MINUTES OF THE OHIO RAIL DEVELOPMENT COMMISSION
REGULAR BI-MONTHLY MEETING
NOVEMBER 18, 2004
CALL TO ORDER AND ROLL CALL
The meeting was called to order by Chairman James E. Betts at 10:10 a.m. Members present included: Chairman Betts, Dan Roberts, Howard Wood, Tom McOwen, Herk Wolfe, Erik Neff, Solomon Jackson, Larry Sowers and Senator Mumper. Eight voting members present; one non-voting member present.
Members absent included: Janet Weir Creighton, Jim Hartung, Representatives Jeanine Perry and Steven Buehrer and Senator Robert Hagan.
APPROVAL OF THE MINUTES OF THE SEPTEMBER MEETING
Chairman Betts asked for a motion for approval of the minutes from the September meeting. Commissioner Wolfe moved to approve the minutes and Commissioner Wood seconded the motion. The minutes were approved as presented.
Chairman Betts noted that he would be deviating from the agenda throughout the meeting due to scheduling conflicts of some participants who are present for specific projects.
Resolution 04-15 - Revised Terms for the Columbiana County Port Authority Rail Line Rehabilitation Loan
Matthew Dietrich presented the proposed change in terms to the Columbiana County Port Authority loan of $2.1 million. Resolution 03-18, previously approved by the Commission on September 11, 2003, was to provide additional time for the new operator of the line, Ohio Central Railroad, to improve the line and track conditions and better service its customers.
The Columbiana County Port Authority owns this line and leased the operation of the line to the Central Columbiana and Pennsylvania Railway, Inc. (CQPA). On June 14, 2004, the CQPA filed for bankruptcy leaving a balance of approximately $377,000 remaining on the loan. The Port Authority has requested a modification of the loan terms in order to have time to have a new operator in place and extend the “no principal or interest repayment option from twelve months to fifteen months.” Because of pending decisions by the CQPA’s bankruptcy trustee, this resolution should be considered a “stop-gap” measure. There is no change in the funding amounts; the change is in the terms of the loan only. Currently, the loan has a term of six years with no repayments of principal or interest in year one, principal only in year two, and principal and interest payments in years three through six with the interest set at 1 percent in years three and four and 2.5 percent in years five and six. If approved, the new structure would be as follows: no repayments of principal and interest in months one through fifteen, repayment of principal only in months sixteen through twenty-four, principal and interest payments in years three through six with the interest set at 1 percent in years three and four and 2.5 percent in years five and six. The duration of the loan remains at six years.
Chairman Betts asked representatives from both the Port Authority and the interested railroad, the Ohio Central, to elaborate on this request. Mr. Tracy Drake, Executive Director of the Columbiana County Port Authority and Mr. Bill Strawn, President of Ohio Central Railroad, spoke on behalf of their respective parties. Mr. Drake indicated that the CQPA was undercapitalized and could not keep up with the amount of traffic that was occurring on the line. The Port Authority has entered into negotiations with the Ohio Central to take over the existing operating lease and acquire the line in March of 2006 (the first opportunity it is available to be acquired). Mr. Strawn then elaborated on the Ohio Central’s interest in this line and indicated that the railroad feels they can grow the business along this line and possibly enter into an interim operating agreement as early as a week or two.
Chairman Betts asked for a motion to approve Resolution 04-15 and grant the Port Authority the change in the loan terms as requested. Commissioner Sowers moved to approve the resolution and Commissioner Jackson seconded the motion. Roll call was taken and the motion was approved to adopt Resolution 04-15 with eight votes in the affirmative.
APPROVED PROJECT BRIEFING
CCPA Emergency Repairs
Mr. Jannazo presented the request of the CCPA of a $75,000 grant to assist with emergency repairs of wash outs resulting from the hurricanes earlier in the year. Columbiana County experienced major flooding as a result of the hurricanes and is also requesting that the remainder of its outstanding $2.1 million loan be authorized for re-direction to assist with the wash outs and other emergency work to preserve the integrity of the track structure.
