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http://www.northcoastrailroad.org/Acrobat/StrategicUpdate/Strategic_Plan_and_Progress_02-23-06.pdf---------------------------------------
NORTH COAST RAILROAD AUTHORITY (NCRA) 2006 STRATEGIC PLAN and PROGRESS REPORT
I. STRATEGIC PLAN The NCRA
Strategic Plan has been refined to reflect available funds and the requirement to have completely operable segments to attract and support an operator.
A. Reopening Plan NCRA’s Strategic Plan calls for the eventual reopening of the entire line. The Plan takes into consideration NCRA’s RFP issued January 17, 2006 for new freight and excursion operators, the comprehensive capital assessments prepared in 2002 and 2005, coordination with SMART and its environmental and capital assessments, the FEMA South-End Programmatic Environmental Assessment, and Federal Railroad Administration and Environmental Consent Decree requirements. NCRA’s Strategic Plan is graphically represented in the work plan flowchart found at the end of this report.
The Strategic Plan divides the reopening geographically into South, North and Canyon regions. Independent environmental processing would be conducted for the South and the North. The environmental process for the Canyon would address the connection of the North to the South and the cumulative environmental effects of the entire line. The 2006 Work Plan shows a deliberate approach to full compliance with the Environmental Consent Decree’s subtasks of site characterization, sub-surface remediation, operating plans, sensitive area cleanup, and monitoring. In addition, the reopening plans for all of the regions reflect an environmental permit approval process and a private-public partnership with an operator. Potential operating revenue is discussed in Subsection 1C. below.
NCRA’s initial focus is to open up operable blocks in the South from the interchange at Lombard north to Willits. The 2005 Capital Assessment Report and related preliminary plans entitled, “Russian River Division Rehabilitation Program” will form the basis of a project description that will be submitted to Caltrans District 1 staff to use to obtain ISTEA funds.
Currently, the plans are being reviewed with SMART, who owns a portion of the right- of-way. The project description will be finalized with input from the new operator regarding sequencing of the blocks, and additional input from SMAR T regarding its level of participation. It is estimated that NCRA will submit the project description to Caltrans District 1 in September 2006 with an estimated cost (see Subsection 1B. below) to re- open the entire line south of Willits of $25 million, assuming that OES funds will be available for recent storm damage (approximately $2 million).
Potential South-End shippers include Sonoma County Waste Management Agency which has expressed an interest in hauling waste by rail, and local natural resource companies such as granaries, lumber mills, and food products.
1 February 23, 2006 NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 2 February 23, 2006 Based on interest from the private sector, it is anticipated that the next logical focus will be the North-End, from South Fork to Samoa, and will result in excursion service over a portion of the line. Additionally, with the current interest in the deep water Humboldt Bay Port by the Port of Oakland and international shipping companies, it is foreseen that Humboldt County industries would benefit and pay for freight rail service connecting to the Port. It is anticipated that the current RFP will result in several proposals to return service in the North. NCRA’s Board will review the proposals, and that review, in combination with available funding sources, will be considered in developing a project description and schedule.
Service into the Canyon region offers two significant opportunities: Island Mountain’s 350-acre aggregate quarry and a major role in goods movement by connecting the Port in Eureka with the interchange at Lombard. Evergreen Natural Resources is in the permitting process of developing a prime-grade aggregate quarry at Island Mountain that has an estimated production rate of six million tons per year. In addition, NCRA owns 15 percent of the quarry. Having access to this aggregate would provide a highly affordable source for roadbed ballast, rip rap and material for stabilization repairs. Island Mountain is nearly the center of the rail line, and may warrant a separate operable segment within the Canyon, depending on an operator’s plan and available funding.
The next two years are critical to the success of the NCRA and the Northwestern Pacific Railroad (NWP) as a public-private partnership. NCRA has no designated administrative funding from public sources, and therefore cannot effectively accomplish its State mandate independent of a viable private operator. Historically, several private operators have failed to successfully operate within this right-of-way, which led to the legislated public responsibility to maintain the transportation corridor for the economic vitality of the North Coast region.
