HISTORY . . .
The Southern Tier Extension is a 145-mile long
mainline that connects Corry, Pennsylvania to Hornell, New York. It
passes through Jamestown, Falconer, Randolph, Salamanca, Olean, Cuba,
Friendship, Wellsville, and Alfred Station. Once a part of the Eire
Lackawanna system, the Southern Tier Extension has a rich history as a
75 mile-per-hour mainline freight and passenger line. The economy of
southwestern New York State was in large part developed because of its
rail system, of which the Southern Tier Extension was a primary part.
The Southern Tier West
Regional Planning & Development Board (STW) has been working on issues
surrounding the Southern Tier Extension railroad line since the mid
1980’s. Then owned by Conrail, all of the line between Corry PA and
Hornell NY was dormant, with the exception of the segment from Jamestown
to Olean. Conrail had an obligation to provide service on the Southern
Tier Extension through an agreement with NYS DOT known as the Southern
Tier Agreement, but Conrail's pricing and maintenance practices
effectively shut down completely the segments west of Jamestown and east
The Southern Tier Agreement expired in 1998.
In the years preceding the expiration, the four counties in New York and
two in Pennsylvania (in which the Southern Tier Extension is located)
were concerned that after the agreement expired, Conrail would formally
abandon the line between Corry PA and Hornell NY and tear up the track.
The counties felt that if the track were torn up, the line never could
be re-installed and become a functioning railroad line again, because
the limited traffic volume would not justify the costs of re-acquiring
the real estate and restoring the rail line.
counties embarked on a strategy to retain the railroad line. The
strategies of the counties in PA and NY differed, but ultimately became
complimentary. In New York the four counties agreed to designate STW as
their lead agent in the process. NYS DOT then gave STW its rights to
negotiate with Conrail and its successors under the Southern Tier
STW began a multi-year strategy of negotiating
the purchase of the line from Conrail, a process that was replete with
many unanticipated turns and strategic re-starts. At one time, the
counties proposed creating a non-profit corporation to acquire, own, and
operate the line; however this process was brought to a halt in the
mid-1990’s when CSX and Norfolk Southern Corporation announced their
proposed acquisition and division of Conrail’s assets.
Subsequently, STW began negotiating with
Norfolk Southern Corporation (NSC), which was the railroad that would
acquire the Southern Tier Extension line in the CSX/NSC acquisition of
Conrail’s assets. During this period, STW became a formal party of
record in the federal Surface Transportation Board's (STB's) review of
the proposed acquisition of Conrail’s assets by CSX and NSC. STW
provided testimony and written commentary to the STB. In May 1998,
weeks before the Southern Tier Agreement was to expire; STW, NSC, and
the NYS DOT executed an agreement that provided a strategy for insuring
that the line would have service after NSC acquired it.
In July 1998, the STB approved the
acquisition and division of Conrail’s assets by CSX and NSC. The
Southern Tier Extension line was to be transferred from Conrail to
Norfolk Southern . The STB decision formally incorporated the May 1998
agreement into its decision as the STB’s approved strategy for the
Southern Tier Extension line.
In the summer of 2000, at the request of the
four New York counties, the NYS Legislature created the Chautauqua,
Cattaraugus, Allegany, and Steuben Southern Tier Extension Railroad
Authority (STERA) as a local public authority. STERA was an essential
element of implementing the May 1998 agreement to return the entire
Southern Tier Extension railroad line to local and mainline through
In late 2000, on behalf of STERA, STW began
negotiating a revision of the May 1998 agreement that would explicitly
make STERA a party to the May 1998 agreement, provide for the redress
for certain other tax abatement issues, and address certain specific
service commitment obligations by NSC. This agreement was executed in
In February 2001, STERA executed an agreement
with Norfolk Southern Corporation under which Norfolk Southern
Corporation transferred title to the Southern Tier Extension real estate
and improvements between Corry PA and Hornell NY to STERA for a period
of years, after which the title was to revert back to Norfolk Southern
Corporation. The agreement also provided that Norfolk Southern
Corporation was to lease the Southern Tier Extension line from STERA
during the period of years that STERA owns the line. STERA exercised
its statutory power to abate real estate property taxes that would
otherwise be owed on the portion of the Southern Tier Extension line
located in New York State (Pennsylvania does not tax railroad real
estate). This abatement structure was designed to provide a low cost
operating environment that would encourage the return of rail service to
the entire 145 miles of the line between Corry PA and Hornell NY.
