RN: Franklin, you have gotten a lot of recognition over the years from your creating THE TEXAS LIMITED, the excursion passenger train between Houston and Galveston, with the late George Mitchell. What I suspect our readers do not know is that once as a young man you were a brakeman for the Santa Fe, riding freight trains and living out of cabooses and boarding houses along the rail line.
Following that, you were a merchant banker for a number of years in London, and since THE TEXAS LIMITED experience you have been immersed in brokerage and consulting with commercial real estate clients, primarily in matters involving the major railroads. Can you describe situations where real estate developers can need help with the railroads, which are notoriously hard to deal with if someone has no experience?
FMD: To best answer that question one needs to differentiate between industrial/commercial developers and retail/residential/commercial developers. The need for cooperation from the railroads by industrial developers, who are creating rail served facilities, is obviously keenly felt by the railroad since this kind of development increases their business. This involves the design and installation of switches, spur tracks, etc. that must be designed to fit in with the railroad’s operations. Given our understanding of rail operations we are often able to assist the developer and the railroad in coming together to bri
ng about the successful completion of a new project. Retail/residential developers are often looking to the railroads for such things as a new road crossing over the track to provide vehicular access to the development. This is major problem because it increases the future liability for the railroad resulting from crossing accidents. Possible solutions include designing the entrance way to be elevated over the track or abandoning two other existing crossings located elsewhere.
RN: I know you have developed strong relationships within the operating departments of railroads serving Houston, and that you have a well-developed understanding of what railroads can and cannot do. I have occasionally heard the word “tenacity” mentioned in the same sentence as your name. Can you give some actual instances where you solved problems for clients involving railroad crossings, approval of rail spurs, etc?
FMD: The best example I could give you of my success in securing the cooperation of a railroad on behalf of a client occurred several years ago. The client, Martin Marietta Materials, the largest aggregate company in the country and my largest and oldest client, bought from my other client, Union Pacific Railroad, a 44 acre tract which U.P. had given me a listing on and which I assembled with an adjacent 16 acres. The 60 acre site in South Houston would not accommodate a circular track as U.P. wanted. After a lot of hard work we were successful in getting the railroad to agree to a straight track configuration. It is the most profitable of all Martin Marietta’s material yards in the Houston area.
RN: We have talked about your helping real estate developers with the railroads. I know some of your brokerage and consulting is done FOR the railroads on parcels of land which, in some instances, they have owned for over one hundred years. Sometimes these parcels are available through you, but not openly advertised on the market. And, I know you have represented some of the large national firms who are traditional railroad customers in their real estate needs. Can you give us some examples about this aspect of your work?
FMD: Land which can be industrially developed and rail and/or water served is in short supply, especially in metropolitan areas. Most of that land does not have a For Sale sign on it. Recently, I was retained by a large client for whom I have done consulting work for several years to negotiate, on their behalf, for the lease of an existing rail spur. This project will require their use of adjacent land which was neither for sale or lease. I identified the land owners, who, as it turns out, I’ve known for many years and I am in the process of negotiating a lease with them. At the same time, I’m involved in discussions with the connecting railroad to insure that the railroad will provide service to the spur. A complicated project with a lot of moving parts.
RN: As a distribution center, Houston is geographically the closest deep water port to much of the southern and central United States. What can you tell us about what the railroads in the Greater Houston area are doing to get ready around the port and in the industrial East/Southeast side of town to get ready for the expanded distribution needs which will come when the wider Panama Canal opens?
FMD: That’s a good question. Rail congestion in the Houston area and particularly at the Port of Houston is a problem due to limited capacity and the recent increase in demand for rail service. I cannot comment on exactly what the railroads’ future plans for expansion are but I can tell you that they are highly focused on that issue. I can tell you that Union Pacific has just begun to double track their mainline in the Sugar Land / Richmond / Rosenberg area to increase capacity and relieve congestion.
RN: My understanding is that the primary railroads serving Houston are the BNSF, the Union Pacific, and the Kansas City Southern…as well as the Houston Belt and Terminal for local switching of cars. Can you describe briefly the focus of these railroads and, of course, add any one I have omitted?
FMD: Their focus is to move as much freight as their customers require as quickly, efficiently and safely as possible.
RN: In closing, what is the scenario you see for passenger rail in its different forms in Houston: slowly expanded Amtrak? Realization of high-speed trains in the Dallas-Houston-Austin-San Antonio triangle? Slowly developing commuter rail to a central downtown station? An expanded light rail network? Will slow return to passenger rail create commercial real estate development opportunities?
FMD: Those are very broad questions. I don’t know what the future of passenger rail for Houston will be. I do know that George Mitchell and I mounted a multi-million dollar Herculean effort to re-establish the precedent and operation of passenger trains on existing rail corridors with the six year operation of the Houston-Galveston TEXAS LIMITED train. Our hope was that the public would take it over and expand it to provide conventional commuter service to the suburbs. That didn’t happen because the public officials refused to support it and instead directed their interest to the light rail system we now have. With regard to Dallas-Houston-San Antonio-Austin high speed trains, I think that would be great but I think such an operation should utilize interstate highway corridors as much as possible for all the obvious reasons. I do not believe such operations can be built and operated without public subsidy.