[PRCo] editorial added

[Fred Schneider]

http://news.google.com/newspapers?id=nkIqAAAAIBAJ&sjid=EE8EAAAAIBAJ&pg=4957%2C2138001
 



Pittsburgh Press,  August 8, 1963, page 2

 

Trolley Firm Faces Condemnation

 

Port Authority Expects No New Talks

 With Railways On Purchase Price

[An Editorial, “The Transit Plan – How Much?” Page 18]

 

   Judge Loran L. Lewis said today condemnation proceedings will be started against the Pittsburgh Railways Co., (PRC) within two months “unless there is a radical change in the company’s bargaining position.”

 

   Judge Lewis, chairman of the County Port Authority, said the decision was reached after negotiations with the railways firm collapsed last night.

 

   “I don’t think there will be any further talks,: Judge Lewis said.   “We’re still much to far apart.” 

 

   In a letter to its stockholders today, the company said negotiations earlier this year left the firm and the authority about $5,500,000 apart.

 

   Under the law, the authority has the power to take any property it feels is needed to improve public service, with the courts setting a fair price.

 

   It is used only after negotiations show the potential buyer and seller cannot reach agreement.

 

   The authority has been negotiating with 31 firms in an effort to put a unified transit system into operation by January.

 

Only Holdout

 

   The only holdout is the Pittsburgh Railways Co.

 

   C. D. Palmer, PRC president, expressed regret his company and the authority were not able to reach a compromise.

 

   “We had always hoped that we could negotiate a sales price for the company and I believe the authority had hoped so too,” Mr. Palmer said.

 

   “We have been unable to reach an agreement and the authority has indicated it intends to follow the condemnation course.   That’s it.”

 

    Neither Judge Lewis nor Mr. Palmer would reveal exactly how far apart the railways and the authority are.

 

   When talks began several months ago, the railways’ asking price was 35 million dollars.   The authority figured the firm was worth about 12 million. 

 

   This was just for its transit facilities and does not include a Chicago aerosol bomb factory and a New York burglar and fire alarm firm, both acquired by the company within the last two years.

 

   Judge Lewis said the railways had lowered its asking price, “but it was not enough to interest us.”

 

   Under condemnation proceedings, the authority will be required to put a sum in escrow in Common Please Court equal to 75 percent of what the authority considers to be a fair price for the railways.

 

   Any such fund, Judge Lewis said, would have to await signatures of the County Commissioners on a contract guaranteeing the bonds for the new transit system.

 

   The judge said completion of such financial arrangements and guarantees should take “about two months.”

 

   Yesterday Commissioners William D. McClelland and John E. McGrady indicated they would go along with guaranteeing the bonds despite authority figures which showed that the deficit for the first year of operation may be $175,000 more than originally estimated.

 

   The authority now calculates that the first-year deficit will be about $535,905.

 

   It attributes the increase to a rapid loss in passengers by the PRC.   Last year alone the railways lost almost seven million passengers.  

 

   There has been no change in the basic purchase cost of the entire system – 39 million dollars.

 

   A New York consulting firm, Coverdale & Colpitts, earlier estimated the deficit may run as high as $1,811,535 for the first year. 

 

 

 

 

The Editorial from Page 18:

 

The Transit Plan – How Much?

 

   The taxpayers of Allegheny County, who will pay whatever deficits are incurred by the new public transportation system of the County Port Authority, may be excused if they are bewildered.   Every time a new financial survey of the proposed system is made, the surveyors come up with a different figure.

 

   Just now, one estimate of the first-year deficit, after debt service, stands at $1,811,535.  That’s according to a survey made by a New York engineering firm for the guidance of prospective bidders on the Authority’s forthcoming $39,756,050 bond issue.

 

   But the same firm two years ago put the annual deficit from operations alone at $3,550,000 and that figure was used last spring by enemies of the transit plan in a determined effort to block its adoption.

 

*     *     *

   The Port Authority itself has a different idea of the deficit.   Now it says the first year (1964) deficit will be $535,905.   But last March this same agency put the tab at $361,535.

 

   The diversity of opinion raises the suspicion that none of these students of the problem really knows how big the deficit will be, assuming that a deficit is inevitable.

 

   Certain it is that the 30-some transit lines, bow being operated by privagte owners, which will make up the new system are not losing anything like $3,559,000 and maybe nothing like $363,535 either.   For the lines now operate under the public utility law with guarantees owners a fair return on the fair value of their properties.   If they’re losing any appreciable amounts of money, they can get relief from the Public Utility Commission – or from the State Superior Court if the Commission is balky.

 

   Authority officials say the New York firm’s gloomy prediction is based mainly on the loss of patronage by the Pittsburgh Railways Co., key carrier in this district.   But the Railways Co., which incurred a deficit of $369,538 in 1961, made a profit of $644,953 last year and still is makin a profit – unspecified – from its transit operations.

 

   It is worthy of note also that the Railways Co. is being forced, by opposition of the City and County, to continue operation on 27 lines which it claims are unprofitable.   If that contention is true, it simply means that the riders on the company’s profitable lines are subsidizing the money0-losing services.

 

   County Commission Chairman William D. McClelland denounced the company as following a “public be damned” policy in putting financial solvency ahead of public interest in the matter of the 27 losing lines.   But if he is returned to office after this year’s election, Dr. McClelland will head a County government which will have to raise the money to pay deficits of the new transit system.   It will be interesting to see then what his attitude is concerning money-losing services.

 

   On the available evidence, we can’t hope to know how much the new system is going to cost us.   But most thoughtful residents of the County are convinced that whatever the cost, this County must make the effort to provide itself with an adequate public transportation system.   Not doing so would cost all of us a great deal more than the system will cost.

 

   As to projections for the future, The Press is inclined to string along with Harley L. Swift, executive director of the Port Authority. He thinks a well run, County0wide system with the advantages such an arrangement will present as compared to the present system, will attract riders.   So do we.