Norfolk Southern Reluctant to Compensate Homeowners in Eastern Palestine | CNN affairs


Washington, DC

Jim Stewart was preparing to sell his home in East Palestine, Ohio, and retire. Then a train derailed in Norfolk Southern on Feb. 3, releasing toxic chemicals into the air and nearby water, and he fears his home’s value will collapse.

He and his wife hoped to put their three-bedroom house on the market this spring, as prices were still high and inventory low. Alternatively, they talked about his son’s family buying a house that was on the market just down the street from Stewart.

But while state officials say the water is safe to drink, convincing potential homebuyers otherwise is an uphill battle.

“Since the derailment, I’ve lost all those options,” he said. “Who is going to buy polluted soil? The elderly are willing to stay and indulge themselves. The younger group, they are smarter. They think of their families. I wouldn’t want my grandchildren here. We don’t know if the soil will be good enough for grass to grow. There are too many unknowns.”

Stewart, 65, recently expressed his anger and grief over what he lost to Norfolk Southern CEO Alan Shaw at City Hall on Feb. 22 over the derailment on CNN.

“You burned me,” he told Shaw. “We were going to sell our house. Our value went phoom,’ pointing his hands down.

Shaw was asked outright by another resident if Norfolk Southern was ready to buy Stewart’s house, he only replied “we’re going to do what’s right for this community.” That didn’t satisfy Stewart or many of the other City Hall participants.

“I’ve lost everything now,” Stewart tells Shaw.

Stewart works as a manager at a commercial bakery company.

“I’ve been working hard. I’m still working,” he tells Shaw.I am in my 44th year at work. I wanted out. Now I’m just stuck.”

Stewart fears he’s lost a huge chunk of the value of his home, which he bought in 2016 for $85,000.

The property was worth about $135,000 a month ago, according to an estimate by Zillow. Lack of transactions since then make a current estimate difficult.

‘I never get that. If so, I should be glad I got what I paid for it,” he said of the estimate. In addition, Stewart believes it would cost a lot to do the repairs and tests to make sure the house is safe.

“At whose expense? That’s the biggest problem right now,” said Stewart. “At whose expense are we going to do things to make sure things work out?”

Stewart isn’t alone in being angry with Shaw and Norfolk Southern for the railroad’s refusal to compensate the community for the property value destroyed by the derailment.

During the Senate hearing on the crash on Thursday, Senator Ed Markey, a Democrat from Massachusetts, asked Shaw four times to commit to compensating homeowners, but he heard Shaw answer repeatedly: “Senator, I am committed to doing what right.”

Markey said that was not an acceptable answer.

“Do you want to make sure that these families, these innocent families, don’t lose their savings in their homes and small businesses? The right thing to do is say, ‘Yes, we will.'” Markey told Shaw. “These families want to know in the long run if they are just left behind. Once the cameras move on, once the national attention fades, where will these families be? I think they’ll be in the crosshairs of Norfolk Southern’s accountants saying, ‘We’re not going to pay full compensation.’”

Paying the homeowners and businesses wouldn’t necessarily be difficult for Norfolk Southern.

With a population of about 5,000 people, there are about 2,600 homes in eastern Palestine according to Attom, a real estate data provider. The average value of a property there in January of this year, prior to the derailment, was $146,000, according to Attom.

All told, the value of all residential real estate in the city adds up to about $380 million, including single-family and multi-family homes.

Those values ​​are only a fraction of the money Norfolk Southern makes. Last year, it reported record operating income of $4.8 billion and net income of $3.3 billion, up about 9% from a year earlier. It had $456 million in cash on its books as of December 31.

It returned much of that profit to shareholders, buying back $3.1 billion in stock last year and spending $1.2 billion in dividends. And it announced a 9% increase in dividends just days before the accident.

A year ago, the board of directors approved a $10 billion share repurchase plan, and it had the authority to purchase $7.5 billion of the remaining plan by December 31.

Asked by Sen. Jeff Merkley, an Oregon Democrat, at Thursday’s hearing, “Will you pledge not to repurchase any more stock until a series of safeguards are completed to reduce the risk of derailments and crashes in the future,” Shaw again evaded. de by only answering with: “I will commit to continue to invest in safety.”

And the company is also investing heavily in lobbying, spending $1.8 million on lobbying by 2022, according to, which tracks lobbying spending and political contributions.

Those lobbying charges also came under attack from senators at the hearing, especially since Shaw would not commit to supporting the bipartisan bill introduced in the Senate since the derailment to improve rail safety. Asked whether he would support or oppose the legislation, Shaw would not approve all of the bill’s provisions, but he replied, “we are committed to the legislative intent of making railroads safer.”

On Sunday, Jennifer Homendy, chair of the National Transportation Safety Board, told ABC News that the safety goals Norfolk Southern set in response to the train wreck were “not robust enough.”

The company last week announced a six-point safety plan that includes a refresh of its network of hot bearing detectors. The detectors use infrared sensors to record the temperatures of railway bearings as trains pass. After the crash in eastern Palestine, NTSB investigators found that sensors had detected a wheel bearing heating up for miles before it finally failed — but didn’t warn the train crew until it was too late, according to a Feb. 23 preliminary report from the agency.

A big payout is probably not what many in eastern Palestine are looking for, said Jim Warren, manager and co-owner of Kelly Warren and Associates Real Estate Solutions, in Boardman, which is about 15 miles from eastern Palestine. They just want a house that is safe to live in and built to its value, he said.

“People around here don’t want much,” he said. “We don’t hunt for the flashy items like other places in the world. We want to grow up, raise our children, earn a living and have a nice place to live, that’s all we want.”

This area, like the rest of the country, has seen the real estate market heat up in recent years with multiple listings on homes and properties selling above asking price. But, Warren said, unlike other parts of the country, the market remains fairly stable in this part of Ohio.

“Our area isn’t moving up that much and it’s not moving down that much,” he said. “We don’t have the big swings.”

Warren’s firm currently has two listings in the city.

“That’s no more or less than normal,” he said. There are only about a dozen properties for sale there, he said.

But, he added, “if your property is contaminated, it’s a concern for you and any buyer.”

As with any real estate purchase, homes in Eastern Palestine require appraisal and safety testing. But like Stewart, Warren said it’s not yet clear who will pay for the additional testing for water and soil contamination for that peace of mind.

“For all we know, maybe the county will cover it, or the EPA, or the Ohio state government. That remains to be seen,” he said.

Overall, Warren said, he expects houses to continue to be bought and sold in eastern Palestine.

“We don’t foresee the market tanking, we foresee steady growth,” he said. “When all the hype is over, we’ll still be living here. We’ll have to figure it out because this is our home.

Correction: An earlier version of the story incorrectly stated the amount Norfolk Southern spent on lobbying.

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