Wednesday, June 18, 2003   9:30 AM

Healdsburg City Council Chambers
401 Grove Street, Healdsburg, Sonoma County, CA


A.                 CALL TO ORDER

Chair Sears called the meeting to order at 9:40 am.


B.                 ROLL CALL

Roll call was conducted with the following members present: Allan Hemphill, Robert Simonson, Budge Campbell, Dave Ripple, and Leo Sears. Chairman Sears presiding.


Directors Absent: Woolley


Also present: Executive Director Douglas M Christy, Executive Assistant Dina Polkinghorne, and Heather Newell, Administrative Assistant


                                                                                                Director Woolley joined the meeting at 9:42


C.                 CONSENT CALENDAR

Director Campbell requested that item C.1 “Approval of Minutes dated 05/21/03” - be held for discussion.


D.                AGENDA APPROVAL 

Executive Director Christy requested that an item be added to Conduct of Business (H.5) in regards to an extension of the consent decree.  Legal Counsel Chris Neary requested that an additional item be added to conduct of Business (H.6) in regards to a “Consideration of Healdsburg Properties Transfer Request from SMART.” Director Campbell requested that the Finance Committee Report be moved to item H.2


Board Action: Upon motion by Director Hemphill, 2nd by Director Ripple, and carried (6-0); the Agenda was approved as amended.


                                                                                                            Adjourn for closed session at 9:52 am


E.                 CLOSED SESSION


1.        Public Employment:

                                Title: Executive Director

2.     Public Employment:

                                                Title: Office Manager



F                   ANNOUNCEMENT OUT OF CLOSED SESSION                          Resume to open session at 10:45am


1.) By unanimous consent the board approved hiring Rick Kennedy as Interim Executive Director.

2.) By unanimous consent the board approved the creation of a new position of Office Manager and promoted Dina   Polkinghorne to this new position.

3.) By unanimous consent, the board voted to begin the immediate recruitment of a permanent Executive Director.


G.                          PUBLIC COMMENT


Mike Pechner

1.)      Requested that the agenda’s be more user-friendly for outside/public interests.

2.)      Requested that all the support documents to the agenda be made available to the public.

3.)      He also asked why the Standstill Agreement is going “on and on” with


4.) Thanked Doug Christy for all he’s done for the NCRA.


James Quinn

1.)      Inquired as to when will  ISTEA be decided.

2.)      Inquired as to when the last contact with Congressman Mike Thompson was.

3.)      Inquired as to how the NCRA is planning to use the 9 million in ISTEA funding.

4.)      Inquired as to when the south end will be operating.

5.)      Inquired about NCRA’s plan to shorten the paper trail.

6.)      Inquired about NWPY and exclusivity.

7.)      Inquired as to when the NCRA sees the south end operating profitably.

8.)      Congratulated the Interim Executive Director.

9.)      Suggested that the NCRA is playing a “bureaucratic game” with Caltrans that can’t be won.

10.) Suggested that the NCRA go around Caltrans and utilize the media and legislatures.  


H.                CONDUCT OF BUSINESS


1.         Election of Officers 


Board Action: Upon motion by Director Hemphill, 2nd by Director Ripple, and carried (6-0) the board reinstated John Woolley as Chairman of the Board.


Director Woolley thanked the board for appointing him Chair. Director Hemphill thanked Director Sears for filling in as Chair in Director Woolley’s absence.




2.         Adoption of Preliminary 2003/2004 Budget


Mr. Christy briefly went over the preliminary agency budget for fiscal year 2003/2004. He explained that the document provided to the board is a staff worksheet and that the fiscal year is not over yet. To prepare this document there were two Finance Committee Meetings and multiple meetings with the Sonoma County Auditors. He then went over three issues facing the preliminary budget for 03-04 fiscal year.

1.)      Some of the revenue items belong off the balance sheet and on the general ledger.

2.)      Delinquent property management – there is $215K still unreceived.

3.)      The CPUC Crossing Maintenance Funding is at risk.




CPUC Crossing Fund

Mr. Christy explained that this particular revenue item is actually for last year. The CPUC inspector determined that the crossings were not maintained. Mr. Christy stated that the inspection was done in 2003 for the year 2002. The CPUC communicated to him that Caltrans funded the work the NCRA did on maintainance but it is Mr. Christy’s understanding that’s it’s unrestricted money. Mr. Christy then explained that in his communications with the CPUC office he stated that the NCRA has always received this funding in the past under similar conditions and that nothing has changed.  Mr. Darling of NWPY stated that there is a federal component to these funds. Mr. Christy reminded the board that the NCRA has $250K in unrestricted cash going into the next fiscal year – there is a cushion available until this issue is resolved and he’s confidant it will be resolved in a positive manner.


