Greenway Gail McNulty

Rail Opponents: RTC Is Moving Too Fast With Progressive Rail

Commission says state and federal rules require to pick new freight operator quickly

Gail McNulty, Greenway’s executive director, believes the Regional Transportation Commission’s new freight contract could put the county on the wrong track. PHOTO: KEANA PARKER

[This is part four in a series about future of the rail corridor. Part five runs on June 13. Read Part 1 here, Part 2 here and Part 3 here.]

Tech consultant Will Mayall has been scratching his head, trying to solve a puzzle.

Mayall, who worked for Apple in the mid-1980s, spends much of his time on the phone, giving advice to startups. But over the last few months, he’s devoted more hours to studying the sometimes controversial recent history of the county’s coastal rail corridor, digging through public records on the Regional Transportation Commission’s  informational pages and deciphering how they all fit together.

Mayall serves as a boardmember for Santa Cruz County Greenway, a nonprofit advocating for the removal of the tracks along the county’s publicly owned rail corridor, in favor of an extra-wide bike and pedestrian trail—in opposition to the RTC’s established rail-alongside-trail plan. And Mayall says that the commission, which owns the corridor, is rushing into a new draft agreement with Progressive Rail, a Minnesota-based freight operator, too hastily. He can’t figure out why, he says, but he believes the RTC hasn’t been forthcoming in its explanations.

Mayall worries that the possible 10-year deal with Progressive Rail would shift control of the rail corridor to the company, getting in the way of plans for both passenger service and a possible trail-only solution. Given those concerns, Greenway supporters say they have an important message for the RTC as commissioners get ready to vote on the contract with Progressive on Thursday, June 14.

That message can essentially be summed up in six words: We could do so much better.

If the long-winded rail trail saga were a romantic comedy, the RTC and Progressive would be standing at the altar, ready to get hitched—while Greenway, which has an admittedly strained relationship with the RTC, runs down the aisle yelling “I object!”

Mayall is imploring the commission to offer more of an explanation as to why Progressive is the right fit. After all, Greenway supporters say, the Progressive deal could even prevent the commission itself from getting what it wants.

“They’re not intentionally driving us into a bad place,” Greenway Executive Director Gail McNulty says of the RTC, “but they’re making choices that could lead us there eventually.”



Mayall says the RTC has “manufactured a false sense of urgency,” but RTC officials say they’re required to pick a new operator as soon as possible.

Shannon Munz, a spokesperson for the commission, tells GT that because the RTC bought the rail corridor with California bond money, the state will mandate that it continue freight service, per guidelines under the federal Surface Transportation Board (STB).

Late last year, Iowa Pacific, the previous operator, announced its desire to pull out of the agreement, although it still isn’t clear what penalties, if any, the RTC would face should it decide to put the issue of its next freight operator on hold. An STB spokesperson told GT via email that he and his colleagues were unable to answer questions on the matter, as they were too hypothetical.”

McNulty says Progressive could have a big impact on the county, and not necessarily in a positive way. “The biggest standout problem with the contract,” she says, “is that the vision is out of line with what the community wants for the corridor.”

Whereas Iowa Pacific was something of an absentee freight operator, known mostly for storing rail cars, Progressive officials have bragged to county leaders about their ability to get involved in bringing economic vitality to the area. When it comes down to it, though, McNulty fears that Progressive will either fail in its money-making mission—like its predecessors before it—or bring in long trains of cars that will clog the line, making for a noisy, unattractive corridor once the RTC finishes repairing the track to allow Progressive to travel the length of the local 32-mile line.

As the commissioners prepare to vote on the contract, they have yet to receive results from the Unified Corridor Study, which will outline suggestions for the major local transportation arteries—Highway 1, Soquel/Freedom and the rail corridor—and is expected to come out in six months. If the RTC ever tries to introduce passenger rail service on the corridor, which the study may recommend, McNulty says the priority given to freight service could make it difficult for passenger trains to move at an acceptable clip and get anywhere on time.

