The Times-Standard Tuesday June 11, 2002

For real? Railroad suitor offers formal bid
By James Tressler

EUREKA -- A Chicago-area man who says he wants to buy the North Coast's railroad -- and get it back in business within a year -- apparently is for real. Last Friday Ted Niemeyer, a railroad engineering consultant with the Illinois firm Niemeyer and Associates, sent the North Coast Railroad Authority a formal proposal, something the authority asked for after initially hearing his offer earlier this year.

Niemeyer wants to take over ownership, as well as the roughly $42 million restoration grant the authority has left from a state award two years ago. In return, Niemeyer said he'll have the entire northern end of the railroad up and running within one year, or else he'll return ownership to the authority.

But that doesn't mean Niemeyer has cleared the tunnel; in fact he may not even be out of the yard. North Coast officials on Monday said they're encouraged to see an offer on paper, but it still doesn't answer certain key points, mainly involving legalities and money. That is, Niemeyer hasn't indicated where he'll get the rest of the cost of restoring the railroad, which some experts estimate could top $100 million. Also, it's not clear whether the authority, a public group, even has the legal right to sell the railroad.

Finally, North Coast officials said they're not sure the 30-day window Niemeyer has given to accept the deal will be enough time to answer all their questions. Niemeyer has not indicated how much money his company, Eel River Railroad, will put up. He also said he's not interested in picking up the millions of dollars in debt the authority has accrued since it purchased the railroad a decade ago.

In a telephone interview from Illinois on Monday, Niemeyer said he has a large team of people assembled and working in a number of project areas. Niemeyer's company, which does mainly engineering consulting, doesn't own any railroads. But Niemeyer boasts of a project team composed of people with loads of experience. He himself claims he helped supervise construction of the Powder River coal rail project in Wyoming in the 1980s.

Niemeyer said he believes he can succeed where others have failed. That success, he said, will hinge on his team and his faith in God. Niemeyer is a devout Christian who said his interest in purchasing the railroad came from a holy revelation he had earlier this year. Skeptics on the North Coast say he'll need divine intervention to ever bring the railroad back, let alone within a year. Others say it's important to keep an open mind, especially considering nothing else has worked.

"It's worth exploring," said Arcata City Manager Dan Hauser, who as a state assemblyman in the 1980s authored legislation that created the North Coast Railroad Authority. Hauser said he's particularly comfortable knowing there's a clause in the deal that would revert ownership back to the authority if Niemeyer's plan doesn't work. "I think a lot of people have been afraid that someone would come in and liquidate it; under this deal that couldn't happen," Hauser said.

Darby Kernan, a spokeswoman for state Sen. Wes Chesbro, on Monday said the proposal "is one step closer in the right direction." The Arcata Democrat is exploring whether the authority, which is a public agency, has the legal right to sell the railroad without public hearings. Also the state must answer whether it will turn over millions of dollars to a private company. Finally, the proposal needs to address how local, state and federal governments, which invested millions of dollars the past few years, would benefit.."This is a proposal that needs to go through the public process," she said. "Not be something that is rushed through."

For more than 80 years, the line served as a vital economic link to the isolated North Coast, transporting mostly lumber to the Bay Area and points beyond. Then in 1998 El Niño floods washed out the northern end of the line, which runs through the Eel River Canyon.

An overall decline in timber and fishing the past few years has prompted some to look to tourism and technology for long-term economic health. But railroad advocates say the railroad, combined with a revitalized port, could again pump dollars and jobs back into the North Coast.

The authority's efforts to restore the line have been bogged down mostly in trying to get the money and the necessary environmental and engineering studies, which weren't required when the line was built in 1914. These studies are supposed to be finished this summer, along with another study being done by several countywide agencies, to determine if the railroad is even a worthwhile investment. These studies will be submitted to the state, which two years ago put in $50 million to restore the railroad.

Others worry that the freight rail interests of the North Coast may eventually be subsumed by the southern end, which runs through Santa Rosa. Bay Area traffic has prompted efforts to develop the southern end for passenger rail, which some say could interfere with making freight rail profitable.

Bonnie Neely, chairwoman of the Humboldt County Board of Supervisors, said she would hold off on the proposal until these studies are finished. "My initial reaction would be to table the offer until we get the data because that information would be valuable to potential investors, "Neely said. "(The studies) are the biggest and best things to happen with the railroad in a long time, it would be great to let that come in before accepting entering such a big change."

The authority will meet today in a closed session in Ukiah to discuss the proposal. Attempts to reach the authority officials were unsuccessful.