Buying abandoned Saskatchewan rail lines got a little easier last week when Ottawa and the province announced they would pay part of the cost.
The two governments will each provide up to 16 percent of the capital that community groups need to develop short lines. The remaining 68 percent must be raised locally through borrowing or private investment. Each government will limit its total spending to $4 million.
Rob Lobdell, chair of the West Central Road and Rail Committee, said the program is an encouraging sign for those trying to preserve their lines.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
“It shows finally that the federal government and the provincial government are starting to realize the seriousness of the problem.”
Lobdell’s group is trying to buy a CN line running from Delisle almost to the Alberta border.
Aside from raising about two-thirds of the required capital to qualify for funding, proponents must submit a business plan demonstrating the viability of a short-line operation. The line must have handling facilities and there must be strong local support.
Separate entity
But the bottom line, Lobdell said, is reaching an agreement with either CN or CP. Any successful short line must have a revenue division from the railway, he said.
“Up to this point I don’t know of any community-based short line that has realized an equitable revenue split.”
Lobdell said only changes to the Canada Transportation Act can ensure revenue sharing: “It’s very slanted in the (national) railways’ favor. They hold all the cards.”
Sinclair Harrison, president of Saskatchewan Association of Rural Municipalities, said the process can be difficult when you have an unwilling seller and a willing buyer.
“You have to deliver the grain to the main line,” he said. “If you can’t work out a financial arrangement at the end of the day they (railways) hold the trump card.”
Harrison called the financial assistance from government a good start. He said it is impossible to know how many groups will try to access the funding.
“The major portion has to be raised by borrowing money and local investment.”
