LOS ANGELES -- The ports of Los Angeles and Long Beach, Calif., have agreed to pay Union Pacific Railroad $75 million for the railroad's right-of-way, a move that brings the $1.84 billion Alameda Corridor transportation project a step closer to reality.
Union Pacific is the third railroad to tentatively agree to participate in the 20-mile corridor, a high-speed rail and highway project that will expedite cargo movement between the ports and downtown Los Angeles rail yards.
Funding is expected to include the issuance of $600 million of municipal bonds.
The Alameda Corridor Transportation Authority, a joint powers authority whose governing members include representatives from the ports, 11 other local government entities, and the California department of transportation, will design and construct the corridor project. Project planners hope to have the corridor operating by the year 2000.
The tentative purchase agreement with Union Pacific was reached last Thursday, James Preusch, treasurer of the Huntington Park, Calif.-based transportation authority, said yesterday. Preusch also is chief financial officer for the Port of Los Angeles.
Tentative agreements have already been negotiated with Southern Pacific Transportation Co. and the Atchison, Topeka, and Santa Fe Railway.
"The right-of-way purchase transactions are expected to close by yearend, when the railroads sign a formal operating agreement," Preusch said.
Dick Davidson, Union Pacific chairman and chief executive officer, and Los Angeles Mayor Richard Riordan issued a joint statement Friday.
"The negotiations were complicated, and, at times, difficult," Davidson said. "But we feel that the agreement is fair to both sides."
"This is the dose of economic good news we've all been waiting for," Riordan said. "We now have the green light to build the Alameda Corridor, a project that will directly create more than 10,000 local jobs, pump tens of billions of dollars into the economy, and forever secure our ports' position as the country's premier gateway for international trade."
The $75 million purchase price for Union Pacific's right-of-way will purchase a 25-mile rail line called the San Pedro branch that stretches from downtown Los Angeles to the two ports.
The two ports will pay Union Pacific with cash and notes, which will be paid off within five years, Preusch said.
The agreement with Union Pacific "gives us strong credibility as we make our appeal for additional government support," Preusch said. "This takes us from a theoretical project to one that is going to happen. What has stalled the project is the lack of commitment on the part of the three railroads."
All three railroads will pay the same fees to use the corridor, Preusch said. Those fees will service debt on about $600 million of revenue bonds to be issued by the Alameda Corridor Transportation Authority.
Preusch Said the Alameda authority has assembled an underwriting team that includes senior managers Goldman, Sachs & Co. and PaineWebber Inc., and co-senior managers Grigsby Brandford & Co. and Pryor, McClendon, Counts & Co.
"It will be well into 1995 or 1996 before we actually are in the market," Preusch said.
In addition to the bonds, other elements of the funding package are being developed, Preusch said.
The project has received $525 million in pledges: $45 million in federal commitments, $80 million from the state department of transportation, and $200 million each pledged by the two ports.
Authority officials have applied for $700 million in federal transportation funds, which Congress would appropriate.
Also at the federal level, the project needs to receive tax-exempt status for the proposed issuance of revenue bonds.
Two bills to amend the tax code to allow tax-exempt status for the bonds are pending in Congress. One bill in the House of Representatives" is sponsored by Rep. Walter Tucker, D-Calif. The other bill, in the Senate, was introduced by U.S. Sen. Barbara Boxer, D-Calif.
Members of the Alameda Corridor Transportation Authority also include the cities of Los Angeles, Long Beach, Vernon, Huntington Park, South Gate, Lynwood, Compton, and Carson; Los Angeles County; the Los Angeles County Metropolitan Transportation Authority; and the Southern California Association of Governments.
The project is designed to decrease freeway traffic congestion, air pollution, and vehicle delays at street-grade crossings. Road and rail traffic noise in residential areas would also be lessened because the corridor will eliminate 200 at-grade crossings.
"The Alameda Corridor affects the movement of goods to and from the entire nation," Long Beach Mayor Beverly O'Neill said in a statement released Friday. "It is not merely a southern California transportation project; it is a national transportation project."