MINUTES OF THE OHIO RAIL DEVELOPMENT COMMISSION REGULAR BI-MONTHLY MEETING November 8, 2012
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1 MINUTES OF THE OHIO RAIL DEVELOPMENT COMMISSION REGULAR BI-MONTHLY MEETING November 8, 2012 CALL TO ORDER The meeting of the Ohio Rail Development Commission was called to order by Chairman James Bradley at 11:07 a.m. on Thursday, November 8, MEMBERS PRESENT Members present included: Chairman James Bradley, Executive Director Matt Dietrich, Commissioners Solomon Jackson, Larry Sowers, Andrew Bremer, Bill Lozier, Tom Maphet, Ronald Rasmus, Kevin Potter and Thomas Zitter. Commissioners Barbara Bennett and Rob Greenlese, Senator Patton, Representative Boose and Representative Hagan were unable to attend. There were 9 voting members present, therefore a quorum was obtained. APPROVAL OF THE MINUTES OF THE SEPTEMBER MEETING Chairman Bradley asked for a motion to approve the minutes of the September 20, 2012, meeting. Commissioner Sowers moved to approve the minutes and Commissioner Rasmus seconded the motion. Roll Call was taken and the minutes were approved as presented with eight votes in the affirmative. Commissioner Maphet abstained. Chairman Bradley requested to address a few items prior to the Executive Director s report. He congratulated Commissioner Lozier on his reelection as Licking County Engineer and his reappointment as ORDC Commissioner. Additionally, Chairman Bradley formally acknowledged Susan Kirkland for her 30+ years of service and presented her with an inscribed clock from the Commissioners. Ms. Kirkland retired October 19, She thanked the Commission for their generosity and kind words. Chairman Bradley introduced the new Commissioner Tom Maphet. He was appointed by Senate President Niehaus to fill Commissioner McOwen s position. Commissioner Maphet previously served in the Ohio National Guard and Air Force Reserve. He now teaches at the University of Cincinnati, Clermont. Chairman Bradley explained that he had learned Commissioner McOwen would not be reappointed just two weeks prior to this meeting and wanted to note that Commissioner McOwen was very appreciative for the opportunity to serve on the ORDC and the Chairman respected how he conducted himself during his time on the Commission and the knowledge he brought about railroading was unmatched. Commissioner Rasmus asked to pass a resolution to thank Commissioner McOwen for his work and noted how he was mentored by him. Commissioner Rasmus recognized that while they serve at the pleasure of the appointing leadership he was disappointed in the fact that Commissioner McOwen was not given any notice for his departure and this procedure was not good business. Commissioner Jackson seconded the motion to pass a resolution. Roll Call was taken and the resolution was approved as presented with nine votes in the affirmative. EXECUTIVE DIRECTOR S REPORT Executive Director Dietrich presented his report to the Commissioners, which can be found on page 11 of the commission packet. Mr. Dietrich informed the Commission that there has been a
2 lot going on, but there are a couple of highlights. The new table of organization is complete. Executive Director Dietrich thanked Chairman Bradley and Commissioner Jackson for being a sounding board as staff went through this process. The new TO will align the Commission in a way that our programs can allow more flexibility among staff to work. Mr. Dietrich described new the new TO found on page 13. He also thanked Nick Nicholson and ODOT Human Resources for helping get this in place. Executive Director Dietrich noted that the benefits calculators from last meeting can be found on pages Additionally, on the table are maps used for biannual reports and budget presentation and strategy. The maps show the locations of projects and the back describes each project. Along with budget testimony, Mr. Dietrich is asking for volunteers for an ad hoc or working group from commissioners and external sources like Art Arnold to work together to prepare documents. The last item Executive Director Dietrich wanted to discuss is a Governor's proclamation for Jim Seney, which can be found on page 35. Jim Seney was Mr. Dietrich s predecessor, mentor and friend. Unfortunately neither his widow, Dawn, nor his children were able to attend, but staff will frame the proclamation and send it to her. Executive Director Dietrich announced the ORDC is in agreement on corridors with CSX and NS to proceed with safety projects. Commissioner Lozier asked how close ORDC is to budget talks and proposals. Mr. Dietrich asked to delay a response until the Finance Report. There were no further questions. FINANCE REPORT Megan McClory, ORDC s Secretary-Treasurer, presented the Finance Report to the Commissioners, which can be found on page 36 of the commission packet. Ms. McClory announced that she submitted ORDCs budget request on October 1. She is waiting to hear from OBM who is reviewing agency requests with the Governor. Budget recommendations usually come out right before Christmas and leave only a couple days to respond. The Governor's recommendations are usually made mid-january. From there, the legislature will introduce the transportation budget bill late January and we should expect passage in late March. Ms. McClory said testimony should be between January and March. She said she will also be working on another budget bill that contains the GRF and should be finalized around the end of June and we will be testifying for that as it continues. Secretary-Treasurer McClory noted that ORDC has committed funds just under half of the project budget, which is good for being half way through the year. She also noted that repayments on all loans are current. Ms. McClory directed the Commissioners to the 2013 meeting schedule on page 44. There were no requested changes so the schedule has been finalized.
