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South Shore; "The Little Train That Could".

The history of the South Shore Railroad is perhaps as diverse as the people it serves.

The 87-year-old commuter railroad rambles 88 miles from South Bend through the posh Lake Michigan shoreline communities of Beverly Shores and Ogden Dunes, near the smokestacks of USS Gary Works, through South Chicago ghettos where open windows are an arm's length away, to Randolph Street in Chicago's Loop and some of the highest-priced real estate in the nation.

By rights, the South Shore should be a thing of the past. It wasn't until seven years ago that 1926 cars were replaced by stainless-steel cars. The South Shore is, after all, the the only remaining interurban commuter rail line in the country. It also is the only commuter rail line in the United States that operates without the benefit of a local subsidy.

Through the tough times, and there have been many the last two decades, it has become known as the "Little Train That Could."

The South Shore now can, and will, according to its operators, largely because of an agreement that took effect Dec. 30, 1989. That agreement provides for the Northern Indiana Commuter Transportation District (NICTD) to purchase the railroad's passenger service, track and right-of-way.

The NICTD is a public agency created by the Indiana General Assembly in 1977 to save the railroad from extinction during one of its many crises in recent years. The NICTD is made up of elected officials representing Lake, Porter, LaPorte and St. Joseph counties, the four in Indiana served by the railroad. The governor also has an appointment.

Former owners repeatedly had petitioned the Interstate Commerce Commission in the past 15 years to abandon the South Shore passenger service, a losing operation, and keep the profitable freight service. In retrospect, that adversity is the best thing that has happened to the South Shore.

"There now is no threat of shutting down the service," says Kenneth R. Peterson, an administrator with the transportation district.

The Chessie System, which today is known as CSX Corp., bought the railroad in 1967 and sold it in 1984 to Venango River Corp., a Chicago-based holding company. Venango primarily was interested in the freight operation and the prime location of South Shore track, which fit into Venango's overall freight plan.

Venango and NICTD never got along, largely because of a disagreement over the amount of money the transportation district owed Venango. Meanwhile, Venango was having financial problems of its own and petitioned the ICC in late 1988 to abandon passenger service as of July 1, 1989. The request was approved.

When Venango filed for a Chapter 11 reorganization, the fate of the South Shore ended up in U.S. Bankruptcy Court in Chicago before judge John D. Schwartz. When the court appointed a trustee to negotiate the future of the railroad, NICTD entered into arrangements to do what it had wanted to do ever since it was formed 13 years ago-purchase the South Shore.

Those negotiations culminated in December 1989 when the judge approved sale of the freight and rail lines to Anacostia and Pacific Co., Inc., of Chicago for $34.6 million. Part of the deal was for Anacostia to keep the freight service and sell the track and right of way to NICTD for $22.9 million. The days of acrimony between the freight and passenger service are behind us,' says Gerald Hanas, NICTD general manager.

State and local officials are hoping the U.S. Urban Mass Transportation Administration (UMTA) will provide $17.2 million, or 75 percent, of the purchase price. The NICTD persuaded Gov. Evan Bayh and Metropolitan Rail in Chicago to put up the $5.8 million needed for the local share. The plan seemed workable until March when Brian Clymer, UMTA administrator, said he was opposed to the federal government's putting up more than 50 percent of the money.

Hanas says if the transportation district has to come up with more money, it likely would have to borrow it and pay back the loan with money it expects to make by renting the tracks to Anacostia for freight service. It would rather not do that, since the transportation district is counting on the rental revenue to help make up for the operating deficit. Money for the purchase is just part of what the NICTD hopes to get out of the UMTA.

U.S. Sens. Richard G. Lugar and Dan Coats, as well as 1st District Rep. Peter J. Visclosky, are seeking $40 million collectively for the purchase, the acquisition of 14 to 17 new cars and rehabilitation of at least three railroad stations.

Hanas says there are some commitments: $800,000 from the Build Indiana Fund, $800,000 from the state's General Transportation Fund, $1.4 million from Metra in Illinois, $850,000 from the South Bend Airport and a commitment from Bayh for another $4.5 million.

One of the South Shore's problems, and one that could affect the amount of federal money it will receive, is the lack of local funding. "It is difficult to get local governments to fix attention on local funding. That is part of our dilemma," Lugar says.

