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Review of the Kansas Short Line Railroad Rehabilitation Program

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Review of the Kansas Short Line Railroad Rehabilitation Program Review Of The Kansas Short Line Railroad Rehabilitation Program Final Report – November 2005 Study Completed By Parsons Brinckerhoff for The Kansas Department of Transportation REVIEW OF THE KANSAS SHORT LINE RAILROAD REHABILITATION PROGRAM For Kansas Department of Transportation Submitted by Parsons Brinckerhoff November 2005 Final Report Review Of The Kansas Railroad Rehabilitation Program TABLE OF CONTENTS EXECUTIVE SUMMARY ...............................................................................................................................ES-1 Study Purpose ............................................................................................................................ES-1 Kansas Railroad Infrastructure ..................................................................................................ES-1 Background ...............................................................................................................................ES-1 State Rail Service Improvement Fund .......................................................................................ES-2 Study Process.............................................................................................................................ES-2 Areas of Focus for the Study .....................................................................................................ES-3 Interview Highlights ..................................................................................................................ES-5 Economic Analysis ....................................................................................................................ES-7 Conclusions................................................................................................................................ES-9 Recommendations....................................................................................................................ES-10 1.0 INTRODUCTION...................................................................................................................................1-1 1.1 BACKGROUND .............................................................................................................1-1 1.1.1 State Rail Service Improvement Fund Program History ....................................1-2 2.0 OVERVIEW OF ECONOMIC TRENDS AND FREIGHT FLOWS............................................2-1 2.1 The Short Line Rail System.............................................................................................2-1 2.1.1 Communities Served by SRSIF Projects ............................................................2-3 2.2 Economic Overview of Kansas........................................................................................2-3 2.2.1 Agricultural Sector..............................................................................................2-5 2.2.2 Manufacturing Sector .........................................................................................2-5 2.2.3 International Exports...........................................................................................2-6 2.3 Kansas Freight Flows and Trends....................................................................................2-6 2.3.1 Freight Modal Characteristics.............................................................................2-6 2.3.2 Freight by Commodity........................................................................................2-8 2.3.3 Businesses Served by SRSIF Projects ..............................................................2-12 2.3.4 Factors Affecting Short Line Freight Flow.......................................................2-14 3.0 INTERVIEWS .........................................................................................................................................3-1 3.1 Short Line Railroad Interviews........................................................................................3-3 3.2 Short Line Shipper Interviews .......................................................................................3-14 3.2.1 Grain Shippers (14)...........................................................................................3-15 3.2.2 Non-Grain Shippers (13) ..................................................................................3-22 3.3 Class I Railroad Interviews............................................................................................3-30 3.4 Other Interviews ............................................................................................................3-35 3.5 Other States Short Line Railroad Assistance Programs.................................................3-40 i November 2005 Final Report Review Of The Kansas Railroad Rehabilitation Program 4.0 DETAILED BREAKDOWN OF PROGRAM EXPENDITURES AND USES ...........................4-1 4.1 Program Expenditure Summary.......................................................................................4-1 4.2 Program Expenditures, by Railroad Line, and Type of Investment.................................4-2 4.3 Program Expenditures Relative to Capital Needs............................................................4-5 5.0 IMPACTS ON RAILROAD OPERATIONS..................................................................................... 5-1 5.1 Operational/Service Improvements .................................................................................5-1 5.2 Short Line Railroad Abandonments Avoided..................................................................5-2 5.2.1 Underlying Causes of Short Line Railroad Abandonments................................5-3 5.2.2 Short Line Railroad Abandonment Trends and Currently Planned Abandonments ....................................................................................................5-3 5.2.3 Impact of Program on Avoidance or Delay of Short Line Railroad Abandonments ....................................................................................................5-4 5.3 Neighboring States Rail Issues Affecting Kansas Short Line Rail Operations................5-4 5.4 Possible Future Short Line Rationalization/ Consolidation.............................................5-5 5.5 Possible Future Class I Rationalization ...........................................................................5-6 6.0 ECONOMIC ANALYSIS ......................................................................................................................6-1 6.1 Earlier Economic Studies of Short Line Rail Program Benefits......................................6-1 6.2 Economic Analysis Methodology....................................................................................6-1 6.2.1 Overall Approach and Basic Assumptions .........................................................6-1 6.2.2 Economic Model – Modeling Procedures...........................................................6-3 6.3 Economic Benefits of Improved Short Line Service for Existing Customers – Rehabilitation Projects.....................................................................................................6-4 6.3.1 Shipper Cost Savings for Existing Customers....................................................6-4 6.4 Economic Benefits Resulting from Avoidance of Short Line and Branch Line Abandonment - Acquisition of the Central Kansas Railroad...........................................6-7 6.4.1 Shipper Cost Savings for Existing Customers – Acquisition of the CKR ..........6-7 6.4.2 Avoided Business Closures from Acquisition of the CKR.................................6-9 6.5 Total Economic Benefits – Rehabilitation Projects and CKR Acquisition....................6-11 6.5.1 Shipper Cost Savings for Existing Customers..................................................6-11 6.5.2 Local and State Income and Employment Impacts...........................................6-11 6.6 Impacts by Industry Sector ............................................................................................6-13 6.7 Public Sector Benefits....................................................................................................6-13 6.7.1 Highway Rehab/Maintenance Cost Savings.....................................................6-14 6.7.2 State and Local Tax Revenues..........................................................................6-15 6.8 Economic Impacts of Future Rail Program Business Model Options ...........................6-16 7.0 PUBLIC INVOLVEMENT ...................................................................................................................7-1 ii November 2005 Final Report Review Of The Kansas Railroad Rehabilitation Program 8.0 CONCLUSIONS AND RECOMMENDATIONS .............................................................................8-1 8.1 Conclusions......................................................................................................................8-1 8.1.1 Economic Analysis .............................................................................................8-1 8.1.2 Other Findings ....................................................................................................8-2 8.2 Recommendations............................................................................................................8-3 8.2.1 Program Continuation.........................................................................................8-3 8.2.2 Project Eligibility and Criteria............................................................................8-3
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