155-mile short line railroad connects SLV to eastern plains

ALAMOSA — The San Luis & Rio Grande Railroad (SLRG) is going up for auction, according to an announcement by William A. Brandt, Jr., the Chapter 11 Trustee currently operating the railroad, which is in bankruptcy.

Brandt’s intention, subject to U.S. Bankruptcy Court approval, is to sell substantially all the assets of the railroad, including the trackage, roadbed, ties, other track material, inventory, maintenance-of-way equipment, vehicles, bridges, culverts, signals, stations, depots, yards, storage facilities, buildings, workshops, garage structures, and various other agreements or licenses relating to the real estate located on, along, over and under the SLRG rail lines.

The San Luis and Rio Grande Railroad, originally constructed almost 150 years ago, is a 155-mile short line railroad that traverses La Veta Pass over the Sangre de Cristo Mountain range and connects Colorado’s eastern plains to the San Luis Valley.

With an interchange connection to the Union Pacific mainline at Walsenburg, SLRG currently provides freight line rail services for various industrial, mineral, and agricultural commodities in the San Luis Valley and maintains extensive railcar storage facilities along its right-of-way with a storage capacity of more than 3,100 cars. Prior to the bankruptcy filing, the SLRG also operated a variety of passenger excursion trains over the scenic La Veta Pass at an elevation of 9,400 feet.

According to Brandt, there have been five letters of intent received over the past two years from groups wanting to operate the SLRG.

“They’re all railroaders, and they recognize the value of the railroad,” Brandt says, “but they’re having some difficulty with financing.”

He is hoping the auction — ordered at the recommendation of the bankruptcy judge — will “force people to get some focus.”

Brandt, whose business Development Specialists, Incorporated was appointed as trustee, is well acquainted with the complexities of selling railroads, a process that is “highly and closely regulated.”

More than 50 years of experience in the business has also taught him how crucial railroad operations are to the communities those railroads serve, including the San Luis Valley.

“If the SLRG were to stop operating, it would mean an additional 10,000 trucks going over La Veta carrying barley to Coors, and that’s just Coors,” Brandt says. “Add the other freight that would have to be trucked, and you’re looking at maybe an additional 24,000 trucks going over the pass. Can you imagine the wear and tear on that highway or what that would look like in the winter? You can bet CDOT is very aware of that.”

Against that backdrop, Brandt stresses his “deepest intention” is to keep the railroad operational, an effort that he says both Rio Grande Commissioner John Noffsker and Senator Michael Bennet along with his local representative, Erin Minks, have been “very, very helpful and supportive” in trying to ensure, as well.

But with Iowa Pacific, the previous railroad owner, no longer in business, the bankruptcy judge is saying a resolution needs to be reached. Putting the railroad up for auction is one way to strongly encourage that happening.

The minimum bid for SLRG is set at $5.750 million. The purchase price submitted must be equal to or exceed that reserve price to be considered a qualified bid.

If Brandt, as trustee, receives multiple qualified bids, an auction will be held on July 14, at the offices of Markus Williams Young & Hunsicker, LLC in Denver. This auction may be convened remotely, via video conference, as deemed appropriate by the Trustee or rescheduled as necessary with advance notice to all qualified bidders.

Should no such bid be received, Brandt says he intends to pursue avenues through the federal government to force Union Pacific to continue the railroad’s operation. But he is hoping it will not come to that.

“It’s so important that this railroad continues,” Brandt says, “and I’m hoping this notice gets the attention of the government and the groups that have expressed interest and tells them it’s time to focus.”

Copies of the Motion to Approve Bidding Procedures, and all other related exhibits, are available upon request by contacting the Trustee’s counsel, or for a fee via PACER by visiting www.cob.uscourts.gov.

For more information, contact the financial advisors at DSI who are handling the organization of this sale effort for the Trustee. Either William G. Brandt at 312-263-4141 or [email protected], or Patrick J. O’Malley at 312-263-4141 or [email protected], should be the point of contact for questions.