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Another shot fired in the Vallejo railroad wars


Courtesy Mare Island Historic Park Foundation

On March 25, the San Francisco Bay Railroad – Mare Island (SFBR) made yet another filing in their railroad war with Vallejo’s developer, Lennar Mare Island LLC (LMI). LMI had previously filed to revoke the common carrier status of SFBR, as far as it applied to their property on Mare Island. In turn SFBR had applied for an emergency order to serve other customers on the island.

LMI made a request (in a footnote!) to consolidate the proceedings. It and the city also replied to the request for emergency service. So yesterday’s filing was what SFBR styled as a Motion/Request/Petition to reply to the city of Vallejo’s and LMI’s replies to their emergency petition. It is technically a reply to a reply and these are usually inadmissible.

However, it does add some light to the heat generated so far. Their most important claim is that the railroad filed for common carrier status because their temporary contract with Vallejo required it. That turns out to be true. However it remains a little shabby to not notice LMI that the filing would cover the island’s track as well as city-owned track.

Filing misleading information with the Federal Surface Transportation Board (Surf Board for short) makes the application void. However, the revocation of the common carrier status hinges on whether it was willfully misleading or merely optimistic.

But the developer by no means has clean hands either. In 2008, it had seven different customers using rail service, when it suddenly raised its fees for track maintenance. It basically told the customers that rail service would terminate and it did. This was an apparently illegal act, as any line of railroad serving more than one customer cannot have its service terminated without approval by the Surf Board. Charging high fees to make the service uneconomic has also been ruled illegal. However, none of the customers took any action on that.

In a letter appended to SFBR’s filing, Alamillo Rebar notes that cessation of rail service has cost it an extra $208,000 so far. XKT Engineering has spent an additional $109,000 transloading steel plates to trucks. It’s not possible to estimate lost business due to being non-competitive without rail service. These additional costs were directly related to the apparently illegal termination of service.

Victor Zaya, President of Earthquake Protection Services said in a letter, “LMI increased their “per car charges” to unreasonable rates.” Why the customers haven’t filed a service complaint with the Surf Board is currently unknown. Other then their letters appended to SFBR’s filing (FD 35360), none of the customers have commented in this case.

In a letter from LMI to its customers on February 25th, they were told that service ceased “for lack of a responsible party.” They were also told that LMI has previously subsidized the rail service. Indeed the letter claimed that SFBR “did not acknowledge LMI’s ownership of the trackage” in its filing for common carrier status. None of that appears to be true.

This railroad war raises three fundamental questions. The first: Why is LMI fighting so hard to not have rail service when they have a huge number of industrial buildings to sell or lease, and rail service is likely to attract more tenants? The second: Why is SFBR fighting so hard for the right to serve so few carloads that the railroad is liable to lose money? The third: Why haven’t the customers either participated in the current filings or demanded rail service from the Surf Board?
 

Railroad wars in Vallejo

Comments

  • moto velo espidi 4 years ago

    good report. please continue.

  • tramky 4 years ago

    It would be very helpful to have clear answers to the questions raised here--all of them.

    The strangest of all is why the rail customers on Mare Island did nothing, apparently, to defend themselves & that rail service. Their failure leaves only one conclusion--they are literally afraid that Lennar Mare Island (LMI) would engage in a get-even approach, evicting industrial tenants that do not fit Lennar's so-called vision for Mare Island.

    Lennar is primarily a home builder; during its tenure as master developer of Mare Island under contract with the incompetent City of Vallejo (that is to say, the political & administrative leaders of Vallejo are incompetent), LMI has demonstrated remarkable inconsistencies in its approach. LMI unilaterally terminated all rail service to Mare Island (which the City of Vallejo happily did for the entire town), then recently brings in a tenant whose very business if the refurbishment & overhaul of railway cars.
    The Feds would do well to break this

  • Guy Span 4 years ago

    As for why the clients failed to demand rail service is beyond my ken. Perhaps you are right in suggesting that their lease might be terminated. But it is beyond understanding why a company that owns industrial property doesn't want to see its renters succeed. Rail service would help them. Here is a company offering to provide such service (SFBR). My economic analysis says that they won't make any money. So I am surprised that they they would fight so hard to lose money. Why LMI seeks to deny its renters this service is also perplexing.

    More as it develops.

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