MINUTES OF THE OHIO RAIL DEVELOPMENT COMMISSION
REGULAR BI-MONTHLY MEETING
SEPTEMBER 16, 2004
CALL TO ORDER AND ROLL CALL
The meeting was called to order by Chairman James E. Betts at 10:18 a.m. on Thursday, September 16, 2004. Members present included: Chairman Betts, Solomon Jackson, Senator Larry Mumper, Brad Biggs in for Eric Neff, ODOD Director’s designee, Dan Roberts, Larry Sowers, Herk Wolfe and Howard Wood, ODOT Director’s designee. The chairman declared a quorum was present with seven voting members present and three absent.
Members absent included: Representatives Stephen Buehrer and Jeanine Perry, Senator Robert Hagan, Janet Weir Creighton, James Hartung and Tom McOwen.
APPROVAL OF THE MINUTES OF THE JULY MEETING
Chairman Betts asked for a motion to approve the minutes of the July 8, 2004, commission meeting. Commissioner Sowers moved to approve the minutes and Commissioner Wolfe seconded the motion. The minutes were approved as presented.
EXECUTIVE DIRECTOR’S REPORT
Executive Director Jim Seney distributed copies of his report to all the commissioners present. Director Seney reported on the potential sale of the Piney Fork line and announced that Ohi-Rail has provided the fee necessary to pay for the appraisers and reviewers of the line ($28,850). He reported that the appraisal team is Dan McCowan and Paul Jannotti and the review team is Ed Merrell and George Wehner. Director Seney also reported that the appraisal work is expected to be completed in mid-October and the review work is expected to be completed sometime in November. This time frame could allow ORDC staff to bring a potential sale of the line before the Commission for a decision by the end of the year.
Matthew Dietrich presented his finance report to the Commissioners. He asked everyone to review his report on page 3 of the packet and pointed out that Resolution 04-09 (the Panhandle Refinance) will not be moving forward as initially thought. The financial benefits of doing the refinancing are no longer present so ORDC staff recommends not pursuing this issue.
Mr. Dietrich then reported that PFM Asset Management, LLC, a firm recommended by the Office of Budget and Management and the State Treasurer’s Office, figured the rebate calculations of the Panhandle Rail Line and determined that ORDC owed the IRS $12,574.12 for arbitrage. This amount must be paid by September 30th to avoid additional interest penalties. Mr. Dietrich assured Commission members that the debt would be paid prior to the due date.
The law firms of Rea, Cross & Auchincloss and Roetzel & Andress have been retained for fiscal year 2005. The amounts of the retainer are $2,000 and $25,000 respectively.
Finally, Mr. Dietrich reported on the balances for projects and contracts available for fiscal year 2005. He indicated that ORDC has a General Revenue Fund balance of $644,515 remaining (assuming all projects considered by the Commission at this meeting are approved) and a loan fund balance of $1.272 million. This leaves a total amount of just over $2.4 million available through the end of the fiscal year.
Commissioner Jackson requested that Mr. Dietrich elaborate on item number 3 (Panhandle Refinance - Resolution 04-03) on the “Accomplishments and Highlights” portion of his Finance Report. Mr. Dietrich responded that additional enhancements would have been required to obtain a rate in which a savings would be realized, thereby negating a financial benefit to the State in proceeding with the refinance of the loan. Director Seney expanded upon Mr. Dietrich’s explanation and a short discussion followed. Chairman Betts interjected and offered that Commissioner Jackson and Director Seney schedule some time to meet and discuss this issue in greater.
Commissioner Jackson asked Mr. Dietrich to elaborate on items five and six in his report. Mr. Dietrich reported that item 5 (Grand River rail line lease) refers to the Approved Project Briefing from the Spring meeting in which ORDC was to assume the lease of the Grand River Line from CSX Railroad. He indicated that several issues were raised with the State of Ohio being the lessee of a rail line, therefore the project will not be done as previously planned.
