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Downeast Scenic Railroad Business Strategy Plan

A project of the

Downeast Rail Heritage Preservation Trust, Inc.

P.O. Box 950 Bar Harbor ME 04609

June 30, 2005

Stone Consulting & Design, Inc.

Copyright @ 2005 Downeast Rail Heritage Preservation Trust, Inc. Unpublished and Confidential Document

This Document may not be copied in whole or in part except with the written permission of the Downeast Rail Heritage Preservation Trust, Inc.

Downeast Scenic Railroad Business Strategy Plan A project of the Downeast Rail Heritage Preservation Trust, Inc.

June 30, 2005

Stone Consulting & Design, Inc. Page 1

Downeast Scenic Railroad

Business Strategy Plan

A project of the Downeast Rail Heritage Preservation Trust, Inc.

P.O. Box 950 Bar Harbor ME 04609

June 30, 2005

Executive Summary The mission of the 501(C) 3 not for profit Downeast Rail Heritage Preservation Trust, Inc. is to preserve and develop the Downeast Scenic Railroad (former MEC Calais Branch) for the education, enlightenment and enjoyment of future generations, and to celebrate the history and preserve the railroad heritage of Downeast Maine. The Downeast Scenic Railroad is part of the mission of the Trust to provide diversified economic benefit with minimal state tax dollars that builds on investments already made by the state in this corridor, helping with private monies to facilitate Maine’s economic development strategy, and provide a variety of jobs and venues for job creation in Washington and surrounding counties. It is made up of many diversified professional people from a broad geographic range both from the rail and transportation industry and from without giving it not only credibility, but access to funding, resources and a degree of exposure not normally associated with such projects. It has long been felt that a tourist operation operating from the Ellsworth area that was professionally managed and leveraged by a not-for-profit status could generate sufficient revenue to be virtually a self sustaining operation. This operation would build on prior investments made by the State of Maine in their acquisition, stewardship and management of this line to enhance economic development in non-traditional ways creating diversification in tourism, a catalyst for economic development, educational awareness of the importance of rail transportation to the State of Maine, both in the past and into the future. It would also provide a broader awareness of the environment and ecological issues and a legacy of educational history and pride for our children to share to future generations. It is also planned that by providing this operation, Downeast Scenic Railroad will substantially reduce the maintenance obligation faced by MDOT for corridor maintenance by approximately $2000/mile/year for sections operated. Stone Consulting & Design, Inc. was retained to study the feasibility of an initial tourist excursion railroad operating from the Ellsworth area, located on the main routes providing access to Acadia National Park. Stone Consulting & Design, Inc. was also to determine the cost of restoring the railroad to operation and


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it’s feasibility of success. This analysis focuses on a core 12-mile segment of the former Maine Central Calais Branch linking Ellsworth with Green Lake creating a 24-mile round trip excursion of approximately an hour an a half. This line was built in the late 1800s and has been dormant for approximately the last 20 years, largely under the stewardship of Maine DOT for corridor preservation. The last Maine Central timetable showing passenger service on this line was dated October 27, 1957, thereafter the line was used only for freight service. The analysis concluded that after a Year 1 start-up, there would be an annual sustained ridership of slightly over 72,000 riders with possible peaks towards 80,000 riders in Years 3 and 4 due to the newness and novelty of the attraction. This would generate a projected 5 year total of over $6,000,000 in revenues, and create direct employment for 13 people. At this level, the railroad would become a self sustaining tourism and economic generator with the ability to generate secondary employment, reach and educate thousands of school children and teach many out-of-state tourists about the history, pride and economic potentials of Maine and the railroads that not only built it, but continue to be viable in new ways sustaining it.

The administrative functions of the railroad would fall under the policies and guidelines of the Downeast Rail Heritage Preservation Trust Board of Directors and executed by the Executive Director and an experienced General Manager in charge of railroad operations. These functions would be carried out under guidelines set forth under not-for-profit rules for program management and would tie directly into educational and economic enhancement issues as defined by the mission statement. This operation would fall under the scope of and embrace all FRA regulations, especially as recorded in FRA CFR 49 Parts 200-399. It would comply with equipment regulations and inspections, crew training, safety compliance, reporting and environmental concerns. Initially, fully trained, experienced and certified operating crews would be used from other railroads, and new crews would be trained and certified under strict procedures and guidelines approved by the FRA. Other technical personnel for mechanical, maintenance-of-way and signal maintenance would be drawn from the ranks of fully qualified people.

Cash Flow Summary Downeast Scenic Railroad

Years 1-5 5 yearYear 1 Year 2 Year 3 Year 4 Year 5 Total

Projected Total Annual Ridership 45,000 72,020 81,620 79,820 72,100 350,560Projected Annual Revenue $739,450 $1,289,586 $1,445,202 $1,421,024 $1,369,980 6,265,242Projected Annual Expenses $812,473 $1,147,613 $1,310,809 $1,322,845 $1,310,453 5,904,193Operating Surplus (EBITDA) (73,023)$

141,973$

134,393$

98,179$

59,527$ 361,049$

Out of Service Segment Fund 10,671$

10,671$

10,671$

10,671$

10,671$ 53,356$

Surplus Funds for Program Management (83,694)$

131,302$

123,722$

87,508$

48,856$ 307,694$

Cash Flow Total (83,694)$

47,608$

171,330$

258,838$

307,694$


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The program plans would include programs aimed at both adult and young people in school and involve:

• The Rail Heritage of Maine and the Calais Branch in particular • The Economic Development of Downeast • Maine History and the Role of Rail Transportation • Regional History and the Role of the Calais Branch • Travel & Tourism • Maine’s Resources and Potential for Economic Growth • Maine Ecology & Environment

Train trips would be staffed with trained docents that would provide narration and information as required. A new train depot would be privately built with sufficient parking, lighting and facilities for the expected ridership. This depot would be a landmark and focal point not only for the Downeast Scenic Railroad, but for tourism and education in general in Washington County. The Downeast Rail Heritage Preservation Trust believes that the implementation of this plan would not only provide a self-sustaining tourist railroad, but would provide a fitting tribute to the investment already put in the corridor by MDOT over the years, giving this resource the chance once again to provide a positive contribution and enhancement to the economy, and more so by providing economic enhancements and incentives in ways not previously thought possible. It will provide employment, training opportunities, educational awareness, historic preservation and tourist enhancement of a different nature than is currently available. The Organization The Downeast Rail Heritage Preservation Trust is a 501 (C) 3 not-for-profit corporation with the mission to preserve and develop the Downeast Scenic Railroad (former MEC Calais Branch) for the education, enlightenment and enjoyment of future generations, and to celebrate the history and preserve the railroad heritage of Downeast Maine. It is comprised of many diverse professional people from all walks of life from a very broad geographical base across the United States. These persons interests are much broader than railroad transportation, and include economic development, environmental, recreational (hiking, biking, canoeing, snowmobiling) finance, education and tourism. It is through this base of resources that the Board of Directors is organized and membership input is taken. It is expected that the Executive Director will coordinate the execution of the policies and goals of the board and supervise the management of the railroad operation under the direction of a professional railroad manager.


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The Operation and Infrastructure The initial operation would center around the 12-mile segment between Ellsworth and Green Lake. This stretch of track has a diverse amount of scenery, will start from an accessible and visible location and travel to a point where the locomotive can runaround the train at a scenic location, be in harmony with neighbors and property owners and return to it’s origination. Operational facilities would be located in the Ellsworth area, most probably at Washington Junction where car and locomotive service facilities would be provided in order to perform proper inspections and servicing. The passenger depot would be a new facility located in a prominently visible area in Ellsworth for the safe and efficient boarding of passengers. This facility will have sufficient parking, lighting, trash disposal and restrooms to service the projected ridership demand. Coordination will be made with MDOT for any special ingress/egress issues, traffic control and signage. Proper permits and revues will also be undertaken with the community prior to initiation of operations. This 24-mile round trip experience will be provided sufficient marketing support and falls neatly into the time limitations and interests of a typical tourist train patron. Operating speeds would be a combination of Class I (max. 15 mph passenger) and Class II (max. 30 mph passenger) speeds depending on the terrain and other safety and operational concerns. Staff will consist of a mix of paid employees and trained/certified volunteers on the model of the Adirondack Scenic Railroad in New York State. This mix will generate operating efficiencies in all departments including administrative, retail sales, operations, mechanical and maintenance. Finances Revenues in the early stages will be derived from operations. In the event of operating deficits, the difference would be made up through the fundraising efforts of the Downeast Rail Heritage Preservation Trust. This 501 (C) 3 form of organization will give substantial leverage to the operations viability and financial stability of the Railroad. Initial investments will be made, and indeed have been made by private investment. Throughout this project to secure and operate a tourist excursion train over the 14-mile segment between Green Lake and Washington Junction, it will be a function of the Trust to manage and monitor not only the annual rail operation, but to provide stability in case of years with lower ridership. The Trust is also willing and maintains as part of its goal, the preservation of all of the Calais Branch for eventual or future rail service. This Trust can generate funds from many sources and through an almost world-wide interest that will be available to MDOT as an asset in the stewardship of the Calais Branch, and its future towards generating economic activity and jobs. With a planning partnership, It can begin to almost immediately assist in reducing the State’s financial obligations in the management of this corridor and bring a consensus of diverse interests together for the benefit of all the people of the State of Maine. Indeed, this project has already proven an ability to generate economic activity by the amount of money already invested in the project and the broad based interest, not only from those in the state, but from many areas around the country and beyond. Financial projections and revenues for the operation are deemed to be on the conservative side. Future track maintenance and capital programs would be funded through aggressive proposals for Section 130, Section 152, legislative appropriations, FRA Rail Infrastructure Funding and other sources as this property


