THE OHIO RAIL DEVELOPMENT COMMISSION

REGULAR BI-MONTHLY COMMISSION MEETING

- NOVEMBER 13, 2003 -

CALL TO ORDER AND ROLL CALL

Chairman James E. Betts called the meeting of the Ohio Rail Development Commission (ORDC) to order at 10:10 a.m. on November 13, 2003. Commission members present included: Chairman Betts, Herk Wolfe, Tom McOwen, Larry Sowers, Mike Ciotola, Dan Roberts, Solomon Jackson, and Jim Battin for Don Clark, Ohio Department of Development designee. Members absent included Janet Weir Creighton, Senators Mumper and Hagan, and Representatives Perry and Buehrer. Eight voting members were present, one absent.

ACKNOWLEDGMENTS

Prior to asking for approval of the September minutes, Chairman Betts indicated that he wanted to acknowledge some recent developments which affect the Commission: 1) Mike Ciotola will be leaving ODOT to accept a new position within the private sector, therefore, this meeting would be his last as a member of the Commission, 2) Don Yerks has asked not to be considered for reappointment to the Commission due to a full work load at his current place of employment, and 3) big congratulations are in order for Janet Weir Creighton who was elected mayor of the City of Canton. Commissioners Ciotola and Yerks will be creating a vacancy of two seats on the Commission, however Commissioner Creighton has indicated an interest in continuing with her appointment.

APPROVAL OF THE MINUTES OF THE SEPTEMBER MEETING

Chairman Betts asked for approval of the minutes of the September 11, 2003 full Commission meeting. Commissioner Sowers moved to approve the minutes and Commissioner Ciotola seconded. The minutes were approved as presented.

EXECUTIVE DIRECTOR’S REPORT

Executive Director Jim Seney spoke on the TEMS contract required to complete the Cleveland Hub study. Director Seney reminded everyone that the delay in the study was as a result of discussions with the Class I railroads on the maintenance costs in the identified corridors. As a result, another opinion was sought. That data, provided by Zeta Tech, supports ORDC’s findings so TEMS can now proceed with the study. Once Dr. Metcalf signs and returns the contract, Director Seney will sign the contract and the study proceed.

Chairman Betts asked Director Seney to report on the legislation before the Ohio House and Senate. Director Seney spoke on the proposed Quiet Zone legislation (HB 247) introduced by Representative Tom Patton. Several communities are involved with this pilot program.

Commissioner Ciotola commented on the Rail to Rail Vickers Overpass article which was included as a supplement to Director Seney’s report. He wanted to explain ODOT’s position with the overpass as a point of clarification for the Commissioners. He indicated that he felt the article was unfair to the railroad and to ODOT in indicating that the project is stalled and that no one has done anything with it. Commissioner Ciotola indicated that several options were studied to make this project work, all of which proved to be very costly. ODOT is working with the City of Northwood and each railroad involved (CSX and NS) to move forward with the project. ODOT will be funding the largest portion of the project which involves the roadway option using the grade separation program and separating Wales Road from the CSX and NS tracks and closing two crossings. Commissioner Ciotola indicated that he had attended a meeting with Northwood officials two weeks prior to the Commission meeting and everything is moving forward on the project.

FINANCE REPORT

Secretary-Treasurer Matthew Dietrich presented the Finance report to the Commission. Mr. Dietrich indicated that ORDC staff is working with Commissioner Ciotola and other staff from ODOT on the rail portion of the state long-term transportation plan, Access Ohio. Mr. Dietrich commended Art Arnold of the Ohio Railroad Association for his efforts in providing data for the report.

Mr. Dietrich updated Commission members on the Columbiana County Port Authority loan; a $2.1 million loan to assist with the rehabilitation of 29.8 miles of track the Port Authority owns between Youngstown and the Pennsylvania border, the former Youngstown & Southern Railroad (Y&S) line. Mr. Dietrich indicated that the collateral determined to be appropriate to secure the loan is in the form of a second mortgage on the rail line, an assignment of the rents and lease between the Port Authority and the railroad, and an assignment of the shipper pay contracts between the railroad and both companies to be serviced by the line. He indicated that the loan should close before the end of the month.

Mr. Dietrich reported that the GRF balance, as indicated in the Finance Report, is $726,932 rather than the identified $1,126,932 balance. He indicated that this discrepancy is due to omitting the $400,000 loan request for the Wheeling & Lake Erie Valley Line to be presented before the Commission at this meeting. Assuming its approval, the remaining balance available for future funding will be $726,932.

Passenger Rail Investment Reform Act - Resolution 03-19

ORDC Planner Don Damron reviewed the sections of the resolution that had been revised to identify the changes requested by the Commissioners at previous Commission meetings. Mr. Damron indicated that Section 4 was added and Sections 5 and 6 had been slightly reworded. Chairman Betts added that Section 7 should also be reworked to include “as well as the reservations expressed in this resolution.” Therefore, the sentence would then read as follows: That the ORDC appreciates Governor Taft’s past support for federal passenger rail proposals and requests that the Governor support the underlying principals of the proposed Act as well as the reservations expressed in this resolution.

