THE OHIO RAIL DEVELOPMENT COMMISSION
COMMISSION MEETING MINUTES
JULY 10, 2003
CALL TO ORDER AND ROLL CALL
Chairman James E. Betts called the meeting of the Ohio Rail Development Commission (ORDC) to order at 10:04 a.m. on July 10, 2003. Commission members present included: Chairman James Betts, Solomon Jackson, Nathan Green representing ODOD, Don Yerks, Tom McOwen, Daniel Roberts, Herk Wolfe, Larry Sowers, Mike Ciotola representing ODOT, Representative Stephen Buehrer and Senator Larry Mumper. Members absent included Janet Weir Creighton, Senator Robert Hagan and Representative Jeanine Perry. Chairman Betts welcomed new Commission members Daniel Roberts and Representative Stephen Buehrer.
EXECUTIVE DIRECTORíS REPORT
Executive Director James Seney stated his Executive Directorís report was faxed to the Commissioners earlier and he would address any questions. Director Seney stated he would like to acknowledge and extend his appreciation to Mike Ciotola for nominating Susan Kirkland to be part of the National Cooperative Highway Research Program. Commissioner Yerks asked if the Highway Safety Section 130 funds would be eliminated in the next Federal Transportation Bill. Mr. Seney explained that the status of the Section 130 program is unknown but historically ODOT invests in rail grade crossing safety beyond the mandated program levels. Commissioner Yerks asked about the status of the Zeta Tech Study for passenger rail. Mr. Seney stated the data will be available later on this summer. The key issues will be the true costs to the freight railroads for passenger rail. The next step for ORDCís passenger rail initiatives will be an economic impact study which will be reviewed by representatives of the Buckeye Institute, Cleveland State University and University of Toledo.
Secretary-Treasurer Matthew Dietrich presented the Finance report to the commission members. He asked the members to refer to the Project Funding Summary Report found in the packet. Included in the Commission packet is a Fiscal Year 2003 Year in Review which provides a summary of funds expended during the last fiscal year.
For FY 2004, ORDC has a total GRF Appropriation of $3,116,889. Included in the report is a breakdown of the commissionís operational expenses which is based on the previous yearís expenses. The revolving loan fund balance is $3,476,006. Controlling Board approval for increased appropriation will be necessary to expend the current cash balances of the loan fund. In response to Commissioner Yerks questions regarding passenger funds expended in FY 2003, Mr. Dietrich stated that a total of $324,000 was expended on passenger rail efforts.
Director Seney stated ORDCís budget of $3 million does not address the seven to eight million dollars in projects of which ORDC is aware. He would like to have discussions with Senator Mumper and Representative Buehrer as to how to fund these projects with funds other than GRF.
MOTION FOR EXECUTIVE SESSION
Chairman Betts asked for a motion to proceed into Executive Session for the purpose of discussing the litigation involving the City of Mentor v. CSX Transportation Inc. (CSX)/Norfolk Southern Corporation (NS) and ORDC v. Gatherco. Commissioner Green moved to approve the motion and Commissioner Wolfe seconded it. All present voted yes. The Commission moved to Executive Session at approximately 10:30 a.m.
MEETING RECONVENED FROM EXECUTIVE SESSION
Chairman Betts called the meeting to order at 10:55 a.m.
JOBS AND CARLOADS REPORT - PART TWO
At the Commissionís request from the May meeting, Ms. Beverly Lee provided additional information on three companies: Schneider Lumber Company, Omaha Paper Products and Pinnacle Plastics Products. The Commissioners questioned whether the companies would comply with their job and carload requirements. Discussion followed regarding loan and grant clawback provisions. Alan Klodell clarified that ORDC has clawback provisions for both loans and grants. Ms. Lee recommended the following:
Schneider Lumber Company - ORDC accept the job and carloads.
Omaha Paper Products and Pinnacle Plastics Products - ORDC reduce the number of carloads to 50 and monitor for a year.