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does not belong to the operator. Other funding would be raised by the Trust to manage and execute the programs and mission of the organization. Implementation It is expected that it would take several years from the time of MDOT approval of this plan for the operation to be implemented. This is because of several reasons outlined in the schedule below:

Function Year 1 Year 2 Year 3 Property lease, permitting and approvals x x Timeline to rehabilitate trackage long out of service x x x Acquisition of equipment x x x Development of core staff x x x Acquisition of property x Property betterments including buildings and grounds x x Grade Crossing Issues x x Interchange connection with Guilford x Preparation of marketing activities x x x Coordination of contractors x x Rehabilitation of track x x FRA regulatory issues and program development x x x Initiation of operation x

The initial step would be for the assignment of a lease by MDOT to The Downeast Rail Heritage Preservation Trust for the proposed section of the Calais Branch. At that time, the Trust would structure the Downeast Scenic Railroad as the operating entity and obtain the proper insurances and set up the business organization. Under 49CFR Part 213.5, notification must be made to the FRA regional office by either party assigning the track to the lessor. Downeast Scenic will then provide written acknowledgement of the assignment and designate a qualified person under FRA Part 213.4 and 213.7 for track, and be ready to implement other FRA regulations as required of an operator. After the railroad entity is up and running, the applicable Rules, Regulations and Programs would be approved and implemented. This will initiate the organization as an operating entity that would be then followed by putting the manpower, training, equipment, communications and operations into active operation. The projection would be for operations to occur in Year 3, but a conservative approach is being taken in that the first year of operations may not be a full operating season, but an interim year. Ridership projections and financial estimates take that into consideration. Initially it would be envisioned to “land” rail borne equipment onto the property in the form of work trains to perform initial work necessary to stabilize the property and perform maintenance activities that would allow for a less expensive rehabilitation contract. This would also establish a rail presence to enhance safety by the time the rail contractor initiates work, and allow time to work through any concerns and considerations of the general public.


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Equipment Passenger Cars A variety of heritage rail passenger equipment is available on the market for reasonable prices with a good selection from which to choose. It is planned to have at least six passenger coaches in order to meet maximum capacity demand, and provide spares for inspection or repair. Open air car/cars may be substituted for traditional coach space as budget, weather and demand permits. Cars would meet all requirements set forth by FRA for excursion service use and be comfortable and clean for the enjoyment of the public. A table car and a dining car would be used for the dinner train operation. A coach could be converted to a tablecar if one cannot be found. Locomotives Locomotives would be of a four axle design with a nominal maximum weight of 130 tons, which will be conducive to the operating profile and bridge restrictions on the line. The locomotives will be in such mechanical condition that they meet all applicable FRA requirements, good mechanical condition and of a vintage and model that will be easily understood and repairable by experienced rail shop forces. Locomotives would be properly equipped with ditch lights, speed recorders and other safety appliances for compliance under FRA Part 229 for the intended speed of operation. Work Equipment It is recognized that in order to properly maintain the railroad that a certain investment in track equipment and machinery is needed. This investment will include general track tooling such as track jacks, level bars, tamping forks, tie and rail tongs, ballast cars, and hi-rail equipment. Other equipment such as backhoes, hi-rail gradalls, loaders and specialized equipment would be leased on an as needed basis. Mechanical Shop The mechanical facility will start out small, with simple tooling for the repair of equipment, and an inspection pit for the underside inspection and proper repair of locomotives. As time progresses, additional facility could be added based on the capital equipment programs selected. In the interim, most heavy work would either be performed on site by contractors, or the equipment moved off-line to a contract shop facility. It is expected that most repairs can be adequately handled in-house with a minimum of infrastructure and a combination of in-house and contract labor.


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Track Rehabilitation Program A separate engineering study has been performed by Stone Consulting & Design, Inc. for the rehabilitation of trackage between Washington Junction and Green Lake and to make equipment moves between Green Lake and the Guilford interchange. Reference should be made to this detailed study. This study outlines the specific costs and workscopes needed to bring the track into proper compliances for passenger train operation. Downeast Scenic will contract with an engineering firm and reputable track contractor for the rehabilitation work and insure that the work has been done satisfactorily. They will also coordinate with MDOT and FRA representatives throughout the process to insure that all standards, expectations and regulations are considered. It would not be in the scope of work to initially bring up to Class I standards the trackage from Guilford to Green Lake, as this trackage would be rarely used excepting for periodic equipment moves into and out of the operating segment. However, adequate standards will be met for safe train movements as per any applicable regulations, and standard operating rules and standards will apply to any movements on this segment. There are a number of resources that are available for this program, and Downeast Scenic looks to work closely with MDOT in making this rehabilitation as efficient as possible. Locally, there are good sources of appropriate ballast material, equipment and skilled people that can be used to mitigate the costs of the work required. Track Maintenance As with any operating railroad, track maintenance is going to be an on-going activity. It is expected that much time will be spent monitoring drainage and beaver activity, and in surfacing and lining track. This is one reason that so many ties were specified in the rehabilitation to Class 1 standards. The curvature of the line and surface will pose continuing problems and the track maintenance budget reflects those conditions and costs. Downeast Scenic is aware of resources for drainage and ditching work through the services of Bob Ames in New Sharon, and other local contractors in the greater Ellsworth area. General, non-capital, track work would be done by in-house personnel and qualified volunteers supplementing the paid staff. Downeast Scenic will also work closely with applicable State agencies for beaver problems and also rely on Charlie Freeman who has been performing beaver work on the line under the auspices of MDOT. Track Maintenance will fall under an appropriately qualified in-house track inspector under 49CFR Part 213.7 Grade Crossings There are some serious issues as pertains to grade crossings. These crossings in many instances have been paved over with asphalt covering the tops of the rails and flange-ways. A public hearing process is needed in order to reopen these to rail traffic, and there is recognition that in some instances additional warning devices may be needed to insure the safety of the public. Many crossings will need to be resurfaced with new ties and highway surfaces. It is recommended that most crossings be done with asphalt and rubber flange-ways (Epflex) for ease and efficiency of maintenance and highway safety. The Route 180 crossing would need a more substantial treatment, and concrete may be the answer at this


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location. There is also the need for signage and pavement markings as appropriate conforming to MUCTD Standards and railroad operational rules. Downeast Scenic contends that all of the cost for reopening the crossings and rebuilding / upgrading of crossings should not be all of their financial responsibility. Downeast Scenic is willing to work in partnership with MDOT, local municipalities and involved parties on this process. Downeast Scenic would place in effect STOP AND FLAG Rules for train movements in the out-of-service track portion west of Green Lake utilized for equipment moves, and comply with all provisions of 49CFR Part 234 for grade crossings in active track sections. Grade Crossings will be either maintained by in-house personnel or contracted out depending on costs and efficiencies yet to be determined. In any case, the General Manager or his assigned designate should keep the FRA paperwork and act as Grade Crossing Program Administrator. Operations The operation of tourist passenger services is expected to be nominally between May and October with special events at other times of the year on a limited basis. Generally, there will be two round trips/day with a possible dinner train trip. This is more clearly defined in the marketing section. Train lengths will be from 2-6 cars in length, depending on the demand pulled by a single locomotive. Operations will be conducted by trained and certified crews under the NORAC (Northeast Operating Rules Advisory Committee) which is compatible with Guilford’s rules and many other rail operators in the region. It is recognized that at some time in the future, these rules will be consolidated or amended into some other form of rulebook, but until that time Downeast Scenic will follow NORAC. Crews will be both volunteer and paid staff as availability dictates, but in any case all crews will be trained and certified under the same regulations and requirements. Operations will also fall under all relevant FRA (49CFR) regulations including, but not limited to: Part 213 – Track Safety Standards Part 214 – Railroad Workplace Safety Part 217 – Operating Rules Part 219 – Control of Alcohol and Drug Use Part 220 – Railroad Communications Part 225 – Railroad Accidents / Incidents: Reporting, Investigations Part 228 – Hours of Service Part 229 – Railroad Locomotive Safety Standards Part 231 – Railroad Safety Appliance Standards Part 232 – Brake System Safety Standards Part 234 - Grade Crossing Signal Safety Part 240 – Locomotive Engineer Licensing Downeast Scenic expects to develop and nurture relationships with MDOT and FRA to provide an excellent railroad service that conforms to the highest degree of safety, management and maintenance standards.