TCRP funding is the cornerstone to the public contribution of restoring the NWP right- of-way. The unavailability of this funding source over the last several years has delayed right-of-way improvements, and subsequently, the ability to attract a viable operator. As a result, NCRA’s administrative funding has been deficient over the last two fiscal years and is expected to be deficient this fiscal year and in future year s unless state and local operational funding is identified. NCRA has a three-fold focus to address this deficiency: 1. Utilize interest earnings on NCRA’s contributions made to the Q-Fund on deposit in the Local Agency Investment Fund (LAIF) estimated to be $43,000, to assist in the repayment of the Harbor District loan of $170,000 due in December 2006.
2. Request NCRA operational funding from the three Counties represented on NCRA’s Board of Directors for a total of $100,000 each year for the next three years.
NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 3 February 23, 2006 3. Request state funding assistance of $250,000 per year from the Public Transportation Account (PTA) for the operational costs associated with the maintenance and preservation of a 316 mile publicly-owned rail corridor.
Finally, before operation resumes, NCRA will pursue compliance through its operator with operation-related requirements of the Environmental Consent Decree. The current TCRP application for Project 32.5 requests funding for site characterization and remediation at maintenance yards and the Hopland station. It has become clear, to NCRA and the resource agencies that are overseeing this work, that the funding available in Project 32.5 may be insufficient. It is estimated that at least $4 million in additional funding may be required to complete remediation and the sensitive area cleanup. In order to address this deficiency, NCRA will pursue folding the efforts related to the consent decree into other TCRP project scopes where a nexus exists. In addition, NCRA will aggressively seek to enforce the contractual arrangement with Union Pacific that requires Union Pacific to remediate the Willits yard.
The CTC has previously asked NCRA to report on its ability to comply with the ECD if the rail is not extended through the Canyon. As stated above, it is NCRA’s intent to eventually open the entire line and thereby address the ECD issues. However, if the rail was not extended through the Canyon, it would be doubtful that NCRA would ever have the financial means to address the ECD through the canyon area. Although some of the ECD concerns north of Willits would disappear without an operating railroad; like the establishment of best practices for the operator to deal with earth flows that would close the rail to traffic, several remediation issues would remain.
ECD issues such as the removal of ties, debris, and waste in the Canyon area north of Willits, have been agreed to be delayed until reasonable access is provided via rail improvements. Without rail improvements the costs related to access will be greatly increased. As an example, the retrieval of discarded rail ties along the right of way, which are called for in the ECD, would cost less than $2 per tie if the rail is available. It is estimated that the costs would be at least 10 times as much to air lift the ties out of the Canyon.
B. Cost Estimate to Re-open the Line by Operable Phases NCRA’s Strategic Plan has been refined to adjust to available funding from TCRP, ISTEA, partnering with SMART, and seeking financial assistance from Sonoma County Measure M funds. In order to maximize funding sources and begin construction as soon as possible, the construction is expected to be phased, based on a strategy of operable segments that produce a return on investment to an operator. As additional funding becomes available, either through private sources or additional public sources, future phases will be initiated.
The following map shows NCRA’s right-of-way and the proposed reopening/ construction phases.
NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 4 February 23, 2006 Phase 7 Phase 6 Phase 5 Phase 4 Phase 3 Phase 2 Phase 1 Phase 9 Phase 8 NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 5 February 23, 2006 The estimated phases and cost to re-open the entire rail line follow, based on the latest available information.