Mr. Seney stated ORDC needs to set a standard and this topic will be discussed in detail at the upcoming retreat.
ANN ARBOR RAILROAD, INC. - RESOLUTION 03-13
Lou Jannazo presented an overview of the project at Ann Arborís "Old Ottawa" yard facility. When Jeep built its new plant in 1999, the company built a state of the art auto-loading facility and the Old Ottawa facility was relegated to vehicle storage. The proposed project consists of repaving portions of the 26-acre facility and purchasing two used locomotives to re-activate the auto-distribution facility. John Chlipala and Mariena Lepior from Ann Arbor Railroad were present for questions. Commissioner Yerks asked how the ORDC-funded locomotives would be used. Ms. Lepior responded they would be used as road locomotives, freeing up other engines to use at Ottawa Yard. Commissioner Yerks questioned the eligibility of Commission funds for locomotives. Mr. Klodell stated it was an eligible activity. Commissioner Yerks asked how much of the auto ramp area was currently paved and how much more needs to be paved. John Chlipala stated itís a 26-acre facility and the project will increase asphalt thickness and add concrete pavement in the location where trucks will now circulate thru the facility. Commissioner Jackson asked if the main benefit of the project was the creation of 12 new jobs. Ms. Lepior stated while the project would create 12 jobs, the competitive nature of the project meant that the auto transload facility could have been built in other states which would have resulted in lost revenues for Ohio. Mr. Seney stated the project is an opportunity to make a transportation-based economic development facility in Ohio more efficient and useful for the purpose of distributing automobiles. Commissioner Green asked about the length of the current contract. Ms. Lepior stated that the contract is for three years with an evaluation every year. Commissioner Roberts asked if the project made the facility more competitive for additional contracts. Ms. Lepior responded "yes", because of increased rail car utilization between two automobile loading facilities and the increased vehicle capacity. Commissioner Jackson recommended to put a clause in the loan contract to check on vehicles handled per year after 3 years. Chairman Betts asked for a motion to approve Resolution 03-13. Commissioner Sowers moved to approve the project and Commissioner Green seconded. Roll call was taken. Resolution 03-13 was approved with eight votes in the affirmative, one negative and one absent.
INFORMATIONAL BRIEFING - OHI-RAIL LOAN FOR NEW SERVICE TO
NEW OHI-RAIL OPERATING AGREEMENT - RESOLUTION 03-14
Lou Jannazo presented an overview of the informational briefing. The Piney Fork line is ORDC-owned and operated by Ohi-Rail which owns the Minerva Yard. Ohi-Rail has a vibrant rail storage business on the line. There are several small shippers and one large customer, DeNoon Lumber, using the line. The southern portion of the line south of Amersdam is out of service and has been rail banked for many years. There is a potential for 4,000 to 9,000 carloads of municipal solid waste on the southern end of the line to Apex where there is a licensed, permitted municipal solid waste landfill. There is a potential of 65 million cubic yards to be permitted at this landfill. Ohi-Rail would like to re-open the ORDC-owned Piney Fork line to serve Apex landfill with either Wheeling & Lake Erie or the Columbus & Ohio River Railroad providing service from the south end. ORDC can loan money to Ohi-Rail to repair either five miles of track to connect with the Columbus & Ohio River Railroad or to repair nine miles to connect to Hopedale for the Wheeling & Lake Erie Railroad. Tom Barnett and Paul Carapolotti were present from the Ohi-Rail for questions. Mr. Carapolotti stated with regard to the landfill, opposition in the area has been very small. Chairman Betts asked if the activity from landfill would generate enough traffic on the line to pay back the loan. Mr. Carapolotti responded "yes". Mr. Dietrich stated when the project is brought forward for full consideration, staff will have established the financing package properly secured at an appropriate level. Commissioner Jackson voiced concerns about such a large loan provided to a railroad that has not managed such a large operation. Commissioner Yerks drew a map of the Apex line, and questioned why ORDC would not lease that section of the railroad to the carrier which ends up serving the landfill. Mr. Jannazo stated that Ohi-Rail has been on the line since 1982. Mr. Betts asked who currently has the right to operate the railroad. Mr. Jannazo stated Ohi-Rail has the right and has just signed a new lease that is effective until June 30, 2004. Mr. Carapolotti stated their long term goal is to purchase the whole line. Commissioner Yerks stated ORDC should consider having common carrier obligation and have Ohi-Rail be a contract operator. Given the number of outstanding issues, Chairman Betts removed Resolution 03-14 from the agenda. Mr. Carapolotti stated there needs to be assurances that there will be long term rail service for the landfill project to proceed. Mr. Seney suggested that ORDC could provide such assurances if needed before the next Commission meeting in September.