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Drug and Alcohol Testing Downeast Scenic would come under CFR49 Part 219 concerning drug and alcohol testing. It is expected that a random testing would be implemented under a federally approved program under the Part 219 regulations. The railroad would set up an appropriate MRO (Medical Review Officer) and most likely contract out the testing to a qualified organization under an in-house FRA Program Administrator. Fire Patrol Downeast Scenic is aware that each year the Maine Forest Service will do an annual audit that will define areas that need fire patrol under certain moisture conditions. To that extent, a motor car has already been purchased and would be used to follow up train movements in order to provide fire suppression as needed. Trains, hi-rails and motor cars would also be equipped with Indian Pumps or other supplies as needed. Communications The Downeast Scenic Railroad will file with the FCC for railroad radio channels and licenses applicable to their operation and possible interface with Guilford Transportation as needed. Supplemental relay towers will be investigated as needed in order to provide adequate communications for train movement authority and safety. Supplemental communications will be done with cell phones. A radio base station will be installed at the operations headquarters and monitored by the dispatcher. Movement and Maintenance on Out-of-Service Track (Guilford to Green Lake) Train and track car movements on the out-of-service segment between Green Lake and Guilford will be governed by all Downeast Scenic Railroad operating rules, special instructions and bulletin orders. However, it is not initially expected to perform a total rehab on this section, but only adequate work to maintain minimal safety standards. Maintenance would be performed as needed to keep the segment intact and in shape for periodic train moves, but other corridor maintenance work would be presumed to fall under MDOT maintenance under a partnership with Downeast Scenic Railroad to maximize resources and minimize direct costs. Operation, while not out of service will fall under 49CFR Part 213.4 (Excepted Track). Guilford It is recognized that at this time, Guilford is the sole interchange partner. Early action will involve negotiations with them regarding providing interchange services at or near Brewer Junction. Currently, the trackage from the Junction to the property cut line east of Green Point Road, which belongs to Guilford is out of service. This track will need some maintenance prior to being able to be reopened. It is hoped that through a partnership with MDOT and Downeast Scenic that this connection can once again be established.


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Marketing & Ridership Analysis Projecting the potential ridership (and in effect, the resulting revenue stream) is one of the key issues for developing a successful recreational rail experience on the Calais branch. The analysis of the potential size of the market, makeup and behavior of the market, and location of the market effectively governs many other decisions in turn, including equipment, budgets, timing, and capital cost campaigns. Tourist railroads as a breed are essentially limited by where the track is. Few other public attractions are so limited in their business plan development – most are only limited by location and land availability. While railroad tracks aren’t particularly rare even in this century, railroad tracks that can be used by people are – through corporate liability, traffic, condition, politics and business decisions. The surviving number of railroad branches that could conceivably be operated as recreational and educational projects is actually very limited. Many places that it would seem logical that a tourist railroad would thrive either don’t have track, or have track that is controlled by a corporation whose mission left passenger railroading far behind 30 years ago. That’s particularly true in New England, where Guilford Rail Systems has not only been ambivalent about Amtrak service, but contested Portland service startup in Federal court to avoid liability. So the available choices, and opportunities, are essentially very limited. Places with people don’t have track, and places with available track often are in remote areas with little commercial and tourism activity. A successful operation also needs room for parking, support, car storage, repair facilities, and retail space for a gift shop. Complicating it even further is that the public at large has far different expectations for their recreational choice and spending than 20 to 30 years ago. Following the shutdown of steam locomotives nationwide in the 1950s, the surviving locomotives that were still serviceable were often ‘preserved’ in museums or operated on recently abandoned branch lines. Track regulations and regulatory issues were in their infancy. A good portion of the population had personal nostalgic experiences with trains in general and steam locomotives in particular, and Dad and Grandpa sought to recapture the experience. The ‘60s market sought out the ‘new startup’ tourist railroads, sometimes in relatively remote locations, with relatively poor services by today’s standards. The now-famous Strasburg Railroad started with a tiny diesel switcher, two cars, and a station made of plywood. Back then, almost any place that could physically operate a train, or particularly a steam train, had a fair chance of success. Success in this new business produced operations, or attempted operations, on almost every sold or abandoned branch line railroad available through the 1980s. By the 1990s, well over 300 various rail-related museums, tourist railroads, exhibits, and rail-related visitor attractions were recorded in the Steam Passenger Service Directory, now published by Kalmbach Publications as the “Guide to Tourist Railroads and Museums”. By 2005, this is a mature and experienced business model, with a 40-year record of performance to observe and analyze. By the 1990s, many began to sense that the industry had achieved saturation and some operations actually began to close and disappear. Railroads that had been marginal for years now lost interest, passengers, and money. Regulatory, insurance, and community issues pressured some to close. Other new startups, developed from recent trackage abandonments in existing well-known tourism markets, opened


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and thrived such as the Grand Canyon Railroad and the Napa Valley Wine Train. Early entrants, such as the East Broad Top in remote central Pennsylvania, discovered that even the combination of history and steam weren’t necessarily enough to keep seats filled, and soldiered on by momentum, volunteers and determination. Determining which railroad projects will succeed in today’s world and which ones will not is now a far more scientific and standard business planning process than just acquiring a couple cars, sweeping them out, printing tickets and seeing who actually shows up. It also cannot be done in reverse; i.e. build the railroad and then attempt to market it when it is discovered to be largely empty. A proposed new startup operation such as the Calais Branch has the benefit of years of experience to research and absorb before a decision is made and an effective business plan developed. There is the underlying need to fit the attraction to the potential market rather than search for the market for the attraction. The high capital cost of starting and the out-of-pocket seasonal costs of operating make it an exciting, sometimes intimidating, attempt at enterprise either for- or not-for-profit. Developing a potential ridership analysis for the Calais Branch leans heavily on this experience. Because the Federal Railroad Administration requires FRA-subject tourist railroads to report and document their safety experience (accidents and incidents), developing the denominator of the frequency calculation also requires reporting total ridership. As this is public data, reported ridership by month is available for analysis dating back over twenty years. While it consists of raw data without much explanation, additional research on the reporting railroads can produce fairly accurate experience representations in a wide variety of national locations. Stone Consulting’s ridership projections and analysis lean heavily on this data set. Many ridership ‘projections’ of new startup railroads completely ignore this experience and attempt to put an unknown percentage on a vast regional population, to project a ridership usually well in excess of 100,000, simply because there is an operating train within X miles of Y million riders. This has proven to be a fundamentally flawed approach. The analysis of potential riders then leans heavily on demographic data and wherever possible, other contributing visitor counts from reputable sources, public or private. Area theme parks, highway traffic counts, Chamber of Commerce visitor statistics, park attendance counts, and other documented visitor counts develop a history of performance for recreational rail attractions nationwide that can effectively be used for comparative analysis of likely new site performance. Such data is always subject to interpretation and analysis, and many variables contribute to such numbers. Honest and open debate and disagreement may occur. While it is often true that a new startup railroad ‘may’ exceed all expectations, the history of the industry is a fairly strong predictor of performance. The Calais Branch Situation Stone Consulting & Design, Inc. examines 5-10 new sites every year that are considered for recreational rail operations. Actual startups occur, usually with significant time delay, on about 40% of those projects. The single most significant issue in successfully starting a tourist railroad in 2005 is putting an attraction where tourism flows already exist. In this regard, the Calais Branch, and specifically Ellsworth, have few equals among proposed projects. The gross activity and visitation statistics for Ellsworth are remarkable, and put them in a category of railroads that have succeeded handsomely as new startups in the last


