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Op-Ed: Deal for Freight Train Service Not Only Shady but Illegal

Bernard Meyers, former Novato councilman and current board member of the North Coast Rail Authority, says the freight contract was made in violation of public disclosure law.

Editor's note: The author is a board member of the North Coast Rail Authority and a Novato resident. The views expressed here represent are his views only and not of the North Coast Rail Authority. This op-ed is a follow-up to one he wrote for Novato Patch in March. To read the earlier piece, click here.

By Bernard Meyers

Where should hundreds of millions of your tax dollars go ... to pay for police, fire service and schools or to a private freight railroad operator that was able to get a lease with a public agency via back-room dealings and meetings that violated public disclosure law?

What if that lease was never examined to see if it was fiscally prudent?

That scenario may soon be coming down the track, unless that lease is amended to avoid the inevitable result. The public agency is the North Coast Rail Authority, and the operator is the Northwestern Pacific Co.

In January 2006, NCRA requested proposals from operators to haul freight on its right-of-way, which includes tracks that run through Novato. Five entities responded. NCRA’s activities — interviewing the bidders, choosing NWP’s bid, and the negotiations for the lease — were performed by NCRA’s operator committee, whose meetings were held without any public notice and without any public participation. The committee appears to have violated the state law governing the public’s right to observe public business, known as the Brown Act.

  • The operating committee did not report in any meaningful way to the public; when it reported to the NCRA board, it did so in secret in board closed sessions;
  • The selection criteria utilized by the operating committee and the board was never revealed to the public, and there is no way to determine how or why NWP was chosen;
  • In June 2005, the committee met at former Congressman Doug Bosco’s office; in December, the committee apparently interviewed an owner of the Island Mountain Quarry in rural northwest California; between the time the request for proposal was issued in January 2006, and the choice of NWP as the winner in May, NCRA utilized the quarry owner in a pitch to the state for funding, and NWP listed both that owner and Bosco as principals;
  • The May 2006 telephonic board meeting at which NWP was chosen violated the law; its notice failed to identify the locations from which members called in and failed to give the real intent of the meeting. No members of the public were present;
  • After NWP was chosen, lease negotiations started. While NCRA still had the ability to negotiate with another bidder, it did not - giving NWP every advantage, to the taxpayers’ detriment. Other bids were more favorable (two included a percentage of revenues going to NCRA), but NCRA stuck with NWP;
  • The notice for the September 2006 board meeting when the lease was supposedly approved does not adequately indicate that the lease was to come before the board for approval. The result is that the public did not see the lease in its final form before it was signed;
  • At no time, from the time the request for proposal was considered through the time the lease was signed, was any member of the public able to comment on the substance of the dealings.

Because a long-term lease can have severe financial repercussions, it is essential for the agency to make every effort to include the public in its decision-making and explain its reasoning. Unfortunately, this lease is the product of secret dealings, with old friends on either side, and without proper public notice or input.

Now that NWP is getting ready to roll, it wants to change some of the lease terms without giving NCRA and the public sufficient time to consider options. The NCRA needs skilled, unbiased counsel to guide it to a fiscally prudent agreement. Over $1 billion in taxpayer dollars could be riding on this. 

We need to have public overview and insist on fiscal prudence. Otherwise, vital public services will be shoved into the baggage car while the operator rides in first class.

