EL PASO REGIONAL INTERMODAL RAIL PROJECT EL PASO, TEXAS PROJECT FEASIBILITY & DEVELOPMENT REPORT

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1 EL PASO REGIONAL INTERMODAL RAIL PROJECT EL PASO, TEXAS PROJECT FEASIBILITY & DEVELOPMENT REPORT Prepared for CITY OF EL PASO 2 Civic Center Plaza El Paso, Texas Prepared by MOFFATT & NICHOL ENGINEERS Richmond Avenue, Suite 200 Houston, Texas October 1, 2003 M&N File: 5127

2 EXECUTIVE SUMMARY BACKGROUND Railroads have long been an integral part of the local economy. Like many western cities, El Paso has grown up around existing rail facilities creating challenges for both the railroads and the community as operations have increased and public acceptance of impacts from railroad operations has changed. Located mid-way between the west coast and the eastern limits of the Union Pacific Railroad s (UPRR) southern tier mainline, El Paso is home to a major railroad service center and junction with the UPRR Tucumcari Line that connects El Paso with Kansas City and Chicago. El Paso is also served by the Burlington Northern Santa Fe Railway (BNSF) with a line that connects to the BNSF mainline near Albuquerque, New Mexico. Both railroads connect to the Mexican carrier, Ferrocarrilles Nacionales de Mexico (FXE) over bridges across the Rio Grande River and international border in downtown El Paso. Currently, the UPRR carries about 40 trains per day through El Paso, with about 25% connecting to or from the Tucumcari Line to the mid-west, and the rest continuing along the Sunset Line. Service along the Sunset Line is increasing at 4% to 5% per year. The UPRR also interchanges approximately one train per day with FXE, while BNSF typically interchanges two trains per day. Rail cargo to and from Mexico is projected to grow at approximately 8% per year. The FXE line passes through downtown Ciudad Juárez on city streets, causing severe congestion and safety concerns. Ciudad Juárez has responded by imposing a curfew that restricts rail crossings to midnight to 6:00 a.m. Various proposals to address this issue have been considered including lowering the rail into a trench and relocating the international rail crossing to Santa Teresa, New Mexico or to a location near Clint, Texas. The City of El Paso and the El Paso Metropolitan Planning Organization (MPO) have previously evaluated the concept of creating a regional freight transportation hub or intermodal facility. A 1999 study by Kimley-Horn & Associates for the MPO recommended that a transportation hub be constructed at the El Paso International Airport. In 2002 following a series of meetings with Ciudad Juárez and the railroads, the City of El Paso developed a concept for a Regional Intermodal Rail Plan that would provide a long-term solution to rail operations in El Paso. Specific goals of the plan are to: Stimulate trade-related economic activities and create jobs; Improve the efficiency of goods movement and mobility; Enhance the quality of life in El Paso and surrounding communities; Improve safety and circulation; and Address environmental concerns related to growth in goods movement. To evaluate the feasibility of the various components included in the Regional Intermodal Rail Concept Plan, and develop a plan for implementation, the City engaged a consultant team experienced in rail project development, advocacy and financing to conduct a three-phased effort to evaluate and advance the project. Moffatt & Nichol Engineers I Final Report

3 The first phase involved jump-starting the federal funding process. The current transportation bill expires at the end of September Congress is considering the reauthorization of the transportation funding bill currently known as The Safe and Flexible Transportation Equity Act of 2003, or SAFETEA, which will establish federal funding for the next six-year period. It has been widely anticipated that the new bill will contain significant funding for rail intermodal projects and that Congress will include specific funding for projects of national significance. The second phase involved conducting various technical and economic studies to evaluate the feasibility, cost and benefits of the components of the Concept Plan. The third phase included preparation of a draft and final Project Feasibility and Implementation Report summarizing the findings and recommendations of the technical and economic studies. NATIONAL ECONOMIC SETTING Based on data from the U.S. Public Waybill, approximately $55.6 billion in commodities passed through El Paso by rail in 2001, with origins and destinations in more than 16 states as well as Mexico. This represents approximately 13% of the total value of all goods transported by rail in the U.S. The area s largest regional transportation partner is the West Coast (primarily Southern California) representing approximately half of all goods transported through El Paso. About 80% of the trains are intermodal, indicating that Asian cargo arriving from the Ports of Los Angeles and Long Beach is the predominant movement. Nearly 17% of the nations 9 million intermodal rail shipments transit through El Paso. Mexico accounts for approximately 180,000 shipments or 5.3% of the El Paso cargo volume. Commodities moved on rail through El Paso support close to 4 million jobs nationwide, in multiple industries. High value products shipped intermodally and on auto trains create 600,000 direct jobs and significant service supporting jobs throughout the United States. In addition, close to 14,000 jobs throughout the U.S. in the railroad and railroad supporting industries are directly supported by rail operations through El Paso. RAIL CONCEPT PLAN The Regional Rail Intermodal Project Concept Plan includes five general projects: New international rail crossing and interchange at Santa Teresa, New Mexico; New rail connection and intermodal facility at EPIA; Relocation and redevelopment of existing downtown rail sites and new rail trench; New rail outer loop; and New roadway outer loop (Northeast Parkway). The projects, when taken together, would form a complete outer loop for rail and truck traffic to bypass downtown El Paso. In addition, certain existing rail facilities in downtown El Paso could be relocated to allow acquisition and redevelopment of prime sites adjacent to the Central Business District. Moffatt & Nichol Engineers II Final Report

