NORTH COAST RAILROAD AUTHORITY

 

FINANCE COMMITTEE MEETING MINUTES

 

MARCH 3, 2000 2:00 P.M.

 

501 ASTI ROAD

CLOVERDALE DEPOT

CLOVERDALE, CALIFORNIA

 

 

A.                 CALL TO ORDER

            Chair Robert Jehn called the meeting to order at 2:04 p.m.

 

B.                 ROLL CALL

            Finance Committee Directors present:  Chair Robert Jehn, Robert E. Simonson, and, by phone,          

            Daniel Opalach. 

            Also present:  Executive Director Max H. Bridges, Russ Mustola, CPA, and, by phone, General

            Counsel Christopher J. Neary.

            Additional attendees:  Members of the public including representatives of Rail-Ways, Inc. and 

            the press. 

 

C.        MINUTES

            1.        Approval of Minutes of the Finance Committee Meeting of January 12, 2000

            2.        Approval of Minutes of the Finance Committee Meeting of February 8, 2000

                       Motion by Dir. Simonson;  seconded by Dir. Opalach to approve Minutes of both                    

                       meetings with a modification to the February 8, 2000 Minutes to include that Dir.

                       Simonson attempted to participate by teleconference, but was unable. 

 

D.        AGENDA APPROVAL

            The Agenda stands approved by Chair Jehn.

 

E.                 PUBLIC COMMENTS

            Dana Fuller of Richmond, California, asked about an internet message regarding a public

            meeting in Eureka attended by Dan Hauser in which he says that it appears that NCRA and

            Rail-Ways have pretty much written off the Northern end of the line.  

            Chair Jehn and Executive Dir. Bridges emphatically indicated that is not the case.

 

            John Darling, President of Rail-Ways, Inc., reported lay-offs due to funding issues and that all   

            services are suspended; however, he assured the Committee that his company is here for the 

            “long haul.”  He has requested the Federal Railroad Administration (FRA) inspect the Railroad 

            and considers it ironic that the line could be opened, yet service suspended.  Chair Jehn

            responded favorably to his suggestion for a special board meeting if an opportunity for possible

            solutions to this financial crises arises.  In response to Dir. Opalach’s question regarding past 

            FRA inspections, Ron Poulsen, Chief Engineer of Northwestern Pacific Railways Co., LLC, 

            indicated one in late May or early June in Willits and one in late June from Lombard to

            Schellville which passed.  Then one in September where it became apparent the track was to be                                      held to a higher standard than previously thought.

 

F.                  CONDUCT OF BUSINESS

            1.      Status of AB 2782 Funds

                     Russ Mustola, Consulting Accountant, reported CalTrans is processing the Prop. 116

                     payment that reimburses NCRA for AB2782 funds advanced to contractors.  Executive

                     Dir. Bridges indicated that NCRA has less than $3000 and payroll is unpaid as of the end

                     of last month.  Mr. Mustola reported that of the Prop. 116 check expected approximately 

                     $143,000 should be returned to NCRA and the rest should be considered Federal 

                     Emergency Management Agency (FEMA) Disaster 1203 funds because NCRA also used

                     Disaster money in obtaining Prop. 116 reimbursment.  The Prop. 116 check is expected

                     as early as March 6, 2000.      

 

           2.       Report on the Status of the Single-Year Audits

                     Mr. Mustola thanked General Counsel Chris Neary for the letter.  The issue with Warren

                     Staley is not resolved, however, he has indicated that Aycock and Edgmon, CPAs, can

                     rely on the balances they carried forward.  Aycock and Edgmon are drafting the 1997 and

                     1998 financial statements to present at the March Board meeting.  In addition, they are

                     working on the 1999 financial statements.  Mr. Neary indicated Mr. Staley will be sending

                     a revised report.  Mr. Bridges reported that completion of these single year audits will

                     fulfill one requirement necessary to receive approximately $8 million in Intermodal

                     Surface Transportation Enactment Act (ISTEA) funds.  He also reported that NCRA has

                     not received the results of an audit performed by CalTrans.  Mr. Darling commented that

                     Rail-Ways is being audited by CalTrans.  Mr. Mustola commented designation as a “High 

                     Risk” subgrantee allows CalTrans to hold NCRA to a higher standard.  Additionally, he 

                     believes granting agencies might assume Rail-Ways is not financially independent from

                     NCRA and, therefore, not entitled to earn a profit.       

         

3.          Distribution of Anticipated Disaster 1044 Reimbursement Funds for a Net

                     Small Project Cost Overrun

                     Executive Dir. Bridges reported NCRA is expecting approximately $200,000

                     possibly Wednesday.  Several scenarios were discussed with regard to the

                     distribution of these funds;  Mr. Bridges spoke of paying Disaster 1044

                     creditor debt, Mr. Darling spoke of applying the payment as a reduction in

                     the security agreement, and Mr. Neary indicated there were more options

                     including integrating use of anticipated income from a contract with Williams 

                     Communications.  Mr. Neary volunteered, with the assistance of Max, to draft

                     options to present them at the next Regular Board Meeting with a

                     recommendation from the committee.   Dir. Simonson moved to recommend,

                     based on Mr. Neary’s analysis that the intent of the Security Agreement

                     with Rail-Ways was to include payment from all prior disasters, the funds be                    

                     given to Rail-Ways.  Dir. Opalach seconded.  Motion carried unanimously.

 

4.          Status of South End Rehabilitation Projects

                     a.        Original and Revised Project Budgets

                     b.        Actual Funds Now Available

                     c.        Contractual “Not To Exceed” Amounts           

          d.        Items Disallowed by Funding Agencies

         e.        Actual Expenditures

                     f.         Equitable Distribution of Revenues

                     g.        Committee Recommendation to the NCRA Board

                                Executive Dir. Bridges reported a potential agreement was reached during a

                                meeting with Rail-Ways and Herzog to decide the future disbursement of funds,

                                including retention, according to a calculation based on “not to exceed” contractual

                                amounts instead of amounts actually billed.                              

                                 

                                Chair Jehn left at 4:15 p.m.

 

G.        ADJOURNMENT

            Dir. Simonson adjourned the meeting at 4:40 p.m.