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decade – working with existing tourism flows and strengthening their region by adding another reason to visit and extend stays. The Calais Branch has a significantly long piece of railroad property extending from Bangor (Brewer) through Ellsworth and east to Calais, running through a tourism transportation corridor connecting Bangor with Acadia National Park. Ellsworth is proud of its location as the “Crossroads of Downeast Maine” between the Rt. 1 Coastal flow and the I-95-Acadia Park flow. Squarely in the middle of the crosshairs sits Ellsworth, and clearly visible to the highway through Ellsworth is the ex-Maine Central Calais Branch. Elsewhere between Bangor and points east, the railroad is relatively invisible. It only crosses Rt. 1A once, and passes under the highway route two more times. East of Ellsworth, the railroad is far away from Rt. 1 and tourism flows fall off drastically as the counts move farther east. For the purposes of this analysis, Ellsworth is unquestionably the prime point of contact and measurement for this project. There may be future longer-distance opportunities, but the core market and activity will remain Ellsworth. With Opportunity . . . Challenges The fact that heavy flows of tourism exist in Ellsworth is self-evident and equally reinforced by the ongoing project of Maine DOT to widen and expand Rt. 1A/3 through the city, due to congestion. Maine DOT traffic counts show that average daily vehicle counts are among the highest in the entire state. Virtually every commercial lot and every available business location is occupied. Vacancies and property abandonments in the 1A corridor are minimal to nonexistent. There is obviously no overwhelming economic ‘need’ to develop a recreational rail experience to increase visitation or economic activity, and the community as a whole appears to be growing in viability rather than retreating. This creates relatively uncommon challenges. The physical location of the railroad is to the immediate northeast side of the Rt. 1A corridor, paralleling it virtually the entire length of Ellsworth from the Rt. 179 intersection to the location of the Comfort Inn, itself built on the original railroad freight terminal. The railroad is often a full block back from Rt. 1A, and where it does come directly beside Rt. 1A, it is above it on an embankment. So while the traffic flows abound, finding a logical, suitable and acceptable location to board, park, and conduct business that can capture that traffic and at the same time be usable by the railroad, is an uncommonly difficult set of choices for Ellsworth. Determining the ‘right’ location will do as much to affect potential ridership (and marketing costs) as any other pending decision. Boarding Location Decision Issues Several potential boarding locations do exist, all with their own particular issues. No single boarding location overwhelms the analysis matrix as being an obvious single decision. Therefore, the analysis of several different sites in Ellsworth is in order, and a quick discussion of each site’s advantages and disadvantages will be undertaken.


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The key issues are:

Visibility and accessibility to the Rt. 1A/3 traffic flows Location to the railroad – proximity, grades and physical room Rail activity - train parking, locomotive runaround and servicing Visitor expectations as to a clean, interesting and acceptable site for entertainment Parking – vehicle restrictions, number of spaces, neighbor conflicts Traffic concerns with 1A/3 access Safety - pedestrian and vehicle concerns, including grade crossing Site development costs, including utilities Site availability and likely land-cost issues Environmental considerations; wetland, drainage Historic considerations

Relationships with Other Activity Economic activity within Ellsworth has become most concentrated on a relatively short section of Rt. 1A/3 where both roads combine, and this is a key feature in project location. This area has the highest traffic counts and it is not surprising that other businesses have located here. This immediate area features a large number of retail establishments including outfitters, restaurants, the Comfort Inn and an L.L. Bean Outlet on the same side of the highway as the visible Calais Branch track. The large number of businesses and the multiple-lane traffic also mean that any parking lot access should be at or near and existing traffic signal, such as the one just southeast of the Comfort Inn and the L.L. Bean Outlet. The L.L. Bean Outlet is an average-sized retail space in a separate building with ample parking to all sides. This outlet is not a destination-sized outlet, but is still one of the most likely places for out-of-town visitors to stop and it is within easy walking distance of the track. This is a possible relationship that can be developed to the benefit of both. The usual commercial development of the regional Wal-Mart is well south of town of Rt. 3 between Bar Harbor and Ellsworth and serves seasonal customers from a wide area. There is no synergy that can be exploited as it is several miles away from the track. Phase Considerations In addition to all those issues, one more consideration for boarding locations is that the ‘ideal’ selected boarding location may not be available or affordable for early implementation with fewer initial riders. A site may be preferable for early development, but not for the ultimate developed project with projected plateau-level ridership and higher demand. The railroad comes into the 1A corridor at Ellsworth Falls and exits at the Comfort Inn. In addition to that corridor, the logical use of the Washington Jct. ‘wye’ track and yard two miles east of Ellsworth should also be included in the discussion as a potential boarding site. A west-to-east (sometimes north-to-south) review of each examined site follows, with a discussion of each key issue.


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Ellsworth Area Location Map:

Ellsworth Falls – 1 – Undeveloped Parcel This is a relatively small parcel that lies immediately east of the intersection, directly abuts the track but has exceptional visibility to Rt. 1A. A dirt parking lot (presumably used by the church across the highway) provides vehicle space. The trackside parcel is lower than the parking lot, necessitating ramping for access and construction of boarding platforms. It is not known if the parcel is available for sale. Valuation maps show this to be a separate and distinct parcel dating back to 1917. It does not appear to have ever been developed for either commercial or residential purposes. This site has the advantage that it has one of the very best visible intercept locations – but is not in the full Ellsworth traffic flow. It does directly intercept Ellsworth traffic bound for Bangor and I-95. It also has the distinct advantage that it is clear of most (but not all) of the significant grade crossing issues in


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Ellsworth, and would not necessarily be held up in implementation for any one of the possible complications of reopening crossings in Ellsworth itself. Disadvantages include the unknowns of parcel availability, and cooperation of the possible parking issue with the church. It abuts a residential property and currently buffers a commercial site to a residential area. The only available passing siding is across Maine 179, necessitating use of the diagonal crossing on a regular basis in any case. It is relatively small and could not handle the projected future volumes of the railroad if the ridership was developed to the expected plateau levels. It would possibly be an ideal site for a demonstration project for the lowest-cost boarding site with fewest complications due to crossings. Ellsworth Falls – NE Corner at ME 179 on Rt. 1A Across from the previous site is a similarly-desirable semi-developed site north of the passing siding. A ‘for sale’ sign is on at least one of the adjacent parcels. This has lesser visibility, no existing parking area and possibly better positioning to board a train while the runaround move was accomplished. It is generally in an industrial area. Ellsworth Falls – SE Corner at ME 179 on Rt. 1A This location is alongside Rt. 1A and between the road and the railroad. An existing commercial building is on the site. Boarding would be on the passing siding to the back of the parcel. Advantages include an excellent location from a commercial visibility standpoint, access to the passing siding, and a developed structure that may be pursued as a station site for a reasonable price. Disadvantages include availability/price – it simply may not be available. It is in a generally commercial/industrial area. An available site could have a lower startup price as a commercial purchase rather than an empty site development. All three of the sites at Ellsworth Falls assume the reopening of the Rt. 179 crossing. One of the key issues for additional traffic on this site is the need for a traffic signal at the intersection. Given the existing volume of traffic on Rt. 1A, it was surprising that no signal is currently at this location and it is still only a stop sign.

Ellsworth falls looking toward Bangor – parcel to right

Parking lot at undeveloped parcel – Ellsworth Falls


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Ellsworth – 1A Corridor – East Side 1A North of High School The railroad parallels the Rt. 1A corridor at some distance to the road for a distance of approximately one mile. Several residential and at least one undeveloped property are between the road and the railroad that have potential as boarding sites. All of these have good-to-excellent visibility on Rt. 1A. None of these locations are immediately adjacent to a passing siding. All would have extensive development cost, with new buildings and utilities. Ellsworth – High School Area This area deserves mention if for no other reason than as a potential boarding site with ample access, signaling, parking and maintenance for an immediate boarding location for a demonstration project. As the train is primarily a weekend and summer-season activity, temporary boarding facilities could conceivably be located here pending the construction of a full facility. It features an existing traffic stoplight to Rt. 1A, excellent parking, a crossing to use as a low-level boarding spot, and room for a temporary (trailer-type) office/ticket structure. Disadvantages include relatively poor visibility to Rt. 1A, public/private conflicts, contractual issues and possible conflicts on the shoulder/fall seasons. Ellsworth – Existing Passenger Station (Community Foundation) Lot Judging from Official Railway Guides, Ellsworth hasn’t been served by an actual scheduled passenger train since at least 1957. The fact that the original passenger station survives at all is unusual, considering that the freight agency was located at the current location of the Comfort Inn. The building is currently occupied by the Ellsworth Community Foundation and is well-maintained. It has a large addition on the east side that was done for commercial storage and likely predates the Foundation ownership. As it still ‘looks the part’ of an actual railroad station, it has appeal from a historic standpoint. Even for a railroad station, it has a surprisingly small parking lot that is barely adequate for commercial purposes. The parking lot is too small for an excursion railroad, even if the site was allowed as a boarding/ticket office location on a limited basis. It cannot be reasonably assumed that the building would be available for office space. The only advantage to the site is that this (and the site below) have good pedestrian access to the downtown area, and as such, should be considered as a ‘flagstop’ for the railroad to increase community visibility and help tie the railroad to the downtown business group for ticket presales.