APPROVED PROJECT BRIEFING - JOSEPH P. RICE, PERSONAL SERVICE CONTRACT
Mr. Seney gave a brief overview of the project briefing.
Mr. Jannazo gave the status report on the Panhandle appraisal. Selection of appraisal services is a two phase process, and ORDC has completed the first phase. ORDC has been working with ODOT Real Estate Services to ensure the best process to select an Appraiser and Appraisal Reviewer. It has been narrowed down to three appraisals firms and two Appraisal Review firms. The final bids are due August 6, 2003 and staff hopes to bring the proposal to Commissioners in November. Director Seney requested that staff accelerate the process to bring the project to the Commission in September.
Commissioner Wolfe made a motion to authorize Special Council for ORDC to appeal the Lake County Common Pleas Court, City of Mentor vs. CSX litigation. Commissioner Sowers seconded the motion. Roll call was taken. The Motion was approved with eight votes in the affirmative, one recused and one absent.
Mr. Seney stated that a one day retreat is planned for early September. Commissioner Yerks asked if railroads are required to provide systems diagram maps which show future rail line abandonment candidates. Mr. Jannazo replied that ORDC was not receiving the maps. Mr. Seney stated the railroads have been very good about informing ORDC regarding abandonments. Commissioner Jackson commented that on June 4th, NS and CSX went to the STB and IRS to request that former Conrail lines be formally recognized as a part of the NS and CSX systems. They are hopeful for a ruling by end of year or early next year.
APPROVAL OF THE MINUTES OF THE MAY COMMISSION MEETING
Chairman Betts asked for a motion to approve the minutes of the May 8, 2003 Commission meeting. Commissioner Yerks moved to approve the minutes and Commissioner Green seconded the motion. The minutes were approved as presented.
Chairman Betts suggested that the grant clawback issue on the agenda would be better discussed at the scheduled retreat. Mr. Seney recommended Commissioners should get their comments to Lou Jannazo. Commissioner Jackson asked if one day will give them time to debate. Chairman Betts stated the topics will be limited with the option to schedule a second retreat later in the year.
Bob Boyce from the OARP asked if the ORDC could investigate insurance rates for tourist railways which has been cited as a principle reason for the discontinuance of several tourist railroads. Mr. Seney stated that ORDC is already looking into the issue. ORDC will take a couple of months to survey other tourists railroads.
Dave Mangold stated ORDC did an excellent job with the tourist brochures for rail tourism in Ohio. He said the Cleveland to Pennsylvania corridor is now a completely sealed corridor because of ORDC sponsored crossing improvements which as a locomotive engineer, he appreciated. Mr. Mangold then asked when the Cleveland Hub Study Draft Report would be available. Mr. Seney stated that the report will possibly be ready in September or October, then ORDC would seek public comment. Mr. Mangold then questioned if ORDC would have the ability to ensure that double-tracked mainlines were not down-graded to single track lines. Mr. Seney replied that the ORDC would not have that ability with the Commissionís current resources.
Chairman Betts adjourned the meeting at 12:40 P.M.