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The Northeast Texas Rural Rail Transportation District met on Thursday to select a new operator
NETEX chooses new rail operator
The Northeast Texas Rural Rail Transportation District (NETEX) chose a new operator for the rail line at their monthly meeting on Thursday, and it is not their current operator Blacklands Railroad.
By a recommendation of the five-person selection committee, the board unanimously voted to enter into negotiations with Freedom Terminal Services/ Freedom Railcar Solutions with intent to install the Mustang, Oklahoma business as their new operator.
Other contenders for the position included Texas Northwestern, Arkansas Shortline, Rock Island Rail of Tennessee as well as current operator Blacklands Rail/ Sabine RailWerks/ Public Werks.
DECISION PROCESS
According to Neal Barker, Hopkins County member of the five-person initial selection committee, each group which presented before the selection committee had a “clear differentiation” of ideas about how the railroad, which stretches 85.6 miles from Greenville to Winfield, should be managed. This allowed the committee to come up with a ranking system for the proposals, Neal Barker said.
What impressed the selection committee about Freedom, said Collin County selection member Cheryl Williams, was their focus on continuous quality improvement measures.
Hunt County selection member Bonnie Hunter said she was impressed by the fact that members of the Freedom company had “done their research ahead of time.”
“They didn’t just come in and do a presentation to us,” Hunter said. “They did a lot of background work on the railroad itself and a lot of discovery.”
The decision not to choose current operator Blacklands Railroad was due to the inability of head investor John Crew to secure the sum of $42 million Crew promised the board in February, according to NETEX president Brian Lee.
“We had talked about large figures,” Lee said. “He [Crew] had faced some challenges in investor money… I think we backed off of what the hopes were and were never given specifics about how the money would be raised.”
TERMS OF SERVICE
Lee stated that he would like to see an operating agreement move forward with Freedom wherein NETEX is “compensated much the same on a per-railcar basis.” Lee mentioned one of the reasons for choosing Freedom was their willingness to invest their own money in rehabbing the line.
According to Freedom proprietor Mike Salek, the group proposed a $12 to $15 million investment through a combination of personal monies and grant funds in the rail to bring the line up to Federal Railroad Administration Class I standard and later Class II.
With an operator’s agreement rather than a lease, this would enable either Freedom or NETEX to break the agreement with permission from the Surface Transportation Board. This recently occurred with Blacklands and NETEX, which led to NETEX selecting Freedom as their new operator.
Salek said he plans for Freedom to be operational within 30 days, and would like to be headquartered out of Sulphur Springs. Salek said they plan to run trains seven days a week and would like to create local jobs.
“We want to help bring companies here. We’re about accountability to the operation and making sure customers needs are met,” Salek said.
MOUNT PLEASANT
The Mount Pleasant former Monticello Luminant Property remains a key component of NETEX’s strategy moving forward.
In March 2020, the city of Sulphur Springs officially annexed their former Luminant mining property, for which the city paid the coal company $100, according to city documents. According to a development agreement between the Sulphur Springs and Luminant, this is because the coal company still has work to do on the property, including knocking down the old coal silo on April 25 of this year. Furthermore, the Sulphur Springs property connects to county roads and contains only a rail interchange with the Kansas City Southern line.
The Mount Pleasant Monticello property is the opposite of the Sulphur Springs property. It’s much larger: stretching from Pittsburg to Winfield, it crosses a major highway on both sides of Interstate 30 and contains approximately 32 miles of usable rail track, according to Luminant documents. For these reasons, the property could be worth as much as $50 million dollars or more, according to land use calculations. And the work on the property is fully completed, according to filings from the Railroad Commission.
New NETEX operator Freedom confirms that they are one of the bidding parties on the Mount Pleasant Monticello property, in conjunction with another bidding party. Freedom could be bidding in conjunction with the city of Mount Pleasant or Blacklands, who have both confirmed their bidding status to the News-Telegram, or another party altogether.
“We’re standing behind someone that’s looking to purchase it, but you’re not going to see our name on it,” Salek said. “A lot of the bidders are looking at it for railcar storage. If our bidder gets it, we’ll work in conjunction with the growth of the existing area… We’ll look at it to industrialize, not to make NETEX compete, but to complement.”
A next decision for the Monticello property was scheduled to be made May 29, but was pushed to mid-June.