4 EXISTING RAIL OPERATIONS Typically, trains do not originate or end at El Paso. Intermodal and carload (manifest) freight that is bound for or originates in El Paso, is cut from or appended to through-trains bound for other destinations. This is because the cargo volumes received or generated in El Paso region are not sufficient to make up full trains proceeding to a single destination on a consistent basis. The UPRR has centered its classification and intermodal operations at one location. This allows a train to quickly unload or take on additional rail cars and continue on its way. UP's terminal is set up so that all crews, engines, and administrative activities are centered at one place, just east of Cotton Avenue in the east end of Dallas Yard. The BNSF serves local intermodal and carload customers, and its interchange with FXE from its single facility. BNSF trains to and from El Paso typically handle both intermodal and carload traffic. Consequently, the efficiency of their operation requires a yard equipped to load/unload containers, and to marshal tank cars, grain cars, flat cars, box cars, etc. The BNSF exchanges about two trains per day with FXE. INTERMODAL BUSINESS TRENDS Nationally, intermodal cargo is the fastest growing segment of rail business with a long-term growth rate of 3.6% per year. However, intermodal business is characterized by tight operating margins. Competition with trucking and the modal and route flexibility of most large intermodal shippers continue to pressure margins. To improve operating margins, rail carriers are increasingly offering guaranteed delivery commitments at a premium price. In addition, the long-term contracts with larger customers often include pay-for-performance provisions or penalties for late delivery. These factors result in greater pressure on the rail carrier to meet faster delivery schedules. System velocity is closely monitored by each railroad and system operations are routinely optimized to maintain or improve overall system velocity. STUDY METHODOLOGY The study effort was organized to support the City s ongoing project development efforts and the requests for Federal funding. Following collection and review of existing reports, site reconnaissance visits and interviews were conducted with officials from the City of El Paso, the El Paso MPO, IMIP and Doña Ana County. From these efforts, initial assessments were made and a White paper was developed to describe the project and its potential benefits to support the ongoing effort to obtain Federal funding necessary for project implementation. Following a third Reunion Meeting held in late January 2003, the railroads agreed to participate in a series of workshops to enable the City and its consultant team to gain a better understanding of current railroad operations and concerns with the proposed projects. These meetings were very helpful, and the cooperation of each of the railroads was excellent. The team then began more detailed technical studies necessary for the evaluation of the various proposed projects. An independent rail operations assessment was conducted by Willard Keeney and Associates to evaluate current operations, and identify system deficiencies and capacity constraints that might be addressed by the proposed projects, and to validate information Moffatt & Nichol Engineers III Final Report

5 provided by the railroads. Concurrently, economic evaluations were conducted on both a macro scale to identify the national impact of trade through El Paso, and a more directed basis to evaluate potential user and public benefits associated with each of the proposed projects. SANTA TERESA RAIL CROSSING The proposed new border crossing at Santa Teresa works only if the companion facilities in Mexico are developed concurrently. Given the level of investment required, neither side is likely to move forward unless and until a binding commitment is made to construct the corresponding facilities on the other side of the border. FXE, like other Mexican railroads, operates as a concessionaire on tracks owned by the Mexican government. In Mexico, there is legislation and precedence for projects such as grade separations and line extensions to be developed through four-party agreements between the railroad concessionaire, and the Local, State and Federal governments, with each party contributing 25% of the total project cost. While it is assumed that financial commitment from the Mexican Federal Government and the State of Chihuahua may be a matter of political initiative rather than financial capacity, it is likely that some form of longterm financing will be necessary for Ciudad Juárez and FXE, if not all four parties. The project has received tremendous support from the State of New Mexico and Doña Ana County officials. The State has offered to assist in a variety of ways including lending political support, assistance with land assembly, permitting, and use of available public financing mechanisms. Staffs from the New Mexico State Highway and Transportation Department and the Economic Development Department have been assigned to monitor and assist with development of the project. EPIA INTERMODAL FACILITY The facility may capture some business originating from the Butterfield Trail Industrial Park due to its immediate proximity, but until the capacity of Alfalfa Yard is approached, or other constraints to the use of the existing yards arise, it s unlikely that it would divert a significant amount of business away from present facilities. It is unlikely that the UPRR and BNSF would desire to shift existing intermodal business to the EPIA site. The BNSF would have to operate on the UPRR Tucumcari line until the northern segment of the Outer Loop is constructed and operational. While the BNSF has operating rights over the line, it does not have trackage rights that would permit it to serve new customers. Even if rights were obtained, it is likely that the BNSF switcher serving the facility would experience significant delays on a regular basis due to congestion on the Tucumcari Line. The new terminal would likely be operated as a local haul service to the existing yards. The primary goal of the proposed new intermodal facility at the EPIA, therefore, is to attract business and create jobs from private investments by manufacturing or distribution center businesses that desire close proximity to rail, truck and air transportation facilities. Much of the freight passing through the City does not stop for further manipulation and distribution. The challenge for the City is to establish a level of non-discretionary demand that must originate or terminate in the City by drawing a series of anchor tenants at distribution parks. These lock-in flows would serve as a basis for making investment in an ICTF and other rail facilities. Moffatt & Nichol Engineers IV Final Report

