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North Carolina. LegiSi.acive
Research Comrnissiori.
RsDortB.
DATE
ISSUED TO
NOT TO BE REMOVED
FROM
UNC LAW LIBRARY
^^D/NoC/L514r/19a5/pt. C3D
North Cav-^olir.a. Legisiatxve
Research Cornrr, i ss i on.
Reports.
LEGISLATIVE
RESEARCH COMMISSION
RAILROAD OPERATIONS
REPORT TO THE
1985 GENERAL ASSEMBLY
OF NORTH CAROLINA
A LIMITED NUMBER OF COPIES OF THIS REPORT IS AVAILABLE
FOR DISTRIBUTION THROUGH THE LEGISLATIVE LIBRARY.
ROOM 2126, 2226
STATE LEGISLATIVE BUILDING
RALEIGH, N.C. 27611
TELEPHONE: (919) 733-7778
OR
ROOM 500
LEGISLATIVE OFFICE BUILDING
RALEIGH, N. C. 27611
TELEPHONE: (919) 733-9390
STATE OF NORTH CAROLINA
LEGISLATIVE RESEARCH COMMISSION
STATE LEGISLATIVE BUILDING
RALEIGH 27611
December 13, 1984
TO THE MEMBERS OF THE 1985 GENERAL ASSEMBLY:
This is the Legislative Research Commission's report to
the 1985 General Assembly on Railroad Operations. This
report is made pursuant to Section 1 of 1983 Session Laws
Chapter 905 (HB 1142) , was prepared by the Legislative
Research Commission's Committee to study the State's Interests
in Railroad Properties, and is transmitted by the Legislative
Research Commission for your consideration.
Respectfully submitted.
Lisron B. Ramsey
Speaker of the House
1^
W. Craig Lawyffg
Senate Presip^nt Pro Temr
Cochairmen
Legislative Research Commission
TABLE OF CONTENTS
Transmittal i
Preface 1
Committee Proceedings 3
Legislative Recommendations 5
Committee Membership A-1
Chapter 905, 1983 Session B-1
House Bill 1142, 1983 Session C-1
Proposed Legislation D-1
Chapter 1372, 1983 Session E-1
Legislative Research Commission F-1
Membership List
W6-42
PREFACE
The Legislative Research Commission, authorized by Article
6B of Chapter 120 of the General Statutes, is a general purpose
study group. The Commission is cochaired by the Speaker of the
House and the President Pro Tempore of the Senate and has ten
additional members, five appointed from each house of the General
Assembly. Among the Commission's duties is that of making or
causing to be made, upon the direction of the General Assembly,
"such studies of and investigation into governmental agencies and
institutions and matters of public policy as will aid the General
Assembly in performing its duties in the most effective manner"
(G.S. 120-20.17 (1) ) .
At the direction of the 1983 General Assembly, the
Legislative Research Commission has undertaken studies of
numerous subjects. These studies were grouped into broad
categories and each member of the Commission was given the
responsibility for one category of study. The cochairmen of the
Legislative Research Commission, under the authority of General
Statutes 120-30. 10(b) and (c) , appointed committees consisting of
members of the General Assembly and the public to conduct the
studies. Cochairmen, one from each house of the General
Assembly, were designated for each committee.
The study of the State's Interests in railroad properties
was authorized by Resolution 61 of the 1981 Session Laws, Chapter
1372, Session Laws of 1981 (Regular Session 1982) , and by Chapter
905, Session Laws of 1983.
- 2 -
The Legislative Research Commission grouped this study in
its transportation area under the direction of Representative
Jack Hunt. The cochairmen of the study committee established by
the Research Commission are Senator Dennis Winner and
Representative Jack Hunt. The full membership of the committee
is listed in Appendix A of this report. Chapter 905 authorizing
the study and House Bill 1142, which the committee was authorized
to consider in determining the scope of the study are attached as
Appendices B and C.
The Commission made an interim report to the 1982 Session,
which appropriated the sum of $150,000 in Chapter 1372 to further
continue the study. Chapter 1372 is attached as Appendix E. The
Commission made another report to the 1983 Session.