Mr. Tracy Drake thanked the Commission for all of its assistance with this situation.
EXECUTIVE DIRECTOR’S REPORT
Executive Director Jim Seney spoke on the restructuring of ORDC’s budget and indicated that approximately $1 million is now available in GRF funds (an increase from approximately $400,000) for projects as a result of this restructuring. Director Seney reported that his plan to charge safety payroll to federal funds was approved by the Governor after the last Commission meeting in September. He also stated that the early retirement initiative (i.e., employee “buy-out”) provision was also approved; thereby freeing up additional funding for the future budget.
Director Seney reported on the Ohio Hub plan outreach meetings and indicated that all is going well. Chairman Betts inquired as to how well the meetings are being attended. Director Seney responded by saying that the “technical” meetings are by invitation only as they pertain to local/community officials and those meetings are being very well attended. He stated that the public outreach meetings, however, are fairly well attended, but could be much better. Director Seney reported that he is very optimistic about the reception the plan has received thus far and indicated that as awareness is raised so too should attendance during the public portions of the meetings.
Matthew Dietrich, Secretary-Treasurer, presented the finance report to the Commission. Mr. Dietrich reported that as a result of the approval by the Governor’s office to move the Safety Section’s payroll from GRF to non-GRF funding sources, approximately $130,000 from Fund 4N4 will be used to cover project inspection and real estate management activities, freeing up $130,000 in funds that will be available to use for projects after January 1. The remaining portion of the payroll will be funded solely by federal sources freeing up $325,000 in additional funds to use for projects. In total, approximately $455,000 will soon be available for projects.
FY ‘05 REHABILITATION PROJECTS SUMMARY
Lou Jannazo presented the project summary to the Commission. He reported that $400,000 in rehabilitation projects is being requested by way of ten projects and another $315,000 is scheduled to be presented at the March meeting. Mr. Jannazo prepared a “Project Inputs Summary” for review, detailing the specifics of each of the requests. Mr. Jannazo reported that ORDC received requests for rehabilitation needs totaling $1.6 million but is able to fund $715,000 of these requests. Determination of recipients of the grants and the amounts were made by ORDC staff and based on the level/seriousness of need and project benefits.
CAPITAL CORRIDOR SYSTEM OF CALIFORNIA
Chairman Betts welcomed and introduced Mr. Eugene (Gene) Skoropowski, Managing Director of the Capital Corridor Joint Powers Authority. Mr. Skoropowski gave a thorough powerpoint presentation on California’s Capital Corridor program to outline what it will take for Ohio to implement the Ohio Hub plan. This program, the Capital Corridor, was started in 1976 and involves three intrastate corridor services: the Pacific Surfline Route, the Capital Corridor Route, the San Joaquin Route, as well as a network of dedicated connecting buses. Mr. Skoropowski reported that a partnership with Amtrak was critical in making the system work. Amtrak is a known-entity and will assume liability for all operations. Amtrak also has a statutory right of access to the private railroads. Mr. Skoropowski indicated that passenger rail service was critical to Californians because the highway capacity could not absorb the continuing vehicle growth and could not be expanded as it would be extremely costly and disruptive. Rail service provides an additional choice for people to travel and is open to all ages. He presented several options for funding this service and stressed the overall benefits to implementing a program such as the one in California as well as other states who have passenger rail “successes.” The benefits far outweigh any perceived “disadvantages” to having such a service.
Note: a complete printout of Mr. Skoropowski’s presentation is available through ORDC.
Resolution 04-17 - City of Medina Rail Rehabilitation
Mr. Lou Jannazo presented Resolution 04-17 to the Commission. Ms. Pat Miller, Medina City Council, was present and spoke on behalf of the city and its need for assistance. The city is requesting a grant in the amount of $150,000 to assist with rehabilitation needs along a 3.76 mile stretch of track served by the Wheeling and Lake Erie Railway. The estimated cost of the project is approximately $558,286. Ms. Miller reported that Medina receives no revenues from this line but has three major industrial employers (305 employees) along the line that the continued deferred maintenance will severely impact if not remedied.
