Railroad Works To Address State Concerns
By MEGAN MIDDLETON
Staff Writer
PALESTINE - The Texas State Railroad Authority board approved Monday accepting $500,000 loans from the cities of Rusk and Palestine to help breathe life back into the deal designed to save the railroad.
But talk at Monday's board meeting quickly turned to the work still ahead as the authority continues to try to secure the state funding it expected to have received.
The funding has been delayed as the authority has worked to address concerns that Texas House Speaker Tom Craddick has with its contract with American Heritage Railways, the new private operator of the Texas State Railroad tourist train that runs between Rusk and Palestine.
On Monday, authority board members discussed addressing at least one other concern that they learned Friday that Craddick's office continues to have that could continue to hold up $2 million in state-appropriated funds.
Without the state funding, officials have said, the deal arranged to save the Texas State Railroad could fall apart and American Heritage could walk away.
Until Craddick's concerns can be addressed and a new contract hashed out, the money the authority expected to receive from the state, part of which would have been loaned to American Heritage for operating expenses, has been, in effect, put on hold, authority officials have said.
Steve Presley, president of the railroad authority, has said that in the most recent contract with American Heritage, the authority agreed to loan $500,000 to the company immediately to pay for marketing and other operational expenses. The authority had also agreed to loan it another half a million dollars if needed, Presley has said.
That money was set to come from $2 million in general revenue the state appropriated in the last legislative session.
But the railroad authority has said the state has not yet released that $2 million, which was also to be used as a match for the authority to receive $10 million in transportation enhancement funds. The lack of funding has put the authority in breach of its contract with the company, starting the time clock ticking for the company to walk away.
Authority officials learned after a meeting with Craddick in late October, that his understanding of the funding was it would be spent for capital improvements only, not operational expenses. However, Presley has said officials presented testimony that some of the requested funding would be used for operating expenses.
A spokesperson for Craddick has said the Speaker is concerned about whether lending public money to a private company would be illegal and also said his understanding was the money was to be used for capital improvements.
Presley has said the Texas State Railroad cannot operate without a large amount of operating funds.
Staff Writer
PALESTINE - The Texas State Railroad Authority board approved Monday accepting $500,000 loans from the cities of Rusk and Palestine to help breathe life back into the deal designed to save the railroad.
But talk at Monday's board meeting quickly turned to the work still ahead as the authority continues to try to secure the state funding it expected to have received.
The funding has been delayed as the authority has worked to address concerns that Texas House Speaker Tom Craddick has with its contract with American Heritage Railways, the new private operator of the Texas State Railroad tourist train that runs between Rusk and Palestine.
On Monday, authority board members discussed addressing at least one other concern that they learned Friday that Craddick's office continues to have that could continue to hold up $2 million in state-appropriated funds.
Without the state funding, officials have said, the deal arranged to save the Texas State Railroad could fall apart and American Heritage could walk away.
Until Craddick's concerns can be addressed and a new contract hashed out, the money the authority expected to receive from the state, part of which would have been loaned to American Heritage for operating expenses, has been, in effect, put on hold, authority officials have said.
Steve Presley, president of the railroad authority, has said that in the most recent contract with American Heritage, the authority agreed to loan $500,000 to the company immediately to pay for marketing and other operational expenses. The authority had also agreed to loan it another half a million dollars if needed, Presley has said.
That money was set to come from $2 million in general revenue the state appropriated in the last legislative session.
But the railroad authority has said the state has not yet released that $2 million, which was also to be used as a match for the authority to receive $10 million in transportation enhancement funds. The lack of funding has put the authority in breach of its contract with the company, starting the time clock ticking for the company to walk away.
Authority officials learned after a meeting with Craddick in late October, that his understanding of the funding was it would be spent for capital improvements only, not operational expenses. However, Presley has said officials presented testimony that some of the requested funding would be used for operating expenses.
A spokesperson for Craddick has said the Speaker is concerned about whether lending public money to a private company would be illegal and also said his understanding was the money was to be used for capital improvements.
Presley has said the Texas State Railroad cannot operate without a large amount of operating funds.
ANOTHER HURDLE
The cities of Rusk and Palestine decided last week to step in with the loans to the authority to help keep American Heritage on board. The $1 million loan the authority would then make to the company would help pay for operating expenses.
Officials said American Heritage has agreed "in principle" to changing the contract to allow the state funds only to be spent for capital improvements and for none of the $2 million to be used as a loan, now that the cities were loaning the authority $1 million.
But authority board members discussed Monday morning that Craddick's office may have other concerns beyond those they have worked to satisfy in their amendments to its contract with American Heritage.
