Improvements To Us Highway 82 East West Freeway And The Relocation Of The Seagraves Whiteface And Lubbock Railroad

The Lubbock District of the Texas Department of Transportation (TxDOT) is planning the acquisition of railroad right-of-way from the Seagraves, Whiteface, and Lubbock Railroad Company (SWLR) as part of the U.S. 82 East-West Freeway project. During the planning process, several questions have arisen regarding the long term commercial viability of the railroad. The SWLR is faced with several situations and conditions that could adversely impact the longer-term viability of the line. The schedule and form of debt service established with the purchase of the line requires renegotiation, refinancing, or as an alternative, sale of the line. Resolution of debt issues should be accomplished within a six-month period. Given the fact that Amerail has been looking for a buyer for several months, the railroad entering receivership appears to be a relatively high probability outcome. The impacts of past deferred maintenance will continue to be an operating challenge for any owner of the railroad. The effects of past maintenance decisions and practices are beginning to be acutely felt in several aspects of the railroad's operations. Resolution of rehabilitation and maintenance issues is contingent upon sale or refinancing of the railroad. Regardless of the status of railroad ownership, rehabilitation must be carried out and a sound maintenance program must be in place within a five-year period. The analysis suggests that as far as TxDOT is concerned, stable ownership and operation of the SWLR is the key issue. Financial sources and the current owners of the company indicate that Amerail is actively seeking a buyer, and has been for some time. The current owners, however, prefer refinancing and continued operation of the SWLR. It is reasonable to expect ownership issues to be resolved within a one-year time frame. TxDOT's options with respect to the SWLR are discussed in terms of four likely scenarios: (1) a buyer is found and the SWLR is sold, (2) Amerail refinances the SWLR and continues operations, (3) a buyer is not found and the SWLR enters receivership, and (4) TxDOT determines that buying the SWLR best protects its investment and the regional transportation system.