Time has officially run out, but negotiations will continue between CN Rail and a group of farmers trying to buy a network of branch lines in west central Saskatchewan.
The statutory deadline for the two sides to reach an agreement was July 6, four months after the West Central Road and Rail Committee formally notified CN of its desire to buy a series of lines running more than 400 kilometres from near Saskatoon to the Alberta border.
The next step in the abandonment process is for the railway to offer the line for sale to the provincial and then municipal governments for net salvage value.
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But both sides say the passage of the deadline doesn’t mean the WCRRC bid is dead.
“Negotiations will continue as far as CN is concerned,” said railway spokesperson Mary Jane Skulski. The railways hadn’t decided as of July 6 whether to formally extend the deadline, but either way, she said, talks will continue.
Committee chair Rob Lobdell said he remains “guardedly optimistic” that a deal can be worked out to allow the local group to take over the track and set up a short line railway, hopefully by this fall.
“We have presented a business case to CN as to why we think it makes good economic sense for both them and us,” he said. “As long as we can keep progressing, I think we can come to some sort of agreement.”
The committee presented its business plan and formal offer to buy the line from CN at a June 2 meeting in Saskatoon. Lobdell said the committee used a computer model from the provincial government to make its case that there will be sufficient grain traffic on the line to make it viable as a short line.
The key issue to be negotiated is the revenue division between CN and the proposed short line, with the rail company demanding highly detailed and specific information about costs and revenues on the line.
“That seems to be the sticking point for all the community-based attempts to purchase these lines,” said Lobdell. CN officials declined to comment on the issues being discussed in the negotiations.
The total cost of the project is estimated at about $30 million, including such things as the track, locomotives and loading facilities. The railway has pegged the value of the track at $18.5 million, although Lobdell said the committee has a different number in mind.
“There is a pretty significant spread there,” he said.
WCRRC wants to raise money through a public share offering, but its proposal is still awaiting approval from the Saskatchewan Securities Commission. An initial offering will be designed to raise $300,000 to cover such things as legal and consulting fees.
While the group’s efforts to ship producer car trains and save the line have garnered lots of attention and public support, Lobdell said the real test will be when it comes time to raise money.
“That’s the key for us,” he said. “We’ve got to show the government and CN that we have the public support.”
Meanwhile, two other groups of Saskatchewan farmers have started the ball rolling to take over their soon-to-be-abandoned branch lines.
Producers along the Cudworth line northeast of Saskatoon and the Imperial subdivision, running south from Watrous in the east central part of the province, have sent formal letters of interest to CN Rail.
Those groups will now have four months to prepare a business plan and negotiate a deal with the railway.
