By Larry Kahn
If you own or occupy property that contains a rail spur, then you need to know about Positive Train Control (PTC) and how it may impact rail switches and how railcars are moved to and from your spur.
PTC is a federal law that was a result of a deadly train crash in California in 2007. PTC mandates that by December 2018, all tracks with passenger service or carrying hazardous materials have switching from a central control point. PTC requires electronically controlled switches and sophisticated location tracking of all trains operating on these lines.
The railroads are investing heavily to be PTC compliant. The most significant impact is for freight delivered by the large Class I railroads and to a lesser extent Class II and Class III railroads. A benefit of PTC is that trains will run faster with fewer stops, resulting in more reliable deliveries. Positive Train Control is already bringing changes to the level of service, switching, and spur locations. Some locations will be significantly impacted by these changes.
Although the intent was to exempt all Class II’s and Class III’s from PTC requirements stipulated in the Rail Safety Improvement Act, small railroads that help move traffic on Class I lines or are connected with commuter-rail systems need to install PTC equipment on their locomotives to comply with the law.
Properties owners/occupiers may be asked to replace current mechanical switches with a PTC switch, which costs between $400,000 to $650,000. If your facility is a bit dated it may not make sense to spend that much on upgrading a switch. Some occupiers may decide to relocate to an industrial park or off the main rail line onto a local track rather than incur the upgrade costs. Others may choose to abandon rail service if rail freight volume is not large enough to justify the spend.
If you lease a property with a rail spur, the responsible party for rail spur maintenance is outlined in your lease agreement. Cushman & Wakefield’s Rail Advisory Group can assist tenants and owners of rail properties navigate the new PTC law and help develop a real estate plan that meets the specific needs of rail and rail-related industries.
Cushman & Wakefield’s Rail Advisory Group creates smart real estate solutions for the complex challenges faced by railroad and railroad-related industries. Our Rail Advisory Group is composed of some of the most knowledgeable and seasoned experts with an acute knowledge of rail properties, sites, easements, and rights-of-way. Our professionals can help monetize under-utilized rail properties and provide rail-served site selection. We also have experience with mineral rights, rail yard management, easement valuation, and business incentives.
Larry Kahn is an 18-year commercial real estate veteran who focuses on rail-served industrial real estate site selection and bringing rail-served properties to market. He has extensive experience consulting domestic and international parties on issues regarding freight and the development of manufacturing and distribution facilities. He worked with the Florida Department of Transportation (FDOT) on multiple projects and authored the FDOT’s Primer on Intermodal Logistics Centers. He advises various Economic Development Commissions throughout the State of Florida.