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Railroad purchase proves worth the money and more

Posted: Friday, January 29, 2010

T wenty-five years ago, the state of Alaska bought the Alaska Railroad from the federal government. The price was a deal then, and time has only made it a better deal.

The state bought the railroad for $22.3 million, a price that was discounted for a variety of reasons. The federal government wanted out of the railroad business in Alaska, and the state was willing to take on the job.

"What we're doing is removing the last vestiges of Alaska's territorial status," said federal railroad administrator John Riley, speaking at a check-passing ceremony Jan. 5, 1985, at the community hall in Nenana.

Sixty-two years earlier, when Alaska was still a long way from statehood, President Warren Harding had driven the railroad's final golden spike just north of Nenana on the bank of the Tanana River. The federal government ran the operation from day one, but, Riley told the audience in 1985, it "can't run this railroad anywhere near as well as you can."

Despite the fundamental agreement between the state and federal governments on the need for a sale, the actual negotiations took quite some time.

The state argued for a low purchase price by asserting the railroad would require many upgrades and modernization, as has proven to be the case.

That wasn't the view on the federal side of the table. Tom Allison, a federal attorney who worked on the negotiations, was in the transfer ceremony audience at the Nenana community hall. He told a News-Miner reporter that the state received a very good deal. Some estimates put the railroad's value at about $500 million, he said. It was in better shape than any other railroad he had seen, he said.

State officials didn't disagree about Allison's assessment of the final terms.

"It was a good deal for the state of Alaska," said then-Gov. Bill Sheffield, who passed the over-sized check to Riley that night while attendees enjoyed Alaska-grown bison stew.

In the years since the purchase, the federal government has returned the state's $22.3 million investment many times. Between 1996 and 2009, federal checks added up to almost $800 million, the railroad reported last week. Former Sen. Ted Stevens was responsible for much of this money. It came regularly in appropriations acts during his tenure on the Senate Appropriations Committee. He sometimes justified the expenditures by noting that other passenger railroads in the country were receiving federal money; so, too, should Alaska's.

The railroad has improved greatly and contributed much to the state's economy during the past 25 years. It should be well-positioned for the next 25 years, even if those coming years do not bring quite such a handsome return from the previous owner.



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