MINUTES OF THE OHIO RAIL DEVELOPMENT COMMISSION REGULAR BI-MONTHLY MEETING September 20, 2012

Transcription

1 MINUTES OF THE OHIO RAIL DEVELOPMENT COMMISSION REGULAR BI-MONTHLY MEETING September 20, 2012 CALL TO ORDER The meeting of the Ohio Rail Development Commission was called to order by Chairman James Bradley at 11:05 a.m. on Thursday, September 20, Chairman Bradley introduced newlyappointed Commissioner Thomas Zitter. MEMBERS PRESENT Members present included: Chairman James Bradley, Executive Director Matt Dietrich, Commissioners Rob Greenlese, Solomon Jackson, Larry Sowers, Andrew Bremer, Bill Lozier, Tom McOwen, Ronald Rasmus, Barbara Bennett and Thomas Zitter. Commissioner Kevin Potter, Senator Patton, Representative Boose and Representative Hagan were unable to attend. There were 10 voting members present, therefore a quorum was obtained. APPROVAL OF THE MINUTES OF THE JULY MEETING Chairman Bradley asked for a motion to approve the minutes of the July 19, 2012, meeting. Commissioner Greenlese moved to approve the minutes and Commissioner Bennett seconded the motion. Roll Call was taken and the minutes were approved as presented with ten votes in the affirmative. EXECUTIVE DIRECTOR S REPORT Executive Director Dietrich presented his report to the Commissioners, which can be found on page 8 of the commission packet. Mr. Dietrich informed the Commission that section 130 was retained in MAP-21. He said staff is still trying to figure out the freight title in the bill. ODOT set up a state freight plan and advisory council to make sure everyone is compliant with the new funding percentage requirements. ORDC staff member Don Damron is leading the ORDC effort with this program. Executive Director Dietrich updated the commission on the RRIF loan process. He anticipates the MOU will be signed shortly. Both he and Lou Jannazo will be attending SCORT in Portland Maine next week and will announce the partnership with the FRA for this program. Mr. Dietrich stated many states anticipate this partnership and our success. Ashland Railway will be our first partner and staff has begun the due diligence process with them and their shippers. Executive Director Dietrich announced that Susan Kirkland will be retiring on October 19, Chairman Bradley commented that the work Ms. Kirkland has done for the Commission and her endless dedication to the industry cannot be matched. She will truly be missed. Mr. Dietrich reminded Commissioners that the annual retreat is October 11, 2012 in Toledo. The anticipated start time will be around 9:30 am and there are local economic development officials lines up to speak to the Commission. Additionally, there are planned presentations by the University of Toledo and CSX. Executive Director Dietrich also announced that Ohio will be hosting the 2013 SCORT conference and that Julie Kaercher is working on confirming the dates

2 and location, which should be late September. Lastly, Mr. Dietrich also told the Commissioners that Rob Marvin from PUCO has retired. Commissioner Greenlese asked if the RRIF pilot program is a national pilot. Mr. Dietrich explained it is just an Ohio-based pilot. Commissioner Greenlese then asked that if this program works and ORDC is a favored partner by the FRA for this, will there be a cost assessed for administration costs. Executive Director Dietrich explained that there have not been a discussion concerning this issue yet as the MOU is still being negotiated. The first loan will probably take a lot of staff time, but he is unsure if administrative fees will be assessed even after that since the RRIF can be considered a supplement of our current loan program. Commissioner Jackson asked if there is a minimum amount for RRIF loans. Executive Director Dietrich said loans can be large or small, but since there is a cost for administration of the loans on the federal level, small loans would not be worth the effort. 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 10 of the commission packet. Ms. McClory announced the Van Wert repayment was finalized with a payment of $237, and the American Rail Center loan drew only $300,000, not $500,000 and repayment has begun. Additionally, Secretary-Treasurer McClory told the Commission that the Ohio-Kentucky-Indiana Council of Governments (OKI) recently approved funds to two rail-related projects in southwest Ohio. ORDC has been asked to administer these projects, which include a total of nearly $3.0 million in federal funds. Staff has agreed and will present the projects to the Commission for formal approval at a later date. Administrative fees will be discussed before finalizing the agreements. Ms. McClory directed the Commissioners to a draft 2013 meeting schedule, requesting any conflicts be conveyed to staff before the next Commission meeting when it will be finalized. Lastly, Ms. McClory explained ORDC s budget request for the FY biennium (starting July 1, 2013) is due on October 1, In addition to the budget request, requests for budgetrelated changes to state law are also due on October 1. One of the items under consideration is the elimination of Ohio s participation in the Midwest Interstate Passenger Rail Compact. This would result in a budget savings of $15,000 per year. A full overview of the budget request will be provided at the November Commission meeting. Chairman Bradley asked if Ms. McClory expected any issues with the budget. She explained that there were instructions on submitting budget requests for the same amount as the previous fiscal year, with the exception of GRF funds, which must be requested at 90% and 100%, including an explanation of why the Commission needs funding at both levels. Chairman Bradley stated that there was an Annual Report produced to justify costs. He questioned if there would be a new report this year. Ms. McClory assured the Commissioners a new report was in