- 3 -
COMMITTEE PROCEEDINGS
The Committee on the State's Interest in Railroad Properties
in its report to the 1982 regular session of the General Assembly
recommended enactment of a bill to appropriate funds for an
independent expert evaluation of the state's interests in the
North Carolina Railroad Company and the Atlantic and North
Carolina Railroad Company, and to receive proposals for the
state's interests and conduct negotiations.
That proposed bill was ratified as Chapter 1372, Session
Laws of 1981, Regular Session 1982.
The Committee recommended to the Legislative Research
Commission that Printon, Kane Research be retained for the
railroad evaluation and that Bradshaw, Realtors be retained for
the real property evaluation.
A summary of the Printon, Kane Report appears in the 1983
report of this Committee. The full report, an additional 80
pages, is available in limited quantity in the Legislative
Library. Copies of the 1981 and 1982 Committee reports are also
available in limited quantity in the Legislative Library.
The Committee met on May 10, 1984 and heard a presentation
from the North Carolina Department of Transportation concerning
passenger rail service, and from the Citizens Railway Council.
Under the 1981 legislation the Committee appointed a negotiating
committee to meet in executive session. That subcommittee met
once.
After due consideration of the points of view, the Committee
- 4 -
on December 6, 1984 adopted the recoitunendations in the next
section of this report. Legislation to implement those
recommendations is attached as Appendix D.
- 5 -
LEGISLATIVE RECOMMENDATIONS
The Committee on the State's Interests in Railroad
Properties, after careful study, makes the following
determinations and recommendations:
(1) The existence of the North Carolina Railroad Company
and the Atlantic and North Carolina Railroad Company spurred the
economic development of North Carolina, and they are a valuable
resource to the State as a whole, and especially to Piedmont and
Eastern North Carolina.
(2) Continued freight service on both routes is necessary
to the further economic development of North Carolina.
(3) Passenger rail service is currently in operation along
the route, with part of the Crescent serving Charlotte-Greensboro
and party of the Carolinian serving Charlotte-Raleigh. These
services are beneficial to North Carolina, although the Committee
has no position on whether these specific routes should be
continued.
(4) The signing in 1895 by the North Carolina Railroad of a
fixed-rate 99 year lease in hindsight was a financial mistake.
Based on the Printon Kane and Bradshaw appraisals, the value of
the State's interests in the North Carolina Railroad is $54.2
million. Based on the normal dividend of $8.00 per share, the
State's annual rate of return from a dividend of $240,016 is just
.44%.
- 6 -
(5) On the other hand, the Atlantic and North Carolina
Railroad Company lease, for a term of 55 years, had an override
based on a percentage of revenues. Based on the Printon, Kane,
and Bradshaw appraisals, the value of the State's interests in
the Atlantic and North Carolina railroad is 2.0 million. Based
on the average dividend for 1978-82 of $5.40 per share, the State
received an average annual dividend during that period of
$68,396, for an annual rate of return on investments of 3.42%.
(6) The Committee feels that the State should either
negotiate a sale of stock, or should work with the Boards of
Directors of the two railroads to enter into new leases prior to
the expiration of the old leases.
(7) Any new lease should not be for a period of more than
30 years beyond the expiration of the current lease, and should
have an escalator clause based either on revenues or inflation,
or some combination of clauses.
(8) Any new lease should preferably involve both railroads.
This will not only improve the bargaining position of the two
railroads, but ensure continued operation of freight service to
Eastern North Carolina as well as to the Piedmont. The
Commission may also consider other alternatives.
(9) Any new lease should require that the lessee cooperate
with innovative uses of the right-of-way, whether for
fiber-optics, intra-city light rail (trolley) service, and
passenger service (in addition to the requirements of the
National Railroad Passenger Act) .
- 7 -
(10) The North Carolina Railroad and the Southern Railroad
Company should jointly reorganize the State University Railroad
Company under Southern Railroad, but in a manner to ensure
continued freight service to the University of North Carolina at
Chapel Hill.