Existing (historic) Ellsworth Station (Community Foundation)


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Ellsworth – West Side of Passenger Station (Church Parking) Sites just southeast of the track across from the existing passenger station include a bakery and an assortment of parking spaces split between the bakery and the parking lot. If the site were undeveloped, it would be one of the prime selection candidates. As the parking appears to be primarily linked to the church, an agreement for non-conflicting time use at a lease price might be possible. There appears to be sufficient space on railroad property for a smaller ticket office/boarding location. The site has poor visibility to Rt. 1A. Site development costs (assuming a working agreement can be reached with the owners of parking) would be relatively low. Ellsworth - Comfort Inn Parking Lot Area The original freight yard/freight house was on this site, and it ‘would’ have had the best location of Rt. 1 and Rt. 3 traffic flows, combined with the best visibility and traffic placement. Remnants of switches and spurs survive to the edge of the motel parking lot. While this would appear to be an alternative at first glance (construct a small station building on railroad property and co-use of the parking lot), the existing parking spaces for the Comfort Inn appear to be inadequate at the current time. Overflow parking is already taking place at the adjacent L.L. Bean Outlet. Therefore, while the site is conceptually valid, the severe lack of shared parking removes it from contention as a boarding location even in cooperation with the motel. There simply is not enough space. The curve in the railroad beside and behind the motel has some of the very best visibility to Rt. 1A/3. It has been suggested that a static piece of equipment be positioned on a remnant of the yard lead track as kind of a ‘rolling billboard’ to attract attention and possibly have a directional arrow or sign. Aside from any local sign ordinances, this would appear to be highly a desirable and practical approach. The land directly northeast/north of the Comfort Inn area is an open mowed field approximately 10’ lower, which is drained parallel and under the track. It slopes gently south, but overall, is substantially lower than the existing right-of-way in the curve. A significant amount of fill, ramping, or regrading would be necessary to develop a site beside the existing

Downtown parking area west of track


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track. This entire zone generally north and east of the Comfort Inn has several potential alternatives for a relatively high-visibility boarding location on undeveloped land. Each of these sub-alternatives have the problem of access to the parcel, drainage, relatively high development costs, unknown parcel cost or availability issues and that they will require a new access road or driveway into Rt. 1A/3 with traffic issues. This entire boarding location zone (along with further east at Washington Jct.) assumes that all grade crossings must be opened and operational through the entire parallel length of Ellsworth Falls and Ellsworth. Each of these location alternatives features use of the existing passing siding track for runaround and train storage – a definite plus. Long term, one of these alternatives or a hybrid combination would appear to be the most desirable from a ridership viewpoint. They may take significant time to develop and may not be possible to implement as a ‘demonstration’ ride boarding location. For the forecasted plateau ridership well in excess of 70,000, it is assumed that one of the high-visibility, higher-capacity sites will be acquired and developed. Ellsworth - Northwest Location from Comfort Inn This location on the north side of the track has a large undeveloped field parcel that is relatively low, wet and would appear to be controlled by the adjacent residential owner, as it is mowed and open. While the eastern side of the parcel is higher and dryer (and wooded), the biggest advantage to this site is proximity to Beale St. and as a possible parking lot location. It may be feasible to access the parcel from the north. Ellsworth - Northeast Location from Comfort Inn This is the same site as above, but further east in the wooded area. The topography of the land rises to meet the railroad and is relatively flat through several benches. It does not have significant drainage or wetland problems and is at the same elevation of the track at the east passing siding switch. It would appear to be practical to access this parcel by construction of a new access driveway through existing commercial parcels somewhere between the Comfort Inn, L.L. Bean, or adjacent properties, climbing to track elevation and crossing into this parcel at or near the point of switch. There appears to be significant acreage for parking available as undeveloped wooded property. Construction of a new driveway and private crossing to access this parcel could have the distinct advantage that it could be fed into the existing traffic light at Washington St., negating traffic and turning concerns that are naturally present on Rt. 1A/3. This is the only significantly-sized undeveloped parcel that is directly on Rt. 1A/3, has the potential of traffic control, has a passing siding immediately adjacent and has no obviously apparent zoning, residential or wetland conflicts. An actual station on this location, however, is relatively hidden behind the motel and commercial structures. We would recommend that a


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visible structure be located on the station itself (such as a clock tower) or adjacent to it, possibly even over the tracks itself, to serve as a visible billboard and identifier for the location. Ellsworth – South Side of Track East of Comfort Inn An existing industrial structure is positioned east of the Comfort Inn that has a relatively large footprint and a small building. There would appear to be physical room to accommodate a boarding location (or at least a parking facility) on this parcel without compromising the viability of the existing business. As this is also one of the parcels necessary to investigate for an access driveway in the above location, it should also be investigated for possible use as the boarding site itself. It has all of the advantages of the above location: traffic control, passing siding, Rt. 1A/3 location and physical space. It is unlikely, however, that the entire parcel would become available as a facility for the railroad development. Washington Junction East of Ellsworth None of the potential boarding locations in Ellsworth have the potential to fully support the actual operation of the railroad at the full ridership level. There is insufficient space for car storage, repair, track materials, engine house and the ‘dirty’ side of tourist railroading that is not necessarily the image that either the rider or neighbor need to be confronted with. The existing junction at Washington Jct. meets virtually all of these needs, with sufficient track space and footprint for a tourist railroad. Because the railroad will have to have a physical existence there in almost any scenario, it’s logical to ask if this could be a boarding location as well. Washington Jct. has the advantage that there would be little if any difficulty in having sufficient land space for parking, depot development, retail space for gift shop, etc. that most tourist railroads need to succeed. In this case, it is ‘location, location, location’. While Washington Jct. really is not that far removed from Ellsworth (approximately 2 miles by highway), it places the railroad boarding location far away from the major traffic flows of Rt. 1A/3. It may be possible to adequately sign the railroad at the Main St./Rt. 1 intersection, but that is a significant risk for project development. Washington Jct. is more desirable than several other alternatives, but does not meet the visibility test to capture the market flow. Recommendations Any of the three locations at Ellsworth Falls on Rt. 1A offer alternatives for a demonstration project on a short-term basis while a better facility can be constructed at the more preferable locations at or near the Comfort Inn. Ellsworth Falls locations may allow operations to begin before all highway grade crossings through the entire length of Ellsworth are reopened for safe, regular train passage (non stop-and-flag). Long-term, a new boarding facility on the high-traffic area of Rt. 1A/3 on undeveloped land may be the only way to capture and effectively serve a high-volume market such as this railroad is capable of developing.


