By Nicole Barde

This was the first meeting since the December 14th 2015 meeting and I’m sure it was difficult to pull together given the unfortunate passing of Kevin Ray who was responsible for all of the content and logistics for these meetings…may he Rest in Peace. You can find the agenda HERE. 

The first agenda item was to ratify the contract to hire Candy Duncan, also the Marketing and Sales coordinator, for a period of one year as the Project Coordinator replacing Ray. It was passed.

Next came the Treasurer’s report which I must say was hard to follow not just because I didn’t have any of the material in front of me but because the Commission operates on a two cycle financial system. They have to report financials to the state and are audited based on the state’s fiscal year which is from July to June. They also report based on the calendar year since their business runs on a calendar year. The net-net is lack of transparency to the public as well as to the board who were as confused as I was in this financial review. The bottom line here is that…………..I don’t think that they know what the bottom line actually IS from a financial standpoint either currently or out in time.

First to be reviewed was the Cash update of the Commissioners General Fund.  This is based on the fiscal year.  As of 3/29/16 there is a cash balance of $256,771 in two accounts.

The estimated revenue for the period ending 6/30/2016 is $255,837.

 Now, in that estimated/anticipated revenue number is $215,532 they expect to get from Storey County. I asked about their confidence in receiving these funds. Since Storey County Comptroller Hugh Gallagher has publically stated that Storey County would not be sending any funds until and unless the Commission gives the County a complete audit on how prior funds have been used, I was curious to know if the Rail Commission was receiving any funds at all from Storey County.  

The issue here is that the Interlocal in place between the Rail Commission and Storey County stipulates certain terms and conditions for use of that tax money and Storey County questions if the Rail Commission is in compliance. Commission Chair Dwight Millard replied to my question by saying that they expect the funds any day since it was committed to.

Without the Storey County money the estimated/anticipated revenue thru 6/30/2016 drops to $40, 305.

The estimated expenditures thru 6/30/2016 are $ 86,250. 

-WITH the Storey County monies the estimated cash balance as of 6/30/2016 is $ 426,358

-WITHOUT the Storey County monies the estimated cash balance is $210,826. Quite a difference.

See HERE for a bit of history on the Storey County Interlocal Agreement.

 The next set of financials to be reviewed was the Enterprise Fund which was described as the operational arm of the Rail Commission. It is based on a calendar year so the financials were as of December 31, 2015. So,  to restate, the Commission General Fund report goes thru 6/2016 and the Enterprise Fund report only thru 12/2015. Hard to reconcile the two.

Total income for the 2015 calendar year was $1,093,364.

Total Expense for the 2015 calendar year was $1,209,629 for a net ordinary income of – (minus) $116,264. The operational revenues can’t support the operation.

Under other income/expense it was noted that the V&T Commissions General Fund gave the Enterprise Fund $150,000 and so after adding that and a few smaller items back in the NET INCOME as of 12/2015 is $34,153.

Polar Express is the big revenue generator with $698,686 in ticket sales and

$ 485,463 in expenses for a total net profit  of $ 213,223…..and that plus the $150k infusion from the General fund is still not enough to run the operation profitably given the other expenses.

The train service agreement expense and track maintenance/inspection expenses are $ 375,271 and is the biggest expense with advertising/marketing/promotion/sales expenses coming in at $ 212,972. The marketing etc. expenses are about 18% of all expenses. 

The way the line keeps operating is thru the financial contributions by the surrounding counties mandated by NRS.. Storey County has always contributed.

(As a side note:  At some point during the meeting Storey County Commissioner Jack McGuffey stated that Storey County isn’t happy with the current arrangement. That the monies secured thru the Storey County sales tax increase aren’t being spent as approved by the voters and that the increase of sales tax by ¼ percent in Storey County puts the competitiveness of TRI as a magnet for businesses at risk. )

Carson contributed at some point but not consistently. However, its voters did approve a $53 million bond to build the track to Virginia City.

The Commission is waiting for Washoe to contribute and the others have contributed virtually nothing. Without full commitment to the Rail Line it cannot operate. Either way, contributions or not if this were a private enterprise its business model and expense structure would have been looked at and revised a long time ago.

The Commission needs to “ virtually” fire themselves OFF THE BOARD……………….then re- look at the operation like business consultants and make the needed changes dispassionately.  

The next agenda item was seeking approval for a $211,000 bid to do the dirt work at the Eastgate station to make it rail ready when funds are secured. The rationale for doing this was:

  1. We need to get our stuff out of Drako now that it’s sold and need a place to put it.
  2. The BLM can take the property back if they don’t see us using it
  3. The Environmental Impact Study has been done but it’s been a while and if we don’t show that we’re using the property we might have to go thru the expense of another one.

There was a bit of discussion then thankfully the conversation came around to the reality that they need to conserve cash for maintenance and operations rather than spending it opportunistically. They determined that numbers 2 and 3 would be taken care of if they just moved the materials out of Drako directly onto the property. I was happy to hear this since the Commission has a history of taking risks and opportunistic spending that just doesn’t pan out.

-The Drako building purchase is one example where it was never used for its intended use as the depot for Carson City. It was purchased for more than $1.2 million and in January 2015 it was put up for sale with the Commission wanting to Net $735,000 and is currently on a lease option.

– The Commission bought 4 or 5 commuter train passenger cars that never were used, they didn’t “match” rolling stock that would have been historical, and never came to the Comstock. The Commission paid rent for years to store them in Portola before they were sold.

– Rail that was used to build the line was “commuter grade” and costly. A less expensive rail could have been purchased.   

The next 2 agenda items were the Engineering report and the Attorneys report which were very short.

Agenda items 12 and 13 were items for approval of the $85,000 Marketing and $14,250 PR contracts for another year. The groups gave a standard presentation of the activities for the last year and the contracts were approved.

Commission Chair Dwight Millard stated after the presentations that the counties are not helping with some of the promotional activities relating to the Rail Line that goes thru their areas. He said he saw no trains in the Tourism efforts that he has reviewed. Commissioner Jack McGuffey said that the VCTC does promote the train but that the brochure that the Rail Commission uses lacks some V.C. information and doesn’t “pop” as far as visual appeal goes.

This then segued into a discussion of the history of the funding for the Rail Commission and how each of the counties have or have not met their obligations to support it. This is the same discussion I heard last year and the previous year……………..nothing has changed.

The next agenda item was a motion to establish a memorial for Kevin Ray and that was tabled until the May 23rd meeting.

Item #15 was a report from Tom Gray regarding the repair efforts on Engine #18 and a number of other issues. To make a long story short it sounds as if the backlog in repairs on several engines, due to various reasons, may very well impact revenues this year. Net-Net the Commission really needs a new engine. Tom has been working and reworking old parts and making “new” parts for a long time and that is playing out.

 Dwight Millard asked that the operating budget revenues be looked at in light of the potential for shortening the number of cars or number of runs.

Next up was Commission Chair and Commissioner reports which were very short.

The next meeting of the Rail Commission is on May 23, 2016 at 3:00pm and the 2016-2017 budget will be reviewed at that time.

(As a side note the tentative 2016-2017 budget had been submitted to the state without the Commission having reviewed it.)

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