A plan to build a commuter rail line from Georgetown to San Antonio experienced a setback Feb. 9 when Union Pacific officials informed the Lone Star Rail District they would no longer be participating in the project. The Lone Star Rail, a $2.4 billion project that currently has the support of the cities of San Marcos, Austin and San Antonio, among others, had been seeking to build the commuter rail on the existing Union Pacific rail line. Regional UP freight would have been transferred to a new line to be built east of I-35. Union Pacific Media Director Jeff DeGraff said his company wanted to make sure those who are outside the project—including cities considering whether to join the district—were aware of where UP stood on the Lone Star Rail proposal. “What this decision does this week is put an end to the existing arrangement,” DeGraff said. “Rather than continuing on for an indeterminate amount of time without making any noticeable progress we decided to terminate the agreement now. Will we be open to dialogue [with the district]? Absolutely. But as it stands right now we no longer support this project as it currently stands.” DeGraff said UP plans to focus on projects to expand capacity on its current line. DeGraff said freight traffic within the Austin-San Antonio corridor has increased 60 percent over the last 10 years. Combining freight and passenger rail traffic was of concern to the company, he said. “When we were approached with this project 10 years ago we had some specific concerns about the idea of combining freight and passenger traffic,” DeGraff said. “Some specific concerns we informed Lone Star Rail about early in this process. Ten years later, we’ve looked at their plans and proposals, and we haven’t seen any progress as far as addressing our concerns.” Bill Bingham, an attorney representing the district, said he thought the concern regarding freight and passenger rail traffic had been sufficiently addressed through the discussions so far.

"I’m disappointed that UP has made that decision. Hopefully cooler heads can prevail. To me it’s a viable option." —Buda Mayor Todd Ruge

“At this point we have requested a meeting with Union Pacific and they are in the process of setting that up, and I hope that will be in the next week or so,” Bingham said. “At this point, we don’t know much more than that.” Bingham said the plan to address UP’s capacity concerns included relocating the rail east of I-35 so that regional freight could pass through cities without affecting commuter rail traffic. Local freight, to be delivered from one city to another within the region, would remain on the line west of I-35. “That’s always been a concern of theirs—capacity of their line—but we have developed a plan that in actuality provides them additional capacity to operate their freight operation,” Bingham said. “We really thought we had resolved that question, so we need to discuss that with them to understand how that concern arises.” The city of San Marcos is supportive of the proposal and has created a funding mechanism to finance it. The city plans to use a tax increment reinvestment zone, or TIRZ, to fund their portion of the project. The TIRZ covers a portion of downtown San Marcos and will utilize a portion of property tax growth to fund the project. The TIRZ is currently being used to fund improvements downtown, but the money generated in the zone will begin going to the rail district later this year. Buda Mayor Todd Ruge said his city, which falls short of the requirement that members of the district have a population of at least 18,000 residents, was hoping to have Hays County sponsor their membership in the district. The city is currently undergoing a feasibility study looking into the possibility of adding a train station somewhere near downtown. A new City Hall is planned to be built, so Buda's current city headquarters would make a great train station, Ruge said. "I’m disappointed that UP has made that decision," Ruge said. "Hopefully cooler heads can prevail. To me it’s a viable option." Kyle Mayor Todd Webster said he has always been supportive of rail—he said he believes growth in San Antonio-Austin corridor necessitates improved transit—but the Lone Star Rail proposal always seemed flawed to him. One proposal by the district was for the city of Kyle to transfer a TIRZ that had helped fund improvements near Seton Medical Center Hays to the rail district. Webster said rededicating the property tax in that area to another project would have further delayed the benefit Kyle residents would have seen from the original TIRZ related to the Seton facility. Kyle has not worked out a funding agreement with the district, and if the district came to the city today, Webster said he would not be supportive of dedicating tax dollars to the project. “I’m for rail someday,” Webster said. “I think it makes complete sense if you have the right plan with the right package and the right funding mechanisms and it’s done really well, it’ll be a really important thing for our community and region. I just never have been sold on this proposal.”