Chair Woolley asked Mr. Kennedy to stay on top of this issue and work with Mr. Neary in Doug’s absence to resolve the issue.


Debt Schedule

Mr. Christy went over the Debt Schedule that was prepared by Sonoma County Auditor’s office. He explained that each of these items is in the budget – the principle balances out but the interest is listed as an expense.


As requested and approved as an amendment to the agenda, Director Campbell addressed the minutes of the June 4th, 2003 Finance Committee Meeting.


Director Campbell pointed out that in addition to the Agency Budget concept, which really allows the pooling of revenue in one fund, the one thing that the minutes should reflect is to retain separate cost centers. We would still have the cost center capabilities so that we know where the money is spent.


In addition, on the second page of the minutes there was a budget bullet item for $55K, his recollection was that it should be $50K. He stated that there was value in putting money in contingency that allowed the board specific control over the budget in light of the fact that there will be a transition period between Executive Directors. He then recommended increasing the contingency to $155K, with no obligations, and that $100K of it be used to balance the budget with sole control over that money going to the board. Mr. Roeser of the Sonoma County Auditor’s Office stated that only 15% of the budget could go into contingency, which would be about $70K. Director Ripple stated that there would be a retained earnings component categorized as unrestricted funds. He questioned why we would want to put money into contingency when you have retained earnings. Director Campbell stated that it gives the board more control over those funds.


Mr. Roeser of the Sonoma County Auditors office recommended that the board approve the preliminary budget as presented.


Board Action: Upon motion by Director Hemphill, 2nd by Director Simonson, and carried (6-0) the board adopted the preliminary budget as presented, with the addition of a notation under total expenses reflecting the operating expense deficit to be funded from reserves.


3.         Approval of Assignment of Prime Consultant to HNTB


Mr. Christy stated that the NCRA had approved the change of the project management role to HNTB. He suggested that the prime role would move over to HNTB, however, that has to come from the two principles. At that point, the board would either accept or deny that request. He stated that Willdan would still be a valuable member of the team.


                Members of the public were invited to speak.


Win Westfall

Yes Mr. Chairman of the board, excuse me, I am Win Westfall, the principal from Willdan, and this is Bob Stromsted, principle from HNTB. As Doug stated, we are very committed to the project and certainly to you our client to see that everything is done in the most appropriate way and with the changes that are involved with this project, it could very well be and probably is more reasonable to reassign who the prime is on the contract.


What we would prefer that you do today is express your sentiment if your in favor of that, so that we can then go to the attorneys and give the things to the agencies, the oversight agencies, to make sure that everything is done properly and there is no concerns and that nobody is going to be caught by doing something that they shouldn’t be doing. Then we could come back to you in a month and present it to you so that you could approve a contract, which I think is the timeline that Doug has described.


Bob Stromsted

Bob Stromsted, VP of HNTB and I concur with everything Win said - we are partners, equal partners, on this project and have been with it from 2001 - 2002 and we want to continue to do what’s in the best interest of the agency and stake holders and we do have this as an alternative before you and we’d like to discuss it with you to make sure all concerns are addressed and (inaudible ) we are prepared to move forward on that direction and want to make sure that its appropriate for the board and all interested agencies.


Mr. Neary stated that the appropriate action would be nothing further than indicating the boards ascent to this process with the board coming back for finalization.


Director Campbell asked what the financial impact would be on the NCRA. Mr. Christy stated that the impact would be under the line item of reimbursable project management, and staff expense on billable projects. He explained that in the past the budget was so tight it was only allocated to the consultants who actually performed some of the assessment work, and there was no room for staff expense to be put against that project because the budget just wasn’t sufficient enough for it. He then stated the NCRA may get into those situations again because when the two roles are split, the project management and contract management, and because of the prime role, there is additional expenses the consultants will have to incur that will come back to the agency or to the billable project that will potentially take away from the Agency’s reimbursables for there own staff members.


Chair Woolley recommended scheduling a workshop to sit down with the two consultants.   


Board Action: Upon motion by Director Campbell, 2nd by Director Sears, and carried (6-0) the board directed staff to get a contract or reassignment letter back from both HNTB and Willdan and to develop a workshop. 


Mr. Westfall wished Mr. Christy well and thanked him for everything.


4.         Project Updates


a) Environmental Consent Decree


Mr. Christy stated that the task order is on budget. The agencies involved have requested four weeks to look over studies before they go out for bid to do the clean-up work. Mr. Kennedy will schedule a meeting after the four weeks and then it will go out for bid. The money has already been allocated at the state level, only needs a signed budget by the Governor and he’s confident this item will remain in the budget. It will be awarded and is contingent upon the budget being passed.   


