The North Coast Railroad Authority is running on fumes.
The public agency, which was created by the Legislature almost 30 years ago, though never given a source of public funding, has racked up more than $8 million in debt, including about $2 million in attorneys’ fees
owed to sought by local environmental groups Friends of the Eel River and Californians for Alternatives to Toxics. (A seven-year legal battle reached its apparent conclusion in May when the U.S. Supreme Court declined to hear the NCRA’s latest appeal.)
The state now considers the NCRA a high-risk agency, meaning it’s no longer eligible for government grants and loans. Its finances, to quote State Senator Mike McGuire, are “a hot mess.” They’re in about as bad shape as the NCRA’s own rail line between Humboldt Bay and Willits, a stretch that hasn’t been operational for two decades now and that the agency finally admitted — belatedly and begrudgingly — probably never will be.
Earlier this year McGuire introduced Senate Bill 1029, The Great Redwood Trail Act, a landmark bill that would dissolve the beleaguered NCRA and divide its 312-mile right-of-way into two segments. Management of the southern section — from Willits south through Sonoma County — would be transferred over to the Sonoma-Marin Area Rail Transit (SMART) while management of the northern section — from Willits north, up to and around Humboldt Bay — would be transferred over to the Great Redwood Trail Agency.
The goal for this newly created state agency would then be to railbank the line (possibly excluding the stretch around Humboldt Bay to preserve the possibility, however remote, of a freight or excursion train) and develop a recreational trail system that stretches all the way from Humboldt Bay down to San Francisco Bay.
“The Great Redwood Trail will rival any trail system on the planet,” McGuire boasted in a phone conversation on Monday. “Nowhere else on Earth will a hiker be able to navigate through such spectacular scenery as the redwoods, Eel River Canyon, wine country and Humboldt Bay. This will be significant driver for the North Coast economy.”
Of course, the bill hasn’t passed yet. It cleared a major hurdle in May with unanimous passage in the Senate, and late last month it was amended and passed out of an Assembly committee. Still, in order to become law SB 1029 must clear both houses of the Legislature before the current term ends on Aug. 31 and then get a signature from Gov. Jerry Brown before the end of September.
Meanwhile, the NCRA appears to be on its last legs.
“The biggest challenge we have,” McGuire said, “is the NCRA’s suffocating debt.”
The agency is expected to completely run out of money by late fall; McGuire said state attorneys and the governor’s office are busy trying to figure out what happens if the NCRA really does go bankrupt before its assets can be transferred to other agencies. There’s not much precedent for a state agency going belly-up.
NCRA Executive Director Mitch Stogner insists that won’t happen. “The NCRA will keep its doors open, pay its bills and honor its commitments until such time as the McGuire bill takes effect,” he told the Outpost.
That remains to be seen, though everyone — including the agency’s fiercest critics — seems to agree that bankruptcy would be a disaster.
“Here’s the bottom line,” McGuire said. “No one will benefit if the NCRA goes off the fiscal cliff.”
In a phone conversation late last week, Stogner sounded exasperated and defensive. He was annoyed by a recent opinion piece from columnist Dan Walters, a longtime critic of the NCRA who worked at the Eureka Times-Standard before heading to the Sacramento Bee. In his latest piece, for the San Jose Mercury News, Walters describes the NCRA as a “shameful boondoggle that has cost taxpayers tens of millions of dollars over the last three decades and has achieved exactly nothing.”
Stogner also feels resentful toward the Outpost‘s own Hank Sims, who once called the NCRA “the most corrupt arm of government currently operating in Humboldt County.”
What these and other critics have consistently failed to appreciate, Stogner said, is that the NCRA was effectively set up to fail. In 1989 the Legislature passed two bills — one to create the agency and another to fund it. Then-Governor George Deukmejian signed the first one and vetoed the second.
“People want to skirt around that,” Stogner said. “It’s the flaw on the front end, the nasty little flaw … that no one wants to confront.”
From Stogner’s perspective, the state has continued to be inexplicably stingy and antagonistic toward the NCRA, with just one exception: $60 million in Traffic Congestion Relief Program funding awarded to the agency in 2006 to rehabilitate 62 miles of track on the southern end of the NCRA’s right-of-way. (The agency’s freight operator, Northwest Pacific Railroad, or NWP Co., now runs a small train between Napa and Windsor a couple times a week.) Even that grant wound up costing the agency money because the funds were restricted to rehabbing the line and couldn’t be used to pay rent or the electric bill or hire staff, Stogner said.
As for the rest of the NCRA’s line — from Windsor north — the agency has seen “nothing but slings and arrows from the state,” Stogner said. Former governor Arnold Schwarzenegger twice vetoed funding bills that had made it through the Legislature, and both CalTrans and the California Transportation Commission (CTC) have repeatedly denied funding requests.
“The enemy here is the state of California, not the NCRA,” Stogner said. He feels the agency’s nine-member, all-volunteer board of directors, in particular, has unfairly borne the brunt of criticism over the years. “The only mistake from the volunteers at the NCRA is that they didn’t just walk away and say, ‘You take care of this.’”
Critics, however, say there have been plenty of other mistakes, not least of which was the 100-year lease awarded to NWP Co in 2006. One of the agency’s own former volunteer directors, Bernie Meyers, lambasted this agreement, saying the terms were negotiated “via back-room dealings … that violated public disclosure law.” Meyers also noted that the terms of the lease don’t require NWP Co. to pay the NCRA a single dime until the company earns $5 million in net profits in a single year — something that, to date, has never happened.
Richard Marks, one of two Humboldt County representatives on the NCRA Board of Directors, said NWP Co. hasn’t even shown up to report for at least the past five NCRA board meetings. McGuire’s bill has caused some animosity between the NCRA and SMART, Marks said, and he speculated that NWP Co. is now negotiating with the latter agency only.
Other NCRA critics say that in its desperate quest to secure public funding the agency has routinely been dishonest and unrealistic, forestalling trail development while trying to sell off public assets. Most recently the agency tried to sell 1.78 acres in Cloverdale that it had declared “excess property,” but SMART and CalTrans submitted a letter to the state protesting the plan, and the California Transportation Commission halted the sale.
And then there’s the lawsuit from Friends of the Eel River and Californians for Alternatives to Toxics. In defending itself in court the NCRA, a state agency, contradicted its own prior statements by arguing that it shouldn’t be required to follow state environmental laws.
Stogner said the agency’s small staff and volunteer board, which is comprised of elected representatives from Humboldt, Mendocino, Sonoma and Marin counties, have only ever tried to preserve the rail corridor. And for all his bitterness toward the state, Stogner is surprisingly supportive of the bill that might dissolve the NCRA entirely.
“I do want to make one thing clear,” he said. “Thanks to McGuire, the state may finally be ready to commit state resources to this historic rail corridor. That’s good for everybody on the North Coast. He’s finally taking this very difficult issue and raising the curtain on it in Sacramento.”
The latest version of McGuire’s bill calls for the creation of the Great Redwood Trail Program Fund and would require “certain moneys” be deposited into it.
Noting that stakeholders need to learn from past mistakes, McGuire said he’s focused on developing a master plan to determine how much it will cost to build and maintain the trail system. That process will require surveys of private property boundaries. “We believe there are over 1,500 properties along the proposed Great Redwood Trail,” McGuire said. “We need to determine where they start and end.”
While McGuire admitted he doesn’t yet know where all the funding for this ambitious project will come from, his office has been approached by nonprofit agencies interested in investing in the master plan.
Before any of that can happen, of course, the bill must get passed into law. And considering the current state of the NCRA, McGuire said, “Time is of the essence.”