3 process and would be available for testimony, in addition to the benefits calculator to show ROI calculations. Commissioner Lozier asked if the operating expenses will be separate from the grants and loans program requests since the completion of the Panhandle lease which made ORDC operationally self-sustaining. Ms. McClory said everything will be included in the same request and will still be requested at 100%. The funds generated from the Panhandle lease will be listed and should be well received by the budget committee since those are funds independent of the GRF. There were no additional questions. RESOLUTION Columbiana County Port Authority Youngstown & Southern Rail Line Rehabilitation Loan Revision ORDC staff member Megan McClory presented to the Commissioners the project briefing on page 17 of the commission packet concerning the payoff of an outstanding loan to Columbiana County Port Authority. Ms. McClory explained staff is requesting the Commission approve a revision in loan terms of the Columbiana County Port Authority s $2.1 million loan with the Commission for the rehabilitation of the former Youngstown and Southern (Y&S) line. Since 2000, the ORDC has been instrumental in the preservation of the rail line. Ms. McClory stated this is the seventh request of the Commission to modify loan terms since the initial approval in September, Resolution 11-10, approved by the Commission on November 10, 2011, to allow the Executive Director to either: Accept a lump sum payment of $1.0 million at the time of the closing of the purchase of the Y&S for the ORDC loan; or, allow ORDC to assign its loan to the purchaser of the Y&S and allow the CCPA to transfer its ownership of the rail line. In this option, ORDC would waive the accumulated late fees, the purchaser would make a lump sum payment of $250,000, and monthly carloading payments, fully repay the principal balance within seven years, and make certain minimum capital investments. Secretary-Treasurer McClory said the current principal balance of the loan is $1,162, Operations at the landfill facility and along the rail line are minimal and ORDC has not received any payments since March, Ms. McClory explained the CCPA has been actively marketing the line and has had several close calls in selling the line to various private entities. The CEO of the CCPA proposed a repayment of $900,000 to settle the outstanding debt. The Executive Director and Secretary- Treasurer of ORDC agreed to accept the payment, subject to Commission approval. The payment was made to ORDC in early August. Commissioner Lozier asked how the repayment went from $1million to $900,000. Executive Director Dietrich explained the million was coming from the purchasing railroad in the previous, but failed, business opportunity. The Port Authority itself will pay off the loan at the reduced amount of $900,000. Commissioner Jackson asked what the current status or outlook is on the line. Ms. McClory explained the line still has opportunities for a new operator and businesses to develop nearby because the company only pulled out of the deal due to environmental findings. The CCPA will

