MINUTES OF THE OHIO RAIL DEVELOPMENT COMMISSION
REGULAR BIMONTHLY MEETING
JULY 14, 2005
CALL TO ORDER AND ROLL CALL
Chairman James E. Betts called the meeting of the Ohio Rail Development Commission (ORDC) to order at 10:11 a.m. on July 14, 2005. The meeting was held on the 31st floor of the Vern Riffe Center in Columbus. Commissioners in attendance were Chairman Betts, Howard Wood, Solomon Jackson, Eric Neff, Larry Sowers, Herk Wolfe and Dan Roberts. (Note: Commissioner Tom McOwen arrived after the Finance Report was presented). Eight voting members were present. Members absent included James Hartung, Representatives Stephen Buehrer and Allan Sayre and Senators Robert Hagan and Larry Mumper.
APPROVAL OF THE MINUTES OF THE MAY MEETING
Chairman Betts asked for a motion to approve the Minutes of the May 12, 2005 Commission meeting. Commissioner Sowers moved to approve the Minutes and Commissioner Wood seconded the motion. The Minutes were approved as presented.
MOTION TO ADJOURN TO EXECUTIVE SESSION
Chairman Betts asked for a motion to adjourn to executive session for the purpose of discussing litigation; the case of the City of Mentor vs. CSX Transportation et al. Commissioner Wolfe moved and Commissioner Sowers seconded. Roll call was taken with all seven voting members present approving the motion. The meeting adjourned to Executive Session at 10:15 a.m.
RECONVENE FROM EXECUTIVE SESSION
The meeting reconvened from Executive Session at 10:25 a.m.
EXECUTIVE DIRECTOR'S REPORT
Executive Director James E. Seney presented his Executive Director's report to the commissioners. Director Seney gave a short overview of his written report and highlighted the fact that through the work of Art Arnold at the Ohio Railroad Association, the Ohio Rail Development Commission (ORDC) was provided a special $500,000 budget appropriation for "transload" facility projects. Director Seney reported that ORDC will have to go to Controlling Board to release the funds for the individual projects, but that he is extremely pleased to have this as an enhancement to ORDC's budget.
Secretary-Treasurer Matthew Dietrich presented his Finance Report to the Commissioners (page 21 of the Commission packet). Mr. Dietrich noted the budget balances for ORDC's loan and grant accounts ($2.9 million and $947,542 respectively). Mr. Dietrich reported that Republic N&T Railroad had accepted the grant for their project but had declined the loan due to other loans the company currently has with other states. Mr. Dietrich announced that after completing the year-end review of all the accounts, ORDC was able to increase the grant amount for US Rail from $40,000 to their full request of $45,520 and also fund the State's three-year commitment to the State of Wisconsin, Midwest Regional Rail grant of $31,250 in one fiscal year.
(Note: Commissioner Tom McOwen arrived at approximately 10:30 a.m.)
JOBS & CARLOADS REPORT
ORDC Planner Beverly Lee presented an overview of the annual "Jobs and Carloads" report located on page 26 of the Commission packet. She noted that most of the companies ORDC has helped with grants for rail spurs are meeting their job and carload commitments. Chairman Betts asked if there were any trouble spots. Ms. Lee replied that three projects on the list have some non-compliance issues but that she would continue to keep in touch with them and monitor their progress. Ms. Lee also reported that five of the companies on the list have exceeded their commitments to the state. Commissioner Jackson asked why some job and carload commitments are still monitored even though they have already exceeded their goals. Ms. Lee responded that she had asked that very question of Commissioners some time ago and was told to continue monitoring the projects even after their job and carload commitments were attained since the monitoring term is for a period of three years. Chairman Betts asked Director Seney to meet with Ms. Lee and bring a recommendation to the next Commission meeting in September about how to handle this type of situation.