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Pricing and Revenues Pricing the basic train ticket for a ‘standard’ excursion on this railroad is done with two comparatives – the national experience in the excursion railroad industry, and the attraction competition and market specific to Ellsworth and Acadia National Park. Most tourist railroads offer a basic 1-1/2 to 2-hour attraction, and a longer trip if track is available. Historically, tourist railroads running steam locomotives charge more than diesels, and the public is often willing to pay more. The best ‘comparative’ on a national basis for such a short-time attraction experience is the competitive price of a movie ticket, which in most areas is in the $7-8 range. Lengthen the trip or add features, and the price expands accordingly. ‘Half-day’ excursions are often priced in the $20 range and all-day ‘event’ diesel trips such as the Adirondack Scenic Railroad’s Utica-Thendara run are as high as $39. Nationally known longer-distance steam excursions such as the Cumbres & Toltec or the Silverton Train (Colorado) can be as high as $62-$70 for the 2005 season. Even more significant than that assessment is the specific recreational ‘ride’ market in Ellsworth. There are a multitude of attractions in the immediate Ellsworth area suitable for family participation. One of the most popular ‘ride-type’ attractions in the region is the water excursion or whale-watch/nature cruise event, often originating from Bar Harbor. All of these cruises are priced rather similarly and adult ticket prices uniformly begin in the $20 range. Ferry charges are in the same price range and even the Bar Harbor mail boat is $15. Family activities under the $15 range are fairly limited, and all relatively passive – the Acadia Zoo (local animals) at $7; the Oceanarium at $8; the Lumberjack Show at $8.25 and a car pass for Acadia National Park at $10. Half-day activities in Bar Harbor such as sport fishing are $40; and an all-day sailboat rental (22’) is $250. Overall, this is a relatively ‘expensive’ comparative market for ride and family activities. Even a daily bicycle rental in Bar Harbor is $18. Target pricing for the pro-forma was tentatively set at a $14.75 adult and $8.50 child level; adding group rates between the two and weighting the average for a typical tourist railroad demographic of 17% children results in a weighted ticket average of $13.21. This per-passenger average seat revenue is used in the various pro-forma exercises in this study. Dinner train revenues are estimated as the train portion of the ticket only, as it is entirely possible that a successful dinner train operation at Ellsworth could be done by partnering with a restaurant to provide food, food service, on-board labor and even marketing. Nationally, dinner train operations often price in the $50-$60 range per seat including the meal, leaving significant possible seat revenue for the train. The revenue stream for the railroad can best be estimated for a ‘high-priced’ coach seat; in this case a $20 adult ticket with only 5% child, for a weighted average of $19.15. This favorably compares to the ‘dinner cruise’ offered that actually ferries customers to a land-based meal on an island outside of Bar Harbor. Comparable Operations New England has several comparable recreational/historic railroad properties. For this discussion, we’ll include railroads in Massachusetts, Vermont, New Hampshire, Rhode Island, Northern New York State


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and Maine. This is a mix of operations that have existed since the 1960s, new starts, rapid growth properties and hardy survivors. Maine currently has one dormant and one operating standard-gauge excursion railroad. The first is the now-dormant operation of the Belfast & Moosehead Lake (B&ML) at Belfast/Unity and the second is the seasonal passenger excursions on the Maine Eastern Railroad between Brunswick, Wiscasset and Portland. The B&ML has evolved from a diesel ‘classic shortline’ operating out of Belfast only in the early 1980s to a split operation, to a Unity-only diesel and Swedish steam operation with a dinner train. Recent developments in Belfast have effectively closed the B&ML R, with the reversion of the railroad property back to the City. The waterfront property in Belfast is the proposed site for a new retail/commercial development that precludes the railroad in its historic location. Well prior to this problem, however, the B&ML had turned its focus to Unity instead of Belfast for personal and political reasons not necessarily tied to the best possible passenger market. Because of these decisions, the B&ML has had relatively low ridership – never significantly exceeding 25,000 passengers per year. It has not effectively tapped into the Rt. 1 coastal tourism market. The boarding location at Belfast was off the through route and down several side streets, was unsigned and was also disconnected from the downtown with no visibility at all. The Maine Eastern (also previously known as the Maine Coast) is a hybrid tourism/transportation concept that was restarted for 2004 and reported only 1,300 riders for 2004. Current 2005 ridership information is not publicly available. Maine also has one operating narrow gauge railroad. The various two-foot narrow-gauge steam railroads do not publicly report ridership to the FRA, however it is reported via news stories that the Maine Narrow Gauge Association operating in Portland had an annual ridership of 27,000 for 2004.1 In areas other than Maine, several well-known and thriving tourist railroads exist. The ‘big operation’ of the northeast is the steam-and-diesel Valley Railroad in Essex CT. The railroad runs out of the bedroom community of Essex northeast along the Connecticut River and features a steam excursion, parallel steam riverboat excursions on the river, a very successful dinner train operation and a full plate of special events including Thomas the Tank Engine and Polar Express specials.2 Their annual ridership has exceeded 100,000 riders for several decades and has been as high as 150,000. Much of this high ridership can be attributed to the special events – sometimes drawing in excess of 20,000 riders for a Thomas weekend. Similarly well known is the for-profit and profitable Conway Scenic Railroad at North Conway NH – another member of the 100,000 ridership group. The railroad now features three distinct excursions – a short-distance steam excursion down the Mt. Washington valley, a second diesel-powered excursion with a dinner train north toward Bartlett and a third all-day, long-distance diesel excursion up the “Crawford Notch” - possibly the most spectacular mountain scenery on a tourist railroad in the East. The railroad features operations from an historic depot area and historic station, in the shopping and tourism center of North Conway.3

1 http://pressherald.mainetoday.com/news/local/050620narrow.shtml 2 http://www.valleyrr.com/ , http://www.essexsteamtrain.com 3 http://www.conwayscenic.com/


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Not far away in New Hampshire is the dual-owned operation of the Hobo Railroad and the Winnipisaukee Scenic Railroad; respectively at Plymouth and Lincoln NH4. The physically separated railroads operate and report as one entity (Plymouth & Lincoln, a.k.a. “PLL”) for reporting purposes. Total ridership has varied between 70-85,000 riders over the last five years. This operation is also remarkably close to the Conway Scenic Railroad – two of the closest major tourist railroad operations in the northeast that manage to co-exist in virtually the same market with relatively high ridership. Most ‘comparable operation’ studies lean hard on the experience of the Strasburg Railroad in Lancaster County, PA as a repeatable prototype. Its outstanding historic success in the Amish area of Pennsylvania using historic steam equipment has resulted in annual ridership often in excess of 400,000 riders per year. That generally places it in the top three of tourist railroads, and often doubles the attendance of the next ridership groups below it of 200,000, such as the Durango and Silverton in Colorado. Strasburg is often touted as a typical tourist railroad or an obtainable ridership model, which in reality it is not. It is an extraordinary success showing what the potential could be, given an ideal set of circumstances and forty years of intelligent growth and consistent, for-profit management. It is valuable to demonstrate that tourist railroads can generate that kind of attendance, but it is not necessarily appropriate to include it as a parallel model to Downeast Maine. National Park Service, Mt. Rushmore Market and the Rail Connection The key ‘draw’ to the Downeast Maine market, and the destination attraction for much of the through traffic through Ellsworth, is Acadia National Park and Bar Harbor. The National Park Service publishes attendance numbers for all National Parks, Acadia included, and they make interesting comparative data for base visitation and market studies. Some numbers from National Parks are certainly suspect. Many have no ‘gate’ or ticketed attendance counting, some have more estimated visits than actual physical counts and the counting methodologies between parks is inconsistent, but available, on a park-by-park basis. Acadia records a ‘recreational visits’ only count (excluding employees and contractors) of between 2.0 and 2.3 million per year – just between May and October – the same intended operating season of any proposed tourist railroad. That is certainly a significant theoretical number, but only if it can be put in the context of something of a similar proposal nature. Acadia’s closed-park-loop and car pass counting makes for much closer visitor estimates than many, but it still includes some estimated numbers. The Black Hills Central Railroad, a.k.a. “The 1880’s Train” is a steam-powered, standard-gauge exclusively tourist railroad that has now been operating as a for-profit operation in Hill City SD, since the mid 1960s. It is now isolated from any other rail connection, but has had a long and distinguished success story located in the same market and destination as the Mt. Rushmore National Park. The original operating location of the Black Hills Railroad is between Hill City and Keystone SD, but until early 2003, the railroad was never actually physically connected to Keystone and operated out of Hill City. This is a key issue of note in the ridership and commentary. 4 http://www.hoborr.com/