4 still actively market the line, now debt-free since they also paid off other debts. Commissioner Jackson asked if ORDC were not to accept repayment now and hold out for the full repayment, were it possible the state would never get paid back. Executive Director Dietrich said the possibility factored into the decision to accept these new terms. The environmental contamination could be an issue that would severely delay new investors and the CCPA s ability to repay the loan. Going forward, the ORDC will use discretion when considering rehabilitating the line without the Port Authority putting money in as first investors. Commissioner McOwen stated he thinks it is a good decision to close the loan and move forward with ORDC s money, as well as the CCPA making new business efforts without debt. There were no further questions. Commissioner McOwen made a motion to approve Resolution and Commissioner Greenlese seconded it. Roll Call was taken and the resolution was approved as presented with nine votes in the affirmative (Commissioner Zitter abstained). RESOLUTION Panhandle Rail Line Easement for TUS Project ORDC Associate Assistant Attorney General Alan Klodell presented to the Commissioners the project briefing on page 23 of the commission packet. He explained that The Ohio Department of Transportation (ODOT) has requested that ORDC provide a Standard Highway Easement in support of a project on US Route 36 along the Panhandle Rail Line in Tuscarawas. ODOT is securing Right of Way for a 0.24 mile long project that includes pavement overlay, pavement widening, and the improvement of driveway approaches. The requested easement is along the east side of US 36 where US 36 closely parallels the Panhandle Rail Line. The improvements to the state highway will be funded by a private company, whose expansion will benefit from improved highway access. The roadwork will also enhance safety for thru traffic on US Route 36. Mr. Klodell indicated staff had confirmed with the Columbus and Ohio River Railroad (Ohio Central) that the requested easement will not adversely affect either the functionality or value of the Panhandle Rail Line. Commissioner Greenlese made a motion to approve Resolution and Commissioner Lozier seconded it. Roll Call was taken and the resolution was approved as presented with nine votes in the affirmative (Commissioner Zitter abstained). RESOLUTION Marion Industrial Center s Intermodal Facility Phase III Project Loan ORDC staff member Lou Jannazo presented to the Commissioners the project briefing, which can be found on page 29 of the commission packet. Mr. Jannazo explained the Marion Industrial Center requests up to $750,000 in loan assistance to extend two existing sets of tracks (one double track and one single track) at its Marion Intermodal facility. The proposed project consists of the construction of approximately 6,758 ft. of new track to extend an existing double track and 1,434 ft. of new track to extend the existing single track, as well as other work including track bed preparation, turnout construction, constructing internal private crossings, providing end of track protection, and other related rail work.

5 Additionally, Mr. Jannazo said the expansion is needed to more efficiently handle expected increases in Container on Flat Car (COFC) business that will result from CSX s decision to run daily intermodal trains back and forth between the MIC and the CSX intermodal block swap yard at North Baltimore, i.e. the Northwest Ohio Intermodal Container Transfer Facility (ICTF). Mr. Jannazo said the ORDC track repair/extension project is a $1.344 million part of the $3.1 million L&D project. The approximately $1.344 million in costs would be paid for with the ORDC loan and with ODOD L&D funds. The MIC is working with CSX on an alternative plan to the straight line extensions and might prefer to build a loop track to connect the extended track at the west end which would provide more flexibility. Entire trains could be readily transferred from one track to the other with a loop track configuration. Ted Graham was present to answer any questions. Chairman Bradley asked if the loop track would be the same cost as the current plan. Mr. Jannazo explained that the loop track may cost more, in which case Mr. Graham may apply for a larger loan, but he is unsure what may happen. Mr. Graham explained they will do what CSX wants, which is to create more capacity and so the loop track might make more sense since it would increase their carloads from the 60-70,000 a year now to 150,000, possibly 200,000 a year with the improvements. Chairman Bradley asked if there would be any job benefits, retention or creation, from this project. Mr. Graham said not a lot directly from the yard, but there will be truck drivers hired by Schneider, at least 15 people to staff the yard and people hired at the truck maintenance facilities nearby as a result from this expansion. A chassis repair company just started operations nearby also. Mr. Jannazo added that in addition to the jobs, shippers will see significant savings in their shipping costs as traffic increases at the yard, an estimated $2-6 million based on standard savings estimates. Commissioner Bennett asked why there was no benefits calculator in the packet for this project. Mr. Jannazo explained the calculator does not apply to intermodal yards, but he heard from the people in the field that this project has great benefits. Staff did use the conservative, percontainer savings estimate to calculate the estimated $2-6 million in shipper savings. Commissioner Bennett additionally asked Mr. Graham if the loop track would fit on the property and he confirmed there is enough space for either project. Commissioner Sowers 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 (Commissioner Zitter abstained). Mr. Graham thanked the Commission for all their help with this, past and future projects. RESOLUTION Columbus & Ohio River Railroad Mt. Vernon Line Rehabilitation Project Grant ORDC staff member Tom Burns presented to the Commissioners the project briefing, which can be found on page 43 of the commission packet. Mr. Burns explained that the Columbus & Ohio River Railroad (CUOH) requests a grant of up to $215,000 to install 3 new bridge decks, 1,500