Chairman Betts asked for a motion to approve Resolution 04-17. Commissioner Sowers moved to approve the Resolution and Commissioner McOwen seconded. Roll call was taken and the motion was approved with eight votes in the affirmative, two absent.
Resolution 04-16 - TEMS Passenger Rail Impact Study
Director Seney presented the personal services contract for Transportation and Economics Management Systems (TEMS) to perform an economic impact study of the Lake Erie Regional Rail/Ohio Hub Study. The study is being proposed over two fiscal years, FY ‘05 and FY ‘06, and is in the amounts of $110,140 and $49,940 respectively. Director Seney reported that TEMS will analyze and evaluate the economic benefits and costs of the construction and operation phases of the project over a thirty year time frame (2006-2035). TEMS will also measure the economic impact on Cleveland’s airport, regional freight operations and commuter railroads where the Ohio Hub will share rights-of-way. A short discussion followed with Director Seney stressing that this study, and its companion study, GEM Real Estate (to be presented later on the agenda), are critical in advancing the Ohio Hub study in quantifying the passenger rail system on Ohio’s economy. A question was raised as to why an exact dollar amount for this request was not listed in the Resolution. Discussion followed with Commissioner Sowers requesting that all resolutions contain an exact dollar amount in the resolution. Chairman Betts asked for a motion to amend Resolution 04-17 to include the verbiage: Now, therefore, be it resolved that the ORDC hereby authorizes its Executive Director, James E. Seney, and staff to enter into a contract to retain TEMS, Inc. to undertake such an economic impact study at a cost not to exceed $170,000, and to report their findings along with any recommendations to the ORDC. Commissioner Roberts moved to approve the amendment to the resolution and Commissioner Wood seconded the motion. Roll call was taken to approve the amendment to Resolution 04-16. The motion was approved with eight votes in the affirmative, two absent. Chairman Betts then asked for a motion to approve Resolution 04-16 with the amended language included. Commissioner Wood moved to approve Resolution 04-16 and Commissioner Roberts seconded. Commissioner Jackson raised the point that while he had no particular issue with the qualifications of those selected to perform both studies, he did have an “issue” with the fact that the vendors were not selected through a competitive bid process. Director Seney responded by saying that the credibility in Ohio of those selected is critical in moving this project forward as they understand the goals and objectives of this study and to bring another firm in “cold” would only delay the process. A short discussion followed. Roll call was taken and the motion passed with six votes in the affirmative, two negative and two absent.
APPROVED PROJECT BRIEFING
GEM Real Estate Group Economic Impact Study of the Ohio Hub Study
Director Seney presented the Approved Project Briefing for GEM Real Estate Group and asked Dr. Sam Staley to make a few comments on the two studies for which ORDC is requesting approval. Dr. Staley reiterated the intent was to provide a “check” on the numbers and data that will be coming from TEMS and further indicated that their role was independent of the TEMS role in performing the study. GEM intends to take a practical, hard-nosed approach to the full impact of implementing passenger rail in Ohio and, through their report, provide a realistic sense of what the overall impact will be on Ohio’s economy. Chairman Betts thanked Dr. Staley for his comments.
Resolution 04-18 - Authorization to approve ORDC entering into a rail service agreement and trackage rights agreement concerning the Piney Fork Rail Line
ORDC requests approval to enter into a rail service agreement and a trackage rights agreement to assist Ohi-Rail in providing rail service to the proposed Apex Landfill on the ORDC-owned Piney Fork Line. Effective rail service to the landfill is absolutely necessary to the landfill being opened. No ORDC funding is being requested as all rail elements of the Apex project will be privately funded. This project is being brought before the Commission to seek direction as to how to, or if ORDC even should, proceed with negotiating trackage rights and rail service agreements with Ohi-Rail. If the Commission votes to proceed, staff recommends that the Executive Director be empowered to negotiate the final agreements between interested parties. Substantial back-up documentation is available from ORDC. Commissioner Sowers moved to approve Resolution 04-18 and Commissioner Wolfe seconded the motion. Roll call was taken and the Resolution passed with eight votes in the affirmative, two absent.