6 The project has received positive support from the Command Group at Fort Bliss since it would enhance their mobilization mission capability given its close proximity to the military base. Their concerns regarding alignment and grade separations for military crossings have been incorporated into the concept plan. DALLAS YARD (WEST) The most feasible relocation and redevelopment project is the Dallas Yard (West). The UPRR has already removed most of the yard trackage located in that area. The proposed project would free up approximately 50 acres adjacent to the downtown core area, which could be redeveloped for beneficial use. Evaluation of recommended specific reuse alternatives is beyond the scope of this study, but proposed alternatives have included a Sports Center, Great Park and commercial business development. RAIL TRENCH PROJECT A rail trench, similar to the Alameda Corridor in Los Angeles and the ReTRAC project in Reno, Nevada was studied for the area adjacent to Texas Tech University, Thomason Medical Center and the proposed Medical School Campus site. The trench would begin immediately east of Copia Street and extend approximately 12,500 feet, ending to near Clark Street. The trench would be constructed in the existing right-of-way, however, a multiple track shoofly, or runaround track, would be required to bypass the trench construction zone. The shoofly needs to be sufficiently far away from the construction zone to eliminate any hazards or interference with construction or rail operations. Additional temporary right-of-way would be required to accommodate the shoofly. The assumed trench would accommodate two tracks and a wide service road. A 54-foot cross section was approved by the UPRR for the ReTRAC project. The principal benefits of a rail trench are the virtual elimination of adverse impacts to adjacent properties associated with grade separations, and the reduction in train noise and vibration impacts on adjacent properties. Relatively inexpensive bridges can be constructed to provide unimpeded vehicle and pedestrian access across the trench. RAIL OUTER LOOP NORTHERN SECTION The Northern Outer Rail Loop crosses approximately the same territory as the proposed Northeast Parkway, traversing west to east through Anthony Gap from Berino New Mexico to the new intermodal yard at EPIA. Certain lands owned and administered by the BLM in New Mexico, including Anthony Gap, are designated as Areas of Critical Environmental Concern and development must address the biological, scenic, riparian, special status species and cultural values in this area. The BLM has established a corridor through the environmentally sensitive Anthony Gap in the general area of the existing highway and major utility corridor. However, it is not feasible for the rail alignment to remain within that corridor raising permitting and environmental concerns. Anthony Gap also contains a number of large natural gas and petroleum product pipelines. Detailed studies of these issues would need to be conducted before finalizing the alignment and profile. While the project offers a reasonable method of bypassing the congestion in downtown El Paso, its primary benefits would not be realized at present rail demand. Moffatt & Nichol Engineers V Final Report

7 RAIL OUTER LOOP EASTERN SECTION The Eastern Section is intended to complete the outer loop and provide a bypass of downtown El Paso. The line is approximately 37 miles in length. Although most of the alignment alternatives are located over undeveloped property, the area is urbanizing rapidly. The loop extension tie-in point is related to an alternative rail crossing near Clint along the Samalayuca gas line corridor. The three railroads considered the Clint location for a new international crossing, but concluded that the Santa Teresa location was preferable. CONCLUSIONS The analysis of railroad operations has established that current railroad operations are rational and reasonably efficient. Both BNSF and UPRR have sufficient reserve capacity to meet current needs and forecast growth for the near term. The railroads also serve a number of local customers in El Paso with frequent service, which would be degraded if rail operations were relocated to more distant locations. The proposed projects, for the most part, provide their primary benefit to the railroads in the future when growth has reduced the capability of the railroads to consistently meet demand and service requirements. Therefore, the projects should be considered primarily from a public benefit perspective for the near term. Based on the analyses and evaluations conducted for this study, projects have been categorized as those recommended for further consideration and potential implementation, and projects recommended for future consideration beyond the next six years. Three projects are recommended for further consideration and development: New Border Crossing at Santa Teresa; Dallas Yard (West) Redevelopment; and EPIA Intermodal Facility These projects, taken as a group, provide significant national, regional and local benefits. These projects would: Create economic development opportunities and jobs; Promote efficient international trade; Improve national security; and Enhance the quality of life in El Paso. Specifically, these projects would create more than 1,750 local engineering and construction jobs, and support another 4,800 jobs regionally and nationally for a period of 3 to 4 years during engineering and construction. Typically, new permanent job opportunities associated with new distribution center facilities are estimated at 400 direct jobs and 450 indirect jobs per million sq. ft. of development. These numbers are significantly higher if distribution center activities also include value-added manufacturing. Moffatt & Nichol Engineers VI Final Report