Commissioner McOwen spoke on his concerns with the resolution. He had e-mailed staff and Commissioners an explanation of these concerns prior to the meeting. Commissioner Roberts also raised a few of his concerns with the resolution. A short discussion followed with Chairman Betts deciding that the resolution will come before the Commission once again in January for a vote.

HR 876 / S1703 - Resolution 03-20

Mr. Lou Jannazo reported on this bill which, if passed, will provide a federal income tax credit of up to $10,000 per mile of track for expenditures of $10,000 or more per mile for track maintenance on Class II and Class III railroads. The bill also allows the railroads to sell the credit to other railroads or suppliers at a reduced price. Mr. Jannazo indicated that ORDC staff recommends full support of this bill.

Art Arnold, President, Ohio Railroad Association, spoke briefly on the bill and indicated that the needs of the short lines are great. This credit will greatly assist the shortlines with necessary maintenance on their tracks. He also indicated that approximately 170 members of Congress have currently expressed support of this bill. Chairman Betts inquired if Mr. Arnold thought that there would be any opposition from those members of Congress who have not yet signed on as co-sponsors of the bill. Mr. Arnold indicated that it was his belief that the remaining members have simply not been approached or notified about the bill but once that was accomplished we would most likely have their full support.

Commissioner McOwen spoke on the shortlines continued attempts at preserving the rail infrastructure in the State and indicated what a tough time they have had due to years of deferred maintenance and higher weight limits on the cars. Profit margins are generally low with the shortlines so, in Commissioner McOwen’s opinion, this legislation is absolutely essential to the survival of the shortlines.

Chairman Betts asked for a motion to adopt Resolution 03-20. Commissioner McOwen moved to approve the resolution and Commissioner Wolfe seconded the motion. Roll call was taken. Resolution 03-20 passed with eight votes to the affirmative and one absent.

Wheeling & Lake Erie Railway Valley Line Preservation - Resolution 03-21

Lou Jannazo briefed the Commissioners on the resolution which will provide assistance to the W&LE in the amount of a $400,000 loan to assist the company in preserving the Valley Line in Harrison and Jefferson counties. Mr. Jannazo indicated that there are several potential uses of the line. Chairman Betts asked for a motion to approve the resolution. Commissioner McOwen moved to approve the resolution and Commissioner Wolfe seconded the motion. Chairman Betts asked Steve Wait, President and COO, Wheeling & Lake Erie Railway, if he felt that traffic would increase over the next five years. Mr. Wait answered by indicating that it depends on the movement of coal along the line. Wheeling-Pittsburgh Steel recently announced plans to install a new electric arc furnace at its Mingo Junction plant. Scrap metal moving to the new furnace could be handled on the Valley Line.

Commissioner Jackson raised the question of “are we just prolonging the inevitable”? He asked if a balloon payment at the end of five years was a feasible option for the railroad given its financial status. He questioned, given the Commission’s budgetary constraints, whether this project was the most effective use of limited funding and if the railroad would return to request additional assistance the end of the loan term. A short discussion followed. Roll call was taken with six votes to the affirmative, two negative votes and one absent. Resolution 03-21 was adopted.

APPROVED PROJECT BRIEFINGS

HDR Engineering, Inc.

Matthew Dietrich briefed the Commissioners and staff on the HDR Engineering, Inc. contract. This contract provides $49,000 to accompany HB 247, a proposed quiet zone pilot project introduced in the House by Representative Tom Patton, to identify and inventory existing grade crossings in the proposed communities (Strongsville, Berea, Brook Park, Brooklyn, Olmsted Falls, Middleburg Heights, and Olmsted Township) and provide cost estimates for Supplemental Safety Measures (SSMs) for the implementation of the project.

WCH Molding, LLC

Beverly Lee briefed the Commissioners and staff on the WCH Molding, LLC project which provides a $25,000 grant toward the estimated $150,000 cost of a rail spur to service its new plant in Washington Court House. The new spur is necessary to allow rail car delivery of bulk raw materials to GK Packaging. This project will create 40 new jobs and will retain five jobs. WCH Molding, LLC will generate 36 rail cars annually.

OLD BUSINESS

None.

NEW BUSINESS

None.

PUBLIC COMMENT

Art Arnold thanked the Commission and staff for considering Resolution 03-20 and indicated that he is looking forward to working with the ORDC in the future.

Commissioner Roberts expressed his thoughts on the Commission Retreat that took place in October. He felt it was very worthwhile and indicated he was pleased that the public took an interest in the retreat.

ADJOURNMENT

Chairman Betts asked for a motion to adjourn to Executive Session for the purpose of discussing the City of Mentor v. CSX Corp. and ORDC v. Gatherco. Commissioner Wolfe moved and Commissioner McOwen seconded. Roll call was taken. Eight voted in the affirmative with one absent. The commission meeting adjourned to Executive Session at 11:45 a.m.

RETURN FROM EXECUTIVE SESSION AND ADJOURNMENT OF THE BI-MONTHLY COMMISSION MEETING

Chairman Betts adjourned the regular Commission meeting at 12:12 p.m.