Railroad deal aims to get business on board Palmetto Railways hopes to lure industries to area from Hampton to Canadys
David Wren — The Post and Courier
Charleston’s Palmetto Railways moved a step closer to acquiring a 40-mile commercial railroad in Hampton and Colleton counties following approval of the plan Tuesday by the state’s Joint Bond Review Committee.
Palmetto Railways, a division of the state Commerce Department, wants to buy the assets of Hampton & Branchville Railroad for $6.5 million. Palmetto Railways would then operate the rail service for at least five years in the hopes of attracting industry to the area stretching from Hampton to Canadys.
“There is no business on the line,” state Commerce Secretary Bobby Hitt told committee members during a hearing in Columbia. “It is anticipated that we could build business on that line.”
The proposal still needs approval from the state’s Fiscal Accountability Authority, which is expected to give its go-ahead later this month.
The joint committee, made up of legislators from the House and Senate, approved a financing method that will not put state taxpayers or the Commerce Department at risk if new industry fails to invest along the rail line.
Under the plan, Colleton County will form a nonprofit economic development group to loan money to Palmetto Railways for the purchase. If the rail line ultimately fails, the group would take back the assets and sell them for scrap. Palmetto Railways will store other rail cars on the property, which connects to tracks owned by CSX Corp., to generate enough money for annual maintenance.
Rose Dobson-Elliott, Hampton County’s administrator, said the rail line “will open many viable sites for economic development,” including a former Nevamar plywood and plastics plant.
Kevin Griffen, Colleton County’s administrator, said the railroad “runs along several candidate industrial sites,” including property along Interstate 95.
Hampton and Colleton counties have unemployment rates higher than the statewide average, and Colleton has the fourth-lowest average wage — $584 per week — in South Carolina, according to the federal Bureau of Labor Statistics.
Hitt said many short-line railroads, including Hampton & Branchville, have gone out of business or are suffering financially due to the demise of the coal industry, once one of their largest customers. The Hampton & Branchville Railroad primarily served the South Carolina & Electric and Gas Canadys Station, a coal-fired power plant that closed in 2013.
“The coal train business is tapering off in that coal-fired power plants are shutting down,” Hitt told the committee. “You’re going to see these lines deteriorate and go away.”
Hitt said there are several other railroads within the state that might be candidates for future acquisition.
“Preservation of short-line railroads is good for South Carolina because it opens up rural, undeveloped areas of the state to industrial development” Hitt said in a letter to the committee seeking approval for the plan. “Whenever possible, we should support efforts to keep this type of existing infrastructure intact.”
State Sen. Paul Campbell, R-Goose Creek, and a member of the joint committee, said he agrees the state ”needs to preserve those assets when we can.” “You could never replace those rails if they come up,” Campbell said.
Hitt said rail service is playing a bigger role in the state’s economy, particularly in bringing cargo to and from the Port of Charleston. The amount of cargo moved by rail at the Port of Charleston has more than doubled since 2009, with 436,068 cargo containers moved by railroads during fiscal 2016, which ended July 13. Rail freight now accounts for 22.4 percent of all cargo at the port.
“We’re going to need rail very much going forward in this state,” Hitt said.