3 Lastly, Ms. McClory announced that V&M Star s Pipe Mill in Youngstown made their first pipe. ORDC is administering a $15 million grant and it is very good news that they are up and running. Chairman Bradley asked if staff was putting together an annual report. Ms. Kaercher explained that the report is in process and should be completed around the time of the next Commission meeting. The report is approximately 75% complete and FY 12 items are being assembled to round out facts and figures. Chairman Bradley requested that Commissioner get the opportunity to review the document and provide input. There were no additional questions. RESOLUTION Modification to 2001 Ashland Railway Rehabilitation Project (Resolution 01-09) ORDC staff member Megan McClory presented to the Commissioners the briefing on page 45 of the commission packet concerning an issue discovered while going over financials in preparation for the RRIF loan application. In 2001 ORDC granted $250,000 to Ashland Railway to be used for mainline and siding rehabilitation. The grant included a stipulation that if carloads rose to a certain level, part of the grant had to be repaid. Ms. McClory explained that the railroad s financers found this as liability and since there has been no rise in carloadings to trigger repayment ORDC is seeking to remove the repayment requirement 11 years later. Also, she stated that both class requirements from that grant language are preventing the railroad from moving forward and should be removed. Staff recommends removal of these items. There were no questions. Commissioner Zitter made a motion to approve Resolution and Commissioner Jackson seconded it. Roll Call was taken and the resolution was approved as presented with nine votes in the affirmative. RESOLUTION Authorizing Ohio Rail Development Commission To Enter Into A Twenty-Five Year Lease With The Ohi-Rail Corporation Concerning The Piney Fork Rail Line Chairman Bradley explained that the Property Committee discussed this in their meeting. Executive Director Dietrich and the Chairman sat in on the meeting, but Commissioner Rasmus will comment on lease. Commissioner Rasmus explained that ORDC has done everything possible to make this process public and worked on the lease diligently. He believes the lease is a win-win for the Commission, State and railroad. Commissioner Rasmus believes ORDC staff fairly negotiated the deal and recommends approval by the Commission Executive Director Dietrich explained the lease is a combination of the original one with Ohi- Rail and the current Panhandle lease. A 25+ year lease was chosen because there are some active development opportunities/projects the railroad would like to move on and know they have the lease for more than one or five years. If passed, staff will dissolve the old lease and begin the new one immediately. Mr. Dietrich stated that the first 5 years Ohi-Rail is to pay $200,000
4 annually then $50,000 a year after the initial five. He said lease payments are to be made yearly or invested into the line. Executive Director Dietrich noted that staff looks at this as a real win since line will be used and rehabbed if ORDC is not receiving rent payment. This lease has also preserved the possibility for 3 rd party railroads to operate on the line if there are significant development opportunities that arise. He noted that staff worked with JobsOhio to define the thresholds. Commissioner Lozier noted that this lease is remarkably similar to the Panhandle lease. The $200,000 is guaranteed to go towards the ORDC or the line and then possibly other additional capital investments will benefit the line as well. He asked how revenue is being handled. Executive Director Dietrich stated funds will go into ORDCs loan fund and capital/administrative costs accounts. The line needs the investment. The preferred option is to have the railroad put the money into the line; the second is to pay us the yearly fee. Chairman Bradley explained that grade crossing improvements were added as an investment qualifier for the yearly fee. Commissioner Lozier said that is good news for the county guys. He also asked if the success of line is predicted to be from fracking. Powell Felix from the railroad announced they are already hauling fracking sand and there have been sizable investments in Minerva to hold sand. He hopes all other commodities will be hauled on the line as well. There were no further questions. Commissioner Rasmus made a motion to approve Resolution and Commissioner Jackson seconded it. Roll Call was taken and the resolution was approved as presented with nine votes in the affirmative. APPROVED PROJECT BRIEFING Reopening the Warren & Trumbull Railroad to Warren Steel Holdings ORDC staff member Lou Jannazo presented to the Commissioners the approved project briefing, which can be found on page 108 of the commission packet. He explained the line was slated to be reopened in 2008 or 2009, but that effort was going to cost a lot of money. $1 million of public funds and $1.1 million of private funds were invested in the line, but the recession caused the steel plant to hesitate to finish their onsite rail work. ORDC has committed $55,000 that has been matched by the company to finish the rail line and the Warren & Trumbull serve the company. Len Wagner and Marty Pohlod from the railroad are present to answer questions. There were no questions. COMMITTEE REPORTS Commissioner Rasmus presented the Contract and Property Advisory Committee Report. He stated that they mostly discussed the Piney Fork lease and deferred to Executive Director Dietrich to give an update on the City of Jackson rail line. Mr. Dietrich said US Rail had sent a letter to the City indicating they will not renew the lease and they will end operations in April, Executive Director Dietrich said this is a positive thing. If there is any railroad in audience who is interested in operating on the line they should call ORDC or the City to discuss options. Mr. Dietrich said ORDC will work with the City to begin discussing operators. The Mayor is also still interested in ORDC taking ownership. Ms. McClory is writing a MOU to delineate
