The petition notes that Iowa Pacific ceased operations in June. According to the Santa Cruz Sentinel, Iowa Pacific defaulted on its contract with the Santa Cruz County Regional Transportation Commission, which owns the line that runs from Watsonville Junction to Davenport, Calif.
Iowa Pacific left with unpaid debts, and some 100 railcars in storage, the newspaper reported.
The commission board approved the contract with Progressive Rail amidst a rail-trail controversy, “one of the most contentious local public policy issues in recent history,” the newspaper said.
At issue is the future of the northern section of the line. The commission has a study under way to determine the viability of commuter rail operations. The study should be finished in December.
If the commission decides against commuter rail, it will tear up the northern portion of the line and convert it for trail use. In the meantime, Progressive Rail will provide service to shippers on seven miles on the southern end, with the option of walking away from the contract if the commission decides to abandon the northern section.
The newspaper reported that the commission used state funds to buy the rail line from Union Pacific in 2012 for $14.2 million. If commissioners decide against developing commuter rail, they will be obligated to repay some $11 million.