Lombard to Willits – South-End/Russian River Division (Costs in Millions Include Environmental Document, PS&E and Capital) Type of Improvement Phase 1 Lombard To Santa Rosa Phase 2 Santa Rosa to Hopland Phase 3 Hopland to Redwood Valley Phase 4 Redwood Valley to Willits Total Cost w/30% Markup for Incidentals Geotechnical $ 0.0 $ 0.2 $ 0.0 $ 0.3 $ 0.8 Tunnels 0.0 0.2 0.0 0.0 0.2 Structures 3.0 0.9 0.5 0.2 5.9 Roadway 1.4 1.2 0.7 0.8 5.4 Signals 5.5 3.0 0.8 0.4 12.7 Total Capital Cost 10.0 5.5 2.0 1.7 $ 25.0 Capital Cost w/incidentals $ 13.0 $ 7.2 $ 2.6 $ 2.3 $ 25.0 South Fork to Eureka – North-End Division (Costs in Millions Include Environmental Document, PS&E and Capital) Type of Improvement Phase 5 South Fork to Fortuna Phase 6 Fortuna to Eureka Phase 7 Eureka to End of Line Total Costw/30% Markup for Incidentals Geotechnical $ 1.2 $ 0.6 $ 3.0 $6.3 Tunnels 0.2 0.1 0.5 1.0 Structures 2.8 13.7 3.4 25.9 Roadway 0.3 0.1 0.6 1.3 Signals 1.0 0.5 2.7 5.5 Total Capital Cost 5.5 15.0 10.2 $ 39.9 Capital Cost w/incidentals $ 7.1 $ 19.5 $ 13.3 $ 39.9 Canyon Division – Willits North to South Fork (Costs in Millions Include Environmental Document, PS&E and Capital) Type of Improvement Phase 8 Willits to Island Mountain Phase 9 Island Mountain to South Fork Total Cost w/30% Markup for Incidentals Geotechnical $ 8.3 $ 4.7 $ 16.9 Tunnels 4.5 1.3 7.5 Structures 3.0 7.1 13.1 Roadway 1.2 1.0 2.9 Signals 0.5 0.0 0.6 Total Capital Cost 17.5 14.1 $ 41.1 Capital Cost w/incidentals $ 22.8 $ 18.3 $ 41.1 NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 6 February 23, 2006 The following table outlines the future cumulative costs for the operable phases and indicates funding currently available. NCRA continues to seek funding from alternate sources. This information will be refined based on input from the operator(s) business plans, as well as the pursuit of additional funding through avenues such as the Governor’s proposed infrastructure bond, Federal Railroad Administration (FRA) Railroad Rehabilitation and Improvement Financing (RRIF) loans, and future goods movement grant opportunities.
Cumulative Cost by Phase (Costs in Millions) Funding Sources(in Million) Phase Division Cost byPhase CumulativeCost TCRP 1 ISTEA2 Meas M3 Private 4 Other 5 Total Phase 1 South $ 13.0 $ 13.0 $ 1.8 $ 8.2 $ 3.0 $ 13.0 Phase 2 South 7.2 20.2 1.0 0.4 0 2.9 2.9 7.2 Phase 3 South 2.6 22.7 0.4 1.1 1.1 2.6 Phase 4 South 2.3 25.0 0.4 1.0 0.9 2.3 Phase 5 North 8.9 33.9 1.3 3.8 3.8 8.9 Phase 6 North 20.4 54.3 .7 4.0 15.7 20.4 Phase 7 North 10.6 64.9 1.7 4.4 4.5 10.6 Phase 8 Canyon 17.5 87.7 7.5 7.6 7.6 17.5 Phase 9 Canyon 14.1 106.0 7.5 5.4 5.4 14.1 Total $ 106.0 $ 106.0 $ 22.3 $ 8.6 $ 3.0 $ 30.2 $ 41.9 $ 106.0 C. Estimated Income from Operations NCRA’s Board released an RFP for a new rail operator January 17, 2006. The RFP covers the entire line from Lombard to Samoa and would allow multiple operators on the NWP. The schedule for selection calls for a contract with a new operator on July 12, 2006. The results of the RFP, including the business plan and funding expected from a new operator(s), will be reported to the CTC when the information becomes available.
NCRA anticipates that the actual income to be generated by a short line operator(s) will include revenue from the following sources: Island Mountain Aggregate Haul: Evergreen Natural Resources is in the permitting process of developing a prime-grade aggregate quarry that has an estimated production rate of six million tons per year or four million cubic yards of material.
1 The TCRP funds include $0.6 million for 32.3, $4.9 million for 32.4, $1.8 million for 32.7 and $15 million, which is half of the funds for 32.9.
2 NCRA has been designated as th e lead agency for this funding.
3 SMART and the County of Sonoma have agreed to use the $3.0 million designated in Measure M for railroad signals for this scope of work.
4 Private funding will be arranged by th e operator with the assistance of NCRA.
5 Humboldt Bay Port Demonstration Bond proceeds and funding being pursued under the Governor’s proposed infrastructure bond, Railroad Rehabilitation and Improvement Financing through the FRA, and future grant opportunities for Goods Movement projects.
NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 7 February 23, 2006 Assuming 100 cubic yards per car, this would result in 40,000 cars per year and at $500 per carload, 6 would generate $20 million in revenue for the railroad operator per year.
