“Public perception-wise [UP’s announcement] was a big hit because people immediately assumed we were dead, and the project is never going to happen,” Black said. “We have a little bit more closer view of it and know what’s going on and where the project is going, and we’re confident we’re going to be able to find a solution.”

Black said the district has “at least three or four alternatives” for the project that do not involve the UP line. Those alternatives, as well as the original plan to use the UP line, will continue to be studied by staff and will be presented to the public at a series of open houses in late spring or early summer. If using UP’s line is deemed the most efficient path forward, the district will look to reopen negotiations with the freight carrier, he said.

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UP concerns

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 put the commuter rail on the existing UP freight rail line. Regional UP freight would have been transferred to a new line to be built east of I-35.

UP Media Director Jeff DeGraff said UP will focus on projects aimed at expanding capacity on its current line now that it has terminated its agreement with LSRD. Freight traffic within the Austin-San Antonio corridor has increased 60 percent over the last 10 years, and 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. “[There were] 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.

Bingham said the plan to address UP’s capacity concerns included relocating the rail east of I-35 so regional freight could pass through cities without affecting commuter 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 provides them additional capacity to operate their freight operation,” he said. “We really thought we had resolved that question, so we need to discuss that with them to understand how that concern arises.”

Local reactions

Buda Mayor Todd Ruge said his city, which falls short of the requirement that LSRD member cities have a population of at least 18,000 residents, was hoping to have Hays County sponsor their membership. The city is currently undergoing a feasibility study looking into the possibility of adding a train station somewhere near downtown.

Kyle Mayor Todd Webster said he has always been supportive of rail—he believes growth in the San Antonio-Austin corridor necessitates improved transit, he said—but the LSRD proposal always seemed flawed to him.

One proposal was for the city to use a portion of property tax generated in a 475-acre zone near Seton Medical Center Hays to fund the city’s inclusion in the district. That property tax has already been committed to nearby infrastructure improvements since 2004. In fiscal year 2015-16, the property tax revenue generated within that zone was $813,435, according to city of Kyle data. 

Webster said he is wary of rededicating it to another project. Instead, he said he would like the money to enter the city’s coffers, where it could fund services and potentially relieve residents of some of their property tax burden.

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. If 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.”

San Marcos City Council Member John Thomaides, who is on the LSRD board, said UP’s announcement is a setback, but he believes the project will ultimately get done. It is in the best interest of UP and the cities along the corridor for the project to come to fruition, he said. Thomaides said removing the pollution, hazardous chemicals and traffic tie-ups at rail crossings from Central Texas cities is in everyone’s interest.

“But we believe that in the end this is still better for Union Pacific after passenger rail service is implemented, and it’s worse for this corridor and this region to have Union Pacific increase their freight rail traffic on the existing lines as much as they’re threatening to do,” he said.