Mr. Neary stated that the NCRA is in the process of developing a demand for indemnity to Union Pacific for the spill at the Willits yard approximately 90 days ago. This demand will trigger a review by Union Pacific and flush out the Union Pacific specifically on the issue of its contractual indemnity for the Willits yard. It will probably be presented to Union Pacific before the next NCRA board meeting.


                b.) FEMA Alternate Project


Mr. Christy stated that he and project manager, Jerry Cheek, have created a draft project description and that was sent to OES, who will then send it to FEMA. FEMA will then issue a programmatic Environmental Assessment. Once that is completed there will be an official Alternate Project. Mr. Sabbaghian from OES stated that the funds are suspended and the process is on hold because FEMA needs an Environmental Assessment (EA) to release the funding. OES is working with FEMA to get closer on the EA, which should take about three months. Continuing with typical procedure, he estimates a seven-month timeframe for starting the project. He added that if there are no major environmental issues on the southern section there should be no problems.


James Quinn

Asked if Caltrans was involved in this project. Mr. Christy replied that they provide accounting oversight.


Mike Pechner

Asked a variety of questions regarding when the money will be available.


Roger Graeber

Commented that the only endangered species we have are freight trains and passenger rail trains.


Chair Woolley recommended that the board adjourn into closed session for an hour, reconvene, and then continue with the rest of the agenda.  




K         CLOSED SESSION                                                                                     

Adjourn for closed session at 12:30pm


1.)      Conference with Legal Counsel – Anticipated Litigation

Government Code Section 54956.9 (b)

Significant Exposure to Litigation (two cases)


2.)      Conference with Legal Counsel – Existing Litigation

Government Code Section 54956.9 (a)

Boyle Engineering vs. NCRA, pending in Sonoma County 


L          ANNOUNCEMENT OUT OF CLOSED SESSION                     

Reconvened at 1:50 pm

Director Hemphill left the meeting at 1:50 pm


1.) By unanimous vote the Board extended the Stand-Still Agreement with NWPY to January 1st, 2004. 


The Board has been meeting through its ad hoc operator committee with John Darling and representatives of NWPY for several months.  Certain performance benchmarks were placed upon the NWPY for continued extension of the Standstill agreement.  The NCRA Board is pleased to announce that significant progress has been achieved against these benchmarks paving the way for a successful south end service reopening strategy.  Specifically, continued forward progress with aggregate producers and suppliers as potential shippers and strategic partners.  Second, serious interests from both investors and the short line railroad industry in working with the NWPY to both restructure and recapitalize.


2.)      By unanimous vote, the board approved a settlement with Boyle Engineering for $20,000. 



H            5.)   Extension of Consent Decree


Board Action: Upon motion by Director Sears, 2nd by Director Simonson, and carried (5-0), the board agreed, at the request of the state office of Attorney General, to extend the Consent Decree another two years to July 14, 2005.


H.           6.)  Consideration of Healdsburg Properties Transfer Request from SMART


Mr. Neary stated that the NWPRA would not transfer Healdsburg properties without prior consent of NCRA. He recommended that the mainline and subsidiary track go to SMART so they have a corridor to operate. Everything else would stay with the NCRA. This would preserve assets until everything is agreed upon with the dissolution of the NWPRA.


Director Campbell requested that a site plan be prepared that would depict the multiple parcels that make up the “Healdsburg Properties”.


Director Sears passed out an opinion document from a lawyer from the Sonoma County Counsel’s office addressing this issue.


Board Action: Upon motion by Director Ripple, 2nd by Director Simonson, and carried (4-1, Aye’s - Woolley, Simonson, Ripple, Campbell. Nay’s  - Sears) the board approved a transfer of the operating track rail facilities through Healdsburg to SMART.




a.)                  Finance

Committee Action: Upon motion by Director Campbell, 2nd by Director Simonson, and carried (3-0), the Finance Committee approved the committee minutes of June 4th, 2003, with the addition of an additional item in the recommendations to include “Maintain separate cost centers within the combined Property/Administration “Agency” budget.”


b.)                 Property – No report


c.)                  Passenger – No report


d.)                 Operator – No report


e.)                  Executive – No report


J             STAFF REPORT


1.)   Mr. Christy thanked everyone involved with the NCRA for all their support during his tenure.

2.)      Mr. Neary acknowledged Mr. Christy and thanked him for all the hard work he’s provided the NCRA.


The Board of Directors thanked Mr. Christy for his dedication to the NCRA and presented him with a plaque and a gift.








                Regular Board Meeting – July 16th, 2003 – 10:00 am

                Willits City Council Chambers, 111 East Commercial Street

                Willits, Mendocino County, CA


O         ADJOURN     

            2:35 PM