San Luis & Rio Grande Railroad May Have A Buyer But Questions Remain

SL&RG 1744 steams eastward into the sunrise toward La Veta Pass
Photo by Mike Danneman

After an auction ordered earlier this summer by a bankruptcy judge, the San Luis & Rio Grande Railroad, operating for years without an owner in the San Luis Valley, may actually have new life and a new owner. Officials are quick to stress that nothing is final or binding, but the details are being ironed out with long-time Great Western Railway of Colorado owner OmniTrax. 

Another company, North Central Railcorp headed by Friends of the Cumbres & Toltec Scenic Railroad, Inc. President Tim Tennant, has indicated its interest to Roni Wisdom, Alamosa County Administrator, and should be working with the court and trustees, says Alamosa News. 

Hopefully, in OmniTrax we have a clear winner. Even if we do, the possibility exists that if OmniTrax fails in the San Luis Valley, it could file to abandon the historic branch like it did recently. According to AlamosaNews.com, 

On Aug. 9, 2019 – just three years after purchasing the line – OmniTrax and CTXR petitioned STB to abandon the line, citing the loss of millions of dollars in acquiring and operating the line and asserting the cost of continuing to maintain and operate the line far outweighed the potential revenue from shippers. STB approved the petition, and the line was abandoned.

That is not to say that the San Luis & Rio Grande Railroad would be in the same boat as the Central Texas and Colorado River (CTXR) Railroad, which was purchased by OmniTrax on the assumption demand for fracking sand would drive their railroad's profitability. When the demand didn't materialize in 2017, the railroad stalled. The San Luis & Rio Grande has the demand already in hand.

The rising sun glints off the special photo freight of the SL&RG
Photo by Mike Danneman

One question would be whether OmniTrax, if awarded the sale, can couple the existing demand for the valley's agriculture with its existing business model of rail-driven real estate. Having a client commit to using OmniTrax in the San Luis Valley would settle a lot of nerves. So would public funding or tax breaks to spur new business growth. But no one can expect either to show up on demand.

On the other hand, one thing is certain: If SL&RG were to shut down for any reason, Coors' Rocky Mountain barley and other clients' products would be forced over La Veta Pass via US 160, and I know from personal experience the highway would never handle such a load without tens or hundreds of millions of dollars spent to improve it. Thus, the San Luis & Rio Grande Railroad had better keep those steel wheels rolling, whatever happens. We can't afford for it to stop. ⚒