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.