6 ties, 2,000 tons of ballast and surface 4.0 miles of track on its 26.1 mile long Newark to Mt. Vernon rail line. The CUOH will match the ORDC investment on a dollar for dollar basis. Mr. Burns said the current rail users are Owens Corning Fiberglas, International Paper, Mauser, Central Ohio Farmers and Rolls Royce Energy Systems. The line currently generates about 1,600 carloads of freight a year. CUOH serves Mt. Vernon 5 times weekly. Mr. Burns explained that currently, CUOH operations over the Mt. Vernon line are at about break even, consistent with the profile of a marginal short line. There is, however, very good upside potential on the line. Rolls Royce has been aggressive in attempting to commence rail service, sending a test car (as their loads are frequently oversize) successfully, which should lead to them shipping via rail for the first time. Further, Mr. Burns said the line serves a developed industrial park, as well as several other industrial sites, in Mt. Vernon. Finally, he stated that the line is fairly well positioned for development of the western section of the Ohio shale play. Mr. Burns explained that the 2009 joint ORDC/CUOH project fixed many of the most pressing needs of the Mt. Vernon line. However, due to budget constraints, the project did not rehab the last four miles of track in Mt. Vernon, at the very northern end of the line. In addition, new bridge regulations have brought more attention to the bridges on the line, three of which are in need of rehabilitation. Chuck McBride was at the meeting to answer any questions. Commissioner Lozier asked if this was the line where people have asked to have their access road paved. Mr. McBride said he did not know, but he would ask Chris Layman. Executive Director Dietrich said he will look into the issue for a resolution. The line has 31 private crossings so there will always be an issue with someone requesting work be done on their road. Commissioner Bennett asked where the benefits calculator was for this project. Mr. Burns said he would run the calculator and provide it to the Commission. Commissioner Greenlese made a motion to approve Resolution and Commissioner Bennett seconded it. Roll Call was taken and the resolution was approved as presented with nine votes in the affirmative (Commissioner Zitter abstained). Commissioner Sowers left the meeting at 12:05pm. Executive Director Dietrich reminded the Commission that the current spending limits for the Commission indicate that assistance of less than $25,000 can be approved by the Executive Director; from $25,000 to $150,000 requires approval of the Executive Director and the chairman; and assistance over $150,000 requires full Commission approval. In addition, staff can issue a go-forward letter to companies so that investment can begin pending Commission approval (however companies proceed at their own risk). APPROVED PROJECT BRIEFING CFER Delphos Terminal Railroad (DTR) Line Rehabilitation ORDC staff member Lou Jannazo presented to the Commissioners the approved project briefing, which can be found on page 49 of the commission packet. He explained that the Delphos to Landeck rail line was part of the Norfolk & Western Railway/Norfolk Southern until about 1990

7 when NS leased the Bluffton, Indiana (through Landeck and Delphos) to Douglas, Ohio line to the Indiana Hi-Rail Corporation (IHRC) under its Thoroughbred Lease Program. Most of the line was scrapped when IHRC went bankrupt in the mid-1990s, however Central Soya (now Bunge) purchased the Delphos to Landeck portion of the line through the bankruptcy court under a subsidiary called the Delphos Terminal Railroad (DTR). Conrail and CSX served the DTR until the CFER leased the Crestline to Fort Wayne line in 2004, and CFER acquired the line from Bunge earlier in When Central Soya purchased the Delphos to Landeck line, it did so to protect service to its Delphos operations. Mr. Jannazo explained that this grant will enhance rail service for businesses with 71 total and 29 rail-dependent jobs, as well as service to 90 acres of industrial park land in Delphos. The DTR line is on the flat western Ohio farm land and has only two bridges that are in good condition. The rail on the line is a mishmash of different rail weights (90, 100, 110, 112) but is primarily 90 lb. rail. There are 10 at grade crossings on the line, most in the City of Delphos proper. The line is generally high and dry but there are areas where ballast needs to be augmented. The track geometry is fair. The tie condition is very poor. Current train speeds is 10 MPH and the track meets minimum Class I requirements. The line is restricted to 4 axle locomotives. The project will replace about 2,500 ties on the line, rebuild a grade crossing, and provide other related improvements. Joe Parsons, the general manager for the CFER was there for questions. There were no questions. APPROVED PROJECT BRIEFING Lake Terminal Railroad Rehabilitation Project ORDC staff member Tom Burns presented to the Commissioners the approved project briefing, which can be found on page 54 of the commission packet. He explained the Lake Terminal Railroad (LTRR) requested a grant of up to $110,000 for its Lorain operations to rehabilitate a section of track between the Black River bridge and the East River Road crossing. This rehabilitation would involve the replacement of 1600 track feet of rail and 275 switch ties. The LTRR would match the ORDC grant on a dollar for dollar basis. Mr. Burns explained that the LTRR submitted four discrete projects for the FY2013 ORDC Rehab Program. Of the four, one was a crossing project that did not rank high enough to warrant improvement; two were internal logistics changes; and one was a straight rail rehabilitation project between the crossing submittal and a bridge over the Black River. The last of these projects is the project selected for funding. Mr. Burns stated the track in question is classified as Class I track, and has old 115 pound rail that has warped over time due to the higher traffic volumes over the track. This section of track carries over 90% of the traffic of the LTRR, and with the possible increased carloads in the future as expansions go online, a derailment-caused delay would be disastrous for both Republic and US Steel. Joe Campeau from LTRR was there for questions. Chairman Bradley asked why ORDC is investing in a steel plant. Mr. Burns explained they are a marginal shortline railroad by definition and need help rehabilitating their line. Chairman Bradley said the company has money to do their own improvements and should not need assistance from the Commission. Mr. Campeau said he cannot answer accounting questions for

