American Heritage makes 16 job offers
BY LELAND ACKER

TYLER - Getting the Texas State Railroad on the right financial track was the order of the day as the Texas State Railroad Rail Authority met Thursday in Tyler. The authority approved several proposed changes to the agreement with American Heritage Railways and contracted with Gary Traylor for grant writing and administration services.

The contract with Mr. Traylor was accepted by a 7-0 vote, after board member Charles Hassell made the motion and Marie Whitehead seconded it. During the discussion phase, Mr. Traylor discussed his role with the rail authority.

"What I see as my primary job is to take all the loose ends and unanswered questions and put those in a box and hand them back to you guys," Mr. Traylor said.

"Mr. Traylor is usually hired to find grant money," said Ron Stutes, the attorney for the rail authority. "In this case, we already know where it is, we're just trying to figure out how to get it."

Mr. Traylor explained the riders in the appropriations bill passed in the spring are general in how they are written. He added that he planned to help the authority learn how to obtain the grant money and how to obtain money previously awarded to the Texas Parks and Wildlife Department (TPWD) in 2001 for state railroad projects.

"We need to see how the benefits of the unexpended money can flow to the authority," Mr. Traylor said. "Because $12 million of the funds are federal funds, the Texas Department of Transportation (TxDOT) is responsible for making sure (their use) complies with the federal highway administration."

"He's going to work on the $2 million, to be sure it can be used as collateral for American Heritage to borrow against," Mr. Hassell said. "Gary will do a good job of helping us to understand that."

Mr. Traylor comes to the board highly recommended. After the meeting, Mrs. Whitehead said that if there was money to be found, Mr. Traylor could find it. He has worked on grant and funding projects before for the Texas State Railroad.

Following Mr. Traylor's welcome to the transition project, Mr. Stutes addressed the board concerning proposed amendments by American Heritage to the operating agreement. The first proposed change to the agreement came as a result of the flooding which washed out more than 60 feet of track at the state railroad.

"American Heritage has suggested that we agree that if they are prevented from operating for two months due to a disaster, that we plug in the historic ridership numbers for those months to count toward ridership goals," Mr. Stutes said.

In the discussion, it was defined that the historic value would be the ridership from the same month from the previous year. For example, if the train shut down for July and August due to flooding, the ridership numbers for July and August of the previous year would count toward American Heritage's annual ridership goal.

In the agreement, American Heritage has to meet certain ridership goals in order to receive ownership of the train.

Another change proposed in the agreement would be to allow the $2 million awarded to the rail authority to be used as a revolving loan fund to American Heritage, which they would be responsible to pay back so that the funds can eventually be used to obtain matching funds.

"This will be an important source of bridge money," Mr. Stutes said. "American Heritage will have the immediate expense of payroll plus months of ramp-up."

American Heritage attorney Jeff Jackson explained his company would immediately inherit the deficits the train is operating under.

Dan Davis, board member, asked how much American Heritage needed.

"It's in the half million range," Paul Schrank, vice president of American Heritage said.

Mr. Stutes pointed out that the rail authority will not need the entire $12 million in the first year of operation.

Board member Dale Brown said using the $2 million as a loan fund and to obtain matching funds will be a balancing act.

"If there is no timeline to get (the loan repaid), then you won't have it to get (the matching funds)," Mr. Brown said. "The state reimburses. The authority has to spend the money first, then apply for reimbursement."

Mr. Jackson said, "We have to walk in Sept. 1 and eliminate the historic losses of the train. One way to do that is to access a line of credit."

"To sum up this situation, All of the money is going to be spent on railroad capital improvement, with some money being involved in a revolving loan fund, at first, but ultimately all spent on capital improvements," said Board President Steve Presley.

In other proposed changes, American Heritage requested permission to mortgage the property transferred to them with consent of the board. Mr. Stutes said they will have to see if the state allows it.

Board member Bob Goldsberry updated the board on track repairs. He said TPWD is still aiming to have the repairs made by Aug. 31. The repairs will either be performed by Tx- DOT or HDR Engineering.

"Ellen Buchanan said her instruction is to get the one who can get it done the fastest," he said.

In other business, the board voted to designate the Palestine city manager's office at 504 N. Queen St. as the rail authority's designated administration offices. This is to comply with the Open Meetings Act requirements to post meeting agendas in advance. Mr. Stutes recommended that the board should send meeting notices to the Anderson and Cherokee County courthouses and Rusk and Palestine city offices.

The board decided that sales tax is applicable in train ticket sales.

Mr. Schrank gave an update on the status of the transition of the train from TPWD to American Heritage.

"I have 16 job offer letters at my hotel room," he said. "The initial job offers are going to operators, technicians and supervisors."

Mr. Schrank named Lori Kastrop as American Heritage's marketing manager. Her office will be located in downtown Palestine until more suitable arrangements can be made. Mr. Schrank said American Heritage will "probably be able to retain 2/3 of the staff," adding that American Heritage will offer jobs to current employees before entertaining additional applications.

Mr. Schrank said the phones are ringing in Durango, Colo., and American Heritage is taking reservations. He added Thomas the Tank Engine tickets are on sale.

Present were board members Mr. Presley, Mr. Davis, Mr. Brown, Mrs. Whitehead, Mr. Hassell, Mr. Goldsberry and Wesley Holloway. Others in attendance were Mr. Stutes, Mr. Traylor and Mr. Schrank. Mr. Jackson participated via telephone.