The Times-Standard  Saturday, July 20, 2002

Niemeyer takes a whack at rail authority, clarifies offer

John Driscoll

Chicago-area railroad suitor Ted Niemeyer clarified his offer to buy the North Coast Railroad in a letter to the North Coast Railroad Authority this week, and took a stab at the authority and staff for failing to get the crumbling line fixed.

Niemeyer modified the offer, abandoning his request for $43 million in state funding he originally wanted to jump-start the project. He instead suggested it would be in the public's best interest to use that money to pay debts to state and federal agencies or to help California balance its budget.

The letter said that his company, Eel River Railroad Co., will invest more than $100 million to restore tracks, bridges and tunnels, which along with other costs, will total $140 million. He repeats earlier assertions that he'll get the railroad up and running within a year, and will put up a $120 million performance bond to back it up. That bond balance would decrease as work is completed.

Niemeyer also stung the authority in a segment of the letter labeled "The Facts."

"Even with 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" after four years, the letter reads. "The public cost of failed operating and rehabilitation efforts cannot be offset, absorbed, replaced or repaid by the private sector," it reads. "However, public exposure to continuing hemorrhages of red ink must be eliminated!"

Authority board member Leo Sears said the authority has only three employees who deal with 18 agencies, all trying to get 300 miles of tracks up and running. "To criticize us for our speed -- it's not our fault," Sears said. "We're in environmental gridlock." Sears had no comment on the offer, because an opinion on whether the authority can legally sell the railroad without the state Legislature's approval is pending from the California Attorney General's Office.

Other terms of the offer include:

* Eel River Railroad will buy the corridor from Healdsburg to the Arcata area, paying the state $10.75 million in cash.

* Federal disaster relief funds will go to Eel River Railroad to cover the cost of meeting the authority's storm-damage repair obligations.

* Real property acquired in the deal includes rights-of-way, adjoining property owned by the authority, all communications sites, mineral rights, air rights and permits.

* Eel River Railroad will initially provide work for 300 workers. After the line is running, 160 workers would be retained as a workforce, and an office would be set up in Willits and satellite offices in Eureka or Arcata.

* Eel River Railroad will remove tires, car bodies, railroad cars and other debris from the Eel River.

Sen. Wesley Chesbro's office said that the legislative counsel's opinion on the legality of selling the railroad is expected next week. "We feel it's premature to comment on the offer before we receive the legislative counsel opinion," said Darby Kernan, spokeswoman for the Arcata Democrat.