8 The projects would promote efficient international trade and create a more efficient, higher capacity international rail interchange with Mexico to take advantage of long-term growth in this market. National security would be enhanced with new, state of the art rail security screening and inspection devices and customs facilities, and closure of the existing rail bridges. Interchange activities would be further from the border, also improving security. The projects would also enhance the quality of life in El Paso by relocating railroad industrial type operations away from the El Paso front door. The projects would also reduce truck trip lengths and queuing in residential and commercial neighborhoods, reducing noise and exhaust emissions. The others are recommended for consideration as long-term projects since the benefits would not accrue immediately, given their respective investments. Project costs are summarized in Table 1 below. Table 1 Project Cost Summary (millions) Project Identification US Mexico Santa Teresa Interchange $199 $95 Dallas Yard (West) $35 EPIA Intermodal Facility (Phase 1) $58 Total Initial Projects $292 $95 BNSF Yard $29 Chamizal Yard $7 Rail Trench $174 Outer Loop Northern Section $258 Outer Loop Eastern Section $243 $80 Northeast Parkway $210 Santa Teresa Interchange $199 $95 Total $921 $80 IMPLEMENTATION In order to develop and construct these projects, the cooperation and regulatory approvals of other governmental jurisdictions are necessary. Given the level of investment required, it would not be fiscally responsible to expend significant amounts for project development unless some sort assurances are obtained that other governmental bodies will approve the project without imposing unreasonable requirements or delays. Moffatt & Nichol Engineers VII Final Report

9 A common method is the formation of a special authority that is empowered to undertake a specific task, in this case the development of a major capital construction project. This is the method used for the Alameda Corridor in Southern California. Recent legislation, Texas HB 3588, potentially gives El Paso valuable new institutional and financial tools to develop transportation projects in El Paso and its surrounding counties in Texas, and to enter into agreements to provide similar authority in New Mexico. The legislation gives special status to El Paso as a municipality that borders Mexico and has a population greater than 500,000. The Act allows the City of El Paso to form a Regional Mobility Authority (RMA) and to participate in development of cross-border and bi-state projects with the approval of the Texas Transportation Commission. The powers granted to an RMA appear to fully encompass the needs of the proposed project. PROJECT FUNDING The long-term benefits of the project are both regional and national in scope. Substantial federal investment, together with private sector participation, is necessary to adequately fund the project. The six-year transportation reauthorization bill, currently known as SAFETEA, is expected to contain significant funding for rail intermodal projects, and it is further expected that Congress will include specific, set-aside funding for large projects of national significance, or Mega Projects. Section 1205 of the proposed bill, entitled Freight Transportation Gateways and Intermodal Connections, authorizes the use of Title 23 highway funds for a broad range of intermodal and freight rail projects. The City has submitted two requests for funding for the El Paso Regional Intermodal Rail Project: A $1 million request for a Federal Demonstration Project grant for project planning and feasibility studies; and A six-year, $240 million request for the Project as a generic provision in the amount of $40,000,000 per year for project implementation costs, including construction, right-of-way acquisition, engineering and utility relocations. The requests have been submitted to the U.S. House of Representatives Transportation and Infrastructure Committee and were sponsored by Congressman Silvestre Reyes, (El Paso), and endorsed by Congressman Stevan Pearce, NM. Both requests are for funds outside the state s normal funding allocation and not a reprioritization of the Regional Plan. To close the remaining funding gap, other sources and project beneficiaries must be investigated. Potential sources include: In kind contributions of land, technical support, etc., by public agencies and/or private parties; State of New Mexico and Doña Ana County; Federal transportation security funds; Border improvement grants; Economic development grants; Public and private development partners or concessionaires; and City funding sources. Moffatt & Nichol Engineers VIII Final Report

10 The most practical funding arrangement will likely consist of an aggregation of funding from each of these sources. A funding program consisting of significant federal funding, together with a tax-exempt bond issue, may be feasible to obtain necessary capital for project development. New Mexico officials are investigating the applicability of various economic development grant and loan programs available in New Mexico. RECOMMENDATIONS It is recommended that the City: 1. Continue to aggressively pursue federal funding for the short-term projects based on their national and regional benefits. The transportation bill reauthorization process should be monitored closely and the City should continue to work closely with Texas and New Mexico representatives to ensure that a unified approach is maintained and that the message remains consistent. 2. Engage in further discussions with the railroads to refine the project and identify issues and concerns so that they can be effectively addressed early on. 3. Initiate a market study to evaluate regional distribution center and manufacturing company interest in El Paso and identify any barriers to investment. 4. Develop appropriate tools and implement an effective public outreach and political outreach, to ensure that the project benefits are well understood. 5. Continue discussions with New Mexico and Mexico officials and consider formation of a Regional Mobility Authority for the purpose of developing a viable plan of finance, and designing and constructing the project. 6. Monitor restructuring trends and marketing alliances in the railroad industry such as the recent proposal to merge the Kansas City Southern (KCS) and Mexico s TFM to form NAFTA Rail of North America. The industry remains dynamic and changes and realignments could have a significant effect on the desirability of El Paso as a rail portof-entry. 7. Evaluate potential marketing alliances with Mexico s west coast ports to focus on El Paso as an alternative Port of Entry for Asian trade. Major shippers are investigating transportation alternatives to reduce dependence on U.S. west coast ports. Although the existing infrastructure and geography does not directly favor El Paso over other Texas gateways, other factors may help to benefit El Paso. 8. Seek development partners for Dallas Yard West and the EPIA Intermodal Facility. Moffatt & Nichol Engineers IX Final Report