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Mt. Rushmore’s visitation is recorded on the same NPS database system as Acadia, and it records 1.7 to 2.0 million recreational visits between May and October under roughly the same visitor count criteria and methodology – that is actually less than Acadia’s same-season total. This is also the same operational season as the Black Hills Central, which operates in a very similar symbiotic relationship to Mt. Rushmore. The railroad’s geographic and intercept position is important here, because until 2003 it was in the same area but not on the same route (and somewhat invisible to the direct Mt. Rushmore visitor) but still had ridership in the 60,000 per year basis. The physical travel relationships between Mt. Rushmore and Acadia are significant and very parallel. Mt. Rushmore traffic leaves I-90 through one primary route south of Rapid City and passes through the small town of Keystone SD (pop. 316) – the gateway to Mt. Rushmore. Keystone features ten motels including Holiday Inn, Super 8 and Best Western. It is the “Ellsworth” of South Dakota. When the railroad was physically extended two miles into Keystone in 2002-2003, it crossed the major route (US16) and access point into Mt. Rushmore from the Interstate Highway system to the north. The casual visitor to Mt. Rushmore would now literally ‘cross the tracks’ at Keystone on their way there, and a new boarding point was located directly in the town instead of two miles away on a side road at the outskirts. While seasonal Mt. Rushmore NPS visitation actually fell from 2.0 million to 1.8 million between 2003 and 2004, extension of the Black Hills Central Railroad into downtown Keystone increased ridership from 83,000 to 91,000 during the same period. The percentage of visitors at Mt. Rushmore that boarded the tourist railroad increased from 3.53% in 2000 to 4.98% in 2004 - a truly significant difference of 26,500 riders on the 91,000 total that would appear to have increased primarily because of the improved position of the intercept and boarding point at Keystone. This is a significant object lesson for the critical nature of the visibility and boarding point selection in Ellsworth, along with being a significant comparative of a rational basis of ridership prediction based upon a very similar current relationship between a National Park and an operating tourist railroad. There are some issues that are non-comparable. At the current time, the Black Hills Central is primarily steam, marketed as an ‘old west’ experience, and is a very scenic and memorable trip featuring a 4% grade climb up a mountain, forests, scenic vistas and antique equipment. It has had a successful past and has a polished and professional reputation that has become near self-promoting. There is a legitimate concern that the average Mt. Rushmore visitor may be more family-oriented in demographics, history-oriented, and that the very nature of Mt. Rushmore is a quick visit followed by a search for another activity in the immediate area. Negatives exist however, in that there are perhaps even more distracting


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alternative attractions in the Keystone area than at Ellsworth; Mt. Rushmore is also home to Sturgis SD, the casinos at Deadwood, Wind Caves, the Crazy Horse monument and several State Parks. Competition for the visitor’s time is intense. Similar to Maine, other tourist railroads in the state of South Dakota have struggled and/or failed, including the Deadwood Central and the community operation in Milbank that operates only three days per year5. Simply being located in the same state as Mt. Rushmore was no formula for success, but the location of the Black Hills Central in a key destination tourism market and physical location on the route has proven successful for over 40 years. Overall, the relationship between Mt. Rushmore and the Black Hills Central is a significant issue in the viability of the Downeast Maine proposal. It provides a demonstrated linkage between NPS destination park visitation and rail ridership, underlines the critical importance of boarding intercept location to a destination attraction, and demonstrates how an operation can succeed and grow in the same state where other operations have languished. South Dakota also tracks vehicle counts in and around the Mt. Rushmore area on a bi-annual basis. Unlike Maine, they do not use seasonal averaging to determine ‘average’ vehicle counts, but record a detailed hour-by-hour, daily high and monthly high system. During July, 2-lane roads are often at a saturation point similar to Ellsworth, with total daily vehicle counts limited by system capacity. Overall annual and seasonal averages are similarly constrained and distorted by the high differences between non-seasonal and seasonal traffic flows. Another operation that has tempting, if non-comparable, issues is the Grand Canyon Railroad connecting I-40 at Williams AZ to the south rim of the Grand Canyon. The Grand Canyon is a for-profit, longer-distance operation that also operates to a major destination park attraction with measured attendance through a park pass system and tight attendance controls. The Grand Canyon Railroad has not only served to become a successful tourist railroad, but a significant transportation link to reduce South Rim vehicle traffic. The 2003-2004 statistics show a 12-month ridership of over 450,000 on an NPS visitor base (annual) of 4,326,000 visitors; an astounding penetration rate of 10.4%. The very nature of the railroad allows the quick daytime visit and run back to Williams; there are no other major activities to do at the South Rim, and a rail-based transportation system evades the traffic and parking problems that constrain movement. The Grand Canyon is not a tourist railroad on the way to an NPS park as much as a transportation attraction to an NPS destination and has much higher ridership results because of that. The relationship between Black Hills and Rushmore (a tourist railroad square on the path to an NPS destination with no transportation feature) is a far more accurate comparable. Development of the Downeast Maine Projected Ridership Using the known figures of Acadia National Park attendance, the performance of the Black Hills Central in a similar geographic, traffic and destination market, and tourist railroads in general nationwide, some general predictions can be accurately made about the likely performance of a Downeast Maine operation in the immediate Ellsworth area.

5 http://www.milbanksd.com/TrainFestival/wve.htm


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Using the lowest recent visitor capture rate recorded by the Black Hills Central against NPS Mt. Rushmore visitation results in a rate of 3.53% against a seasonal Acadia market of 2,054,000 (2004 data, also a lower-than-average year). That results in an annual projection of 72,500; conservatively lowered slightly to 72,100. It is important to note that this incorporates: ˜ A lower-than-average May-October recreational visit only base on both locations. ˜ A historically low visitor count at Acadia (five-year average is 2.2 million) ˜ The lowest historical capture rate of the Black Hills Central against their market of 3.53% of visitors;

this was before the connection was built into Keystone. This number of 72,100 represents a ‘plateau’ level, which in itself has other issues implied. This is the projected ridership at stabilization, where the market has adjusted to the initial enthusiasm reaction to a new railroad, after marketing beyond the local area has essentially ceased initial growth, and when it is essentially operating in equilibrium with the underlying tourism market. Nationally, mature tourist railroad operations tend to be relatively static in an achieved market ridership without wild swings in attendance, and this ‘plateau’ level rarely moves +-5% without some substantial change in the railroad such as new equipment, special events (such as Thomas the Tank Engine), services or destination. All of the comparative tourist railroads examined have reached this plateau level – the only new startup (which was not used for comparison) is the Maine Eastern. It is more than likely that Year 2 or even Year 3 ridership may be higher than the ‘plateau’ levels, and the business plan reflects this trend. Most tourist railroad projects show a significant burst in ridership resulting from a ‘new’ thing to do, saturation of the local regional interest, and startup publicity. Sustaining this burst of ridership beyond the initial enthusiasm requires marketing well beyond local boundaries and being far more sophisticated about a sustainable marketing program than simply opening the doors and running trains. A projected plateau ridership of roughly 72,000 riders puts Downeast Maine well below some established operations such as the Conway Scenic Railroad and the Valley Railroad – both of which have maintained ridership in excess of 100,000 and have part-time steam. It is comparable to the totals exhibited by the Plymouth and Lincoln Corporation - primarily a diesel-powered operation in an established tourist area. It is well above some operations such as the Green Mountain and the Cape Cod & Hyannis. This projected ridership level is significantly higher than any other performance exhibited by a tourist railroad in Maine. It can be argued, however, that the target intercept area of Ellsworth also has the highest visitor density and traffic counts of any potential tourist railroad site in the State. A 72,000 ridership level places the Downeast Maine as an ‘above average’ operation compared to national tourist railroad statistics – but well under the ridership levels of some of the nationally-known operations. This is a rational and achievable ridership level that is based upon existing market trends and tourism levels, and not dependent on developing additional destination tourism to succeed. That may actually happen, but for the conservative baseline of planning, was not factored into our ridership estimate.


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How High is Up? The potential for a higher ridership certainly exists, as least through statistical evaluation. Given a situation of a well-marketed, well-executed and well-placed boarding area, some comparisons offer a tantalizing target, even if possibly unrealistic: ˜ Using the five-year average ridership penetration rate of the Black Hills Central against 2004

Acadia NPS visits (4.18%, 2.05 million) would result in an 85,800 passenger market. ˜ Using the current ridership penetration rate of 4.98% (2004 BHC ridership was over 91,000 riders)

against higher Acadia visitation would result in a 102,290 projected market. ˜ Using the current ridership penetration rate of 4.98% against five-year average Acadia visitation

(2,241,000) would result in a 111,601 projected market – possibly the most optimistic scenario available.

