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Rail-Trail Project/Scam Update

State Senator Mike McGuire’s Senate Bill No 356 (Feb. 19, 2019) will turn over the North Coast Railroad Authorities tracks south of Cloverdale to the Sonoma-Marin Area Rapid Transit-‘SMART’] district.

According to a recent article in the Press Democrat by reporter Kevin Fixler, “One of NCRA’s primary creditors is the Northwestern Pacific Railroad Co., which since 2006 has owned the exclusive contract to operate freight on the line. The company’s managing partner [Doug Bosco] claims more than $6 million of NCRA’s debt is owed to the freight operator, primarily from loans NWP Co. provided to restore the railway to carry trains starting in 2011. Under its freight agreement with the state agency, NWP Co. holds a renewable contract that does not expire until 2031, according to co-owner Doug Bosco, a Santa Rosa attorney and former North Coast congressman. The freight company has options to extend its lease for a combined 70 years. Terms of the original contract do not require any payments from NWP Co. to NCRA until the freight operator reaches $5 million in annual revenues — a threshold it has never met. Bosco, an investor in Sonoma Media Investments, which owns the Press Democrat, declined to detail yearly earnings other than to call NWP Co. ‘profitable’.”

Fixler is treading on tricky ground here. His paper is owned in large part by Bosco who stands to get repaid millions of dollars — with relatively high interest and possible option buyouts — because Bosco’s company, NWP, is owed $6 million of the railroad’s apparent $8 million debt mostly for track repairs on tracks that have only seen a few token trains for decades. 

We first wrote about this NWP/Bosco debt in 2013 when dissident NCRA Board member Bernie Meyers blew the whistle on the NCRA/Bosco scam.

Few people will recall that back in 2012 Meyers called for “a comprehensive audit of the NCRA to determine if the NCRA is providing what it should provide to the state and taxpayers and if it should continue to exist.”

Is someone finally heeding Meyers’ call — a call that all his NCRA colleagues denounced at the time — albeit buried in the Great Redwood Trail proposal?

Fixler also reported: “McGuire’s bill follows related legislation sponsored by McGuire in 2018 that Gov. Jerry Brown signed into law in September providing for study of the trail proposal and transition of freight rail oversight in the region to SMART. The law also launched an audit into the North Coast Rail Authority, the Ukiah-based public agency that currently oversees regional freight rail operations and which has struggled under mounting, multimillion-dollar debt. ‘We’ve always known this project was going to be complicated because NCRA has never been managed well,’ said McGuire. ‘We are taking the necessary steps to wind down this financially bankrupt public agency. It’s the right thing to do for taxpayers and we know it’s going to take time to be able to secure the funds to complete this project.’ 

Fixler was referring to McGuire’s earlier 2018 Senate Bill, SB 1029, and the “study” being referred to in that Bill was: “13978.9. (a) Upon the appropriation of moneys by the Legislature for these purposes, the Transportation Agency, in consultation with the Natural Resources Agency, shall conduct an assessment of the North Coast Railroad Authority to provide information necessary to determine the most appropriate way to dissolve the North Coast Railroad Authority and dispense with its assets and liabilities. The Transportation Agency shall report to the Legislature before July 1, 2020, on its findings and recommendations from the assessment.”

Notice that what Fixler calls an “audit” or a “study” is referred to in 2018’s SB 1029 as an “assessment.” 

Fixler continued, “The audit is expected to be completed in June 2020. NCRA’s known debts top $8 million, but could be as high as $12 million. ‘There is no way in hell I would ever trust the numbers that they have advanced,’ said McGuire, ‘which is why we’ve brought on an independent auditor to verify the total debt owed by NCRA. This is an unfortunate but necessary step to unravel the finances and shut them down.”

Speaking to what Ukiah Daily Journal reporter Justine Frederiksen described as a “standing room only crowd” on Saturday, McGuire said that “there is an additional $10.8 million in the state budget this year, money that will also be used for a new weed abatement program along the right-of-way here in Ukiah and Willits to make this rail line more fire safe, also for other maintenance issues, and to be able to pay off the remaining NCRA debt,” which McGuire estimated to be between $10 million and $12 million, with the exact amount to be determined once the audit is complete.

McGuire is being very loose with his millions. $10.8 mil for a little weed abatement, some “maintenance issues,” oh and “the remaining NCRA debt.” Right, lump it all together. McGuire has “brought on an independent auditor” which is conveniently not named. Senate Bill 1029 called for an assessment to be conducted by Caltrans. But the 2019 follow-up bill, SB 356, makes no mention of an “independent auditor.” SB 356 only calls for an audit after the transfer is complete: “[The SMART Board shall] Cause a postaudit of the financial transactions and records of the district to be made at least annually by a certified public accountant.”

We’d like to believe that Senataor McGuire is looking out for the taxpayers’ interests. But with the very clever former Congressman Bosco in the loop, we are skeptical: 

If the “audit” was “launched” in 2018, why would it take until June of 2020 to complete? 

Who is the “independent auditor”? All we see in McGuire’s actual bill language is the far-from-independent “assessment” being conducted by Caltrans.

What’s this new reference to “could be as high as $12 million”? Where’d that number come from? Could Bosco be angling for a bigger payback than the NCRA even recognizes with an audit that substantiates his higher claim? 

There’s no indication that the audit or assessment or whatever it is will be made public, which, if they were truly working in the taxpayers interest they’d be trumpeting.

Since “NCRA has never been managed well,” as McGuire correctly says, why is he turning over the southern railway section to SMART — perhaps the most poorly run rail system in the state? SMART hasn’t produced anything close to a viable passenger rail service even with their huge subsidies and sales tax revenues and which still doesn’t connect with any other NorCal rail system.

The Great Redwood Trail is supposed to replace the northern section of the NCRA right-of-way from Cloverdale to Eureka overseen by a new group of Democratic party hacks, er, Board. McGuire and his legislative colleagues are putting a lot of energy and money into this “dream” that seems quite impractical when closely examined. We doubt it will ever come to pass —these politicians are incapable of actually doing anything besides “dreaming” and spending money — and it could wind up coming with a price tag that includes paying Doug Bosco up to $12 million. Or more. 

One Comment

  1. Michael Koepf July 1, 2019

    Well, at least there’s one journalist in the Redwood Empire who’s paying attention to facts and blatant greed— Mark Scaramella.

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