporation in an amount no less than $26,500,000 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 the City of Cincinnati, and to pay for the costs of administering the trust fund?”
What will the campaign look like?
Norfolk Southern plans to fund a campaign in favor of the measure, according to a spokesperson. Local consulting firm JS Strategies will manage the "Building Our Future" campaign. The Norfolk Southern spokesperson said the company has not decided how much money they plan to spend.
No city funds can be used for political activity, which includes supporting or opposing a ballot initiative like the proposed sale.
All city officials, including the volunteer members of the CSR Board, are subject to that prohibition. Anyone can express their personal opinions on the measure.
A memo from the city solicitor outlined what is and is not permissible for board members:
| Permissible | Not Permissible |
Providing factual information related to the sale, including using CSR resources to do so. | Using CSR funds to support the ballot initiative, such as placing an ad. |
Personally advocating in favor of the sale outside of a CSR Board meeting. | Using a CSR Board meeting to advocate for the passage of the ballot initiative. |
Donating your personal funds in support of the ballot initiative. | Receiving funds from Norfolk Southern and the Board using them to fund support of the ballot initiative. |
Taking Board action as required by law, such as approving the sale to be submitted to the electorate. | City Council passing a resolution in support of the ballot initiative. |
Asking factual questions about the ballot initiative at a CSR Board meeting. | Using CSR resources to pay a consultant to draft a message of support in favor of the ballot initiative. |
It's not clear whether those in opposition to the sale will mount an organized campaign.
Former city officials have vocally opposed the sale, including former Council Members Christopher Smitherman and Kevin Flynn.
A group of people opposing the sale marched in the Fourth of July parade in Northside. They sported signs saying "Norfolkin' Way" and "Derail the Sale."
