Agency loses access to $41 million; general manager announces plans to leave beleaguered railroad

May 8, 2003

By BOB NORBERG
THE PRESS DEMOCRAT

The state has suspended $41 million in funding to the Northwestern Pacific Railroad, forcing the long-struggling agency to shelve plans to reopen a freight line through a rugged, slide-prone canyon from northern Mendocino County to Eureka.

"We don't have the financial ability to go north," Doug Christy, executive director of the North Coast Railroad, said Wednesday.

Christy also announced he would step down as railroad general manager in 60 days to take a job with Schneider National, a Midwest rail company. He said his leaving was not related to the funding problem.

"It was just a heck of an opportunity," Christy said.

The funding freeze is just the latest problem facing the railroad, which has been closed by severe storms and beset by crippling financial problems. So far, at least $70 million in public funds have gone into buying, running and repairing the line after damage from a series of storms dating back to 1991.

The $41 million was part of a $5 billion transportation improvement package that was passed two years ago, when the state's coffers were flush during a robust economy.

The state froze the funds, however, as it grapples with ways to survive a $35 billion deficit.

Christy said the lingering question is whether the funds would be restored once the state's budget crisis passes.

"Our hope is that the funds are just suspended, not gone," Christy said.

Railroad officials said they still plan to push ahead with plans to reopen the southern portion of the line between Schellville and Willits. And they said they are not giving up their goal of one day restoring service to Eureka on Humboldt Bay.

The railroad is a vital to the Humboldt Bay economy, where business is ham-strung by expensive transportation costs, relying on 50-foot truck-trailers to haul timber and gravel out and consumer goods in, said Leo Sears of Eureka, authority chairman.

"The North Coast has to have that rail line," Sears said. "If we don't, in 30 to 40 years we will only be a tourist backwater with no industrial base."

The railroad authority was created by the state Legislature in 1990 to buy the railroad out of bankruptcy.

However, severe storms through the 1990s wiped away miles of track and left the railroad with crippling financial problems.

"The fact that someone has not torn the tracks up is grounds for optimism," said Allan Hemphill, a railroad director from Geyserville. "We are not where we want to be, but you have to consider this beast is a combination of government and business and regulations all mixed up."

The railroad runs 300 miles from San Rafael and Schellville to Eureka, a historic line that once hauled timber, farm products, tourists and passengers.

It has been strictly a freight line for decades, carrying mostly lumber products and gravel from the Mendocino and Humboldt county, although there were several tourist trains run between Healdsburg and Willits six years ago.

The line runs 146 miles between Willits and Eureka, through the fragile Eel River Canyon, and frequently slid into the Eel River during major storms. Under the ownership of Southern Pacific, it had the well-earned reputation of being the most costly line to maintain in the United States.

El Niño storms of 1998 closed the entire line. It reopened briefly between Willits and Schellville, but it was closed by the Federal Railroad Administration for safety problems.

Christy said that in December the board was warned by the California Transportation Commission that the state funds were in jeopardy, and now have been told that they have been suspended.

The $41 million was a key part of the railroad's $61 million plan to reopen the entire rail line by segments, completing the Willits-Eureka portion by 2006.

But no one is willing to say the railroad is finished.

"It is a serious matter, but it doesn't mean the end of the railroad," Hemphill said.

The railroad has reached an agreement with federal authorities to use $7.4 million to reopen the southern end of the line to trains, which would haul freight between Willits and Schellville, within a year.

Christy said he believes there is enough lumber and feed and grain on that portion of the line to run about 300 cars a month.

"If we can start in June and get people in field, we should have railroad ready for service by end of the year," Christy said.

Christy said that the environmental impact work on the Willits-Eureka segment, which was to cost $2 million, will be delayed until the funding issue is resolved.

You can reach Staff Writer Bob Norberg at 521-5206 or [email protected].