Resolution 04-19 - Indiana & Ohio Railway/Fulton County Processing lead track/siding loan
Mr. Jannazo presented the project to the Commissioners. Ms. Janice McNeal of the Indiana & Ohio Railroad (I&O) was present to give an overview of the proposed project. The I&O is requesting a loan in the amount of $245,000 to assist with the construction of a mainline turnout and approximately 1,690 feet of new track parallel to the I&O mainline in the city of Delta, Fulton County. This spur will connect as many as four new customers along the line. Ms. McNeal reported that revenues generated from the 750 carloads from another customer on the line will allow the company to fully pay back the loan within five years. She reported that this is Phase I of a proposed multi-phased project. Chairman Betts asked for a motion to approve Resolution 04-19. Commissioner Wolfe moved to approve the resolution and Commissioner McOwen seconded the motion. Roll call was taken and the motion was approved with eight votes in the affirmative, two absent.
Chairman Betts introduced Matt Lydon, State Director for Go21 (Growth Options for the 21st Century). Mr. Lydon reported that their mission is to build a coalition of Ohioans concerned with the future of transportation and promote rail as a safe, clean, and cost-effective means of shipping freight. Congestion on Ohio’s roads continues to be a major problem and with an estimated 67 percent growth in truck traffic by the year 2020, the problem will be much worse. Commissioner Wolfe and his company are featured in the Fall newsletter of Go21. He spoke for a few moments on why he is a supporter of this coalition and reiterated the need for Ohio to have a voice in this area to achieve the country’s transportation goals of the future.
APPROVED PROJECT BRIEFINGS
Byesville to Derwent Washout Repairs
Lou Jannazo presented the request of the Cambridge-Guernsey Community Improvement Corporation for a grant in the amount of $20,000 to assist with washout repairs along its 3.6 miles of track from Byesville to Derwent after hurricane-related rains caused numerous washouts along the line. Funding from ORDC will assist the CIC in achieving a match for funds granted from the Appalachian Regional Commission. Without ORDC funding, the CIC will not have enough to achieve the local match.
YSD Industries Lead Track Rehabilitation
Mr. Jannazo presented the $10,000 grant request of the Youngstown and Austintown Railroad to be used toward the rehabilitation of 500 feet of track owned by YSD Industries. The cost is estimated at $60,000. Participation in this project will help to retain 100 jobs at YSD Industries and will allow the additional 100 carloads per year the company is expecting to generate to assist the Youngstown and Austintown Railroad to remain profitable.\
WESTCO Stoney Run Culvert
Mr. Jannazo presented the request of the West Central Ohio Port Authority for a $40,000 grant to replace the Stoney Run Culvert on its Maitland (Cold Springs) line. The culvert is located on WESTCO’s Maitline line which is operated by the I&O Railroad. This grant will allow WESTCO to maintain safe operations on the line.
Portage County Line Rehabilitation
Mr. Jannazo presented a $30,000 grant and a $20,000 loan request from Portage County to repair six miles of the 7.22 mile county-owned track between Kent and Ravenna. Participation in the project allows continued safe rail service to Smurfit-Stone, a customer on the line, and it helps to preserve the Warren to Akron rail line for potential future freight or passenger traffic to use as an alternative to the heavily-congested CSX mainline between Warren and Akron.
Mink Road Super Site Access
Mr. Jannazo briefed the Commissioners on ORDC’s recommendation to continue ownership of the property which is located in Licking County, and wait for a buyer who is interested in the property for rail access. If no such buyer is found in a reasonable amount of time, staff will consider recommendation to the Commission that the property be sold to any qualified buyer.
Mr. John Manning of the Ohio Association of Railroad Passengers expressed his support of the Ohio Hub Plan.
Chairman Betts asked for a motion to adjourn the meeting of the Ohio Rail Development Commission. Commissioner Wolfe moved to approve adjournment and Commissioner Roberts seconded the motion. The meeting was adjourned at 12:28 p.m.