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Such a deal

November 7, 2012
By Lee Keet , Adirondack Recreational Trail Advocates

The Adirondack Rail Preservation Society has just announced plans to enter into a partnership with Iowa Pacific Holdings to establish "high end excursion passenger service between New York City and Lake Placid, utilizing restored Pullman railcars and sleeping cars" with "white glove service for the discerning traveler."

In other words, they envision a return to the bygone era of 100 years ago, before cars and highways penetrated the Adirondacks. They would turn the clock back rather than look ahead to a new and beneficial use of the old corridor with dramatic implications for the Tri-Lakes area.

And as a private-equity investor for 28 years, I have never seen a deal more leveraged in favor of private investors at the expense of taxpayers. Their plan, they say, is to run on Amtrak lines to join with restored rails from Utica to Lake Placid. Taxpayers pay the costs; investors get the rewards. Such a deal!

Iowa Pacific Holdings operates the much shorter (three-hour) luxury Hiram Bingham train in the Andes that I have taken. Great trip, even at a $329 price tag. (At that rate, the approximately nine-hour overnight trip from New York City would command a $900-plus ticket.) If pre-booked for special runs, as I assume would be the case for this fanciful service, investors would not have to worry about under-utilized trains, and since almost all the costs, other than operating each train run, are on the backs of others, the profit potential is obvious. Their cost per passenger will be small since taxpayers would shoulder the reconstruction cost of the 90-mile line between Old Forge and Saranac Lake, which is now completely falling apart. That price tag is estimated by ARPS to be $16.5 million and more realistically by the New York State Department of Transportation at $43 million. We tend to believe the $43 million figure, or even more, since DOT has already spent $32 million to restore two short segments for slow-speed tourist service.

Note that this is not ARPS' long-promised regular passenger and freight service that would bring people regularly to Old Forge, Tupper Lake, Lake Clear, Saranac Lake and Lake Placid. This new scheme - and grand deal for investors - consists of special trains that presumably run only when enough high-rollers sign up.

It is interesting that this deal is being promoted by ARPS, which operates the tourist trains between Utica and Thendara and Lake Placid and Saranac Lake, at this particular moment. Why now? Because town after town has indicated that it's time to take a close look at all the options for optimum use of the old rail bed. The announcement of this new "partnership" gives ARPS an excuse they needed to resist the alternative use of the corridor as a rail-to-trail conversion that could attract a quarter-million new biking and other tourists to this region.

There is another reason. Remember their previous promises? Twenty years ago ARPS sent a letter to the DOT/DEC (state Department of Environmental Conservation) planning team and promised to restore the railroad from Utica to Lake Placid to Class III condition at no cost to the state. So far, only the 9 miles between Lake Placid and Saranac Lake and the section between Utica and Thendara have tracks capable of handling even slow-speed tourist trains. As noted, the proposed partnership between ARPS and Iowa Pacific would foist the multi-million-dollar cost of restoration onto the taxpayers. Meanwhile, we continue to lose the $400,000 per week (!) in tourist revenues that a recent Rail-to-Trail Conservancy study says could flow to the Tri-Lakes area.

But let's assume they could actually get the permits and we are all willing to foot the bill. Where does that leave all the prior arguments for regular train service, restored freight, ski trains to Tupper Lake, etc.? The railroad folks will no doubt say that once the rails are restored (by grateful taxpayers), new businesses will come to use the tracks for freight hauling, and other trains will bring us passenger service. Yet their own studies show that only 7,000 people per year would use the train if passenger service could be restored - not much more than when train service was discontinued 40-plus years ago.

The good news is that this magical deal is not one that ARPS can do in accordance with its permit. DOT has to approve everything. Iowa Pacific's and ARPS' announcement says that "the parties will work together on the full development of a joint plan that can be submitted to the New York State Dept. of Transportation and form the basis of business discussions with Amtrak and other stakeholders." This is good news because such a dramatic change in plans can only happen under a revised unit management plan. UMP revision would let the facts be known: when the trains would run, how many people would ride them, what would Amtrak permit on its corridor, who would pick up the big capital costs, what towns would be serviced, etc. But it would also bring into focus the competing story: How many tourists would be attracted to a world-class recreational trail? How many dollars and how many jobs would a rail-to-trail conversion bring? And last, but by no means least, what would be the quality-of-life benefits to local residents?

It is time for a thorough airing of the various plans for the corridor within the context of the UMP process. And when that happens, I have faith in the ability of my fellow citizens to separate fact from fancy and solid opportunity from smoke and mirrors.


Lee Keet is a member of the Adirondack Recreational Trail Advocates board of directors and a year-round Saranac Lake resident on Lake Colby.



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