Sonoma County Garbage Haul: In the “Assessment of Long-Term Solid Waste Management Alternatives for Sonoma County”7 prepared January 2006, the consultant concludes, “Considering that the costs for rail transport vs. highway vehicle transport are fairly comparable (within 7 to 8%) with the added benefits discussed above, WBR [waste by rail haul] should definitely be considered as a long- term out-haul option.” The report estimates that Sonoma County would ship 12 railcars a day at $600 per car 8 to generate revenue of approximately $1,872,000 per year for the selected rail operator. NCRA met with the County February 9, 2006 to discuss future timing of rail service, and intend to meet regularly to discuss options and progress.
South-End Traditional Clients: Historically, the NWP has provided service to several companies: lumber mills, granaries, wood products, building products, and produce. In the Parsons Brinkerhoff Economic Feasibility Report for NCRA (PB report), the low forecast shows 43 shippers in the South-End, the largest include Mead Clark Lumber in Santa Rosa with 700 cars per year, Piedmont Lumber in Calpella with 555 cars per year, and Standard Structures in Windsor with 550 cars per year. The total number of railcars projected in the low forecast scenario for the South- End was 4,051 cars. Using an average revenue per rail car of $500, a conservative forecast would generate $2,025,000 annually. Recent operator projections for these same traditional clients indicate 7,000 cars per year after the first year of operation, which would result in $3,500,000 in annual revenue for the private sector operator.
New Markets: As dependable rail service becomes available on the NWP, new clients will specifically locate warehouses and distribution centers along the line to take advantage of alternate shipping opportunities. Around the nation, shippers have been prompted to modify logistics practices so that goods are not delayed. Some shippers have established warehousing and distribution facilities in close proximity to alternative seaports, ensuring easier access and distribut ion of their goods throughout the nation. Similarly, shippers take advantage of rail and trucking competition and locate or relocate to sites that can be serviced by both modes of transport.
Goods Movement Port/Rail Opportunities: Not only is rail service important for the Port of Humboldt Bay to reach its potential role in improving State-wide goods movement, but it is also an important tool to attract additional manufacturing to California. There is a significant market in the entire north coast area for new 6 The Long Term Financial and Economic Feasibility of the Northwestern Pacific Railroad, Parsons Brinkerhoff, January 2003 7 Assessment of Long-Term Solid Waste Management Alternatives for Sonoma County prepared by Brown, Vence & Associates January 2006, Appendix E Waste by Rail Haul Letter Report September 2005, p. 18
www.sonoma- county.org/pw/pdf/solid_waste_jan06.pdf.
8 Ibid, p 7 and p 13 NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 8 February 23, 2006 commercial, industrial, warehousing, and distribution centers, that at present is languishing because of the lack of sea and rail transportation. The Port of Humboldt Bay presently has many underutilized real estate and port services appropriate for additional growth in California’s manufacturing sector. Reestablishment of rail service provides the opportunity for a variety of manufacturing or bulk commodity shipping businesses to relocate or expand to California. To attract businesses to the Humboldt Bay region, the Port of Humboldt Bay has partnered with the Port of Oakland and is actively marketing Humboldt Bay’s underutilized port assets in China through individual business meetings including the Governor’s November 2005 trade delegation to China. The Port is also participating with the State’s CalBiz and Upstate California economic development programs.
Reestablishment of rail service to the Port of Humboldt Bay impacts the success of any statewide goods movement improvement program. The Port of Humboldt Bay continues to revitalize the Port and work toward diversifying the commodities shipped through California’s Northern Gateway, Humboldt Bay. As a part of this diversification, the Port is actively working toward the development of container handling facilities aimed at not only handling containers destined for local consumers and manufacturers, but also providing the capacity to provide a measure of relief to other congested California container ports. Except for one minor tunnel repair, the entire 316-mile NWP is accessible to ship double-stack containers. One estimate has suggested that if the railroad is reopened and the port container handling facilities are upgraded, up to 1,000 containers per day double-stacked could be moved to and from the Port of Humboldt Bay to the national rail system. Using an average revenue per railcar of $1,000, this results in $130 million per year based on a five-day per week hauling schedule.
