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NCRA Chairman defends lease with NWP Co.
Friday 8 Apr 2011, 07:03
Filed under: Humboldt, Marin, Mendocino, NCRA, Northwestern Pacific Railroad, Railroad, Sonoma

A MARCH 24 Marin Voice column, “Lopsided freight train lease,” [and other papers] by North Coast Railroad Authority board member Bernie Meyers is a “lopsided” opinion. Meyers does not speak for the board.

We invite the public to view his insinuations and compare them with the facts about the NCRA process and operator contract as detailed below.

The NCRA entered into a lease agreement with North Western Pacific Co. in 2006. A board member may disagree with the terms of that operator agreement, but it is wrong to suggest that the process took place behind closed doors.

The NCRA used a request-for-proposals process, which was widely publicized, and the selection of the operator was accomplished at a public meeting in May 2006.

That selection was subject to negotiation of a contract, which came back before the board in an open meeting in September 2006.

The “fairness” of the contract has to be viewed at the time of its making, not through the lens of subsequent events.

At the time the contract was signed:

• The railroad had been closed down for eight years.

• The California Transportation Commission had stated it would not allocate any Transportation Congestion Relief Program funds to the NCRA.

• The NCRA had a pending $10 million claim from its previous Operator, which had to be resolved before any third party, such as NWP, could operate.

• The Union Pacific had said they would never do business with the NWP (the former operator) railroad again.

• NCRA did not even have enough resources to pay its staff.

This was the situation when the agreement was signed. Most of the other short-line railroads solicited did not even respond. Rail America stated that it was not interested under any circumstances.

Against this challenging and pessimistic backdrop, NWP agreed to:

• Assume the common carrier obligation.

• Support NCRA staff at the rate of $20,000 per month, without knowing whether the railroad would ever reopen.

• Risk up to $4 million cash of its capital to fund the TCRP project, with little security in the event of project failure, and knowing that Caltrans might disallow some or all of the costs.

In addition, when contractors who were hired to get the railroad open failed, NWP risked an additional $2 million to get the job done.

NWP has brought credibility to this railroad through its commitment, competence and capital.

NWP and John Williams have risked much to bring an operating railroad to the public, a facility that has great value to present and future generations of citizens and businesses.

Nobody else offered to take the risks that Williams did and without those risks being taken, NCRA meetings would be nothing more than dream sessions, wishfully looking forward to the day when rail service might be restored.

The only price NWP asked in return for taking 100 percent of the risk was to be reimbursed for the cost of money spent for the NCRA.

We hear a lot these days about public/private partnerships and the NCRA board is blessed with some tenacious directors.

Bernie is one of them.

But to give credit where credit is due, the NCRA had little hope of success without the unswerving faith and full credit of its private partner, NWP and John Williams.

Former Mendocino County Supervisor Hal Wagenet is chariman of the North Coast Railroad Authority, which plans to run freight trains on tracks that cross Novato.

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