Edwin Drake June 02, 2011 at 04:26 AM
This is a Great Train Robbery, except the public are the ones being robbed. This entire episode is going to haunt us, and cost us money we don't have. How can it be stopped?
Austin Morris June 02, 2011 at 03:38 PM
First: Thank you Bernie for your insight and staying on top of this. Then too as Edwin Drake pointed out "How can this be stopped?" Was there criminal intent here, probably not initially, just low moral & ethical standards under the guise called 'business'. Well it is bad business, for it takes advantage of not only the public trust, but also schemes public monies. When the latter is put into play or is executed then that does seem to me as criminal. To counter the latter that is why all this matter must be done in an open forum and with full disclosure as Bernie stated.
DINAH MATTOS June 02, 2011 at 06:13 PM
Thank god I know nothing about politics. I am learning and what I am hearing I do not like. I can't wait for the forum to hear everybody's opinion. Maybe I'll wear my sign that says WAKE UP NOVATO. Pay attention. How bout' SMART TRAIN MY ASS. I need a new sign.....How can this be stopped? or...lies lies lies. I like the latter.
Robert J. Cleek June 02, 2011 at 06:36 PM
Give it a rest, Bernie! You're a salmon swimming upstream and late to the dance at that. Had Marin bothered to appoint a representative to the NCRA board when the operator lease was offered, your input might have been relevant, but now, years later, you're just blowing smoke. Spare us the self-grandizing political grandstanding. The FACTS evidence that you are either disingenuous or, at best, simply ignorant. Care to enlighten us on how many bidders were even interested in operating a short line on the NCRA? Mmmmm... I thought not. Care to enlighten us on the amount of money the lessees were obligated to put into the operation (and have)? Again, aparently not. Those millions would have had to come from tax dollars that didn't exist. Under the lease, the private operator takes that huge financial risk, not the taxpayers. The "benefits" the operator can only hope to realize, which you decry, are a fair return on their investment. The NCRA posted on their website all the necessary information in their bid solicitation and the contract is there for all to read. It couldn't have been any more open and transparent. Do you have some other qualified operator with the millions of dollars in hand to run a railroad that wants to give the NCRA a better deal? I doubt it. Quit yer bitchin' about who got the job nobody else could do or even wanted until you've got a better solution, Bernie. We can't afford to waste time catering to obstructionists any longer.
Marie Hoch June 03, 2011 at 01:27 AM
Bernie, Thank you for writing this article. What can the public do about this? Can you suggest a call to action? Marie
B Meyers June 04, 2011 at 12:54 AM
I appreciate Mr. Cleek's comments and the opportunity to reply. He is correct that service in the public arena can feel as though its an upstream swim, and, perhaps, not a fruitful swim at that. Its not necessarily a pleasant experience - but it is necessary to undertake the effort if you want to do your public duty properly. Here is part I of my response. It is not too late to change the lease. In fact, that will probably occur within the month, and apparently without proper fiscal and economic analysis. NCRA has yet to determine whether the current lease is fiscally prudent and that analysis for any changes will most likely continue to be be missing. There were five (5) entities who responded to the 1/17/06 RFP. Your comments highlight a weakness in Op-Eds (or at last mine). They need be brief and can not deal with every issue that might be raised. To see my longer response, please link to my memo being presented to the Marin Board of Supervisors next Tuesday at: ( http://www.co.marin.ca.us/efiles/BS/AgMn/cybagnda.htm#consent - Item CA-1 d.). In brief, two of the other responders were considered by the Operator Committee and both NWP Co. and one of the others was on the "short list" of finalists. Both of the other two responders were, going in, offering more money than did NWP Co. Please see Part II
B Meyers June 04, 2011 at 12:55 AM
Part II You correctly observe that since the lease was signed, NWP Co. has put in funds. This aspect deserves further comment beyond what can be briefly said here. Clearly NWP Co.'s contributions should be taken into account in any change to the lease. But to say that these contributions warrant outsized profits - potentially over the next century - could be a bit to a stretch. Also, the taxpayers will continue to shoulder substantial risks and will be called upon for further funding, during the entire time period. As you will see from the linked material, the RFP was open, but not what happened thereafter - including the choice of NWP Co. and its September 2006 lease. The lease was put on the web site only years after it was signed, after two the the Board members requested a hearing on the issue. Openness and transparency were not hallmarks associated with this. Please see the linked material. As to a better solution - over the past year I have suggested changes to the lease and an interim agreement to cover both the operator and the NCRA until a new agreement is in place. So far, my suggestions have not received a warm welcome. Perhaps others see me as an obstructionist as do you. If so, I apologize. But I still believe that if my views are correct, then they are worth expressing and worth fighting for, even if, in the near term, they do not carry the day. - Thank you.
B Meyers June 04, 2011 at 02:59 PM
To Messrs Drake and Morris and Ms. Mattos and Ms. Hoch: The NCRA Board and NWP Co. need to be convinced to amend the lease so that its terms are not so egregious as far as taxpayers are concerned. Thus, it might help if the public were to, in person or by mail, tell the Board of your concerns. See the NCRA web site for meeting dates and places, including Healdsburg on 6/8 and 6/16. The lease will soon be amended to deal with the new operating agreement with SMART and the upcoming EIR certification. This would be an appropriate time to change how fees are paid to NCRA, the lease term, and other matters covered in my 12/14/10 memo to the Marin County Board of Supervisors (http://marinsearch1.co.marin.ca.us/smb/egovfiles.co.marin.ca.us/WebShare/Ego vShare/BS/AgMn/agdocs/101214/cybagnda.htm ‐ Item 9). If the lease is not properly changed, consider contacting state and federal legislators to voice your position. Federal and state funds are the backbone of rehabilitating the line and paying for future major repairs. On a personal note, thank you for your kind words
B Meyers June 04, 2011 at 02:59 PM
Please see my reply, below. - Thank you - Bernie Meyers
B Meyers June 04, 2011 at 03:00 PM
Please see my reply, below. - Thank you - Bernie Meyers
B Meyers June 04, 2011 at 03:00 PM
Please see my reply, below. - Thank you - Bernie Meyers
B Meyers June 04, 2011 at 03:00 PM
Please see my reply, below. - Thank you - Bernie Meyers
B Meyers June 04, 2011 at 03:05 PM
The 12/14/10 BOS agenda link is a long one - I hope this is better, or that you can find it separately. - Bernie Meyers http://marinsearch1.co.marin.ca.us/smb/egovfiles.co.marin.ca.us/WebShare/Ego vShare/BS/AgMn/agdocs/101214/cybagnda.htm ‐ Item 9
Jason Bulliet June 04, 2011 at 04:40 PM
Keep on trucking NOvato! Bernie must work for a trucking company. It appears that there is no stopping the selfish center of the universe. No trains in my back yard. You are all a bunch of NIMBY's. Yes more cars and more trucks is the answer to our environmental problems. Put up more road blocks or should I say rail blocks Bernie. You are my hero!
Robert J. Cleek June 06, 2011 at 09:27 PM
Mr. Meyers, I did check your links, but I couldn't find anything there from you. One didn't open at all. I appreciate your efforts to protect the public purse, but it seems, if in fact there is any truth to the technical procedural shortcomings y0u cite, that you are here simply elevating form over substance. Like yourself, I wasn't there and I wasn't privy to the lease negotiations. However, I don't see anything unconscionable, nor even arguably poor business judgment, in the terms of the lease. How much should a private business make on investing millions and millions of dollars taking a chance on running a short line railroad that the one of the largest railroads in the US, flush with federal subsidies, abandoned as unprofitable in light of the greater profit to be made on long-haul freight? How, exactly, in terms of dollars and cents, are the taxpayers getting ripped off by the present lease. Seriously, I'd like to know. "Transparency" and "public comment" are good things, but with respect to this "done deal," how were we disadvantaged? Isn't it possible that your colleagues on the NCRA board, none of whom support your positi0n, might just actually have done their jobs as they were appointed to do and on balance picked the best candidate at the best price, notwithstanding your "20-20 hindsight" concerns about the way they conducted this business?

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