June 10, 2016 – SAN DIEGO — sandiegouniontribune.com – A new company will take over repairs and eventual operations of the beleaguered Desert Line railroad, clearing the way for work to begin this summer and for trains to move goods made in Mexico into the United States in 2018.
In a deal finalized Thursday, the Baja California Railroad will sublease the old and dilapidated line from the Pacific Imperial Railroad, a company that has leased the tracks from the San Diego Metropolitan Transit District, since 2012.
The agreement cuts Pacific Imperial out of most Desert Line operations and repairs. The company has no experience running a railroad and has been the subject of a federal inquiry.
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Officials said the sublease is a crucial step in getting the Desert Line running again so that products made in Mexico’s maquiladoras (a manufacturing operation, where factories import certain material and equipment on a duty-free and tariff-free basis for assembly, processing, or manufacturing and then export the assembled, processed and/or manufactured .) can be efficiently shipped into the United States by rail rather than sitting for hours in trucks at the region’s border crossings.
Between $60 and $70 million in repairs on 70 miles of track, 57 bridges and 17 tunnels are needed before any freight is moved. The two rail companies will pay for the renovations.
As a term of the sublease, MTS will continue to receive $1 million in minimum annual rent, but will now only receive a 7 percent cut of gross revenue when freight starts moving on the line, down from 15 percent in the previous agreement with Pacific Imperial.
Additionally, deadlines for repair and operational milestones that Pacific Imperial was supposed to meet have been pushed back a year, marking another in a series of delays that have hindered progress on the Desert Line.
A 10-mile stretch from Coyote Wells to Plaster City in Imperial County is now supposed to be repaired by March 2017 and begin limited operations by the end of that year.
The 60-mile span from Division near the border to Coyote Wells must now be repaired by April 15, 2018, begin limited operations by Aug. 15, 2018 and complete full-scale repairs by Dec. 21, 2018.
Baja Rail has already repaired the Mexico Line, a 40-mile stretch of track that connects with U.S. trains in Tijuana and heads east to Tecate before crossing the border and connecting with Desert Line. The Mexico Line is ready to start moving goods from the factories toward the U.S., but still lacks a station where freight can be loaded from trucks onto train cars, Baja Rail President Fernando Beltran said.
San Diego City Councilman David Alvarez, who has criticized Pacific Imperial in the past, said Baja Rail’s work in Mexico makes him optimistic that the freight line will be repaired and running soon.
“I have personally seen the work performed by the new partner, Baja Rail, on the Mexican side and was reassured by them and MTS staff that the new milestones will be met and the line will be operating in the next two years,” he said.
Joe Kasper, chief of staff for Rep. Duncan Hunter, R-Alpine, said the deal is just another delay in the Desert Line saga with no sign of work, and no real leadership.
“So here we are again. Another year, another deal, and MTS has nothing to show as evidence of progress. If anything, MTS is taking steps backwards without ever taking a step forward,” Kasper said.
Hunter is a member of the House Transportation and Infrastructure Committee. In October 2014 he asked the U.S. Attorney to investigate the Desert Line and the transit system’s lease with Pacific Imperial.
Hunter and former Pacific Imperial executives accused the rail company of falsifying and misrepresenting its assets in order to lure investors, and of mismanaging funds. MTS said it looked into Pacific Imperial but did not find fraud.
The sublease divides responsibility of the Desert Line into two sections. The eastern portion runs approximately 60 miles from the border just east of Campo to Coyote Wells, which can handle trains of up to 30 cars, will be repaired and operated by Baja Rail. Construction on this span is expected to begin this summer.
Near the eastern terminus, Pacific Imperial will build a facility to load truck freight onto rail, and assemble trains with as many as 100 cars. From this hub trains will run on a 10-mile stretch repaired and operated by Pacific Imperial with Baja Rail’s help and then connect to the Union Pacific Railroad in Plaster City, the end of the line.
There are also plans for an international security checkpoint near the border but details have not been determined, Roberts said.
Pacific Imperial signed a 99-year lease with MTS in 2012, and has been in discussions with Baja Rail since 2013.
Since acquiring rights to the property, Pacific Imperial has done some tests and preliminary work but has not done any major construction or rehabilitation of the rail line.
The Desert Line is a portion of the San Diego & Arizona Eastern Railway built by sugar magnate John Spreckels under the San Diego & Arizona Railway Company.
Spreckels broke ground in 1907, but construction was a challenge. Mexican revolutionaries interrupted work in 1911, and the U.S. government seized railroads in 1917 in support of the war effort. Construction was eventually finished in 1919.
It has been nicknamed “the impossible railroad.”
MTS purchased SD&AE Railways Company in 1979. Fires, floods and other disasters over the years have made the route, including the Desert Line, inoperable.
Credit kyma.com, sandiegouniontribune.com