5 ORDC and City roles while this process takes place. Mayor Heath thinks that if it was a good idea for ORDC to take over the line with US Rail on it, it is an even better idea for ORDC to take ownership now. Commissioner Jackson had a question on the Piney Fork. He asked that when the lease outlined the deeds from Conrail to the State it made mention of Wyandot County. Mr. Jannazo explained that when Conrail sold, they sold several lines at one time as one package so the deeds reflected more than one line and in several counties. The Wyandot County reference is not a part of the Wyandot County line. Commissioner Jackson asked if the State owns the rail line in Wyandot County then. Mr. Jannazo said he is unsure of what happened to that piece, but the State doesn t own it, to his memory. There were no further questions. There was no Human Resources Committee meeting. There was no Economic Development Committee meeting. OLD BUSINESS There was no old business to come before the Commission. NEW BUSINESS ORDC staff member Cathy Stout presented the HSIP report, found on page 58 of the September commission packet. In addition to outlining program results for FY 2012, she highlighted several challenges for FY 2013: providing construction oversight due to a large number of projects advancing in FY 2012, moving the preemption program from analysis to projects and construction, and identifying improvements at crossings with active warning devices that could use additional improvements. Commissioner Lozier said that he thought there was a program in Licking County to get lights and gates at crossings, but that surfaces were not eligible to be repaired with those funds. He asked if it was possible to get them eligible or if there is a way to get the railroads to participate in such a program. Executive Director Dietrich said the ORDC has a surface program in place and used to have $2 million to repair the state system, but not local roads. ORDC has considered reactivating that program, but the best way now is through the closure process so the ORDC money can go towards other crossings surfaces. He also noted that there is a difficult matter of prioritization between light and gate installations, preemption, and surfaces. Commissioner Lozier asked if federal grants are allowed to be used on surfaces. Ms. Stout said they do, but they are difficult to get and for the railroads to bill for surfaces internally because there are a lot of intricacies related to it and ORDC is working with them through that. Commissioner Lozier suggested ORDC can maybe take a package to the railroads that can defray the costs through federal grants, but include surfaces in those projects. Mr. Dietrich said he would be happy to entertain that idea, but technical issues will arise depending on whose processes and specifications are used.
6 Commissioner Jackson asked if there is a fatality at a location with lights and gates, does ORDC make sure all safety upgrade options are exhausted to make it safer. Ms. Stout said that ORDC staff goes to the site of the accident and evaluates if there is any room for improvement. Sometimes circuitry or coordination upgrades are possible, other times not. Chairman Bradley asked if suicides on tracks are noted in ORDC s fatality numbers. Ms. Stout said that unless the accident occurs at a crossing they are not included in our numbers. The PUCO does, however, keep it in their records. PUBLIC COMMENT Art Arnold spoke on the subject of grade crossing issues. He said the unfortunate fact is that fatalities get the attention in statistics, reports, etc. He asks the ORDC to also address the number of crashes, not just loss of life, since cars can have 1-8 people in them and the numbers do not exactly correlate. Railroads pay over $25 million a year to keep crossing surfaces in good condition and their poor condition is partly due to the state allowing heavier trucks to cross railroad tracks, which results in rough crossings. Mr. Arnold noted it is very difficult to maintain crossings when this is allowed and it is a growing problem and expense for the railroads. Chairman Bradley announced that with the exit of Commissioner McOwen and the new commissioners who have joined us, the Commission intends to change committee structures. He acknowledged there is a lot of expertise in the room and the goal is to tap into all the resources available. Mr. Bradley proposed a new committee structure, one with two committees. One committee will focus on policy and one for technical issues. The two-committee structure will strengthen the committees and will reduce cancellations due to absences. Chairman Bradley asked Commissioners to contact Executive Director Dietrich with their committee preference and the new structure will be discussed further at the January meeting. Rich Delatore with Ohi-Rail thanked the Commission for their consideration of the Piney Fork Lease and also thanked staff for their kindness and hard work throughout the process. He also announced that they are doing four crossing repairs before the New Year as good neighbors and partners to the community. Commissioner Jackson said this line speaks to why it is so important for rail line preservation. No one knew 30 years ago that this line would be needed, especially for the shale business that has developed in the area. EXECUTIVE ORDER K: FRAUD AND ETHICS TRAINING ODOT s Fraud and Ethics Training Course was presented to the Commissioners. ADJOURN Chairman Bradley adjourned the meeting at approximately 12:52 p.m.
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