Coshocton Ethanol, LLC
ORDC's Chief of Project Development, Lou Jannazo, noted that there were several large ethanol projects which would be coming before the Commission to seek funding to assist with rail infrastructure needed for the new plants. Mr. Jannazo reported that Coshocton Ethanol was the first of these ethanol projects. Mr. Jannazo gave a brief overview of the project noting that ORDC staff was recommending a grant of $250,000 to the company to help offset the costs of approximately $1.4 million in on-site rail tracks. He noted that the new ethanol plant would stimulate the development of a new industrial park and generate thousands of new carloads on the Ohio Central Railroad and the Panhandle Rail Line. Mr. Jannazo introduced Mr. Steve Dopuch, Manager of Business Development for Baard Corporation/Coshocton Ethanol, who was present to address any questions the commissioners might have. Commissioner Jackson asked Mr. Jannazo why ORDC staff was recommending $250,000 for this project while it had only previously provided $50,000 in grant funds for a project with similar benefits, the Menard, Inc. project in northwest Ohio. Mr. Jannazo responded by detailing the public benefits of this project (i.e., 41 new jobs created, 9,000 new rail cars, $72 million investment, etc). Director Seney then noted that at the time staff evaluated Menard's project, $50,000 was all ORDC had in its budget. Commissioner Sowers moved to approve the passage of Resolution 05-06 and Commissioner Wolfe seconded. Roll call was taken and eight commissioners voted in the affirmative to approve the resolution.
APPROVED PROJECT BRIEFING
Capital Partnerships, LLC Personal Services Contract
Director Seney reported that ORDC was entering into another contract with Capital Partnerships, LLC (Chris Vineis) for $18,000 to assist ORDC with its legislative affairs. Director Seney reported that this contract was a continuation of the previous year and that Chris Vineis' role in helping to enhance support of the Ohio Hub plan and ensuring the "profile of ORDC is completely understood" has been extremely helpful to the agency especially during times when ORDC has been under scrutiny as to where the agency was most effective to operate (i.e., as an independent agency as is the current structure or within another state Department such as the Departments of Transportation or Development).
INFORMATION PROJECT BRIEFING
Sale of Ohio Southern Rail Line
(Note: Commissioner Sowers left the meeting at the start of Mr. Dietrich's report on the Ohio Southern Rail line).
Mr. Dietrich presented a short overview of the briefing on the Ohio Southern Rail Line sale. Mr. Dietrich noted that ORDC Commissioners had voted in December of 1999 to sell the Ohio Southern Rail Line to the Ohio Southern Railroad as part of ORDC Resolution 99-22. He explained that through this Resolution, ORDC provided funding for the rebuilding of the line to facilitate the movement of a significant amount of coal traffic and also stated that ORDC would sell the line to the Ohio Southern Railroad for the Net Liquidation Value (NLV) of the line before the line was rebuilt. Mr. Dietrich noted that the loan provided to the Ohio Southern Railroad through Resolution 99-22 for track repairs was paid off. ORDC staff will proceed with a sale per the Resolution for the NLV of the line as determined in January of 2000. He noted that no further action from the Commissioners was needed at this time, that his report was an update for the Commissioners on the status of this issue. Commissioner Jackson asked where the money would go once the sale was complete and if ORDC would finance the line purchase. Mr. Dietrich replied that there was no indication that the Ohio Southern Railroad would request financing and that the proceeds of the sale would go directly into ORDC's 4N4 Revolving Loan Fund.
Chairman Betts announced that Director Seney would be providing a report on investigations into the possible sale of the Panhandle line as required by a March 14, 2002 Motion of the Commission to "authorize ORDC staff to prepare documents, framework, process and procedures that will be used to perform the formal investigation for determining the disposition of the state's equitable or contingent equitable interest of the Panhandle Rail Line." Director Seney explained that staff had proceeded first by soliciting input from various parties with an interest in the Panhandle. He noted that a summary of the various meetings and other input was included in the binder that was distributed to Commissioners at the meeting ("Public Input for Panhandle Sale Process"). Director Seney noted that the next step taken by staff was to acquire an appraisal of the line. The appraisal revealed the total value of the line to be nearly $30 million. He reported that copies of the appraisal had been provided to all Commissioners. Director Seney announced that anyone who desired the same information provided to the Commissioners could receive it by contacting the ORDC office, but also announced that much of the information was available for review on ORDC's website (www.dot.state.oh.us/ohiorail).
Director Seney noted the framework of the proposed sale was outlined in his June 17, 2005 memorandum to Chairman Betts and included in the Commission packet (page 46). He explained that ORDC's recommendation was to not sell the right-of-way; rather, sell only the track and fixtures. This would help ease many of the concerns raised by various interested parties and allow for potential passenger rail use. He noted the track and fixtures were appraised at $17 million. He also stated that a draft Purchase and Sale Agreement for the track and fixtures and a draft Lease Agreement for the underlying property were included in the Commissioners packet.
