Results from Today’s Sault City Council Meeting

I was able to watch the portion of the city council meeting (via live-streaming online) where the passenger working group’s motion (to not, at this time, sign the funding agreement with RailMark Canada) was presented and discussed.

Tom Dodds, on behalf of the local Economic Development Corporation (EDC) and the passenger train working group, and Allen Brown, president of RailMark, were both able to address the council and respond to questions before the motion was called and voted on.

Some highlights:

  • Dodds’ presentation reiterated the interest of various local groups in the health of not just the passenger service, but the rail network around the Sault in general, the economic benefit to the area of the various rail connections and services, and the working group’s strong support of the service. The working group feels that in addition to providing actual access to the country north of Sault Ste. Marie, due to the low levels of freight traffic on the ACR line, the revenues from the passenger train’s use of CN’s tracks, while a fraction of the maintenance costs of the line, would not be insignificant to the continued health of the overall line.
  • Dodds tried to make it clear that the working group is not trying to say “no” to anyone, but reiterated that the EDC’s precondition to recommending the city sign the funding agreement was that the operator (RailMark) have suitable financing (in the form of a line of credit of up to three months operating costs) to prove the financial ability to maintain the service. So far, no documentation to demonstrate this has been provided, and this is why they recommend the city not sign the agreement at this time.
  • It was suggested that other options may be and should be explored with CN, the working group, RailMark and Transport Canada. This may be towards the end of exploring other operators, but not necessarily ruling out RailMark if they can still make this work. Above all else, they want confidence and stability in the operation, and the current state of the funding agreement is definitely creating some uncertainty.
  • It was acknowledged that from April 1 to May 1, CN had continued to operate the passenger service, being subsidized directly from the federal government under an extension of the previous agreement. Since May 1, RailMark has been operating the service entirely at their own cost. During the initial period, crews were provided by CN, but paid for by RailMark as RailMark gradually took over, but apparently as of last Thursday, it’s a fully RailMark operation.
  • The passenger service and the Agawa Canyon Tour Train should be considered separate operations, and at this point the discussion is entirely about the funding and operating of the regular service, but ideally both will fall under the same operator, as the two services would naturally work well together and could share some resources. Due to the time frames involved with the current season, CN and RailMark have agreed that CN will continue to operate the Canyon tour train for at least this season.
  • Brown’s address to council acknowledged the difficulty in obtaining the aforementioned line of credit, but mentioned that it would have been much easier if there had at least been a conditional agreement subject to the desired financing. However, due to the preconditions, there is currently *no* signed agreement at all, and his US bankers who would have otherwise been ready to provide the required line of credit are hesitant. Since then, says Brown, he has been mainly trying to work with Canadian sources of financing, and suggested he may actually be close to an agreement; he hoped to have something in hand at today’s meeting but will have to return to Michigan to have his accountant prepare some required financial information records.
  • Brown also stated that as an American company trying to take over a Canadian railway operation there has also been a lot of work and a learning curve to climb. But RailMark did indeed obtain their certificate of fitness from Transport Canada, and that was the first such certificate under new tightened regulations (although I’m not real conversant in railway fitness requirements to know much about what the newer requirements are).
  • Little mention was made of the service disruption last week other than by a councillor who made a comment about doing business with a company that create a couple of “uncomfortable situations” including the recent stranding of travellers during a follow up question to something in Mr. Dodds’ address. But then I guess when VIA Rail has service disruptions due to “Operational Issues” not much is publicly stated either, just there’s so many railfans and watchers in southern Ontario that everyone seems to know the whole story within about an hour. And VIA passengers usually at least have other options.
  • One councillor asked Brown if he could comment on the state of the unresolved issues with the Columbia Star Dinner train in Missouri. Brown indicated that this train basically got caught up in complications regarding the failed sale or merger of one of his divisions to TBG Group, and he really should have resolved that by now but has been so focused on the Algoma Central deal, but suggested that a legal action from his company would likely be forthcoming but that his lawyer (for obvious reasons) said he shouldn’t mention anything about that (to which the mayor commented “You might want to listen to your lawyer”, with what seemed to be just a trace of snark).
  • The final word seemed to be given by the city’s mayor who took a slight issue with something Brown said about various actions to comply with the city’s requests and the mayor wished to clarify that Brown and/or RailMark was not acting on the request of the city and that “any actions you take going forward are of your own volition” before dismissing Brown and calling the vote. This delivery came across rather like a verbal body slam against Brown, and he seemed visibly frustrated on being dismissed, and I can’t say I blame him. It’s been a bumpy road so far and multiple parties are understandable concerned, but from Brown’s perspective, working with multiple stakeholder groups, corporations and levels of government bureaucracy can’t be easy either.

Ultimately the vote was called (to not sign the agreement at this time) and passed. The vote was asked to be recorded, and it was unanimous in favour of the motion.

So at this time, the agreement goes unsigned. I guess it’s up to the working group, RailMark and CN what happens next. If Brown does have a suitable source of financing lined up, maybe this whole thing can still come together soon and find some stability.

[Edit: here’s an article from the Sault Star covering today’s meeting.]

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