11 EL PASO REGIONAL INTERMODAL RAIL PROJECT EL PASO, TEXAS TABLE OF CONTENTS PAGE EXECUTIVE SUMMARY... I 1.0 INTRODUCTION BACKGROUND HISTORY PURPOSE & NEED NATIONAL ECONOMIC SETTING PROJECT ELEMENTS NEW INTERNATIONAL RAIL CROSSING SANTA TERESA NEW RAIL CONNECTION AND INTERMODAL FACILITY AT EPIA RELOCATE AND RE-DEVELOP EXISTING RAIL FACILITIES NEW OUTER RAIL LOOP NEW ROADWAY OUTER LOOP (NORTHEAST PARKWAY) RAILROAD OPERATIONS UNION PACIFIC RAILROAD OPERATIONS BURLINGTON NORTHERN SANTA FE RAILWAY OPERATIONS INTERMODAL BUSINESS TRENDS FEASIBILTY ANALYSIS STUDY METHODOLOGY SANTA TERESA CROSSING Development Considerations Costs AIRPORT INTERMODAL FACILITY Development Considerations Costs REDEVELOPMENT OF DOWNTOWN RAIL FACILITIES Development Considerations Costs RAILROAD OUTER LOOP Development Considerations Costs ROADWAY OUTER LOOP Development Considerations Costs CONCLUSIONS INITIAL PROJECTS New Border Crossing at Santa Teresa Dallas Yard (West) Redevelopment EPIA Intermodal Facility LONG-TERM PROJECTS PROJECT IMPLEMENTATION PROJECT ORGANIZATION PROJECT FINANCING Federal Funding Other Sources Moffatt & Nichol Engineers

12 6.3 PUBLIC OUTREACH RECOMMENDATIONS REFERENCES List of Figures FIGURE 1-1 REGIONAL RAIL NETWORK FIGURE 1-2 CITY OF EL PASO REGIONAL INTERMODAL RAIL CONCEPT PLAN FIGURE 2-1 PROJECT SITE PLAN FIGURE 2-2 SANTA TERESA SITE FIGURE 2-3 EXISTING UP RAIL UNDER ROUTE 136 (AIRPORT ROAD) FIGURE 2-4 EXISTING UP RAIL AT SANTA TERESA FIGURE 2-5 INTERMODAL FACILITY SITE PLAN FIGURE 2-6 EXISTING EL PASO RAIL YARDS FIGURE 2-7 EXISTING DALLAS YARD (WEST) FIGURE 2-8 PAISANO YARD FIGURE 2-9 CHAMIZAL YARD FIGURE 2-10 ALFALFA YARD FIGURE 2-11 INTERMODAL ACTIVITY AT ALFALFA YARD FIGURE 2-12 BNSF YARD FIGURE 2-13 EXISTING BNSF INTERMODAL RAIL YARD FIGURE 2-14 EXISTING BNSF FREIGHT DEPOT FIGURE 2-15 VIEWS OF THE ALAMEDA CORRIDOR TRENCH, SHOWN FOR EXAMPLE FIGURE 2-16 OUTER HIGHWAY PRELIMINARY CONCEPT ALTERNATIVES FIGURE 3-1 EXISTING DALLAS YARD FUELING STATION FIGURE 4-1 TUCUMCARI RAIL UNDER INTERSTATE-10, LOOKING SOUTH FIGURE 4-2 TUCUMCARI RAIL UNDER ROUTE 54, LOOKING NORTH FIGURE 4-3 DALLAS YARD FIGURE 5-1 FXE RAIL ROUTES IN MEXICO List of Tables TABLE 1 RAIL TRADE SHIPMENTS VIA EL PASO BY O/D TABLE 2 COMMODITIES BREAKDOWN (INCLUDING MEXICO) TABLE 3 JOBS SUPPORTED BY INDUSTRY RELATED TO CARGO TYPE TABLE 4 PROJECT COST SUMMARY Appendix Moffatt & Nichol Engineers