Mr. Dietrich then reported on item 6 in which a revision to the contract of Continental Realty for the Panhandle appraisal was requested as a result of the contract expiring on July 30. The company, Continental Realty, needs additional time to perform the services outlined within their original contract. This revision was done solely for the purpose of accounting regulations and did not entail a revision to the contract amount ($36,500).
Project Inputs for FY 2005 Track Rehabilitation Projects
Lou Jannazo spoke on the project prioritization process for rehabilitation projects and ORDC staff’s recommendation to postpone funding decisions until later in the fiscal year. Mr. Jannazo indicated that postponing these funding decisions could allow ORDC to fund current rehabilitation requests at higher levels than previously anticipated. He indicated that ORDC received a total of $1.4 million in requests.
Mink Road Property
Susan Jenkins, Property Manager for ORDC, reported on the Mink Road site that Howard and Rosemary Emsweiler have expressed an interest in purchasing from ORDC. ORDC originally purchased the property in early 1997 for the purpose of economic development. The Emsweiler’s have been in discussions with ORDC for quite some time and have an offer on the table of $240,000 for the parcel (Resolution 04-11). This amount, however, is the exact amount that ORDC originally purchased the land for and does not take into account for an increase in value. Chairman Betts requested that Matt Dietrich provide the Commissioners with a history of this site. Mr. Dietrich indicated that an option to purchase this site was originally approved by the Commission in 2002. Mr. Emsweiler spoke before the Commission and indicated his interest. Director Seney said that his initial understanding was that the property had been appraised two years prior and not four years prior as is the case, and indicated that he now feels an appraisal is necessary before pursing approval by the Commission to sell this property to the Emsweilers. A lengthy discussion ensued with Chairman Betts asking to postpone any decision on this property until an appraisal is completed and the proper value is determined.
Sandusky-Seneca-Tiffin rail line & bridge rehabilitation loan - Resolution 04-12
Ms. Beverly Lee, ORDC Planner, reported that the Sandusky-Seneca-Tiffin Port Authority is requesting a loan in the amount of $290,000 to assist with the rehabilitation of nine miles of its 25.5 mile Woodville to Tiffin line that includes a bridge at milepost 58.7 that needs repaired. The total project cost is expected to be $390,000. She indicated that the repairs are necessary to maintain the integrity of the track and the bridge to handle heavy loads (286 tons) and increased traffic. The Northern Ohio & Western Railroad serves this line under a lease contract with the Port Authority and has agreed to provide the additional $100,000 to cover the remaining costs of the repairs. Approval of this project will result in the maintenance of 3,960 carloads annually. Chairman Betts asked for a motion to approve Resolution 04-12. Commissioner Sowers moved to approve the resolution and Commissioner Wolfe seconded the motion. The roll was taken and the project was approved with seven votes in the affirmative.
RJ Corman Railroad, St. Marys line - Resolution 04-13
Ms. Lee presented an update on the RJ Corman, St. Marys project. She indicated that in March of 2004, the Commission approved a state grant of $213,032 and a federal grant of $46,690 to assist with spot rehabilitations along portions of the 10-mile Minster branchline to eliminate the Federal Railroad Administration’s mandated slow order from Lima to Celina. The $46,690 of federal funds is in an interest-bearing account. ORDC staff is requesting approval to grant the interest that has accrued to RJ Corman to complete the project. Approval of this request will add an additional $2,000-$3,000 to the project. The additional funds to the federal funding portion is the only change to the project. Chairman Betts asked for a motion to approve the resolution. Commissioner Jackson moved to approve and Commissioner Wood seconded the motion. The roll was taken and the project was approved with seven votes in the affirmative.
Ashland Railway Yard Rehabilitation - Resolution 04-14
Mr. Jannazo presented this project to the Commission. He reported that Ashland Railway (ASRY) has had a large increase in traffic over the past few years and, as a result of the increase in volume, has experienced deferred maintenance of its main classification yard in Mansfield.
