LOS ANGELES -- The ports and cities of Los Angeles and Long Beach, Calif., announced yesterday that they have reached an agreement with Southern Pacific Transportation Co. to purchase a key rail right-of-way for the $1.8 billion Alameda Corridor Transportation Project.
Attempts to finalize the purchase were on and off for months, as port officials and Southern Pacific haggled over numerous details.
Construction of a high-speed rail path along the 20-mile corridor will relieve congestion and speed shipments from the ports, according to supporters of the project.
Municipal bonds are expected to play a role in financing part of the cost, but a final funding package is still being developed.
"The Alameda Corridor is the most critical transportation project on our drawing board, and one of the most significant transportation projects in the nation," Long Beach Harbor Commission president Alex R. Bellehumeur said in a statement hailing the purchase agreement.
The $240 million purchase price for the Southern Pacific property will be paid at the closing, which is expected to occur by Dec. 31, according to the statement.
The parties also reached agreements that provide "assurances for matters relating to title [and] environmental remediation," the statement says. In addition, a memorandum of understanding will be prepared to govern how three railroad companies, including Southern Pacific, will operate on the right-of-way.
Local officials, including Los Angeles Mayor Richard Riordan, have pushed for the agreement, partly because the project is expected to generate thousands of jobs in Southern California. In a statement, Riordan termed the project "vital to the economic future of the region's domestic and international trade."
The ports have indicated that they will contribute $400 million toward the project. State and federal grants, plus local assistance, will cover some of the costs as well.
The Alameda Corridor Transportation Authority also expects to sell revenue bonds to cover some of the up-front cost. The authority already has assembled an underwriting team of senior managers made up of PaineWebber Inc.; Goldman, Sachs & Co.; Grigsby Brandford & Co.; and Pryor, McClendon, Counts & Co.
Southern California lawmakers recently urged Congress to approve federal legislation to allow tax-exempt financing for the corridor. The authority believes it should have the ability to issue bonds under the tax law provision that permits tax-exempt financing for dock and wharf facilities. The authority's general counsel has said that current tax code precludes such as tax-exempt issue.
At a hearing in September, some members of the House Ways and Means subcommittee on select revenue measures said they saw merit in allowing tax-exempt sales for a project such as the corridor. A bill introduced by Southern California lawmakers to amend the Internal Revenue Code for that purpose did not move forward this year.