The existing ports of California are overloaded and the State is losing business to alternate ports. The Goods Movement Action Plan Phase I states: With record increases in cargo volume creating delays through the ports of Long Beach, Los Angeles, and Oakland, shippers have begun to diversify the ports of entry for their cargos. This diversification includes other West Coast ports as well as East and Gulf Coasts ports, which can be reached by ships going through the Panama and Suez Canals. Thus, instead of offering only the traditional land-bridge service (disembark at a California port and move by rail through California and across country), ocean shippers are beginning to offer all- water services with greater service frequency, speed and reliability. 9 As a result, if secondary ports are not developed in California, California will lose its share and shippers will bypass to Seattle, Portland, Vancouver, Mexico, and the Gulf Coast. Recently, several businesses have expressed great desire to relocate to California, specifically to Humboldt Bay region, but left the State and went elsewhere 9 Goods Movement Action Plan Phase I: Foundations prepared by Business, Transportation and Housing Agency and California Environmental Protection Agency, dated September 2005, Page IV-7.
NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 9 February 23, 2006 because of the lack of rail service. In each case, the businesses were willing to invest $150-$300 million in their facilities and had the potential to employ 60-250 employees each. These are sobering examples of the huge losses to the State economy because of the lack of rail service in the north coast region. The Humboldt Bay Port and NCRA’s rail assets are currently underutilized and pr ovide an incredible opportunity to provide some measure of statewide goods movement relief and create an enticement for the establishment or relocation of additional manufacturing, shipping or distribution centers in northern California.
II. PROGRESS REPORT Since the NCRA last reported to the California Transportation Commission (CTC) on October 28, 2004, several important milestones have been achieved: 1. NCRA is in the process of developing a project scope, funding pl an, and operation plan for the reopening of the South-End of the line in phases. It is important to note that SMART and NCRA have overlapping interests and both have the common goal of opening segments of the NWP, with SMART as owner of the line from Lombard to Healdsburg, and NCRA having maintenance responsibilities over the same segment.
Therefore, there are shared interests in capital improvements. NCRA met with SMART staff January 25, 2006 and together are establishing timing and cost responsibilities for capital investments such as signals, roadway crossings, and bri dge repairs and/or replacements. Based on the timing of the operator RFP, it is anticipated that NCRA will have a viable operation plan and project scope by the third quarter of 2006 as shown in the South-End Reopening work plan at the end of this report.
2. NCRA has terminated its operating agreement with NWPY, and on January 17 released a Request for Proposals (RFP) for a new contract railroad operator for the line. A pre-proposal conference was held February 15, and the deadline for submission of proposals is March 31. As of February 6, 25 RFPs had been requested by interested parties.
3. In January 2006 NCRA responded to several emergency calls, including: a) a massive debris flow that plugged NCRA culverts and presented a major flooding threat in Redwood Valley, b) a roadway embankment that washed out spilling ballast and roadway fill onto a rancher’s property in Hopland, c) flood debris blockage at a bridge that diverted flood waters onto a rancher’s property in Ukiah, and d) a number of cases where culverts were blocked and adjoining private properties were flooded. NCRA submitted storm damage estimates to OES for public assistance funds. The storm damage in Humboldt, Mendocino, Sonoma, Marin, and Napa counties continues to be evaluated and quantified.
4. NCRA signed a lease in December 2005 for the leasing of 35 rail boxcars that will result in an annual revenue stream of $240,000. NCRA purchased these new boxcars as discussed in item 8 below. This is a responsible use of this asset until an operator can NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 10 February 23, 2006 make use of them. In addition, NCRA is updating and improving its approach to property management. NCRA’s billing records are being thoroughly reviewed to reflect current leases, licenses, easements, and other revenue generating entitlements, including the increase of leases, where appropriate, for CPI increases. In addition, an aggressive delinquency management system is being initiated. These changes are expected to increase annual revenues from this source anywhere from 5 -15 percent.
