Ohio’s Queen City is counting on the sale of its Cincinnati Southern Railway system to Norfolk Southern Corp. to help it fund infrastructure enhancements and repairs.

However, the $1.6 billion transaction hinges on whether enough residents will approve the sale of the 337-mile interstate freight railroad, which dates back to the late 19th century.

“The community is divided,” said Mark Mallory, a former Cincinnati mayor. “If I had to guess, I’d say it is going to be close one way or the other.” 

For voters there is no clear understanding of the benefits of selling the railroad and not a lot of people are aware that the city owns it, said Mallory, who serves as a trustee on the Cincinnati Southern Railway Board.

“It’s like the best kept secret in Cincinnati’s history,” he added. “As people have come to realize that we have a railroad, I think that natural inclination is to want to hold on to it.” 

The Ferguson Act, a 1869 Ohio law that created the railroad running from Cincinnati to Chattanooga, Tennessee, requires Cincinnati voters to approve its sale. The legislation also states that the city can only spend revenue generated from the railroad on infrastructure.

Critical Decision

“This is a critical decision for the future of Cincinnati,” said Mayor Aftab Pureval in an emailed statement. “At a time when cities like ours are facing uncertain financial realities, the sale of the railroad provides us with a generational opportunity to reduce our risk and make needed investments in our aging infrastructure.”

If the sale crosses the finish line, Cincinnati will invest the $1.6 billion into a trust that is projected to generate about $40 million to $50 million per year, twice the revenue that the railroad is currently generating under a lease agreement with a Norfolk Southern subsidiary that expires in 2026. The deal ensures that Norfolk Southern will own the railroad in perpetuity and the Atlanta-based railroad operator will get ownership of roughly 9,550 acres of land.

Cincinnati plans to use the proceeds of the sale to update and replace local streets, bridges, municipal buildings, parks and green space. The city faces a backlog of about $400 million in necessary infrastructure projects, according to Building Cincinnati’s Future, an advocacy group pushing for the sale to go through. A campaign finance report, filed on Oct. 26, showed that Norfolk Southern is the only contributor, donating about $4.25 million to the group.

Whack-a-Mole

“The real skepticism about the deal is will the money really be used for what you say it is going to be used for,” University of Cincinnati political science professor David Niven said in a phone interview. “Will the money really be shepherded and protected for the future?”

He noted that the city’s local government has been plagued by corruption as the city council tries to regain residents’ trusts after three members were indicted on fraud and bribery charges.

“Some people feel that even cutting our ties with Norfolk Southern would be a good thing,” said Charlie Luken, a former Cincinnati mayor who is also a Cincinnati Southern Railway Board member, adding that he expects the ballot measure has a chance.

“Right now we are in kind of a whack-a-mole kind of environment of different arguments against the proposal and I think we would be characterized as underdogs going into Election Day,” said Luken.