13 1.0 INTRODUCTION 1.1 BACKGROUND The City of El Paso is the fifth largest city in Texas and, together with its sister city Ciudad Juárez, represents the largest urban center along the U.S. Mexico border. Named for its geographic location in a pass south of the Franklin Mountains and north of the Rio Grande River, El Paso is located at the juncture of several historic trade routes including rail, interstate highway, and international airport facilities. Typically, more than 55,000 trucks cross the international bridges in and near El Paso into the U.S. each month carrying a wide variety of manufactured goods and materials. Geographic constraints and urban development have created a transportation bottleneck in the center of the City. Since 1881, El Paso has been a center of railroad activity. Railroads have been an integral part of the local economy, with El Paso being one of the first southwestern cities in the U.S. to have a thriving rail service. Like many historic western cities, El Paso has grown up around existing rail facilities creating challenges for both the railroads and the community as operations have increased and land use patterns and public tolerance of railroad impacts has changed. When constructed, the rail yards were located on the outskirts of the City. Today, they are located in or near the Central Business District (CBD), and adjacent residential and commercial neighborhoods. Located mid-way between the west coast and the eastern limits of the Union Pacific Railroad s (UPRR) southern tier mainline, El Paso is home to a major railroad service center and crew change location. The UPRR mainline is the railroad s primary east-west route for intermodal containers from the major port complex located in Southern California, serving both the Mid- West (Chicago) and the South-Central (Houston/Dallas/New Orleans) market through El Paso. The City is also served by the Burlington Northern Santa Fe Railway line that connects to its major east-west mainline at Belen Junction, just south of Albuquerque, New Mexico. See Figure 1-1 Regional Rail Network. In addition to serving local customers, both railroads interchange rail cars daily with Ferrocarriles Nationales de Mexico (FXE) across two single-track international railroad bridges located in the downtown area. International exchange operations are currently restricted to nighttime hours (approximately midnight to 6:00 a.m.) due to limitations on rail movements in downtown Ciudad Juárez imposed by the municipality. As trade with Asia increased dramatically during the 1980 s and 1990 s, and the maritime industry shifted to ships too large to pass through the Panama Canal (Post-Panamax vessels), containerized goods arriving at or departing through the Ports of Long Beach and Los Angeles increased at double-digit rates. This has led to substantial growth in rail traffic through El Paso. Current forecasts indicate that trade volume through those ports is expected to nearly triple by the year 2025, with a corresponding increase in the number of intermodal trains, or container trains, passing through El Paso. Similarly, rail interchange movements between the U.S. and Mexico at El Paso have also increased in the last decade, and are growing at approximately 8% per year. Moffatt & Nichol Engineers 1-1 Final Report

14 Figure 1-1 Regional Rail Network 1.2 HISTORY Over the years, various proposals to relocate the international rail crossings and downtown rail yards, and to construct new modern intermodal transportation hubs have been studied. Some proposals were driven by the desire to spur economic development opportunities and some to address safety or traffic congestion concerns. Nearly fifty years before the much-lauded Alameda Corridor project in Los Angeles, the City constructed the Bataan rail trench through downtown El Paso with virtually an identical configuration to permit the expansion of the CBD core. Civic leaders and media editorials have encouraged a regional approach to addressing these transportation issues. Intermodal freight transportation is defined as the transportation of freight using two or more modes of transportation including rail, trucking and aircraft. In the rail industry, intermodal refers to rail transported containers. The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) stated; It is the policy of the United States Government to encourage and promote development of a national intermodal transportation system in the United States to move people and goods in an energy efficient manner, provide the foundation for improved productivity growth, strengthen the Nation's ability to compete in the global economy, and obtain Moffatt & Nichol Engineers 1-2 Final Report

15 the optimum yield from the Nation's transportation resources.'' Civic leaders and transportation planners have recognized the importance of developing state-of-the-art intermodal transportation facilities to the region s economic well-being. In 1998/1999, a comprehensive study was undertaken by the El Paso Metropolitan Planning Organization (MPO), under the direction of the Transportation Policy Board, to evaluate the feasibility and recommend the preferred site for a major new intermodal transportation hub. The goal of the proposed facility was to stimulate economic development opportunities and capture additional private investment in distribution, warehousing and manufacturing businesses that would benefit from access to an efficient multi-modal transportation facility. This study, conducted by Kimley-Horn and Associates, recommended that a new multi-modal transportation hub be developed. The study evaluated five locations for the transportation hub: Santa Teresa, New Mexico Clint, Texas South of I-10 San Elizario, Texas near Herring Road Fort Bliss/Biggs Army Airfield (BAA) East of El Paso International Airport (EPIA) The Santa Teresa site had considerable support from the State of New Mexico and its Congressional delegation, and some support from Juárez officials who also were considering relocation of the international rail crossing to Santa Teresa to avoid the need for trains to pass through downtown Juárez. However, the recommended site, a combination of the BAA and EPIA sites, was selected over Santa Teresa primarily because it was located close to the major industrial areas in southeast El Paso and Juárez. Little progress was made in implementing the proposed project due to lack of funding. The State of New Mexico and Doña Ana County, together with various private developers, have promoted development of an intermodal facility and new international rail crossing at Santa Teresa, New Mexico to encourage industrial and distribution center businesses to locate at the Santa Teresa Industrial Park. The former Southern Pacific Railroad (now UPRR) studied alternatives in the 1980 s for creating a shortcut and bypass for trains bound to or from the mid-west along their Tucumcari Line, which joins the east-west mainline in El Paso. Although the project was deemed feasible, no progress was made due to the high capital cost and limited benefits. In the summer of 2002, the City learned that efforts were underway in Mexico to evaluate the feasibility and commence preliminary engineering for a downtown Juárez rail trench that would eliminate traffic impacts associated with rail movements. A Reunion Meeting was held with the Mayors of Ciudad Juárez and El Paso, and representatives of the railroads and other interested groups to discuss plans for addressing rail issues. At that meeting, the BNSF and UPRR expressed concerns that the proposed rail improvements in Juárez would not work well for them. The railroads were requested to review various options for improving the international rail crossing, including new crossings at Santa Teresa, New Mexico and Clint, Texas, and present their preferred solution at the next Reunion Meeting. Concurrently, the City began considering other long-range rail projects to enhance the community including: Moffatt & Nichol Engineers 1-3 Final Report

