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CSX back on track

We would like to be able to claim extraordinary prescience, keen journalistic insight or perhaps comic book-level super powers for predicting in this space just 3½ months ago that CSX Transportation would climb back on board the proposed public-private partnership to renovate the Howard Street Tunnel that would ultimately allow double-stacking of freight trains serving the Port of Baltimore. But, to be honest, it was really all of those things.

Sorry, had to try. Actually, it was none of those things. It was obvious all along that the Howard Street project is simply too profitable a deal for CSX to walk away from, as they appeared to do one year ago. And, wouldn’t you know? They’ve come back to the table with a plan to make it even more lucrative for the Florida-based railroad. Go figure. But more about that in a moment.

The big news to come out of a meeting between CSX CEO Jim Foote and members of Maryland’s congressional delegation last week was that the company had re-engaged with the project and is proposing putting up $91 million toward a total cost that was last estimated at $455 million. How important is the Howard Street Tunnel renovation to Baltimore’s economic future? Let’s just use one rather overworked word: very.

The secret to transportation is keeping down costs, and Howard Street is the biggest roadblock to continued growth of Baltimore’s port, particularly for so-called “discretionary” cargo — that’s the stuff shipped in containers that’s headed beyond our borders. Tractor-trailers can handle some of that, but if you want to keep prices down, you double-stack them on freight trains. Unfortunately, the 12 decades-old Howard Tunnel prevents that. The ceiling is too low.

And the Baltimore region really, really needs that growth at the port. Here are the numbers associated with the port’s economic impact: $2.9 billion in personal income and more than 127,000 jobs linked to the port (of which 13,650 are direct employment, including many well-paid blue-collar jobs with the average longshoreman earning more than $70,000 a year). The tunnel project has been linked to as many as 7,800 more direct and indirect jobs. That’s some pretty rarefied economic development air. And it’s not just good for the city, it’s a huge employment center for the entire region.

Still, Mr. Foote’s proposal would seem to come with a catch. Before CSX walked away last year (back when the company was run by a different CEO and was trading at less than $50 per share), the plan called for CSX to kick in $145 million with $155 million coming from the feds and the rest from the state. By cutting $54 million out of the company’s cost, the obvious expectation is that taxpayers will make up the difference. And did we mention that CSX share prices topped $74 last summer after much cost-cutting? To quote “On the Waterfront’s” Father Barry: “You want to know what's wrong with our waterfront? It's the love of a lousy buck.”

That retreat could cost Gov. Larry Hogan some political capital. After all, CSX isn’t necessarily collecting a lot of warm and fuzzy thoughts from Baltimoreans these days, not with the retaining wall collapse on East 26th Street after an even worse collapse nearby involving CSX tracks four years ago. But to his credit, the governor appears ready to open the state’s purse, ask for more from Washington or both. “Our administration stands ready to work with our federal partners to secure the resources we need to to get this critical project back on track,” was how Mr. Hogan’s official statement on Thursday alluded to the turn of events — without directly addressing the shortfall.

Here’s an idea. If Mr. Foote wants to reduce his company’s financial participation in the project, perhaps he can make it up in other ways. One possibility? Provide the public with a full advance description of cargo headed for the tunnel. That way the public can know if anything volatile or hazardous is being shipped in their midst. Indeed, this could be the start of a whole new state-level regulatory regime that puts safety and transparency first — surely a prospect that would make CSX train crews happy. That peace of mind might be worth the added expense. And perhaps set a rule-making standard that CSX could apply to every community where its trains can be found.

Or maybe CSX might not want to leverage Maryland taxpayers for a highly profitable project where government was already expected to pay two-thirds of the cost. Either way, it’s time to get a deal done and secure proper funding from all involved.

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