Presley said the issue is related to how the contract calls for the railroad to be transferred to American Heritage a piece at a time. Presley said the Speaker's office has concerns about the railroad ownership being transferred gradually and wants to see it either be transferred all at once or not at all.
Under the eight-year contract, the authority would transfer to American Heritage an undivided percent of the ownership interest of railroad if it meets certain performance requirements in terms of ridership numbers.
Board members during Monday's meeting discussed the possible ways that they might be able to work through the issue, including turning the train over to American Heritage in four years instead of eight and tying the transfer to the company's pay back of the $1 million loan.
Some in attendance at the meeting expressed frustration over the continued hold up of the funds. But Presley said the Speaker has the right to be asking questions.
"And it's our responsibility to do our best to answer them," he said.
Presley said after Monday's meeting, "We're going to talk to them (American Heritage) about new conditions and see if we can work out a condition under which American Heritage is OK with changes necessary and to make sure there are plenty of protections left in the contract for our local communities and that the Speaker is OK with, based on this latest request."
Alexis DeLee, a spokesperson in Craddick's office, said the issue was something that was discussed in the meeting the Speaker had with the authority board members back in October.
"We're just waiting to hear back from them on the new contract," Ms. DeLee said.
When asked about what the concern is, she said it is with the possibility that if anything ever changed and, for example, a new operator needed to be acquired, then the state would own a percent and the private operator would own a percent.
Presley said during the meeting that the issue was brought up in the October meeting, but that he thought it had been settled during that meeting.
When asked about a timeline for finalizing a new contract, Presley said, "We need to do it rapidly. We know that we have a timeline to meet ... American Heritage could be and should be moving out, but they're not - they're continuing to stay with us and so it's just day by day."
Officials said American Heritage has agreed "in principle" to changing the contract to allow the state funds only to be spent for capital improvements and for none of the $2 million to be used as a loan, now that the cities were loaning the authority $1 million.
But authority board members discussed Monday morning that Craddick's office may have other concerns beyond those they have worked to satisfy in their amendments to its contract with American Heritage.
Presley said the issue is related to how the contract calls for the railroad to be transferred to American Heritage a piece at a time. Presley said the Speaker's office has concerns about the railroad ownership being transferred gradually and wants to see it either be transferred all at once or not at all.
Under the eight-year contract, the authority would transfer to American Heritage an undivided percent of the ownership interest of railroad if it meets certain performance requirements in terms of ridership numbers.
Board members during Monday's meeting discussed the possible ways that they might be able to work through the issue, including turning the train over to American Heritage in four years instead of eight and tying the transfer to the company's pay back of the $1 million loan.
Some in attendance at the meeting expressed frustration over the continued hold up of the funds. But Presley said the Speaker has the right to be asking questions.
"And it's our responsibility to do our best to answer them," he said.
Presley said after Monday's meeting, "We're going to talk to them (American Heritage) about new conditions and see if we can work out a condition under which American Heritage is OK with changes necessary and to make sure there are plenty of protections left in the contract for our local communities and that the Speaker is OK with, based on this latest request."
Alexis DeLee, a spokesperson in Craddick's office, said the issue was something that was discussed in the meeting the Speaker had with the authority board members back in October.
"We're just waiting to hear back from them on the new contract," Ms. DeLee said.
When asked about what the concern is, she said it is with the possibility that if anything ever changed and, for example, a new operator needed to be acquired, then the state would own a percent and the private operator would own a percent.
Presley said during the meeting that the issue was brought up in the October meeting, but that he thought it had been settled during that meeting.
When asked about a timeline for finalizing a new contract, Presley said, "We need to do it rapidly. We know that we have a timeline to meet ... American Heritage could be and should be moving out, but they're not - they're continuing to stay with us and so it's just day by day."
TRAIN RUNS
Despite the ongoing funding uncertainty with the railroad, plans are moving ahead for the train to operate through the end of the year.
In July, flooding rains washed out a portion of the Texas State Railroad tracks. Regular, full train runs were stopped until the damage could be repaired.
At Monday's meeting, a railroad official said that regular runs of the Texas State Railroad are expected to begin again Dec. 1, while the special runs for "The Polar Express" event will begin on the Palestine end of the railroad starting Friday.
For more information on "The Polar Express" special train run, visit www.polarexpressride.com.
In July, flooding rains washed out a portion of the Texas State Railroad tracks. Regular, full train runs were stopped until the damage could be repaired.
At Monday's meeting, a railroad official said that regular runs of the Texas State Railroad are expected to begin again Dec. 1, while the special runs for "The Polar Express" event will begin on the Palestine end of the railroad starting Friday.
For more information on "The Polar Express" special train run, visit www.polarexpressride.com.
FAQ
Search Forums
Log in
Register
