Such a subsidy, if endorsed by the Dunedin City Council, has emerged as the most likely way a catch-up on maintenance might be funded.
It would come at a time when the rail operation is looking to rebuild after Covid-19 and amid contemplation about enabling services to be restored for the full length of the line, from near Dunedin to Middlemarch.
A figure of $20 million across 10 years has been indicated in discussions for the council’s 2024-34 draft long-term plan, but no decisions have been reached yet and the future shape of Dunedin Railways has yet to be determined.
The council considers the gorge rail experience to be an anchor product in the Dunedin tourism sector, but the pandemic disrupted tourism, and limited train services have since been run under a temporary structure.
Options for the future of Dunedin Railways are due to be considered this month, and an update was provided to councillors at a workshop last week.
At the update, it was disclosed the possibility of separating the track and below-rail from above-rail operations had been looked into.
Guidance from Deloitte was this would be more trouble than it was worth, because of additional compliance costs.
However, if the council wanted to retain a train service, it could provide a grant to Dunedin Railways to maintain structures and the track.
The Deloitte advice was funding should be managed and ring-fenced solely for below-rail costs through a 10-year grant funding agreement.
Dunedin rail operations have for years effectively run at a loss, because they battled to break even at the same time as keeping on top of maintenance.
An alternative idea for use of the scenic rail corridor is to convert it into a trail for cycling and walking.
The Otago Central Rail Trail Trust is exploring trail possibilities.
Mosgiel-Taieri Community Board chairman Andrew Simms, who attended the workshop, said he was disappointed trust representatives were not invited by the council to participate in the discussion.
"Our exclusion hasn’t really allowed us to contribute towards the council making a prudent decision about the future of the gorge," Mr Simms said.
At this stage, a viable operating model for Dunedin Railways was not apparent, he said.
It is expected the council will choose a preferred option to put in front of the public for consultation and at least one alternative.
Cr Steve Walker asked at the workshop if the feasibility of a joint venture between rail and trail had been explored.
There were indications this had not been ruled out.
