A Robbery from Downtown to the Sea : Alameda Corridor: Why compensate for profit loss when the railroad can still use the right-of-way--that it got free?

If there was a $200-million robbery in progress, the print and television media would relentlessly cover the story.

But “The Great Train Robbery of the 1990s” has not been deemed newsworthy.

On April 19, the Los Angeles Board of Harbor Commissioners and the Long Beach Port Authority reached a tentative agreement to buy the right-of-way for the Alameda Corridor, the major rail link from the ports to downtown Los Angeles, from the Southern Pacific Railroad for approximately $275 million, more than $200 million more than the State Board of Equalization’s valuation of the property.

If consummated, Southern Pacific Railroad will have received approximately $945 million--almost $1 billion--in public funds in the past three years for rights-of-way that Southern Pacific will continue to use after billions more of public funds are spent to finance improvements to the lines. California’s other railroads also have profited from similar public largess, even when the railroads were granted the rights-of-way for free more than a century ago.

Moreover, the ports apparently will buy the Alameda Corridor right-of-way without a financial plan to fund the improvements necessary to upgrade the line, expected to cost more than $1.5 billion.

To add insult to injury, the public agencies responsible for this purchase have not yet begun to negotiate operating agreements with the railroads, including the Southern Pacific, which will be in a position to use the Alameda Corridor without any commitment to assist in paying for improvements.

The Alameda Corridor is perhaps the most important unfunded infrastructure project in Southern California. Since the ports constitute the nation’s largest harbor, and since as many as 750,000 jobs are tied to the trade that flows through the ports, any project that enhances competitiveness is a project of national significance. But does its acknowledged importance justify a purchase at any price?

At a time when all public funds are under intense scrutiny, when California faces its worst recession since the Great Depression, it is shocking that the public port authorities should agree to such an outrageous expenditure of public money, especially in light of the fact that the Southern Pacific and its competitors will continue to use the line after the public has paid for improvements to it.

This massive public investment will provide the railroads with a four-fold increase in operating speeds and triple the number of freight movements, which ought to give them substantial profits.

Ironically, the lame-duck members of the Los Angeles Board of Harbor Commissioners who approved this deal with one railroad are the same commissioners who insist the port has no money to help bail Los Angeles out of its dire financial straits. Maybe it would have been cheaper to send them all to Asia on public business.

What is even more upsetting is that the Los Angeles media, including this newspaper, have missed this vital story. On March 1, The Times published an editorial on the Alameda Corridor that called on the railroads to agree to a reasonable price for the right-of-way and urged the Alameda Corridor Transportation Authority to find financing for the improvements.

Apart from that, the Alameda Corridor has received little coverage. Like so many other important but complex public issues, the media have all but ignored this story.

At an April 8 public hearing, the Assembly select committees on the Alameda Corridor project and on California ports, (co-chaired by Assemblywomen Martha Escutia and Betty Karnette), heard testimony from Public Utilities Commission President Daniel Fessler and me, representing the California Transportation Commission. We questioned whether it made sense for the public to compensate Southern Pacific for its so-called loss of competitive advantage as well as for the value of the property itself, particularly if the high price of the right-of-way jeopardized the affordability of the entire package.

For nearly a year, a few public officials, including Gov. Pete Wilson, Sen. Dianne Feinstein and Los Angeles Councilwoman Joan Milke Flores, have tried to focus attention on how the project could help pull California out of its economic doldrums. It is appalling that such a project instead must first enrich only one company.