In March 2001,
STERA approved the long-term sub-lease by Norfolk Southern Corporation
of the Southern Tier Extension line to the Western New York and
Pennsylvania Railroad Company (WNYP). Under the terms of this
sub-lease, WNYP operates the Southern Tier Extension line. WNYP also
since has acquired ownership of the connecting section of line from
Corry PA to Meadville PA. WNYP's Southern Tier Extension trains now
connect with Class 1 service (Norfolk Southern) at Meadville PA and
Hornell NY. For shipping information for the Western New York and
Pennsylvania Railroad, contact: Daniel E. Eagan, Vice President -
Marketing & Sales, telephone: 585-346-2090, email
Decades of deferred maintenance by the prior
owner Conrail had left the line needing extensive rehabilitation in
order to bring it up to a safe and economical operating condition.
STERA and Southern Tier West have been working on an ongoing basis
since 2001 to secure low-cost state and federal funding for the
rehabilitation of the Southern Tier Extension line. The first phases of
an ongoing multi-year rehabilitation work program began in August 2002.
STERA and Southern Tier West expect this rehabilitation, upgrade, and
maintenance effort to continue over a number of years.
As of the fall of 2003, however, STERA and WNYP
had sufficiently rehabilitated the line so that commercially viable
local service was re-established over the entire 145 miles of the line
between Corry PA and Hornell NY, with functioning interchange
connections to Norfolk Southern at Meadville PA and Hornell NY.
Utilizing trackage rights it retained in the sub-lease agreement with
WNYP, Norfolk Southern is now running regular mainline “through freight
traffic” (i.e., non-local service) over the line, while WNYP operates
local service trains over the line. STERA will continue its plans to
further rehabilitate and repair the railroad line in order to make the
line even more attractive as a mainline and local freight-shipping line.
After a STW study completed in 2009, documenting the feasibility,
selecting the most appropriate site, and preparing preliminary
engineering, STERA has decided to construct (on a phased basis and
pending state and federal funding) a freight transload facility in Olean
NY, which could lead to container service as traffic volume grows.
In December 2006, STERA was approached by
Norfolk Southern Corporation and WNYP, who indicated that Norfolk
Southern intended to lease the portion of the Buffalo Line that is north
of Machias Junction to the Buffalo & Pittsburgh railroad company.
Additionally, NSC and WNYP indicated that Norfolk Southern intended to
lease the portion of the Buffalo Line that is between the Pennsylvania
State Line and Driftwood PA to WNYP. NSC and WNYP proposed that
STERA, NSC and WNYP enter into an arrangement on the portion of the
Buffalo Line that is between Machias Junction and the Pennsylvania State
Line that would be similar to the arrangement between the parties on the
Southern Tier Extension. That is, NSC would deed the specified
portion of the Buffalo Line to STERA for a period of years, and STERA
would lease it back to NSC, which would then sub-lease it to WNYP as
operator, retaining trackage rights. STERA would provide a real estate
property tax abatement on the line during the period of years, with a
graduated PILOT in the last three years of operation that escalated to
the full tax level at the end of the period. NSC was to provide a
one-time negotiated payment in 2007 to ease the first year transition to
full tax abatement for the affected New York State taxing jurisdictions.
