NORTH CREEK Less than a year after negotiating a contract with Warren County, owners of the Saratoga and North Creek Railway are now seeking to re-draft the agreement to temporarily cap their ongoing payments to use the county rail line, and share the cost of about $1 million in track upgrades with the county.
At a meeting Feb. 2 between county supervisors and railway officials, a decision on the concept was postponed for at least 30 days.
The proposal calls for the county to temporarily forego its contractual 6 percent slice of the railway revenue beyond a minimum of $81,958 — in return for Iowa Pacific investing about $1 million up front in upgrades to the county track that stretches between Corinth and North Creek.
Ed Ellis, CEO of Iowa-Pacific Holdings — the parent company of the railway, and railway consultant David Simpson made a presentation to county Supervisors Feb. 2 requesting the cap in payments to the county. Five-sixths of those payments was to be set aside by the county anyway in a reserve fund for major repairs.
Ellis noted that in 2011, Iowa Pacific already spent $800,500 in repairs and maintenance, far beyond the $300,000 annually specified in the contract. Iowa Pacific also spent $280,000 in improving track at the Saratoga Springs rail station.
With Iowa Pacific earning $3 million in revenue per year, the foregone payments would total about $500,000 over five years, at which time the 6 percent payouts to the county would be reinstated. Ellis said he expected that revenue would surpass that figure, prompting the end of the temporary cap in three to four years.
Supervisors questioned whether the cap might leave a shortfall in the 2012 county budget. county Superintendent of Public Works Jeff Tennyson replied that only the $81,958 was penned into the budget as revenue. He noted that the primary impact of Iowa pacific’s proposal was that the county’s reserves wouldn’t accrue as much in the next few years.