16 Lowered sections of the UPRR mainline through downtown into a trench to eliminate grade crossings and reduce impacts associated with rail operations; Light rail transit connections to border crossings; Relocation and redevelopment of existing rail facility sites; New intermodal facilities at EPIA; Rail loop system to bypass downtown. In December 2002, a second "Reunion Meeting was held in Ciudad Juárez. The three railroads, UPRR, BNSF and FXE, reported that their preferred location for the international crossing was the Santa Teresa, New Mexico site. Considerations included concerns about the cost of the trench in Juárez, constraints and impacts on U.S. rail operations, UPRR opposition to shifting rail operations eastward due to crew timing issues, and right-of-way and terrain constraints associated with the Clint crossing. The City then prepared a Regional Intermodal Rail Concept Plan (Figure 1-2) for a long-term, regional approach to goods movement. The plan was intended to provide an integrated, longrange transportation program, that enhances linkages, addresses increased goods movement, and promotes economic growth in the region through a major realignment and improvement of the rail and highway transport system and its associated facilities. The concept plan included a rail loop bypass of downtown El Paso and Juárez, new rail border crossings, new rail yards and intermodal facilities, relocating and redeveloping existing rail sites, and lowering segments of the existing mainlines into a trench to enhance adjacent land uses and development opportunities. The plan was presented to various transportation agencies and community groups and the concept developed considerable interest. The El Paso MPO, representing nearly all the communities affected by the project, voted unanimously to support the project and amend the 2025 year plan to include proposed federal funding requests. Unanimous resolutions of support were issued by the Doña Ana County Board of Commissioners and the El Paso City Council. Moffatt & Nichol Engineers 1-4 Final Report

17 Regional Intermodal Rail Project January 2003 Figure 1-2 City of El Paso Regional Intermodal Rail Concept Plan 1.3 PURPOSE & NEED Community leaders have become increasingly concerned about highway crossing safety, transport of hazardous materials in downtown and residential areas, noise, traffic congestion and air quality impacts associated with rail operations and highway crossing delays. Existing rail facilities occupy key areas in the downtown area that may offer potential redevelopment opportunities that would create jobs and enhance the quality of life for all residents of El Paso. At the same time, it is clear that efficient and cost effective rail service in El Paso is essential for the economic vitality of the City, the region and the nation. The El Paso Regional Intermodal Rail Project is intended to address these growing concerns and take advantage of El Paso s location at the juncture of major highway and rail trade corridors to create economic opportunities. Specific goals of the projects are: Stimulate trade-related economic activities and create jobs; Moffatt & Nichol Engineers 1-5 Final Report

18 Improve the efficiency of goods movement and mobility; Enhance the quality of life in El Paso and surrounding communities; Improve safety and circulation; and Address environmental concerns related to growth in goods movement. In order to evaluate the feasibility of the various components included in the Regional Intermodal Rail Concept Plan, assess the relative benefits and costs, and develop a plan for implementation. The City engaged a consultant team experienced in rail project development, advocacy and financing. The project team was tasked with conducting a three phased effort to advance the project. The first phase involved jump-starting requests for the federal funding process. In 1991, the Congress enacted the first omnibus transportation bill known as Intermodal Surface Transportation Efficiency Act (ISTEA), which established a new framework for project development and addressed surface transportation funding for a six-year period. The transportation bill was reauthorized in 1997 for another six-year period as the Transportation Equity Act for the 21 st Century (TEA-21). This bill included provisions promoting intermodal goods movement projects, but provided little in the way of additional dedicated goods movement funding. Since the current transportation bill expires at the end of September 2003, Congress is currently considering the reauthorization of the transportation funding bill for the next six year period. The reauthorization bill is currently known as The Safe and Flexible Transportation Equity Act of 2003, or SAFETEA. It has been widely anticipated that the new bill will contain significant funding for rail intermodal projects and that Congress will include specific funding for projects of national significance. These are projects that extend beyond the means of local transportation agencies to fund through normal methods, but provide tremendous regional and national benefits. Project nominations and funding requests from each Congressman were originally due to the House Transportation and Infrastructure Committee on February 1, 2003 for consideration in the reauthorization bill. The work scope included preparation of an initial project Whitepaper and completion of the draft project questionnaires requested by the Committee, together with continuing advocacy for the project in Washington, D.C. The second phase involved conducting technical and economic studies to evaluate the feasibility, cost and benefits of the various components and to make recommendations for changing the concept plan as warranted. This phase also included research and coordination with various project stakeholders, and provision of technical support to the City in its outreach and project coordination efforts. The third phase included preparation of a draft and final Project Feasibility and Implementation Report summarizing the findings and recommendations of the technical and economic studies. The report is organized into seven sections including this Introduction. Section 2 provides a description of each of the proposed project elements. Section 3 summarizes current railroad operations and intermodal business trends. Section 4 provides an analysis of the benefits and costs associated with each element, including significant findings developed through the course of the analysis. Section 4 includes a discussion of issues related to development of each project. Section 5 summarizes the conclusions reached in the study and provides recommendations for short- term and long-term projects. Section 6 provides a project implementation plan for the short-term projects and Section 7 provides recommendations for next steps. Moffatt & Nichol Engineers 1-6 Final Report