(11) The Governor, in making appointments to the Board of
Directors of the North Carolina Railroad and the Atlantic and
North Carolina Railroad under the charter provisions should seek
to ensure continuity of the boards as well as directing the two
boards to meet jointly and cooperate with the Commission
established as a result of this report.
(12) The Committee recognizes that with two railroads and
the State involved on one side and one or more potential
purchasers or lessees on the other, there must be one voice less
the negotiations be chaotic. While the State recognizes that the
two railroads are private corporations, the State as majority
stockholder has the paramount interest.
(13) The General Assembly should appoint a negotiating
commission to both assist the railroads in negotiating as well as
decide the most beneficial route to take. Such commission should
consist of 12 members, appointed as follows:
a. 2 directors or officers of the North Carolina
Railroad appointed by its board,
b. 2 directors or officers of the Atlantic and North
Carolina Railroad, appointed by its board,
c. The Attorney General or a member of his staff
designated by him.
- 8 -
d. The State Treasurer or a member of his staff
designated by him,
e. The Lieutenant Governor or his designee and one
member of the Senate appointed by him,
f. Two persons appointed by the Governor, one of whom
shall have business experience and one of whom
shall be knowledgeable and an advocate of
passenger rail service, and
g. The Speaker or his designee and one member of the
House appointed by him.
(14) This Commission should have a term expiring June 30,
1988. It should negotiate with Southern Railroad (Norfolk
Southern Corporation) and any other potential person it desires
to negotiate with. The Commission should be allowed to meet in
executive session.
(15) If the Commission determines that a renegotiation of
the lease is desirable, it should recommend the terms of such
lease for joint approval of the Boards of Directors of the two
railroads .
(16) If the Commission determines that sale of the stock
owned by the State is desirable, it shall recommend a contract to
the General Assembly for its approval as required by Chapter
1046, Session Laws of 1951 as amended by Chapter 1372, Session
Laws of 1981.
(17) If the Commission determines by June 30, 1988 that it
is unable to recommend any action on terms that are favorable to
the State and the Railroads, it shall so report to the General
- 9 -
Assembly so that alternate action to take effect at the
expiration of the lease in 1994 can be taken.
(18) To protect the interests of the minority stockholders
any recommendation to sell the stock must include a provision
that the purchaser will offer to purchase all shares tendered at
the same price or for the same amount of stock to be swapped.
(19) If the stock is sold, the Committee recommends that
the proceeds be placed in a special capital improvements fund
with the principal and interest being used for purposes provided
by the General Assembly.
(20) The Commission should have expert assistance in
negotiations, to be provided by the Attorney General, State
Treasurer, and the two Railroads, or under contract with a
qualified professional.
APPENDIX A
COMMITTEE MEMBERS
COMMITTEE TO STUDY THE STATE'S INTERESTS IN RAILROAD PROPERTIES
Sen. Dennis J. Winner
co-chairman
Rep. John J. (Jack) Hunt
co-chairman
Sen. Elton Edwards
Rep. David Bumgardner, Jr ,
Sen. A.D. Guy
Rep. John T. Church
Sen. Robert B. Jordan III Rep. Daniel T. Lilley
Sen. David R. Parnell
Rep. Ray Sparrow
Mr. Thomas G. Lynch
Mr. Vernon Rochelle
LRC member responsible for study: Rep. Jack Hunt
Professional Staff: Gerry Cohen
Clerical Staff: Betsy J. Sykes
A [' F' K N 1) I X R
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1983
RATIFIED BILL
CHAPTER 905
HODSE BILL 114 2
AN ACT ADTHOEIZING S^TODIES BY THE LEGISLATIVE RESEARCH C0P1HISSI0N
AND BY THE COMHISSION ON CHILDREN WITH SPECIAL NEEDS AND MAKING
TECHNICAL AMENDMENTS RELATING THERETO.
