Union Pacific Railroad has agreed to an option to sell its
Hollister-to-Gilroy track to Palo Alto-based San Benito Railroad
LLC, according to a UP spokesman.
Hollister – Union Pacific Railroad has agreed to an option to sell its Hollister-to-Gilroy track to Palo Alto-based San Benito Railroad LLC, according to a UP spokesman.
UP spokesman John Bromley said Tuesday the option includes the land, the tracks, and full use of the rails, but declined to comment further, saying all other information was confidential.
Currently, the UP operates a short line used by San Benito Foods and Tri Cal Soil Chemicals to ship their goods. It is unclear whether San Benito Railroad LLC would have exclusive use of the tracks or would still allow companies like the cannery and Tri Cal to ship on its line. But if San Benito Railroad does buy the tracks and limit their use, according to transportation lawyer Joe Thompson, “It would be like an artery in your heart being cauterized and closed,” and might force companies to turn to the highways for their shipping needs. That could end up costing local taxpayers because heavy trucks cause structural damage to roads requiring highway improvements, he said.
John Ivancovich of Tri Cal said the company had been hearing about a possible sale of the tracks for several years, but has never gotten any details, such as who the new company might be, whether they would allow Tri Cal to continue shipping on the railroad or what alternatives to the railway Tri Cal would be looking at. He added it was too early to speculate about the economic future of Tri Cal if UP sells to San Benito Railroad.
San Benito Railroad LLC is a Palo Alto-based company registered in 2001, according to secretary of state documents. The company could not be reached for comment, but Economic Development Director Al Martinez said short lines across the nation are being sold as their large owners stop profiting from the few companies short lines tend to serve. Martinez speculated that might be the case with the UP tracks in Hollister.
“They’ve closed lines hundreds of miles long (across the country) because they only serve one or two companies, so it’s not profitable. And in this case, if it weren’t for the cannery they (UP) wouldn’t be in business (here),” Martinez said.
Rumors of the possible UP sale have been circulating for at least five years, said Thompson, who once sat on the Rail Advisory Committee. At that point, he had heard a developer called Rancho San Benito had wanted to buy the rail property to build a community of homes.
“The people at Rancho San Benito have been saying for a long time that they’re going to build a city between Hollister and Gilroy,” he said.
And Rancho San Benito is a branch of DMB Realty, according to Dist. 1 Supervisor Don Marcus. According to DMB’s Web site, the company develops private luxury home communities in several states. A representative for DMB didn’t return phone calls for comment Tuesday.
San Benito County Supervisor Pat Loe said she had also heard rumblings of a possible sale of the UP tracks two years ago when she sat on the RAC.
“At that time we were talking to UP and we were told that the people that owned the Rancho San Benito property were dealing with exclusive rights, so you would have to deal with them to ship through the area,” she said.
Neither speculation has been confirmed.
Because San Benito Railroad has only purchased an option, it will be given first chance at buying the railway if UP does decide to sell, Thompson said. That means San Benito Railroad has probably not committed to buying the tracks, and UP has most likely hasn’t even committed to selling them at all, he explained.
Jessica Quandt covers politics for the Free Lance. Reach her at 831-637-5566 ext. 330 or at [email protected].
