‘Impossible Railroad’ Hits Yet Another Setback With Missed Payments

A celebrated but troubled cross-border project aimed at connecting maquiladoras in Baja California to the United States rail system has quietly dropped from public view in recent months.  

And here’s the reason: The San Diego Metropolitan Transit System (MTS) has ended its contract with Baja California Rail Road, the company that had signed on to rebuild a dilapidated 70-mile stretch of track between Campo and Plaster City.  

Building the project has been an over 100-year saga, earning it the nickname the “Impossible Railroad,” since it was launched in 1907 by developer John D. Spreckels. The latest delay joins a list over the decades that includes those caused by attacks by Mexican revolutionaries, fires, heavy rains, landslides and legal battles.  

Known as the Desert Line, the track is critical to the vision of building a commercial rail link between Tijuana’s automotive industry and the eastern United States. 

“We engaged in over a year-long mediation process with Baja Rail but weren’t able to reach a resolution,” Karen Landers, MTS’s general counsel, said last month at a board of directors meeting of San Diego and Arizona Eastern Railway Company (SD&AE), the MTS subsidiary that controls the Desert Line. “We did end up terminating the lease.” 

To those who have been watching the project closely, it’s not exactly a surprise. Since January 2020 Baja Rail stopped making the agreed-upon lease payments — $500,000 every six months — to MTS, according to the agency. 

Supporters on both sides of the border see refurbishing the damaged stretch as a unique opportunity for the binational region to generate development and billions of dollars in revenue. The rail line would carry products between Tijuana’s maquiladoras and Imperial County, connecting to the Union Pacific Railroad system. It would also reduce the costly waits and emissions of trucks stalled at commercial border crossings, proponents say. 

“It is unfortunate efforts to reestablish the Desert Line have stalled,” Rita Fernandez, director of global affairs for the city of San Diego said in a written statement. “Our binational region must work together to see this project to fruition both to help accomplish out climate action goals and to drive economic development.” 

Jerry Sanders, president and CEO of the San Diego Regional Chamber of Commerce, has been a longtime supporter of the project, and hopes to see it move forward. 

The rail connection “would bring a much-needed alternative for moving goods through one of the most vibrant centers of commerce in the world,” he said in a statement Friday.  

At last month’s meeting, Landers said that “there’s still some unwinding things we need to do,” such as inspecting the state of the line. MTS has been working with Caltrans and SANDAG “to see if we need to take a step back and study this project, if it’s something that people think that public funds need to be invested in.” 

Baja California Railroad is owned by Tijuana boxing promoter Fernando Beltran. Under a concession agreement with Baja California’s government, it operates a 44-mile line in Mexico that starts south of San Ysidro and ends up in Tecate, carrying products such as fuel, corn and wood into Mexico. 

North of the border, the Desert Line has been under MTS’s control since 1979, part of a purchase by the agency of 108 miles of the “Impossible Railroad” for $18.1 million. Baja Rail first stepped in to repair and operate the Desert Line in 2016, initially subleasing from Pacific Imperial Railroad, and then directly from MTS. 

Baja Rail had been making $500,000 payments every six months to MTS starting in July 2017 under a lease and operating agreement, and continued to pay through July 2019. 

But since January 1, 2020, the company stopped paying, according to a June 21 letter from Sharon Cooney, MTS chief executive officer, to Roberto Romandia, CEO of Baja Rail.  

The letter details requests by Baja California Rail Road to extend payment deadlines and negotiate new terms. MTS terminated the contract in August 2020, but agreed to mediation sessions that started last December—sessions that were ultimately unsuccessful, according to the letter. “All that has been achieved over the past 11 months is the delay of the rehabilitation of the Desert Line,” it stated. 

Romandia did not respond to a request for comment. 

The missed payments that lead to the termination of Baja Rail’s lease aren’t a new story for MTS. In 2014, Pacific Imperial Railroad, nearly defaulted on its lease, before missing additional agency-imposed deadlines and getting sued by investors, before Baja Rail eventually took over.