Tho General Assembly of North Carolina enacts:
Section 1. The Legislative Research Comaission may
study the topics listed below. Listed with each topic is the
1983 bill or resolution that originally proposed the study and
the nane of the sponsor- The Coaaission Bay consider the
original bill or resolution in detemining the nature, scope and
aspects of the study. The topics are:
(1) Continuation of the Study of Revenue Laws (H.J.H.
16 - Lilley) ; and the ramifications, if enacted, of
H.B, 746, Appraisal of Subdivided Tract (Aunan) and
H.B. 1250, No Intangible Tax/Income Surtax (Auman) ,
(2) Continuation of the Study on the Problems of the
Aging (H-J.R. UU - Econonos; S.J.R. 16 - Gray),
(3) Continuation of the Study on Insurance Regulation
(H-B. 63 - Seymour) and Insurance Laws and
Regulation of Insurance Industry (H-B. 1243
Hightower) ,
(4) Teaching of Computer Literacy in the Public Schools
and Community Colleges (H.J-R- 191 - Berry) and the
Continuation of Study of College Science Equipment
(H.J-R. 898 - Enloe) ,
(5) Adequacy of State Management of large-Scale Land
Clearing and Peat Mining (H.J-R. 220 - Evans) ,
(6) Adeguacy of Existing Water Pollution Control
Programs to Improve and Protect Water Quality in
the State (H.J-R. 232 - Evans),
(7) Marketing of Seafood by Fishermen (H.J.B. 896 -
Chapin) ,
(8) Continuation of Study on the Economic Social and
Legal Problems and Needs of Women (H-J.R, 904 -
Easterling; S.J.R- 329 - Marvin),
(9) Regulation of Nonpublic and Public Post-Secondary
Educational Institutions (Joint Resolution 33
(H-J.R. 988 - Thomas) ) ,
(10) Readable Insurance Policies (H.B- 106*} -
Ballance) ,
(11) State Government Risk Management (H-J-B. 1083 -
Seymour) ,
(12) Biotechnology Development (H-B- 1122 - Etheridge,
Bobby and H.J-R, 1282 - Etheridge, Bobby; S.J.R-
6 20 - Hancock) ,
(13) Continuation of Study of the State's Interest in
Railroad Property (H-B- 1142 - Hunt),
(14) Restricting Driving by Minors (H-J.R. 1149 - J.
Jordan) ,
B-1
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(2 5)
(26)
(27)
Health Professionals (H.J. R. 1191 - Diamont) ,
Water Quality in Haw River and B. Everf.>tt Jordan
Reservoir (H.J.R. 1257 - Hackney),
Regulation of Alcoholic Beverages on State
Property (H.J.R. 1292 - Clark),
Disposition of Animals by Animal Shelters and
Pounds (H.J.R. 1309 - Stamey) ,
Boards, Coamissions, and Councils in the Executive
Branch (H.J.R. 1321 - Hunt) ,
Feasibility of a Food Distribution Facility on Dix
Farm Property in Raleigh (H.J.R. 1334 - Janes),
laplementation of Identification and Labelling of
'"oxic or Hazardous Substances as Proposed by House
Bill 1339 (Payne) ,
Water Resources Issues Involving North Carolina
and Virginia (H.J.R. laou - Church) ,
Investment Guidelines for Eleemosynary
Institutions and Funds (H.J.R. 1423 - Musselwhi te) ,
Child Support Collection Procedures (H.J.R. 1U39
- Easterling; S.J.R. 675 - Boodard, W.),
Contamination of Onpackaged Foods (H.J.R. lU^I -
Stamey) ,
Legislative Coamunications Confidentiality (H.R.
