The Humboldt Beacon   July 25, 2002

Railroad board considers revised purchase proposal

By Leann Whitten

Ted Niemeyer, a Illinois developer who wants to re-establish the railroad to the North Coast, has again revised his proposal to acquire North Coast Railroad Authority's property, this time with a little bite. "Even with the average annual administrative expenses of approximately $500,000 per year, the NCRA Board of Directors and staff remain unable to provide rail service to the North Coast," Niemeyer wrote in his letter under the subhead, "The Facts."

Niemeyer altered his original proposal mainly to eliminate the original condition that Eel River Railroad Co. be able to sell, merge or consolidate all or a portion of the railroad to another operator or owner without state approval. NCRA Director Leo Sears said that clause was a nonstarter, a condition the NCRA could not except.

The new proposal was received hours before the board's July 16 meeting. The Board of Directors appointed Sears and Bob Simonson as the agency's fact finders to consult with Ted Neimeyer to determine whether there is a basis for entry into negotiations concerning his proposed acquisition of NCRA's  property. "All it is right now is words," Sears said. "We are not to the point of negotiation." Sears said they were appointed to basically communicate with Niemeyer if he wishes while the agency continues to check with the 18 public agencies involved. "Government agencies just don't move that fast," he said. The Attorney General's Office is one of those agencies. The NCRA's questions were submitted through Sen. Wesley Chesbro's office.

Originally, Niemeyer requested the $43 million of Transit Cooperative Research Program funding as part of the deal. It has since been learned that a private operator is not eligible for these funds so the money will be returned.

The new proposal states ERRC will initially provide work for more than 300, open three offices and permanently staff about 160 workers.

Sears said it is pretty clear the sale of the railroad is possible once all of the procedures are followed, ramifications are examined and clauses on donated monies are executed, in some cases paid back with interest. There is no final dollar amount which would enter the Eel River Railroad Co.
and NCRA into negotiations.

Sears said ERRC has to come up with money upfront for any paybacks, an unknown figure. Niemeyer suggests $10.5 million in his latest proposal; Sears said he imagines the final figure will be two to three times that. "He's not shown us any financial ability to do so," Sears said. "We don't know what his financial means are." Sears said it is getting to be "show me the money time."

NCRA directors had suggested Niemeyer initiate an operator's contract rather than buy the property, the same cash flow would be acquired. Sears said at that point, Niemeyer informed the board he wished to mortgage the property. If that's the case, Sears said, Niemeyer will have to purchase the same amount of performance bonds to match the mortgage amount in case of default.

If Niemeyer imitated a request for proposal as contractor, he could keep federal and state monies and gain cash flow. "We could move forward fast," Sears said, if Niemeyer wanted to be operator of the railroad. The NCRA board will meet Aug. 13 at an unannounced location. The board has
authorized no negotiations until then, while it waits for answers to questions it posed to the Attorney General's office. They expect those answers by the end of July. "We are looking for enough information by Aug. 13 to determine whether there is sufficient reason to go forward ... or ... close communication."

Sears said he is skeptical but wants a rail line established to ensure the bay becomes an international port. Otherwise, he said, Eureka will become a tourist town with no economic base and a silted-up bay. "If (Niemeyer) can do everything he says he can do, I would jump up and down
with joy" he said.