COURTESY Engine No. 316, built in 1901, crosses the Neches River Bridge.

The Texas State Railroad now carries freight railcars along with its tourist trains, a move that could be a key to the long-term operation of the historic trains and to provide a spark to spur more economic development in two East Texas towns.

On June 16, short haul freight service resumed on the rail line, that connects to the Union Pacific track and rail yard in Palestine and extends to the city of Rusk.

The original intent of the line was restored after 45 years, according to Iowa Pacific Holdings, the current operator of the Texas State Railroad. The last freight hauler was Texas Southeastern Railroad, which leased the line in the 1960’s and gave up the lease in 1969, according to the company.

Big River Industries was the first customer, transporting two open-top hopper cars carrying roughly 120 tons of lightweight volcanic aggregate, ground up volcanic rock used to make building supplies. The cars traveled from Erwinville, Louisiana to the Union Pacific’s interchange in Palestine, where the Texas State Railroad picked up the cars at the Union Pacific rail yard and transported them to its Palestine depot. There, the freight cars were emptied using a conveyor belt into two 18-wheelers, according to Iowa Pacific.

Big River Industries is the first official customer of Iowa Pacific Holdings, and plans to ship two to eight freightl cars per week on the railroad.

The railroad is also in negotiations with several other potential freight customers.

The objective is to maintain the historic trains and family events, and the industrial use of the rail line will not hamper the schedule of the Texas State Railroad, said Steve Presley, president of the Texas State Railroad Authority, the quasi-governmental agency charged with overseeing current railroad and it operator.

“The freight traffic paves the way for tourist business, which is extremely expensive,” he said. “A single locomotive can cost well over $1 million to bring it back into service and it goes out of service about every five years. … Ticket sales alone cannot cover the expense.”

The hours of operation for the tourist side also lend well to the business side.

“The tourist line honestly operates four to six hours a day on days that it runs, which is not that many days,” Presley said. “They run summer, Christmas and spring break and on weekends. They leave the whole week where no business is going on.”

 

A ROCKY ROAD

The Texas State Railroad has a long history of financial woes and near-shut downs and has been working toward adding freight since 2007.

The rail line, now known as the Texas State Railroad, started to ship out iron ore prison workers mined out of Rusk, according to the Texas State Historical Association’s website.

The prison stopped using it in 1913, but assorted products were still carried along the line for a fee, the website reads.

The railroad was marginally profitable, but by 1921 was facing abandonment because of debt. The Legislature commissioned a committee of professional railroad men to determine if the railway could be profitable, and the state paid for updates and put it under a governing authority, according to the historical association. Several operators used the line until 1969.

Tourist train operators attempted to run for a few miles on the Rusk end, but only managed a few trips because of several problems, the website reads.

The line was near to closing again, when the 61st Legislature turned over most of the railroad to Texas Parks and Wildlife in 1972 and the Texas State Railroad Historical Park was formed. It opened in 1977, according to the historical association.

In 2007, Texas Parks and Wildlife considered turning the Texas State Railroad into a static display because of the rising costs of operating it, Presley said.

Presley said the parks department estimated it would take roughly $60 million spread out over five sessions to get the historic trains in good, working order for another 10 years.

“We asked that they would give two years of that grant money, and we felt like we could keep it running on those grants funds,” Presley said.

The Legislature complied and created the Texas State Railroad Authority to oversee the lease of the track and $12 million in grants for capital improvement projects and another $1 million for startup capital.

The authority brought in its first operator, American Heritage Railways, to operate the tourist rail operation and complete a list of grant projects. The company left in 2012 citing financial troubles and after furloughing its employees to conserve funds. Iowa Pacific Holdings came in August of that year.

Although the historic rail line has never been profitable, Iowa Pacific is closing in on breaking even, increasing ridership by almost 7,000 people from 2011.

“This (new freight) business, combined with the fact that ridership on The Official Railroad of Texas was up 17.6 percent in 2013 and is currently up 25.2 percent over the first five months of 2013, is cause for celebration,” said Janet Gregg, spokeswoman for Iowa Pacific.

The company completed work on nearly 3 miles of track that connects the line to the Union Pacific, Ms. Gregg said. It was so neglected that trees were growing in the path, she said.

“This has been a long term goal since Iowa Pacific took over,” Ms. Gregg said. “We truly believe that freight is going to be the difference in us achieving financial stability for this railroad.”

Presley said introducing freight was a part of the original plan presented to the Legislature in 2007, and he is excited to see it finally come to fruition.

“It’s like walking through the gates of Disney Land,” he said. “When you get there you are excited about all the possibilities that you can do. This is just the very beginning of something that should lead to a lot of jobs in East Texas, it should lead to a lot of industry being able to move in and help the whole East Texas area with economic development as a result. That’s what I see when I walk through the gate and seeing this happen is that first step.”

 

ECONOMIC DEVELOPMENT

Leaders from Rusk and Palestine are excited about the possibility of bringing in new companies that will benefit from the rail service, because as gas prices have continued to rise, it is often more economical to ship by rail than by truck.

Presley, who also serves on the Palestine City Council, said the tourist operation is already a driver of the city’s economy, contributing between $200,000 and $300,000 a year in sales tax dollars, and now has potential to bring in more businesses and families.

“Once we are successfully able to unload them, there are bunch of other bulk materials that can be unloaded here for all kinds of other industries,” he said. “We think Palestine is a good logistic place to unload things or Walmart wouldn’t have built a warehouse here.”

The city of Rusk is constructing a 100-acre business park where the rail line ends in the city.

The city began replacing roughly half a mile of worn track to make the final connection, said Bob Goldsberry, president of the Rusk Economic Development Corporation and board member on the Texas State Railroad Authority.

The project is at least six months from completion and will cost roughly $290,000 out of economic development funds, he said.

Neither Palestine nor Rusk have loading docks ready, but they can move products directly from freight cars to trucks for transport.

“It’s been since the late ‘70s since any trains have been across it,” Goldsberry said. “All of the ties have to be replaced, new blasts and there is a section where rails were taken up.”

Goldsberry said the city waited until it had a tenant before fixing the rail.

Rusk official said they hope freight will not only bring in new businesses, but strengthen those already in the city.

“The last time we had a train running here was 40 years ago, so his has been a long time coming,” Rusk Mayor Angela Raiborn said. “I bet a lot of people never dreamed we would have rail again in Rusk, but it’s amazing that it’s all coming together.”