5. NCRA has completed the waste and debris clean-up of nine rail yard sites (all in the Eel River Division except the Willits Yard and the Hopland Station) as required by the Environmental Consent Decree and managed by NCRA. Waste and debris cleanup consisted of sampling, packaging, transportation, and disposal or recycling of hazardous waste, regulated waste, and inert debris; and the decommissioning of aboveground diesel, gasoline, and waste oil tanks at the following sites: Eureka, Scotia, South Fork, Fort Seward, Alderpoint, Island Mountain, Dos Rios, Willits and Hopland as documented in the Kleinfelder report dated December 23, 2005 entitled, “Documentation of Completion Waste and Debris Cleanup North Coast Railroad Authority.” 6. On November 18, 2005 David Hull, Port Director of the Port of Humboldt Bay forwarded a request to Secretary McPeak and Secretary Lloyd to add two projects to the infrastructure short list of the December 2005 Phase II Goods Movement Action Plan. In his correspondence Mr. Hull explained: These projects will increase the goods handling capability of shippers through California, will create thousands of new jobs in the port and in the rail system, and will provide an alternative port to California in response to any security issues or natural disast ers that may hamper goods movement at other California ports. The two project s that we strongly recommend being included in the Phase II Action Plan are: The reestablishment of freight rail service on the State-owned NCRA rail line from the Port of Humboldt Bay to the national rail system; and the modernization of the Redwood Dock Marine Terminal to both facilitate s hort-sea shipping between the Port of Humboldt and the Port of Oakland, and to accommodate and respond to goods movement shipping demands at the Harbor District’s publicly owned marine terminal in Humboldt Bay, as well as support national and international investment in and around the Port of Humboldt Bay.
NCRA and Port of Humboldt Bay staff met in November 2005 to discuss partnering on a new feasibility study, project schedules and scope. The two agencies are working together to inform the appropriate state and federal authorities of the opportunities for goods movement on the north coast.
7. In November 2005 NCRA entered into a contract with a consultant to assist in documenting, organizing, and where necessary, preparing the administrative documents and procedures necessary to eliminate the high-risk grantee status of NCRA. NCRA recently completed its 2004-05 financial audit, and is in the process of finalizing its policies and procedures manual in order to schedule a Caltrans audit in April 2006. An indirect allocation plan will be submitted shortly thereafter.
NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 11 February 23, 2006 8. Federal Emergency Management Agency (FEMA) proceeds of $7.9 million were used to complete an Updated Capital Assessment Report for the Russian River Division (Willits south to Lombard) by NCRA’s on-call engineer dated November 2005. The report updates the work and costs necessary to re-open the line and will be the source of the South-End re-opening project description. In addition, the FEMA funds were used from December 2004 to November 2005 to: Purchase the following signal materials: 70 Bi-directional Predictors, 70 Shunt Enhancers, 140 Tunable Narrow Band Shunts, 8 Dummy Loads, 10 Gates, and 2 Flashers.
Purchase 35 new rail boxcars.
Purchase the following maintenance equipment: a brush cutter from Westside Tractor Sales, an excavator from Westside Tractor Sales, a 3/4–ton Ford high rail pickup, a 2000 Volvo rotary dump truck, a 2005 Caterpillar 430D backhoe, and a Sullaire 185 CFM Compressor.
Complete preliminary bridge layout plans and estimates ($4.5 million) for the repair and replacement of 120 bridges in the Russian River Division Complete existing signal layout plans with repair and replacement recommendations for 99 highway-rail grade crossings and three drawbridges and estimates ($9.8 million) for the Russian River Division Prepare detailed maps of the Russian River Division documenting right-of-way, geotechnical sites, signal locations, bridge sites, and other details.
Complete inspection, plans, and fender protection improvements on the Haystack Landing and Black Point bridges and update the navigation lighting system.
9. SMART released a Draft Environmental Impact Report in November 2005 to provide passenger rail service on approximately 60 miles of the Russian River Division (Ignacio to Cloverdale). FEMA’s Final Programmatic Environmental Assessment (PEA) for the Russian River Division was prepared in March 2004. Both of these documents cover much of the physical activities proposed in NCRA’s design work plan to open the Russian River Division (South-End). The biological and technical studies from SMART’s DEIR and FEMA’s PEA will be used in addition to any other required studies to complete NCRA’s environmental process from Lombard to Willits.
NCRA’s environmental process is estimated to take a year and is shown on the South- End Reopening work plan at the end of this report.
10. On October 2, 2005, NCRA received a copy of a permit request by Evergreen Natural Resources to mine Island Mountain. The mine operators will be quarrying the site for aggregates of all sizes to be used to repair the NCRA railroad and also to be sold in the bay area and other places for construction purposes. The mine area includes 350 acres and will produce approximately four million cubic yards per year. The site contains about NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 12 February 23, 2006 250 million cubic yards with a specific gravity of 3.2 which is prime grade. Access to this site by truck is impractical because of the lack of public roadways and the grade and condition of the existing private roadways. The applicant assumes that rail service will be used to transport equipment and the aggregate materials.
