Negotiating with the Railroad
If you’re involved in a rail-trail project, more than likely you’ve entered into negotiations with a railroad company. Navigating through the corporate structure to find a representative who is willing to discuss rail-trail acquisition and development may be difficult. Railroads make very little of their income from real estate sales, so don't be surprised if your interest in acquiring a corridor isn’t their top priority. Don’t let this discourage you! Be persistent and contact other trail managers to learn more about successfully negotiating with the railroad.
If you’ve conducted corridor research and determined that the railroad still owns or operates on the right-of-way, you’ll need to start the acquisition process by contacting the railroad. Negotiations with the railroad will differ depending on the nature of the property, and the options and interests of the railroad.
Your first step will be to determine who to talk to. Large railroad companies (referred to as Class I Railroads) have several departments, and understanding the structure of the railroad company and how each department functions will help you decide who to contact. Listed below is a description of each department and what they can do to help you.
Asset Management or Strategic Planning Department
This department is responsible for continuously evaluating the profitability of all the rail corridors in a railroad system. They decide how to dispose of the property, if needed. You can request system diagram maps from this department.
This department schedules and operates trains and maintains the rolling stock and track. Operating personnel often have a deep understanding of the corridor. If you know someone in this department, ask them about their understanding of the corridor, such as the condition of existing structures, any drainage issues and other maintenance problems. The regional manager may also be able to assist in a tour of the corridor.
This department evaluates contracts and issues opinions on labor, government and business- relations matters. The legal department also submits filings to the Surface Transportation Board (STB). The legal department can furnish copies of abandonment applications, notices and other legal documents and is sometimes the most receptive to rail-trail negotiations.
Real Estate Department
This department manages real estate assets and is responsible for maximizing corporate returns on any real estate investment, including selling property that is officially abandoned. You will have to negotiate with the real estate department for acquisition if the corridor is already abandoned, and some railroads may require their involvement pre-abandonment as well. Staff in the department will have access to valuation maps and information about property easements.
Public Affairs Department
This department monitors state and local politics that may affect the railroad via attorneys that are assigned to a region or state. A public affairs representative may be more than willing to assist on high-profile, widely supported projects. They can also act as a liaison between departments.
Understanding the interests and options of the railroads will enhance your negotiations. Learning from other trail managers who have dealt with the same railroad company is a great way to find good contacts within the railroad. Use RTC's Trails and Greenways listserv to connect with other trail managers across the country. You should also become knowledgeable about the railroad company's history and current state of operations. Contacts, financial information, operating statistics and more can be accessed on most websites. The seven Class I railroads in the United States are:
- BNSF Railway
- CSX Transportation
- Grand Truck Corporation (subsidiary of the Canadian National Railway)
- Kansas City Southern Railway
- Norfolk Southern Railway
- Soo Line Railroad (subsidiary of the Canadian Pacific Railway)
- Union Pacific Railroad
Regional and short line railroads (Class II and Class III) may be easier to contact since they are much smaller companies that usually have local offices. Search the American Short Line and Regional Railroad Association's directory of members for local contact information.
Once you have established a relationship with the railroad, your negotiations may lead to a preliminary agreement for gaining site control, setting a purchase price and establishing an acquisition process and timeline. Acquiring Rail Corridors: A How To Manual will help guide you through the process and provide tips on negotiating with the railroad.