By Victoria Hurley-Schubert, Staff Writer
The idea for a private-public partnership to own the Dinky rail line was presented to Princeton Borough Council this week.
The venture would be called the Princeton Community Rail Authority (PCRA) and is the brainchild of Henry Posner III, chairman and founding principal of Railroad Development Corporation (RDC) of Pittsburgh, a privately held railway investment and management company.
The presentation and a following question-and-answer session was interrupted by applause from a large audience several times.
The Dinky has been the subject of debate since Princeton University proposed to moving its station 460 feet to the south as part of its plan to construct and arts and transit neighborhood.
Mr. Posner said his plan would “preserve the Dinky in a way it is useful to the Princeton community. And avoid relocating the station, which will create undue hardships on the traveling public.”
The purchase from Princeton University would include the station platform, the railroad right of way and the land to accommodate the two. The tracks are owned by NJ Transit and are placed on the parcel that is university owned by an existing easement.
In the public-private partnership the borough would contribute the power of condemnation and the RDC would contribute the funds and purchasing power.
”It is a tool Princeton Borough might not have thought it had to protect this community asset,” he said. “The key to making this work is that the financing will be neutral to the borough. In other words, this won’t cost the borough out of pocket.”
He said his company would purchase the land for fair market value, fund administration costs and insurance. It would also fund any legal costs that would ensue.
The interest and principal on the loan would accumulate and be paid off when either the borough decides to exit the partnership or the borough buys out RDC’s interest by paying off the loan.
RDC’s funding would come from a private investment fund, where the company invests its own capital.
”Our business is investing in railroads and railroad-related businesses,” said Mr. Posner. “So for us this would be another railroad-related investment. Most of the things we are involved in are equity investments and in some cases we are able to include debt to make our investment equity go farther, but often we make equity investments.”
Mr. Posner declined to speculate on acquisition costs, except to say “we expect that both the acquisition cost for the parcel and the transaction costs, which would include the condemnation process are within the range we are used to seeing in other transactions we have done.”
Transactions have cost the RDC up to “tens of millions of dollars,” he said and “we don’t see the transaction running into the tens of millions of dollars. It’s going to be complicated, but its not going to be enormous.”
”Our business is taking on unusual railroad transactions where the outcome is not clear,” he said
How is this venture profitable for RDC?
”At some point, we believe the borough will want to take RDC out and own the venture 100 percent or they won’t want to be in this business and we’ll buy them out,” he said. “There is a third possibility that the borough remains and our capital is tied up indefinitely.”
Interest on the loan to make the purchase will provide additional profits after a triggering event, said Mr. Posner.
”At some point there will be a triggering event,” said Mr. Posner. “This is intended to be a business transaction, we are business people and we are long-term investors,” said Mr. Posner.
PCRA would be a passive entity that would function as landlord and collect some sort of stipend from whomever operates the line. In the worst case scenario, the PCRA would have to pay someone to operate the line, which would come from RDC, but is a highly unlikely situation, said Mr. Posner.
”We don’t think its going to be a gold mine, but it should be financially neutral,” he said. “PCRA would simply substitute itself with the university,” and whatever the deal is between NJ Transit and the university is now is what will be in place.
RDC has not had discussions with Princeton University regarding this specific proposal, said Mr. Posner.
After the meeting, Robert Durkee, Princeton University’s vice president and secretary, said the university would “never sell. These are important campus lands.”
He also thinks NJ Transit has no interest in selling either.
NJ Transit said it could not comment on a proposal they have not seen.
For costs or what the line was worth, NJ Transit could not give an exact figure.
”If the line did not exist and were to be constructed today, it would be at a significant capital cost to include right-of-way, structures, stations, overhead electrification, electrical feeds and substations, signals, equipment, etc. We do not have a capital cost estimate for construction,” said Courtney Carroll, NJ Transit spokeswoman.
RDC is currently involved with four international public-private rail projects.
The new partnership would stabilize and protect the Dinky station location and track right of way in a couple of ways.
First, it would insulate the Dinky “from the political risk of something political happening. For example, NJ Transit being coerced into decisions beneficial to third parties such as the university,” he said. “PCRA would serve as the franchise authority, and what I mean by that is PCRA would be the landlord for NJ Transit to continue operating the Dinky more or less as it is; or if NJ Transit truly wants to get out of the Princeton market, then we find some third party operator to operate the line.”
The Dinky is in the middle of the pack as far as operations and cutting service at NJ Transit, according to Mr. Posner.
”There is nothing going on I’ve heard of in NJ Transit that suggests that the Dinky is being held out as the poster child for hopelessly inefficient lines,” he said. “I’m not aware the Dinky is on anybody’s hit list at NJ Transit.”
The PCRA would offer the same easement to NJ Transit that Princeton University currently does.
Should NJ Transit decide to get rid of the Dinky branch, which connects Princeton to the Princeton Junction station in West Windsor, PCRA would buy the rest of the line all the way to Princeton Junction, said Mr. Posner.
”Should that happen, we would provide additional financing that would allow for the purchase of the track, etc.,” he said.
Costs for operating the Dinky are included in the operating budget for the Northeast Corridor line and are not broken out separately.
According to NJ Transit, there are no rail lines with a public-private partnership such as this in the state.
Councilwoman Jo Butler asked why, as a Princeton alumnus, he would want to spoil the university’s planed arts and transit development.
”It would be wrong to marginalize the Dinky and make it less useable to the public,” said Mr. Posner. “Somehow you can incorporate transportation instead of marginalizing it. I’m a railroad person, and I think it’s bad policy and it’s bad for the community.”