19 A number of prior studies and reports have been reviewed for this study. Valuable information has been utilized from each of these studies, which are identified in the reference section (Section 8). The focus of this report is not to re-engineer all of the previous work. The primary emphasis is to look at the project on a region-wide basis and make recommendations that will benefit the whole El Paso region and assist the City in the formation of a development plan. The second emphasis is on the economic benefits and funding mechanisms that will bring this project to fruition. 1.4 NATIONAL ECONOMIC SETTING The nature of goods movement has changed dramatically in the past 20 years. Transport of goods, whether by rail or truck, is now part of a complex distribution network that is a core part of the entire manufacturing and retailing process. Time-to-market expectations have shortened dramatically while manufacturing centers have moved farther away from the retail consumer. The growth in large retailers, together with ever shortening product life cycles, has led to significant changes in logistics and product distribution activities. Today, most enterprises operate under just-in-time shipping and warehousing systems, meaning that arrival at a precise time is essential. Transportation companies, including the railroads, are responding by becoming integrated service providers that move freight using multiple modes to best meet customers needs. Today, goods movement has high information requirements, such as the ability to continually track a shipment s location from beginning to end and to know its contents and customer information. El Paso, located along major east-west and north-south trade corridors, serves a vital role in goods movement affecting the local, regional and national economy. To determine the importance of rail activity in El Paso from a regional and national perspective, an analysis was conducted using public data sources, including the U.S. Public Waybill Database for 2001 published by the Department of Transportation. This information clearly demonstrates that El Paso serves as a vital link in the nation s logistical chain. Jobs throughout the west coast, southwest and mid-west are dependent on goods movement by rail through El Paso. Based on data from the U.S. Public Waybill, approximately $55.6 billion in commodities passed through El Paso by rail in 2001, with origins and destinations in more than 16 states as well as Mexico. This represents approximately 13% of the total value of all goods transported by rail in the U.S. The area s largest regional transportation partner is the West Coast (primarily Southern California) representing approximately half of all goods transported through El Paso. About 80% of the trains are intermodal, indicating that Asian cargo arriving from the Ports of Los Angeles and Long Beach is the predominant movement. By value, approximately 60% or $33.3 billion in cargo arrived from the West Coast. Mexico accounts for approximately 180,000 shipments or 5.3% of the El Paso cargo volume. Moffatt & Nichol Engineers 1-7 Final Report

20 Nearly 17% of the entire 9 million U.S. intermodal rail shipments transited through El Paso during the same period to origins and destinations shown in Table 1 below. Table 1 Rail Trade Shipments via El Paso by O/D Non-Intermodal Intermodal ¹ Total In Out In Out In Out West Coast 151, , , , , ,496 Southwest 42,602 59, , , , ,595 Midwest 11,375 76, , , , ,537 Gulf 1,986 28, ,789 2,658 33,058 Southeast 4,944 6, , , , ,677 Total 212, ,137 1,497,228 1,497,228 1,709,365 1,709,365 Note: (1) Number of Containers Source: 2001 Public Waybill Sample, U. S. Department of Transportation The major category is mixed products, which are made up primarily of consumer goods imported from Asia and destined for retail distribution centers. However, many product industry sectors and service industries are directly impacted and supported by El Paso transited cargos. Table 2 provides a tabulation of commodity types. Table 2 Commodities Breakdown (Including Mexico) Type Cargo Value Type Cargo Value Mixed Products $31,900M Textiles $165.5M Autos $12,100M Furniture $164.5M Auto Parts $3,900M Plastics $84.1M Livestock $2,800M Lumber $79.8M Chemicals $1,800M Manufactured Goods $30.7M Grain $1,000M Minerals $27.0M Paper $637.3M Scrap $26.9M Metal $491.7M Machinery $15.4M Electronics $215.4M Stone $0.9M Petroleum $208.9M Total $55,600M Source: 2001 Public Waybill Sample, U. S. Department of Transportation Commodities moved on rail through El Paso support close to 4 million jobs nationwide, in multiple industries. High value products shipped intermodally and on auto trains create 600,000 direct jobs and significant service supporting jobs throughout the United States. In addition, Moffatt & Nichol Engineers 1-8 Final Report

21 close to 14,000 jobs throughout the U.S. in the railroad and railroad supporting industries are directly supported by rail operations through El Paso. A breakdown of jobs supported by industry related to cargo is shown in Table 3. Table 3 Jobs Supported by Industry Related to Cargo Type JOBS Direct Indirect Induced Total Services 4, , , ,302 Products 453, , , ,054 Transportation 101, ,105 96, ,963 Food 46,687 19, , ,526 Agricultural 175,881 59,510 29, ,928 Accessories 48,246 23, , ,606 Chemicals 70,609 26,153 8, ,194 Other 148, , ,081 1,154,060 Total 1,48,543 1,238,264 1,630,827 3,917,633 Source: 2001 Public Waybill Sample, U.S. Department of Transportation, IMPLAN Econometrics Model A breakdown of value and jobs by Congressional District is included in the Appendix. Clearly, the El Paso region is a vital and necessary link in the nation s supply network. The economic impact of goods transiting through El Paso is staggering. It is noteworthy that more than 40 trains per day pass through El Paso each day, which is about the same as the total number of trains transiting the Alameda Corridor in Los Angeles. Moffatt & Nichol Engineers 1-9 Final Report