1 1»61 - Miller) ,
Continuation of the Study of Information
Processing Resources in State Government (S.J.E. 4'»
- Alford) ,
(28) Regulation and Taxation of Banks, Savings and
Loans and Credit Unions (S.J.R. 381 - Edwards of
Caldwell) ,
(29) District Attorney Standards (S.B. 4<^6 - Hipps) ,
(30) Cost of Providing Attorneys and Guardians Ad Litem
to Indigents (S.J.R. 643 - Swain) ,
(31) Public Health Facility Laws (S.J.R. 656
Hancock), and Review of Certificate of Need
Procedures (H.J.R. 1294 - Econoraos) ,
Life Care Arrangements (S.J.R. 657 - Hancock),
Worthless Checks (S.J.R. 661 - Thomas of
Henderson) ,
State-owned Rental Housing as contained in Section
2 of this act.
User Fees at State-owned Facilities, as contained
in Section 3 of this act,
Hotorboat Titles and Liability Insurance, as
contained in Section 4 of this act.
Motor Vehicle Inspection Program, as contained in
Section 5 of this act.
Continuation of the Study of Day Care (H.J. E. 594
- Colton) ,
Continuation of th^^ Study on Twelfth Grade (H.J.R.
753 - Mauney; S.J.R. 343 - Tally) ,
Procedure for Incorporating Municipalities (S.J.R.
445 - J. Edwards) ,
Solar Law (S.J.R. 670 - Walker),
^ 2 House Bill 1142
(3 2)
(33)
(34)
(35)
(36)
(3 7)
(3 8)
(39)
(40)
(41)
(42) Statutory Liens (S.J.R. f>00 - Fdwards of
Caldwell) ,
(43) In-service Traininq of Teachers in North Carolina
History, the American Economic System, Iree
Enterprise Concepts, and Leqai Topics (H.B. 1281 -
Foster) .
Sec. 2. State-owned K
LPqislative Research Commission is authorized to conduct a ::fudy
of all State-owned rental housing during the 1^^83-84 fiscal year
and to recommend a comprehensive statewide rental policy, +o be
administered by the Department of administration, to the 1984
Session of the General Assembly, This study shall be conducted
in consultation with the department that owns the housinq. Tn
conducting this study, the Commission shall first determine the
amount of nonessential rental housinq currently owned by the
State using the following criteria: The geographic location of
the State property on which the housing is located and its
proximity to alternative privately owned housing; the amount of
time that would be required for employees to arrive at the State
property on which housing is now located in the event of an
emergency; the a«ount of security necessary for State property
that is now being provided by State employees living in State-
owned rental housing; and any other benefits to the State for
employees to occupy said housing: The Comaission shall recommend
the disposition of nonessential rental property by one of three
means: sale of the housinq and property on which it is located;
sale of the housing unit only with the stipulation that the house
be removed from State property; and conversion oi the housinq
unit to an alternative use.
(b) It is the policy of the State of North Carolina
that the State provide rental housing only in cases in which an
essential State purpose is served. Nothing in these sections
shall be construed to aiean that State departments may not
continue to divest themselves of nonessential rental housinq
during the course of the Legislative Research Commission study.
Sec. 3. User Fees. The Legislative Research Commission
is authorized to study the potential for user charges and
admission fees at State-owned cultural, recreational and
historical facilities. The study nay cover museuas, historic
sites, marine resource centers as well as other facilities. The
Legislative Research Commission nay make an interim report to the
1984 Regular Session of the 1983 General Asseoiblv and Bay mike a
final report to the 1985 General Asseably.
Sec. 4. Motorboat Titles and Liability Insurance. The
Legislative Research Commission of the General Assembly is
authorized to study the issue of motorboat titles and liability
insurance. The study may include start-up and administrative
costs, potential revenues, phas«.'-in plans, financial institution
req ui resents, etc. The Commission may report to the 1984
Sessi on .
Sec. 5. Hotor Vehicle Inspection Program Study. The
Legislative Research Commission may study the <>f f pctivenoss of
the Hotor vehicle inspection prograa required by Article 3A of
Chapter 20 of the General Statutes. The study may consider,
among other aspects, the impact on highway safety, cost
House Bill 1142 B-3
eliainatinq
effectiveness of the program, and probable impact of
part or all of the program.