STERA felt that the long-term existence of the
Buffalo Line was at jeopardy because of the lack of local freight volume
on the Buffalo Line and the high costs of operation of the line for the
Class I NSC. Further, STERA was convinced that WNYP operations and
overall system load would be improved by integrating the Buffalo Line
into WNYP operations. STERA approved this arrangement in February
2007, and the real estate transaction was filed in February 2007.
At the same time, STERA decided to extend the
real estate tax abatement on the Southern Tier Extension. In
STERA’s judgment, the abatement was necessary to insure the viability of
the line and maintain the region’s investment in it since 2001.
STERA felt that several factors, including the extensive historical
deferred maintenance of the line and the removal of certain rail assets
by CONRAIL, the deterioration of the line with the passage of time and
the use of new heavier coal cars, and the inability to obtain public
rehabilitation funding per the originally envisioned schedule, had
caused progress toward complete rehabilitation of the line and viability
of WNYP operations to be inadequate to date, and that the line’s
viability would be in jeopardy without the cost-stabilizing abatement.
Accordingly, simultaneously with the February
2007 approval of the Buffalo Line transaction, the STERA Board approved
an extension of the May 1998 Southern Tier Extension agreement, so that
its term matched the Buffalo Line agreement's terms. The Buffalo Line
transaction arrangement was incorporated into the revised May 1998
agreement, which now expires in March 2016, with graduated PILOT
payments on both lines due in years 2014, 2015, and 2016. All of the
other terms of the May 1998 agreement continue with this extension.
WNYP then went in front of the Surface
Transportation Board to obtain regulatory approval for the Buffalo Line
proposal, which was granted in August 2007. On August 4, 2007, WNYP
became operator of the Buffalo Line between Machias Junction and
Driftwood PA. As a consequence of this development, WNYP has created an
operations center in the Olean yard (located in Olean NY and Allegany
NY), moving operations personnel from the facility in Falconer NY. WNYP
has since built an engine house in the Olean yard for locomotive repair
and maintenance work.
WNYP's trains now additionally connect with
Class 1 service (Norfolk Southern) at Driftwood PA and Machias Junction
NY. Again, for shipping information for the Western New York and
Pennsylvania Railroad, contact: Daniel E. Eagan, Vice President -
Marketing & Sales, telephone: 585-346-2090, email
In June 2013, STERA and Norfolk Southern
Railway Company executed a second amendment to the 1998 MOU, extending
the abatement agreement on both railroad lines to an expiration date at
the end of 2028. This amendment agreement also provides for a 100%
property tax abatement during this period, with no PILOT payments due
during this period. The $40,000 annual administrative fee due from
Norfolk Southern to STERA remains in place over this period.
The mission of the Southern Tier Extension
Railroad Authority is to fulfill the intent of the New York State
Legislature in creating it, which was "to preserve and enhance the
system of railroads serving Chautauqua, Cattaraugus, Allegany and
Steuben counties in New York state and Warren and Erie counties in the
Commonwealth of Pennsylvania, so as to insure a healthy economy for
these counties." In other words, STERA's plan is to invigorate the
southwestern New York and northwestern Pennsylvania economy by
re-invigorating its railroad system. With respect to the Southern Tier
Extension Line and Buffalo Line, STERA's success in this regard will be
a function of the financial viability of railroad operations on the
Southern Tier Extension Line and Buffalo Line, and hence a function of
the financial viability of the operator WNYP. STERA and Southern Tier
West are now embarking on a strategy of working more closely with the
other railroad operators in southwestern New York (NSC, CSX, Buffalo &
Pittsburgh, and New York and Lake Erie) to more fully fulfill its
mission of invigorating the southwestern New York and northwestern
Pennsylvania economy by re-invigorating its railroad system.
Moving forward, STERA and Southern Tier West are
working in partnership with WNYP and the other railroad operators to
improve access to rail service by potential rail shippers in the region.
Initiatives include rail sidings, intermodal access, and other economic
development activities along the lines.