The railroad is requesting a loan in the amount of $500,000 to rehabilitate approximately 4,500 feet of track in its yard. Approval of this loan will improve service to 26 rail users and enables ASRY to invest in a new yard control tower and electronic car reader which will improve yard efficiency. The railroad will provide all remaining funds which are over and above the $500,000 loan. Commissioner Jackson asked what the collateral would be for the loan. Mr. David Crane, President of Ashland Railway, spoke to the Commission members and indicated that the 25-mile piece of track owned exclusively by ASRY will be used as collateral for the loan. Mr. Crane further elaborated on the need for the loan and reported that the yard is in such bad condition that cars are actually leaning in to a creek which runs alongside the yard. An increase in steel business for the railroad makes this loan critical to the company.
Chairman Betts asked if there were any additional questions. Hearing none Chairman Betts asked for a motion to approve Resolution 04-14. Commissioner Sowers moved to approve the resolution and Commissioner Roberts seconded. The motion was approved with seven votes in the affirmative.
APPROVED PROJECT BRIEFINGS
Ms. Beverly Lee reported that a grant of $50,000 is being requested by Menard, Inc. to assist with the construction of a 6,804 foot multiple track spur at its new facility in Madison Township, Williams County, Ohio. The company owns and operates more than 192 home improvement retail stores in Nebraska, North and South Dakota, Minnesota, Iowa, Wisconsin, Illinois, Michigan, Indiana and Ohio. This project will allow the company to expand its operations and will result in the creation of 358 new jobs.
Engage Public Affairs
Mr. Stu Nicholson, ORDC’s Public Information Officer, reported that the citizen participation and outreach process for the public roll-out of the Ohio Hub study will be managed by Marie Keister of Engage Public Affairs. Funding for this project will likely be paid from ORDC project funds, but could possibly come from ODOT’s State Planning and Research program funds. The total cost is expected to be $43,315. Mr. Nicholson indicated that the scope of work provides an explanation of the citizen and agency participation objectives and the target audiences. He indicated that Ms. Keister’s professional background and overall knowledge of this type of process makes her an excellent choice to handle this important project. Commissioner Roberts further elaborated on Ms. Keister’s abilities to handle this project.
Raymond E. Hicks Enterprises
Director Seney reported on the personal services contract for Raymond E. Hicks in the amount of $37,000 for fiscal year 2005 to provide fiber optics survey work in regard to the potential sale of the Panhandle. Director Seney reported that Mr. Hicks is one of the best in the field and will be able to provide staff a report on the history of fiber optic facilities occupying the railroad right of way. Chairman Betts asked when the work is expected to be completed. Matt Dietrich responded by indicating that Mr. Hicks’ contract currently expires on December 15 of this year and a full report is expected shortly thereafter.
Grand River Line Update
Mr. Jannazo reported that in May of 2004, ORDC approved a $25,000 grant to be used toward the lease costs ($58,000) to preserve the CSX Grand River rail line. ORDC planned to enter into a three party agreement in which ORDC would lease the line from CSX with the Ohio Central Railroad being ORDC’s contract operator. Since that time, CSX decided that it would be best to deal directly with Ohio Central Railroad regarding the lease. One of the main issues CSX had with the lease is the state’s inability to indemnify CSX. Chairman Betts asked Mr. Jannazo if all parties involved agree with the changes. Mr. Jannazo indicated that they do; that no one’s financial obligations are changing.
Mr. Bob Oess of the Cambridge Community Improvement Corporation (CIC) spoke on the damage that Hurricane Frances has done to the CIC-owned rail line in the area. Currently, the line is being used for a rail tourism operation. Initial estimates indicate approximately $75,000 in damage. Chairman Betts asked Mr. Oess to draft a letter to the Commission requesting its assistance with the rehabilitation.
Mr. Don Gadd, Mayor of Byesville, spoke about the rail line that runs through his town and how important it has become to the people of the area. Mr. Gadd indicated that any assistance the Commission could give to Mr. Oess in his quest to rehabilitate the areas of track that have been washed out would be greatly appreciated.
Chairman Betts asked for a motion to adjourn the meeting of the Ohio Rail Development Commission. Commissioner Roberts moved to approve and Commissioner Jackson seconded the motion. The meeting was adjourned at 11:55 a.m.