NORTH COAST RAILROAD AUTHORITY (NCRA)

BOARD OF DIRECTORS REGULAR MEETING MINUTES

WEDNESDAY, JULY 19, 2000 AT 10:00 A.M.

WILLITS CITY HALL

111 EAST COMMERCIAL STREET, WILLITS, MENDOCINO COUNTY, CALIFORNIA

A. CALL TO ORDER

Chair Jehn called the meeting to order at 10:00 a.m.

B. ROLL CALL

Directors present: Chair Robert Jehn, David Ripple, Allan Hemphill, Daniel Opalach, Jack McKellar,

Robert E. Simonson, and Max Schlienger. Executive Director Max H. Bridges was absent; he was

attending the California Transportation Commission Meeting.

Also present: General Counsel Christopher J. Neary, Property Manager Cyndee Logan, Consulting

Accountant Russ Mustola, and Administrative Assistant Pamela Fishtrom.

C. MINUTES

Approval of Minutes of the June 21, 2000 Regular Board Meeting

Dir. Ripple moved approval of the Minutes as written; seconded by Dir. Hemphill. Vote taken;

motion carried.

D. AGENDA APPROVAL

Dir. Simonson moved approval of the Agenda with the following additions:

Item F.14 Federal Emergency Management Agency (FEMA)/Office of Emergency Services (OES)

Programmic Agreement

Closed Session Items M.3: Conference with Real Property Negotiator – Fiber Optics

a. Pacific Bell

b. Qwest Communications

and, the order in which each item was to be heard arranged as follows:

Items 2,5, and 9 to become Items 1,2, and 3, respectively

Item 13 to become Item 4

Reverse Items 10 and 11; seconded by Dir. McKellar. Vote taken; motion carried.

E. PUBLIC COMMENTS

Hannah Burkhardt, Mendocino County Railway Society, read a letter written by her husband in which

he recommends payment for the Board Members by the county from which they are selected.

Jay Mosley, Boyle Engineering, introduced himself.

Chair Jehn read a letter written by Kaye Strickland, Chair of Citizens for Port Development, in which

she announces the formation of the sub-committee, “Friends of Northcoast Railroad,” to enlist

renewed support for the Railroad. In addition, she urged NCRA to request a bridge loan from

Humboldt County Headwater funds.

F. CONDUCT OF BUSINESS

1. Approve Project Manager Job Description and Authorize Hiring Recruiting Firm

Dir. Opalach requested from Executive Director Bridges an outline of the separation of duties

between the Project Manager and the Engineering firm. Dir. Hemphill said historically CalTrans

has criticized NCRA for hiring consultants without oversight by accountable employees. Dir.

Opalach also recommended inclusion of the physical requirement within the job description.

Dir. Hemphill moved approval to hire L.B. Hayhurst and Associates to recruit a Project

Manager; seconded by Dir. Ripple. Vote taken; motion passed unanimously.

2. Authorize Issuance of Request for Proposals for Engineering Services

Chair Jehn described development of the Capital Project Program as a plan to rehabilitate the

Railroad irrespective of the funding sources. Dir. Hemphill reminded there may be some overlap

with Boyle Engineering’s contract. Dir. Opalach recommended the Proposal contain consistent

language with regard to the scope of repair to Class 1, 2 and/or 3. Dir. Opalach also recommended

the Board be included in the interview process. Chair Jehn formed an ad-hoc committee of Dir.

Opalach and Dir. Hemphill to assist interviewing respondents and making recommendations.

Dir. Opalach moved approval to authorize the issuance of a request for proposals for a

consultant to develop the Capital Project providing the language in the scope is made

consistent with the summary and adding the selection process to include review by a Board

sub-committee; seconded by Dir. Simonson. Vote taken; motion passed unanimously.

3. Action to Adopt Budget for Fiscal Year 2000-2001

Chair Jehn reported two changes from the previous version include revenue from the Transit

Congestion Relief Plan (TCRP) and an expenditure item, “Q-Fund Retirement.” Dir. Hemphill

praised the budget as a conservative document sensitive to the priorities of a public agency.

