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Ram it through on the existing 1¾-mile branch to Peabody Square as the implementation of Urban Rail intra-128 frequencies on the Eastern Route. Short length, small number of bridges/culverts to upgrade, and only 2 platforms (Salem Station side platform + Railroad Ave., Peabody) keeps the costs low and construction timetable short. While the existing 3-track (formerly 4) North St. freight yard adjacent to Salem Station provides an easy-grab layover yard for the service. Institute a shuttle bus from the Mall to the Square for the interim.
Pan Am freight storage for its Peabody local can be re-accommodated 2 ways: (1) repairing some of the out-of-service portion of the South Peabody Branch up to the foot of the Summit Ave. grade crossing and installing a passing siding to runaround the locomotive when they're shoving cars around (also keeps them from constantly tying up the Square grade crossings 3 afternoons a week shunting a few cars at a time back and forth between North St. and Rousselot Gelatin). (2) inserting a new crossover from the Eastern Route south portal incline into
Castle Hill Yard (furthest track on Street View link) so they can turn out quickly to park their trains between Boston-Salem trips rather than doing a cumbersome backup move into the yard.
When this easy part is figured out, then start planning Phase II 1.2 miles to the Mall along the former South Middleton Branch ROW (currently owned by Peabody Municipal Light, who have banned any trail use of their ROW but long ago gave endorsement of commuter rail usage). Not a big deal since the largest abutter is Peabody Light's HQ; the most opposition there'd be is on the Mall side of 128 where the layover yard would fit between the residences of Proctor Circle & Essex Green Lane out to the Lowell St./Prospect St. intersection (on-alignment to allow future +1 extension to West Peabody @ I-95/US 1 if ever desired). But since new track with fresh EIS'ing is going to be more expensive than active-track rehab, it's probably best off to split it from 1 moderate-size project into 2 small ones for expediency's sake.
The TOD potential shoots through the frickin' moon if you get Urban Rail to Salem...to the Square...and/or to the Mall. If for no other reason than area buses can run much, much more frequently and begin de-sprawling/re-densifying everything out to Liberty Tree Mall, Danversport, and US 1 in West Peabody. This area's already becoming a hotbed of hospitals and medical offices. Diversify that mix with direct transit frequencies as a catalyst and the whole thing could blow up mega.