Sec. 6. For each of tho topics the Leqisiative Research
Coamisiiion decides to study, the CoBBission may report its
findings, together with any recommended legislation, to the 1981
Session of the General Assembly or to the 1985 General Assembly,
or the Commission may make an interim report to the 1984 Session
and a final report to the 1985 General Assembly.
Sec. 7. G.S. 120-30.17 is amended by adding two new
subsections to read:
" (7) to obtain information and data from all State officers,
agents, agencies and departments, while in discharge of its du^y,
pursuant to the provisions of G.S. 120-19 as if it were a
coGraittee of the General Assembly.
( R) to call witnesses and compel testimony relevant to any
matter properly before the Commission or any of its committees.
The provisions of G.S. 120-19.1 through G.S. 120-19.4 shall apply
to the proceedings of the Comnission and its committees as if
each were a joint committee of the General Assembly. In addition
to the other signatures reguired for the issuance of a subpoena
under this subsection, the subpoena shall also be signed by the
members of the Commission or of its committee who vote for the
issuance of the subpoena."
Sec. 8. Section 1 of Chapter 1372,
Session Laws
Section 2
of
of
Session Laws
inserting
of
in
1,
of
by
1981, is amended by deleting "as authorized in
Resolution 61, Session Laws of 1981".
Sec, 9. Section 1 [3) of Chapter 1372,
1981, is amended by deleting "1933 Session", and
lieu thereof "1983 and 1985 Sessions".
Sec. 10. G.S. 12U-5 is amended bv deleting "June
1983", and inserting in lieu thereof "the date of convening
the 1985 Regular Session of the General Assembly".
lec. 11. The last sentence of G.S. 124-5 is amended
deleting "11-month period", and inserting in lieu thereof "period
ending on convening of the 1985 Regular Session."
Sec- 12. Deaf/Blind School Hove — Commission on Children
with Special Needs. (a) The Commission on Children with Special
Needs, established by Article 12 of Chapter 120 of the General
Statutes, may study the issue of transferring the State schools
for the Deaf and the Governor Morehead School for the Blind to
the -jurisdiction of the State Board of Education.
(b) The Commission may make a final report to the Second
Session of the 1983 General Assembly. (H.J.R. 246 - Fenner)
Sec. 13- Bills and Resolution References, The li^^ting
of the original bill or resolution in this act is for references
purposes only and shall not be deemed to have incorporated by
reference any of the substantive provisions contained in the
original bill or resolution -
B-4
House Bill 1142
&V.:i
I
sec. 14. This act is effective upon ratification.
In the General Assembly read throe timer; and ratifi«-(3
this the 21st day of July, 1983. ' '
JAMES C. GREEN
Janes C. Green
President of the Senate
LISTON B. RAMSEY
Listen B- Ramsey
Speaker of the House of Representatives
I
B-5
House Bill 1142
CI
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1983
HOUSE BILL 11U2
Short Title: Railroad Study Extended. (Public)
Sponsors: Represent ative Hant.
R eferred to: Rule s and Operations of the House .
nay 27, 1983
1 A BILL TO BE ENTITLED
2 AN ACT TO EXTEND THE STODY OF THE STATE'S INTERESTS IN RATT.-nnD
3 PROPERTIES.
4 The General Assembly of North Carolina enacts:
5 Section 1. Section 1 of Chapter 1372, Session Laws of
6 1981 is amended by deleting "as authorized in Section 2 of
7 Resolution 61, Session Laws of 1981".
8 Sec, 2. Section 1(3) of Chapter 1372, Session Laws of
9 1981 is amended by deleting "1983 Session", and inserting in lieu
10 thereof "1983 and 1985 Sessions".
11 Sec. 3. G.S- 124-5 is amended by deleting "June 1,
12 1983", and inserting in lieu thereof "the date of convening of
13 the 1985 regular session of the General Assembly".
1'* Sec. a. The last sentence of G.S. 124-5 is amended by
deleting "11-month period", and inserting in lieu thereof "period
ending on convening of the 1985 regular session."
^7 Sec. 5. The Legislative Research Commission is
'8 authorized to continue its study of the State's interests in