Dondero, however, says there could be a number of solutions. It’s possible, he says, that the freight service could run at night and that positive train control—a system that automates rail scheduling and is now coming online around the country—is making it easier for train companies to communicate and coordinate schedules. Dondero says this scrutiny is all a distraction from the bigger issue of locals stuck in traffic—especially those driving from the southern portions of the county and who want another way to get to work.

Jason Culotta, Progressive’s public affairs director, says passenger and freight service coexist on railroads around the country, and that the company plans to respect the passenger rail schedule.



Mayall says there’s one other option the RTC could pursue, and it’s called “abandonment”—a process by which the STB lets line owners stop providing rail service if it’s no longer economically viable. If the corridor owner determines that circumstances have changed, they can re-apply to reverse the abandonment.

Before the RTC bought the rail line, a 2010 appraisal referenced a consultant who found that there was “no chance that the STB would deny an application” from the owner to pursue abandonment of the corridor. The appraiser added that, in his opinion, there was no way the STB would ever be profitable north of Watsonville, and he predicted that the RTC would seek to abandon the line immediately, which the RTC ultimately did not do.

The appraiser found that it generally takes three to six months to get approval for abandonment, but he added that the RTC should qualify for an expedited process to speed things up, given that the Davenport cement plant had closed down by that point.

GT reached out to the RTC for follow-up information, and, in an emailed statement, Dondero charged Greenwayers with “cherry picking” information from more than 10 years ago—the 2010 study references findings from 2005—and stressed that state transportation requirements demand the commission continue freight and passenger service.

“Abandonment would not serve our community or our future, and would be entirely inconsistent with the policies of the RTC that have been established and confirmed over many years,” Dondero wrote.   



The 28-page draft of the agreement with Progressive Rail is rich with detail.

If the forthcoming corridor study finds that freight service won’t work on the southern portion of the corridor, for instance, Progressive would be released from the 10-year contract, and the RTC will be required to pay Progressive $300,000. Bike advocate Ron Goodman, who wrote an analysis breaking down the contract on his website, argues that this clause creates a conflict of interest that undermines the study.

Dondero says the arrangement boils down to the cost of doing business. “The reason for that is that it costs them money to set up shop here. They have to lease locomotives and hire people and set up an office. There’s a lot of work that needs to happen before they even move one car,” he tells GT.

The contract also prioritizes freight service over passenger rail service.

There were other elements that raised eyebrows in the 28-page contract, like construction of a possible locomotive pit in the area around the Wrigley building in Santa Cruz. The contract additionally mentions a provision allowing the freight operator to store up to 100 cars on the corridor at any given time, each in designated zones, and none for more than two months. Each of those passages is a holdover that the RTC had negotiated into the previous freight agreements.

Iowa Pacific had been parking cars outside the designated corridors, Dondero says, which was one of the ways it was in violation of its contract. Progressive owner and president Dave Fellon has said his company’s “not in the business of storing cars,” but that they may do it for a day or two here or there, as their customers request it.

As for the locomotive pit, Progressive representatives have announced that they want to remove the wording about the locomotive pit from the contract. “It was a feature of a previous agreement that the RTC had had,” says Culotta. “The reason they had it in there was they had a goal to keep a locomotive there that could be used to switch out cars. Since Progressive Rail has no intention of storing cars, we’re happy to have that removed from the wording.”

If Progressive comes in, Culotta says the majority of Progressive’s freight customers would be local farmers, who could ship produce to other parts of the country—reducing their greenhouse gas emissions and potentially their costs, as well. He anticipates some of Progressive’s existing customers from the Midwest will also have an interest in expanding to California.

Progressive has additionally discussed hauling propane into Watsonville, creating some concern there. It isn’t clear how much Watsonville officials would be able to regulate the unloading of propane or other materials because of federal guidelines, according to a memo from the Watsonville city attorney to the City Council.

As things move forward, the previous freight operator casts a long shadow over the line, as Iowa Pacific still owes the RTC about $80,000. Dondero won’t be holding his breath or waiting for a check to come in through the RTC’s mail slot.

“When a check comes in, I’ll give you a call,” Dondero says. “I haven’t seen any money.”

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