Sierra Railroad to buy Skunk Train

Bankruptcy judge cites Oakdale company's experience in choice of bidder for tourist line

December 18, 2003



Oakdale-based Sierra Railroad was chosen Wednesday by a federal bankruptcy court judge to take over Mendocino County's historic Skunk Train, one of the region's premier tourist attractions.

Judge Alan Jaroslovsky, who initially indicated he would not choose a buyer until Monday, cited the experience of Sierra, which runs tourist and freight trains in Northern California, in the $1.4 million sale.

Sierra officials said they hope to have the train, which is now idle, running again by May.

"The court is impressed by Sierra's railroad resume," Jaroslovsky said in his ruling late Wednesday.

The difference between Sierra and two other bidders "could be the difference between survival and demise of this railroad," he said in his decision.

Sierra bid $1.4 million for the 48-mile line, which winds through a lush valley and along an arid mountainside between Fort Bragg and Willits, attracting some 60,000 riders a year and $9 million in tourist spending.

The other bidders were Old 45 LLC of San Francisco, $1.4 million, and Pacific Cascade of Grants Pass, Ore., $1.5 million.

Neither of those, however, has experience running railroads, which Jaroslovsky wrote was one of the reasons he chose Sierra.

The Napa Valley Wine Train, the only other operating railroad that had submitted a bid, withdrew Monday. It had made the low bid of $750,000.

"It (Sierra) has operated railroads since 1897. It is currently operating several railroads, some of which operate excursion trains and some which handle heavy freight operations. It has demonstrated that its ability to use track maintenance personnel and equipment on many different lines will result in an economy of scale which could be the difference between survival and demise of this railroad," Jaroslovsky said.

Mike Meyer, bankruptcy trustee for the court, also said Sierra was a good choice to operate the Skunk Train.

"With Sierra's experience -- they run railroads -- they will make a go of it," Meyer said.

The Skunk Train, owned by California Western, filed for bankruptcy a year ago, with debts of $2.6 million and assets of $2.4 million.

Officers had blamed its demise on the loss of its freight service three years ago, when the Georgia-Pacific mill in Fort Bragg stopped shipping logs to Willits. It was a loss of about $300,000 a year in revenue.

With the sale now decided, Sierra Railroad officials said they will work to get the excursion trains running for the tourist season beginning in May.

"We have always felt we had the best proposal," said Mike Hart, Sierra president. "There will be a lot of work to do in the next month to finalize the sale, but we believe we can make it for the start of tourist season."

Sierra Railroad will put $600,000 to $900,000 in track repair and another $300,000 into marketing next year, Hart said.

In the long term, Sierra plans to continue operating the entire line between Fort Bragg and Willits, instead of from Fort Bragg halfway to Northspur, which was the route run this year.

He also said Sierra plans to outfit some flat cars to carry automobiles, recreational vehicles and buses so when riders get to their destination, they will have their vehicles to continue their trip.