Director Seney noted that the Wheeling & Lake Erie Railway (W&LE) had tendered an unsolicited offer to purchase the Panhandle for $30 million, noting that W&LE fully expected some of these proceeds to be used to compensate the current owner (the Columbus & Ohio River Railroad, part of the Ohio Central Railroad system).
Director Seney noted that staff was not looking for Commission action at this time but was only providing Commissioners with all the research and findings as required by the March 14, 2002 Motion. He noted that ORDC staff is seeking direction from the Commissioners on the next steps, which Commissioners can provide at the August 30, 2005 Commission Retreat. He noted that this Retreat would be open to the public, but that this forum would not allow for public comment. Director Seney stated that he recommended the September Commission meeting be held off-site (i.e, Coshocton) to better allow for public input into the Panhandle Sale process.
Chairman Betts noted that a scheduling conflict precluded his attendance at the scheduled September 8, 2005 Commission meeting and requested that the meeting be moved to September 15, the following Thursday. Chairman Betts asked Lynda Nelson to look into changing the date and location for the meeting.
Commissioner Jackson asked if an inspection trip of the Panhandle for interested Commissioners was still being planned. Mr. Jannazo stated that Bev Lee of his staff was in the process of putting a trip together. He noted that two separate trips might be needed to avoid having a quorum of voting Commissioners together on one trip. If the number required to constitute a quorum of Commissioners is met, then the public would have to be invited which would cause logistical problems for the trip.
Chairman Betts asked if anyone had anything additional to add regarding the Panhandle. Commissioner Wood asked staff to please be sure that the legal issues involving continued ownership of the underlying property were properly handled and inquired whether or not a briefing or legal opinion would be given at the staff Retreat in August. Director Seney responded by indicating staff is looking at the contracts and other issues regarding the underlying property (i.e., fiber optics) and reported that a lot of these questions were answered in the proposed lease and proposed sale agreements. Commissioner Wood then left the meeting.
Commissioner Jackson went on record to say he would pay particular attention to ORDC ensuring the process and framework of any sale was appropriate.
Chairman Betts opened up the meeting for comments from the public in attendance.
Mark Demoline of the W&LE, on behalf of Larry Parsons, stated that the W&LE offer to purchase the Panhandle for $30 million was still on the table and that W&LE would gladly meet with ORDC to explore how they would make such a purchase.
Jim Ong, Brotherhood of Locomotive Engineers, noted that the communities along the line were critical in helping to initially save the Panhandle and that ORDC needed to do its due diligence to ensure that the Panhandle stays in place and is well run. He noted that the Columbus & Ohio River Railroad is doing a good job, but that they are profiting from the Panhandle too.
Rick Platt, Executive Director of the Heath, Newark, Licking County Port Authority, noted that discussions about selling the Panhandle were basically talking about fixing something that isn't broken. He noted that State ownership is the best way to preserve the benefits of effective rail service on the Panhandle. Mr. Platt offered the Commissioners meeting space close to the Panhandle Line to hold the September ORDC meeting, if desired.
Dan Dupps, Mayor of Heath, inquired about public input at the Retreat. Chairman Betts noted that public comment would be welcome at the Retreat or in writing, but that the public would not be able to be involved in the dialogue of the Commissioners during the Retreat. Chairman Betts suggested that the best venue for expressing opinion would be the September meeting or in the form of a letter to ORDC.
Bill Strawn, President of the Ohio Central Railroad System, noted that the Ohio Central has invested millions in the Panhandle and has helped the economic development of the area.
Art Arnold of the Ohio Railroad Association thanked Director Seney for the kind words regarding his efforts in obtaining the additional funding for transload facilities but noted that Senator John Carey was the one who is responsible for getting ORDC $500,000 for transloading projects. Mr. Arnold noted that truck weights were a key issue and that the Senator was interested in seeing if railroads could handle more heavy traffic if there were more transloading facilities. Mr. Arnold also noted that his Association would prefer that ORDC limit its spending on consultants or personal services contracts if ORDC staff or the state's legislative offices could perform the same work. He indicated he would much prefer the money be put toward legitimate projects.
MOTION TO ADJOURN
Chairman Betts asked for a motion to adjourn the meeting. Commissioner Neff moved to approve the motion and Commissioner Wolfe seconded. The motion was approved and the meeting was adjourned at 11:35 a.m.