Foster inks 30-year deal to run ESHR

State must approve deal

By Ceri Larson Danes

As seen in Eastern Shore News – 12-10-2005

MELFA — On the verge of losing all of its state funding, officials with the publicly owned Eastern Shore Railroad on Wednesday signed a 30-year operating agreement with Dickie Foster, developer of the Bay Creek marina and Resort in Cape Charles – a move that should ensure an infusion of cash into a rail service that was on the brink of collapse last year.

Parties are not speaking freely because the deal has to be blessed by the state Department of Rail and Public Transportation.

"Obviously the folks in Richmond are going to have to approve it," said Bayshore Concrete Products president John Dobbs, a member of the railroad board. Dobbs was also on a four-person committee charged with coming up with a plan that would right the rail's ills and then to identify an operator. He confirmed that the agreement was with Foster.

Foster also declined to comment about the deal Thursday, but has said he would like to make improvements to the rail, run an historic excursion line between some of the Shore's towns, and keep the freight business going.

The rail line has operated in the red for decades and under a cloak of secrecy – it has long cited its private status as a reason not to disclose financial information, even thought it accepts public grant and operating dollars.

Dobbs said a press release was being prepared by board member Richard Lewis, owner of the Parksley-based Associated Farms, a grain and fertilizer company, and the railroad's attorney, Robert Oliver. He referred further questions to them.

Lewis declined to comment until the state has approved the deal, which could take a month. Releasing the information now would just create more questions, he said. Dobbs said the railroad is hoping for a Jan. 1 effective date once approved.

"From what we understand about state funding from our board meetings, they intend to pull the plug after the first of the year." he said.

Foster last year was in discussions with the board about taking over management of the railroad. He subsequently withdrew his "memorandum of understanding" when the Accomack-Northampton Transportation District Commission decided to schedule a public hearing on it.

The public bi-county commission purchased the private business Canonie, a holding company that owns the railroad real estate and track, and the railroad business almost 30 years ago. Supervisors from both counties serve as board directors of Canonie, a holdover name from a previous owner who bought the line from Penn Central. Larry Trala, a Northampton County Supervisor, is chairman of all three boards.

The deal on Wednesday immediately followed a public Tuesday night meeting of the commission and the Canonie Atlantic board, which meets privately. Membership on the Canonie Board and the Eastern Shore Railroad's board are the same.

Since fears that the railroad would collapse, the commission then expanded the railroad‚s board by adding business people – exclusively those who are customers of the short line, and hiring a business consultant, adopting a business plan, deciding to seek a long-term operator, then ending up in a deal with Foster more than a year after his original offer.

The business plan recommended the railroad institute higher car-handling fees, more aggressively market itself locally and regionally and consider leasing some of its real estate holdings to produce more operating income.

It also showed the railroad continues to operate in a deficit, owes $486,000 in matching grant funds to a state rail agency and has seen car traffic erode 28 percent on its 65-mile Eastern Shore track since 1999.

Lewis felt having a new operator would change the outlook.

"It's all progress. It's all very positive," he said. "Both sides are in agreement and are ready to move forward."