Dir. Opalach moved to adopt the Budget for fiscal year 2000-01; seconded by Dir. Simonson.

Vote taken; motion passed unanimously.

4. California Western Railroad (CWR) Presentation

John Mayfield, Skunk Railroad, indicated the relationship between CWR and NCRA is in jeopardy.

Tom Honer, CWR President, explained that under the Trackage Rights Agreement, NCRA is

responsible for track repairs performed by Rail-Ways in the Willits Yard. CWR was billed

however and their lawyer, Mr. Cheever of Diepenbrock Law Firm, requested NCRA indemnify

CWR from the subsequent lawsuit brought by Rail-Ways.

5. Authorize Signatores to the Bank of Willits Property Account

Dir. Simonson moved to authorize all Board Members and the Executive Director as signers

on the account; seconded by Dir. Ripple. Vote taken; motion passed unanimously.

6. Action to Approve Bylaws

General Counsel Neary recommended adding a sentence to the Public Character section that deals

with a method of memorializing Closed Session Minutes. Chair Jehn suggested the Executive

Director, who is also the Board Secretary, continue to be responsible for taking the Closed Session

Minutes.

Dir. McKellar moved approval of the Bylaws with the language suggested by Legal Counsel;

seconded by Dir. Ripple. Vote taken; motion passed unanimously.

7. Adopt Executive Director Performance Evaluation Procedure

Chair Jehn reported having encouraged Mr. Bridges to submit to an annual performance evaluation.

Because his one-year anniversary of employment with NCRA is July 26, 2000, he is asking the

Board to adopt the form and procedure presented, to be filled out by the Chair, and adopted at the

August Board Meeting.

Dir. Hemphill moved approval of the form and procedure presented; seconded by Dir. Ripple.

Vote taken; motion passed unanimously.

8. Property Management Issues Considered

a. Lease Format

Dir. Ripple reported on Page 11 it is written $2 million, yet numerically $1 million.

Dir. Hemphill moved to approve the lease format with the error corrected; seconded by

Dir. Ripple. Vote taken. Dir. Schlienger abstained; motion carried.

b. Fee Structure

Dir. Schlienger was concerned over the cost of overhead crossings. John Darling, President of

Rail-Ways, Inc., requested collaboration with his company before approving leases.

Chair Jehn recommended dealing with Property Management issues by creating a

committee including Dir. Ripple, Dir. Schlienger, Executive Director Bridges, Property

Manager Logan, and Rail-Ways President Darling.

c. Residents on Railroad Property

d. Lease, Kenneth A Quigley

e. Lease Procedure

Chair Jehn recommended Items F.6.c-e be sent to the newly formed committee.

9. Authorize Signatores to CalTrans Fund Transfer Agreements

Dir. Ripple moved to approve either the Executive Director or the Chair execute CalTrans

Fund Transfer Agreements; seconded by Dir. McKellar. Vote taken; motion carried.

10. Approve Contract with Mustola Management to Provide Accounting Services

Dir. Opalach recommended adding the word “assist” in the beginning language of Attachment A

so it does not appear that Mr. Mustola is entirely responsible for revisions to the business plan.

Dir. Hemphill moved to approve the contract with the revision as stated above; seconded by

Dir. Schlienger. Vote taken; motion passed unanimously.

11. Consider Rail-Ways, Inc. Request for Extension of Start-up Date to Trigger Commencement

Date of Permanent Operation Agreement

General Counsel Neary reported NCRA’s agreement with Rail-Ways, Inc. begins when freight rail

operations commence prior to December 1, 1998, after the FRA Emergency Order lifts. The date

was extended through today; however, with Rail-Ways concurrence, Mr. Neary recommended

extending the date to August 16, 2000. Mr. Neary reported meeting with Rail- Ways, Inc. to

discuss procedure for review of their financial business plan, and how to incorporate into the

Agreement concerns of the California Transportation Commission (CTC), CalTrans, and OES

regarding the relationship between Northwestern California Railway Engineering, Corp.