8 the steel plant because the railroad is treated as a separate business and does not have their funding to back up their operational needs. The railroad was incorporated in 1856 and is a standalone, Class III railroad. Commissioner Rasmus agreed with the Chairman that this seems like an unusual grant. He asked if there was any benefit other than improving the rail line for this one shipper. He asked about job creation or if there would be any action by the steel company to better the line. Mr. Jannazo explained that the grant application was for four separate projects, totaling close to $1million. He reiterated that the LTRR does not have the money; the steel company has the money and will not put the full investment into the line. He stated that ORDC can give this grant to help LTRR do more, better, faster. Commissioner Jackson said the project should be considered in car loads against truck loads and road wear if this is not a rehabilitation project, but an economic development project. Commissioner Rasmus said he would not hesitate to grant money for railroad improvement, but he is hesitant with state money being granted to a company that has no proven job retention or other requirements. Commissioner Bennett said that ORDC has the tool to qualify this project, but, again, the benefits calculator was not used. Executive Director Dietrich said from now on ORDC will use the benefits calculator for all projects with the exception of grants that do not meet the criteria. Mr. Jannazo said some projects just don t have direct measurable benefits. Commissioner Lozier left the meeting at 12:26pm. COMMITTEE REPORTS Commissioner McOwen presented the Contract and Property Advisory Committee Report. He asked Mr. Dietrich to give an update on the City of Jackson rail line. Executive Director Dietrich said the ORDC tried to stop the lawsuits by taking over the line, but, after a year, has not been able to reach an agreement with the operator, as terms of the takeover. The ORDC has decided to step back and let the city continue to work with the operator. Mayor Heath from Jackson was in attendance at the Committee meeting and added that he was supportive of ORDCs action to withdraw from negotiations and let the city resume their legal proceedings with US Rail. Commissioner McOwen updated the Commission that staff is almost finished with negotiations for a long-term lease with Ohi-Rail on the Piney Fork Line. He announced there will be a public meeting after the retreat, before the November Commission meeting. There were no questions. Commissioner Jackson presented the Human Resources Committee Report. He explained that the committee is satisfied with staff succession planning. The committee wants to have Chairman Bradley and Executive Director Dietrich provide them with other topics to explore since both he and Commission Sowers feel the committee has completed assigned tasks with no others naturally presenting themselves.

9 Chairman Bradley explained the committee set up to Commissioner Zitter and asked if he would provide a fresh set of eyes. There were no questions. Commissioner Bennett presented the Long-Term Strategy/Economic Development Report. She said they went over staff participation in the State Freight Report, as well as Access Ohio. She urged that the committee assist during the budget process so ORDC can secure 100% GRF for fiscal years. Commissioner Bennett also added she is looking forward to the October 11 retreat. Executive Director Dietrich let the Commission know J.M. Rayburn has been working on updating the reporting and maps for a cohesive package during budget testimony. OLD BUSINESS There was no old business to come before the Commission. NEW BUSINESS ORDC staff member Cathy Stout will defer her presentation on HSIP, found on page 58 of the commission packet, until the November meeting. Dave Workman from Edison Welding Institute presented an update on their Head Defect Repair technology to the Commissioners. Jerry Vest and Chuck McBride presented Genesee & Wyoming s acquisition plans for the RailAmerica network to the Commissioners. Executive Director Dietrich indicated that ORDC has had a good relationship with the Genesee & Wyoming since their acquisition of the Ohio Central and they are looking forward to a strong local team on the RailAmerica side. PUBLIC COMMENT There was no public comment. ADJOURN Chairman Bradley adjourned the meeting at 1:15 p.m.