Building a business plan around a projected plateau ridership of 72,100 is one of the more conservative models based upon actual performance data and factors in features such as diesel-only, demographic differences, and the nature of the park attractions themselves. Black Hills Central’s current success is a combination of a steam-powered, established operation square on the travel path to Mt. Rushmore demonstrates the potential of all things being done ‘right’ on capturing a destination park market. The business plan assembled around projected visitation is a conservative derivative of this experience – by no means the most optimistic alternative available for planning purposes. Seasonal Impacts and Capacity Planning Along with annual projections, tourist railroads encounter what is essentially a heavily seasonal business plan. This makes the usual challenges of operating a railroad coincide with the challenges of operating a highly-seasonal summer attraction business. Tourist railroad ridership history and NPS visitation statistics tell a predictable story about the nature of the seasonal visitor and what it means for any potentially tourist-based business. The high volumes in the northeast for tourist railroads come as two surges – the first a predictable peak in July-August when 18-25% of the entire year’s activity happens – and a second surge that coincides with the fall foliage season. Depending on geographic location, this can be either in late September or as late as the third week of October – but the effect is usually the same – any given tourist railroad runs at even higher levels at or near capacity conditions. Recorded ridership totals from other tourist railroads in the region indicate that this surge varies by railroad but is usually another 20% to as high as 30% of the total ridership for the year. These two seasonal surges combined result in a two-month period that must effectively create 50% of the business plan revenue. On railroads that have virtually no seat capacity constraints and excellent fall foliage, the fall ridership surge factor can be even more dramatic. On the Potomac Eagle (Romney WV), the combination of well-


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reputed fall foliage, high train capacity and proximity to metropolitan day-trip market (Washington DC) result in a mind-boggling 65% annual ridership during October only. Most tourist railroads do not effectively clear the ‘profit’ for the year until at least mid-October because of this phenomenon – making cash planning and budgeting a difficult – if predictable – phenomenon. Handling and predicting this seasonal distribution curve for Downeast Maine is accomplished by taking an average five-year comparable tourist railroad ridership distribution and blending it with a similar percentage distribution of visitors to Acadia. Acadia’s visitation patterns show that September visitation is actually higher than October, but the two months together still produce 30% of the seasonal visitor distribution. The northern location of the park pushes the foliage season closer to late-September than the more-typical mid-October surge of northeast tourist railroads. The predicted monthly seasonal distribution coming from a mix of existing northeast tourist railroads plus Acadia visitation is used to generate an expected monthly ridership profile. This, in turn, can be used as a financial and operational model for expected passenger demand – resulting in better-tuned pro-forma activity bases of crew times, number of trips, total miles operated and volume-based cost factors. Equally important is the effect of the seasonal ridership demands on system capacity, resulting in necessary equipment projections to fit the market. Simply put, you can’t make money with trains that are already filled to capacity and lack of seats to sell. This ridership model generated by the demand curve can effectively generate a seat plan. Most tourist railroad coaches have a maximum capacity of 80 seats per car, and the total number of weekend, weekday and special trip seats can be modeled on a schedule and trip plan to see if they meet a projected operating and capacity plan. Excursion trains are also rarely operated at full capacity, and there is a natural tendency for riders to occupy high-density (80/car) seating at substantially less than high density. It is not uncommon for a natural (unforced) occupancy of 60-70% before a seat reservation system is necessary to enforce full seating. Most tourist railroads operating short-distance coach services only find it necessary to enforce full reservation situations during the fall foliage season. The additional costs of a full-time reservation system including labor and overhead costs are often far easier solved by simply adding unreserved surge capacity with additional cars. Because of the variances between weekend, weekday and time-of-day variables, along with the perception that a car is ‘full’ when it actually isn’t, it is a good practice to significantly add capacity beyond the plan. Developing a ridership plan was developed on a following likely scenario: ˜ Minimum of four excursion passenger cars at 80 seats/car available at all times. ˜ One open car of 44 seats for overflow and non-reserved capacity (May-Sept. only). ˜ Maximum of two round-trips per day on weekends or weekdays as to meet demand. ˜ Weekend only operations prior to third week of May and second week of October. ˜ Weekday operations added as 1-2 trips per day to meet predicted demand curve. Results from this predicted capacity curve and schedule distribution resulted in a scheduled system capacity of over 114,000 seat-trips. There is a minimum ratio of monthly capacity to demand of 153% in August and even 115% in October – meaning that the average train has an additional 15% capacity than the predicted maximum demand in October, and 50% more during the summer surge season. If this is still


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found to be inadequate in actual practice, additional trips can be added at the expense of increased variable costs, or additional equipment purchased. This scheduled demand and activity curve are also used to generate the planned train-miles, operational labor hours and seasonal activity for the railroad that generate the pro-forma statements. Taken as a whole, this combination of ridership, revenue and capacity analysis generates the basic structure of a business plan for Downeast Maine that is developed in this study. Gift Shop The Downeast Scenic Railroad will have a gift shop selling railroad related items with a specific emphasis on Maine railroading, its history and heritage. Other lines will include railroad themed clothing, children’s toys (Thomas the Tank ®) Maine souvenirs and educational material related to railroads, the environment, history and recreation. Food Service Minimal food service focusing on drinks and snack bar food will be available. A diner train is also projected which will be a higher quality fare more in line with a fine dining experience. Testa’s Restaurant in Bar Harbor, an advocate of this railroad concept, has substantial experience with food service and restaurant operation, and it is projected that this service will provide a nice enhancement to the overall operation. All applicable permits and licenses will be obtained and codes followed. Partnerships Partnerships will be developed, and in some cases have already been developed with other interest groups and entities. It is critical that this operation, although an operating railroad, be thought of as more than a railroad. It is a tourist attraction and an educational venue as well that will promote not only tourism and history, but education and enlightenment of the ecology of Downeast Maine, an awareness of the environment and a catalyst for the leveraging of additional economic activity of various forms in the surrounding region. These partnerships will not only include Washington County, but the whole of Downeast Maine and beyond, including but not limited to:

• Acadia National Park • Baxter State Park • Restaurants • Hotels • Chambers of Commerce • Municipalities • County Governments • Recreational Users • Railroad Historical Societies


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• Local Public Schools • State Colleges & Universities • Vocational Technical Schools • Environmental Organizations • The Arts • Maine Office of Tourism • Maine Department of Conservation

Educational Partnerships It would be planned to work with local schools to provide educational opportunities related to their local history curriculum, vocational-technical schools to assist in hands on training in the fields of diesel mechanics, air conditioning, electrical technology and possibly other fields such as travel and tourism, environmental sciences and food service. Recreational User Partnerships This would involve coalitions and partnerships with a diverse group of recreational users including but not limited to:

• Hikers • Bikers (on and off road) • Canoers & Kayakers • Rock Climbers

Through these partnerships, the train can develop trail interfaces for these uses that can be controlled and managed for the benefit of other users and for the preservation of sensitive or endangered ecosystems. It would allow for easier remote access to areas that would only be available with over use of other trails and provide a balance to recreational areas. It would also be a part of the marketing strategy to appeal to the growing demographic that demands to do more than sit, ride and be passive. The ever growing number of Gen-X’ers with a growing disposable income cannot be ignored in today’s tourist market. This demographic wants to have an active interface with whatever venue they are involved in, and controlled professionally managed rail access along the Calais Branch Corridor is an ideal recreational alternative or even supplement to Acadia National Park or Baxter State Park that would be a unique experience with a seamless form of booking coordinated through the Downeast Scenic Railroad. Trails Accommodation The Downeast Rail Heritage Preservation Trust would be agreeable to trail accommodation where it would not compromise the safety of the public. There may be numerous synergies for trail development, maintenance and cost sharing that could be explored for the mutual benefit of all parties.


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Community Involvement The Downeast Rail Heritage Preservation Trust will be a very active part of their communities and neighborhoods. It will not just be a passive good neighbor, but plans to weave itself into the very fabric of the areas it operates. Through community involvement will be the seeds of a brighter and more dynamic tomorrow whereby new ideas and new opportunities can develop for the good of all residents of Downeast and the economy of the region. Freight There has been no study of freight operations. Freight trains have not operated over this line in almost a quarter century. The dynamics and economy of the region has shifted considerably during that time. However, a cursory look reveals that there may indeed be some sources of freight for intra-line movement, both on the planned operating segment and areas to the east. Other commodities may be developed using the not-for-profit status of the railroad as an incubator for this freight. If that were to develop, this operation would have to undergo some restructuring to separate the passenger tourist excursion from the freight movement. This would include, among other things, the filing of common carrier status with the STB and employees involved in the freight operation coming under the Railroad Retirement system. These are not insurmountable hurdles and indeed are part of the mission of The Downeast Rail Heritage Preservation Trust. For the development of this plan however, any freight revenues have been negated. It may be possible though for as many as 300 carloads/year to be developed within a few years. There would be a concern on inter-line movements interchanging with Guilford Transportation and if the freight would bear the joint rates and the service would be timely enough to hold the business. It would also probably require winter operation. These are issues that would have to be part of an on-going process, but indeed through the resources and efforts of the trust could be brought to bear fruit. Conclusion As can be seen from this analysis, there is a positive economic reality in the restoration of active rail service in this corridor that is not only viable in the short term, but sustainable in the long term. This sustainability actually derives from a changing demographic trend of a more active demographic that understands and supports sustainable nature tourism and lowering ecological impacts. The railroad operated as a not-for-profit entity with the support of the Downeast Heritage Trust has the ability to reach many diversified interests, generate substantial financial support and develop recreational, tourism and educational partnerships that will enhance the quality of the region and its constituents.

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