(NorCare) and Rail-Ways, Inc. Mr. Neary suggested both organizations file conflict of interest

statements, and the Agreement contain anti-collusion language. In addition, add a clause to

allow NCRA to reject NorCare as a sole source provider, and clarify how contractors access the

facilities for construction.

Dir. Simonson moved approval to extend the start-up date of the Operation Agreement to

August 16, 2000; seconded by Dir. Ripple. Vote taken; motion passed unanimously.

12. Consider Approach to Southern Division Repairs to Class I Status by Amending Southern

Remediation Agreement or Issuing New Request for Proposals

Chair Jehn reported NCRA may need to issue a Request for Proposals to continue Southern

Division repairs because Rail-Ways, Inc. may not be able to perform under the suggested

amendments to the Agreement.

13. Claims Recommended for Denial

a. Bushnell Enterprises ($212,195.05)

b. Bushnell Enterprises ($8,408.89)

General Counsel Neary recommended denial of both claims based on discrepancies within the

claims. However, Mr. Jackson, Attorney for Bushnell Enterprises, responded to his request for

clarification. Therefore, he recommended putting the matter over to the August Meeting.

Dir. Schlienger moved approval to continue both claims to the August Meeting; seconded by

Dir. Ripple. Vote taken; motion passed unanimously.

14. FEMA/OES Programmic Agreement

General Counsel Neary reported distributing to the Board a proposed agreement between NCRA,

the State Historical Society, FEMA, and perhaps the product of negotiations with the Round

Valley Indian Tribe. Tomorrow NCRA meets with FEMA/OES to discuss the agreement and

NCRA’s response to the Environmental Assessment comments. FEMA, as lead agency, can delay

the reopening of the North End. Mr. Neary requested authority to discuss the Revised Improved

Project concept with FEMA.

Dir. Hemphill moved to allow General Counsel Neary to explore the Revised Improved

Project option at tomorrow’s meeting with FEMA/OES; seconded by Dir. Simonson. Vote

taken; motion approved unanimously.

G. LIAISON REPORTS

1. Northwestern Pacific Railroad Authority (NWPRA) – Max H. Bridges

Dir. Hemphill reported NWPRA is exploring the fundamental duties and potential redundancies in

the myriad of governmental agencies responsible for the Northwestern Pacific Railroad (NWP).

General Counsel Neary reported the Coast Guard requires NCRA to repair the Haystack Landing

Bridge.

2. Legislation – Max H. Bridges

Chair Jehn reported the Governor approved AB 2928, the Traffic Congestion Relief Program

(TCRP). A summary is available on NCRA’s web site in the Powerpoint presentation. AB 1093,

proposed legislation providing a mechanism to fund short line railroads, may be amended to

include only NCRA. Also, Executive Director Bridges is at the CTC meeting explaining the top

priority is accessing the $10 million slated for debt reduction.

3. Passenger – Chair Jehn

No report.

4. Cities – Dir. McKellar

No report.

5. Sonoma-Marin Area Rail Transit Commission (SMART) – Chair Jehn

Chair Jehn reported SMART meets August 9, 2000 2:00 pm at the Petaluma Community Center.

SMART was appropriated $37 million from the Governor’s budget. Additionally, $28 million will

be available from Proposition 116 funds.

6. Mendocino Council of Governments Technical Advisory Committee (MCOG-TAC) -

Property Manager Logan

Property Manager Logan reported MCOG-TAC discussed crossing repair as opposed to losing the

10% set-aside for rail out of state transportation funds, however, Loretta Ellard, MCOG, reported

TAC has not made a decision on the use of funds.

7. Web Site – Chair Jehn

Chair Jehn reported visitation to the site this month will be near 4,000 hits; 127 people subscribe.

Also, the web site is very helpful in terms of disseminating knowledge to the public.