Local planners and some state representative shave been talking for years about creating a regional development authority. Such an agency would have taxing authority, with income going to a variety of transportation needs, including the South Shore. Another taxing proposal should be introduced in the Indiana General Assembly next year.

The lack of local funding has plagued the railroad for years, although the four counties did provide money when 44 new cars were purchased in the early 1980s. The money problem, perhaps, is magnified by the unique circumstances under which the South Shore has operated since the NICTD came into being in 1977. The NICTD was formed largely as a local depository for state money in an effort to keep the railroad alive.

For almost a decade thereafter, NICTD lobbyists plodded the halls of the Statehouse looking for $1 million here and $1 million there. It did the lobbying in the face of opposition from southern and central Indiana legislators who questioned the wisdom of keeping the financially troubled railroad alive.

Other legislators were unwilling to back South Shore money if the four counties refused to come up with a local funding mechanism. But the NICTD, essentially, saved the railroad when it purchased 44 new cars to replace the 1926 models that were cold in winter, hot in summer, usually filthy and frequently late.

Since the NICTD was created, South Shore ridership, which had been declining for several years, grew from 1.5 million riders in 1978 to 3 million in 1986. About 3.5 million riders are expected in 1990.

Despite the new cars and increased ridership, however, troubles mounted for the NICTD as it faced increasing payments to the South Shore. Part of the problem was a dwindling pool of federal money for transit operations. Meanwhile, some elected officials in northwest Indiana continued to balk at a local tax.

The South Shore cars are crowded again. Through March 19, 691,033 people had taken the train in 1990, compared with 672,646 for the same period in 1989.

While the new cars maybe warm in winter and cool in summer, people during the rush hours are standing. About 13 percent of the rush-hour customers can't find a seat. The ontime performance has increased, too, to almost 95 percent this year. A mild winter has helped.

The NICTD wants to purchase up to 17 new cars. Three of those bought in the early 1980s aren't useable because of accidents. Two types of cars are being considered: motorized cars at $1.9 million each, and trailer cars at $1.4 million a throw. Those purchased a decade ago cost about $1 million each.

Back when downstate legislators were hassling their northwest Indiana counterparts about the worth of the railroad, Indiana University Northwest did a study that concluded those riding the South Shore bring $1 00 million in wages back to the area each year. That figure has grown in the last four years, NICTD officials contend.

Lake and Porter counties are in the midst of a population boom as Illinois residents are fleeing to Indiana to take advantages of lower housing prices and lower property taxes. The influx of Illinois residents has been especially heavy in western Lake County along the Illinois line and in northern Porter County.

The growth in western Lake County has sparked interest in developing another commuter rail line-a seemingly untimely undertaking in the face of the financial problems the South Shore has faced in recent years. But local planners say the push to convert the old Monon Railroad tracks into a commuter rail service from Lowell to Chicago also could benefit the South Shore. The key to west Lake County's proposal is local funding, without which the idea has virtually no chance.

There are two studies under way this summer that could have a direct impact on western Lake and the South Shore. The first study was commissioned by the 1990 General Assembly for the purpose of coming up with a local funding source. The second study is being conducted by the Northwestern Indiana Regional Planning Commission (NIRPC). That one, known as Operation Bootstrap, is to identify the infrastructure needs of northwest Indiana, including commuter rail.

Joseph Crnkovich, project manager for the western Lake County project, says that U.S. Secretary of Transportation Samuel Skinner gives little hope for federal money unless a project has at least 51 percent state and local funding.

James E. Ranfranz, executive director of the NIRPC, recently released figures on what a variety of taxes could raise in Lake, Porter and LaPorte counties. The taxes he mentioned, and the money they would raise annually, are: 2 cents on a package of cigarettes, $2 m i I I ion; I 0 cents per $1 00 of assessed valuation on property taxes, $3.2 million; 4 cents on a gallon of gasoline, $5.9 million; 0.2 percent county option income tax, $13.2 million; 0.5 percent county adjusted gross income tax, $33 million; and I percent sales tax, $33.4 million.

There are cars to buy, parking lots to expand and stations to renovate. There is still talk of extending the line to the South Bend airport; the South Shore still has a problem in Michigan City it would like to eliminate: The train runs down the middle of 11th Street, sharing the right-of-way with automobile traffic.

The luxury of local money won't put the South Shore on easy street.
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Title Annotation:The South Shore Railroad
Author:James, Richard E.
Publication:Indiana Business Magazine
Date:May 1, 1990
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