11. NCRA actively pursued the forgiveness of the Q-Fund loan from November 2004 to October 2005. The following steps to reallocate the forgiven loan proceeds have been taken or are in progress: HR 3, the Federal Highway and Transit Reauthorization Bill, was signed into law in August 2005 with provisions to forgive the $12 million Q-Fund loan.
State legislation (SB 792-Chesbro) to reallocate the funds set aside to repay the Q- Fund loan was enacted by the legislature in September 2005. Under SB 792, $5.5 million allocated to NCRA in 2001 (under AB 2928) for Q-Fund repayment would have been reallocated to fund the second phase of the court-mandated environmental clean-up, and fund public safety improvements on the publicly-owned right-of-way.
SB 792 was vetoed by the Governor in October 2005.
12. In addition to achieving forgiveness of the Q-Fund, NCRA has reduced its debt load over the last year by paying the following: Creditor P&I BalanceEnd of FY 2004-05 P&I Payment in FY 2005-06 P&I Balance End of FY 2005-06 PALCO Notes $ 230,400 $ 0 $ 230,400 Option B Interest 52,773 7,539 45,234 TXL Capital 42,805 9,551 33,254 Humboldt Bay Harbor Loan (using $43,000 of LAIF interest earnings for 05-06 payment) 183,600 49,800 133,800 Meecham Loan 216,388 0 216,388 NWPRA (SMART) Loan 128,490 128,490 0 Mass Electric 259,769 259,769 0 Neary Debt 40,701 0 40,701 Q-Fund 10,687,234 Forgiven 0 Caltrans Prop 116 Audit Exception (using $90,000 from Cloverdale Bypass funds for 05-06 payment) 152,886 102,000 50,886 Total $11,995,046 $ 557,149 $ 750,663 13. With the enactment of HR 3 in August 2005 NCRA was designated as the lead agency to receive $8.6 million in Intermodal Surface Transportation Efficiency Act (ISTEA) funds on deposit with the Federal Highway Administration (FHWA). NCRA intends to use these funds along with the matching funds designated in TCRP Project 32.7 toward Phase 1 rail improvements to the South-End. NCRA submitted the second draft of a NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 13 February 23, 2006 Disadvantaged Business Enterprise (DBE) program and methodology to Caltrans District 1 on January 31, 2006.
14. In September 2005 Caltrans District 1 requested NCRA review the Willits Bypass Preliminary Plans for impacts on the NWP. The plan is in final design and NCRA has been coordinating with the District on location of structure foundations, track alignments, track clearances, construction easements, and right-of-way requirements. An agreement between NCRA and Caltrans District 1 is expected in the next few months to document right-of-way requirements, construction easements and reimbursement for engineering plan review.
III. NCRA’S RESPONSE TO CTC QUESTIONS In April 2004 the CTC requested that NCRA respond to several ongoing concerns regarding the viability of the railroad and NCRA as a public agency. These questions were addressed in the information provided above, but are summarized below.
1. Completion of the amended TCRP application for project 32.5 – Environmental Remediation.
Response: NCRA has continued to work closely with the State Agencies, both in completing the work funded so far through prior TCRP commitments and in the last few months in preparing new applications for the remainder of the 32.5 funds. NCRA and the State Agencies are working steadily towards compliance with the Environmental Consent Decree.
2. A Funding Plan to address the negative funding for FY 2004-05 through 2008-09, for administrative function, outstanding debt, and other pertinent issues.
Response: The Authority receives revenues from easements, property leases, the leasing of rail cars and equipment, and recently through the reimbursement of project management and administrative costs for the FEMA South Alternate project. Equipment leases constitute a new revenue source for the Authority and result in annual revenue of $240,000 until the railcars can be used by an operator on the NWP line, at which time they will be leased to the operator.
This year the Authority will be finalizing its Indirect Allocation Plan as well as other policies and procedures to work toward eliminating its status as a high-risk grantee. It is expected that a Caltrans audit of NCRA’s books and procedures will be scheduled in April 2006.
The Executive Director has successfully worked toward the forgiveness of certain debts and has initiated negotiations to restructure other debts listed on NCRA’s financial statements. As shown in Section 2. above, NCRA’s outstanding debts went from a balance of $12 million in FY 2004-05 to $0.8 million in FY 2005-06.
NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 14 February 23, 2006 An RFP for an operator was released January 17, 2006 that will also address certain administrative costs. NCRA will continue to utilize contract staff in order to complete engineering, maintenance, and certain administrative functions necessary to access public dollars for capital repairs.
Discussions have been initiated with the Counties of Sonoma, Mendocino and Humboldt, with the help of NCRA Board members, to explore the possibility of securing up to $100,000 per year in local funding for certain administration, maintenance activities, and repairs. Future budgets will reflect the outcome of these discussions.
3. Progress in remediating the environmental hazards and achieving consensus with the ECD agencies to move forward with the clean-up. A joint written statement from the ECD agencies and NCRA is requested.
Response: As stated in Section 2. above, NCRA has completed the Waste and Debris Clean-up of nine rail yard sites. The Project 32.5 application to be reviewed by the CTC at its March 2006 meeting represents continued consensus building with the State Agencies and is a request for the next phase of work towards completing the Consent Decree remediation. Several conference calls and two meetings have been held with the State Agencies to build consensus on the remaining scope and budget required to comply with the Consent Decree.
4. Progress in hiring a short-line operator and actual funding it would generate .
Response: As stated in Subsection 1C. above, NCRA’s Board released an RFP for a new rail operator at its January 2006 meeting. The RFP covers the entire line from Lombard to Samoa and would allow multiple operators on the NWP. It is anticipated that a new operator will be on board in July 2006. The results of the RFP, including the business plan and funding expected from a new operator(s), will be reported to the CTC when the information becomes available. Several potential revenue sources are highlighted in Subsection 1C. above including, Island Mountain aggregate haul, Sonoma County garbage haul, traditional clients in the South, North and Canyon Divisions, new markets, and port related traffic.
5. Strategic plan for re-opening the entire line north of Willits. Address the impact on NCRA’s ability to comply with the ECD, if the line is not reopened north of Willits.
Response: NCRA’s strategic plan includes reopening the line north of Willits as described Subsection 1A. NCRA’s reopening strategy is dependent on State funding. That said, NCRA recognizes that funding is finite. In setting its funding priorities, the State may choose to delay funding for the Port and/or railroad improvements serving it. If so, barring changes to existing legislation, NCRA will still need to comply with the ECD and maintain its right-of-way in accordance with its legislated mandate to maintain the transportation corridor for future use. As stated in Subsection 1A., the addressing of ECD issues, in the canyon area north of Willits, has been agreed to be delayed until reasonable NCRA Strategic Plan and Progress Report March 16, 2005 California Transportation Commission Meeting 15 February 23, 2006 access is provided via rail improvements. Without these improvements the costs related to access will be greatly increased. Without the rail it would be doubtful that NCRA would ever have the financial means to address the ECD through the canyon area.
It should be understood that maintaining the railroad infrastr ucture is a significant public safety issue. For example, the road bed serves as a levee in several regions of the railroad and flooding of public and private lands is a concern. In addition, culvert maintenance and flood debris removal at bridges is required to protect streambeds and public property from flooding, and vegetation and brush control is required to limit the spread of invasive plant and minimize fire hazards.
6. Estimates of the revenues and the number of clientele that would use the line south of Willits, as well as north when the entire line is open.
Response: This information will be updated to reflect the selected operator(s) business plan. The operator is expected to invest where it can derive a reasonable rate of return.
The focus on return will not necessarily yield a public benefit to the entire line.
Improvements such as those proposed in the current 32.4 application are not necessarily going to be immediate priorities to the operator, but they are urgently needed for public safety. Potential revenue sources are listed in Subsection 1C. above.
7. A final proposal to CTC and Department Dist rict staff regarding the repayment of the $166K in disallowed Proposition 116 costs.
Response: As shown in Section 2. Item 12, NCRA has been making payments toward repayment of the disallowed Proposition 116 costs in accordance with NCRA Resolution No. 2004-06 approved August 18, 2004 and subsequently accepted 7-0 at the September 15, 2004 CTC Meeting.
8. Develop a proposal for use of the balance of funds in the Q-Fund account should forgiveness of the federal loan be included as part of the approved Federal reauthorization bill.
Response: NCRA will use its share of the remaining proceeds of the Q-Fund account, which consist of the interest earnings on the portion of the Q-Fund contributed by NCRA, to partially repay the $170,000 Harbor District loan that is due December 2006.
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