8. Contractor – Rail-Ways, Inc. / Northwestern Pacific RailWays

John Darling, President of Rail-Ways, Inc., praised the Board for succeeding in securing funding

from the State. He described his position with regard to CWR and expressed the desire for an

amicable resolution. Also, he said he understands NCRA’s need to explore options with regard to

the Southern Division repairs. Finally, he reported lighting has been restored in the Willits Yard.

H. EXECUTIVE DIRECTOR REPORT – Max H. Bridges

In Executive Director Bridges’ absence, Administrative Assistant Fishtrom reported Bruce Evans,

Northwestern Pacific Railroad Historical Society, advises that the Society will be looking into a

stewardship program for the passenger cars. Consulting Accountant Mustola presented audited

financial statements for fiscal years ending 1996, 1997, 1998, and a draft of 1999 which needs to be

accepted before July 31, 2000 so as not to be considered late by CalTrans. Mr. Mustola also presented

draft financial statements for June 30, 2000.

I. PROPERTY MANAGER – Cyndee Logan

Property Manager Logan expressed satisfaction with the Board’s creation of a sub-committee to work on

property management issues.

J. LEGAL REPORT – General Counsel Christopher J. Neary

General Counsel Neary reported NCRA is required to update its Conflict of Interest Code.

K. MATTERS FROM BOARD MEMBERS

Dir. Opalach reported Rick Knapp, District 1 CalTrans Director, asked him to serve on the District

External Advisory Liaison committee. The first meeting is August 2, 2000. Dir. Opalach will report

the committees actions at NCRA’s regular Board meetings. In addition, he has a July 25, 2000 meeting

with Marcus Brown to discuss a steam tourist train around Humboldt Bay. Finally, in light of the

Board’s decision to allow Mr. Neary to explore with FEMA the “Revised Improved Project,” he

recommended addressing the Board’s concerns by making adjustments to the established project.

Chair Jehn indicated the intention is to explore all options, with the possibility of removing FEMA as

the lead agency.

Dir. McKellar will also attend the meeting with Marcus Brown. Dir. McKellar supports the develop-

ment of the proposed railroad museum, and indicated donations of used rail equipment is appreciated.

Dir. Schlienger cautioned adequate financial reporting is absolutely necessary to administer public

funds.

Chair Jehn reported Jake MacKenzie, Vice-Mayor of Rohnert Park, replaces Dir. McKellar as the

Cities Representative.

L. ANNOUNCEMENT OF NEXT MEETING

Regular Board Meeting – August 16, 2000 10:00 a.m.

Eureka City Council Chambers, 531 K Street, Eureka, Humboldt County, California

M. CLOSED SESSION – Convened at 12:40 p.m.

1. Conference with Real Property Negotiator – Max H. Bridges, Cyndee Logan

Government Code Section 54956.8

Sale of Ukiah Depot

2. Conference with Legal Counsel – Existing Litigation

Government Code Section 54956.9(a)

a. NCRA v. Green

b. East Bay Machine v. NCRA

c. Rail-Ways, Inc. v. NCRA, CWR (Including Consideration of Rail-Wyas, Inc. Claim)

d. Claim of Richard Reid

Government Code Section 54956.9(b)

e. Claim of James Bruggere

f. Green v. NCRA

3. Conference with Real Property Negotiator – Fiber Optics

Government Code Section 54956.8

a. Pacific Bell

b. Qwest Communications

N. ANNOUNCEMENT OF ACTION TAKEN IN CLOSED SESSION – Reconvened at 1:45 p.m.

1. Conference with Real Property Negotiator – Max H. Bridges, Cyndee Logan

Government Code Section 54956.8

Sale of Ukiah Depot

General Counsel Neary announced the Board provided direction to Property Manager Logan.

2. Conference with Legal Counsel – Existing Litigation

Government Code Section 54956.9(a)

a. NCRA v. Green

General Counsel Neary announced the Board authorized the issuance of a 90-day notice to

terminate the Quarry Agreement.

b. East Bay Machine v. NCRA

General Counsel Neary announced the Board accepted the claim for $15,300.00.