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Why buy the Nevada Northern Railway?

I have read Ms. Baker-Anderson’s letter with interest. She does raise valid points if we were going to do a commercial rail operation in the normal sense of the word. The short version is we will not be a normal commercial operation. The Great Basin Railroad is not designed to be your typical commercial operation.

Let me start with the track. The plan is that the White Pine Historical Railroad Foundation will purchase the track from Los Angles. Why the Foundation? The Foundation is a 501(c)3 non-profit that is allowed special consideration on taxes and donations. We do not pay taxes and better yet people and corporations can make tax-deductible donations to us. The donations can be in the form of locomotives, rolling stock, rail, ties, and of course cash. Will we receive these donations? Good question. The Foundation just received two locomotives in donation. Neither locomotive is currently in working order but both could be put back in working order if there was the need. We can also receive government surplus property and have in the past received an additional two locomotives from the government.

America is a very generous country; non-profits receive tens of millions of dollars in funding annually from corporations and individuals. So far this year we raised over $1,500,000 through ticket sales, donations, and grants. Part of this money is the $500,000 grant from the state in the last legislative session. I spoke to a friend of mine who is a lobbyist and asked her help in getting the bill through. She told me that we did not have a ghost of a chance of succeeding. So what did the community do? It put in two bills for $500,000 apiece when it was told repeatedly that just one bill wouldn’t pass. So what happened? We received $500,000 to purchase the line. In addition to the money granted by the state, the Foundation currently has $2,800,000 pending in grant applications. The White Pine County Economic Diversification Council has another large federal economic development grant waiting to be submitted once we have ownership of the line. My point being that this money is considerably easier for a non-profit to receive than a private company. In fact, some of these grants are not available to a private company.

Once the ownership question is settled, then the Foundation would create the Great Basin Railroad. It will be a for-profit arm of the Foundation and by definition would be a unique company. Is it unusual for a non-profit entity to own a for-profit company? Yes, but the concept does exist in countless forms through out the country. Why? Because a non-profit by definition does not make a profit. Where a for profit company usually needs to make a profit, this is not the case when a non-profit owns a for profit company. We just need to cover costs.

Lets examine the costs. In the beginning, train speeds will be slow and a large potion of the cost of running the line will be labor cost. Here the non-profit has another trump card; we have volunteers who work for free. The Nevada Northern currently runs six days a week with the vast majority of the trains being crewed by volunteers. These volunteers run scheduled trains carrying paying passengers for no compensation. The Great Basin Railroad will also use volunteers. There will be paid employees but the railroad will have volunteers also.

Another advantage that a non-profit has over a for profit is that we receive donations. As mentioned earlier we have already received four locomotives. Once we have ownership of the track we can aggressively go out and solicit locomotives, rolling stock, heavier rail, and ties. The Foundation can approach the railroads for these donations.

Now we need to answer an important question — Why? Why attempt to go through with the ownership of the track and attempt to run a commercial railroad? The answer is simple, we are slowly dieing as a community. In her letter, Ms Baker-Anderson suggests that the tax payers of White Pine County might have to step up to the plate and help with this project. The taxpayers of White Pine County cannot help with this project because all of the tax structures available are maxed-out except for one, you could raise the sales tax. But to generate the revenues needed, you would have raise it so high that it’s not practical.

Are we going after windmills? No, we are attempting to build something that will help in our fight for survival as a community. I can tell you what will happen if we don’t succeed. Our tax base will continue to erode, more businesses will close, the mine will never re-open, and the moment our children graduate, they are out of here, because there is no opportunity for them in White Pine County.

Will we succeed? I don’t know, but our chances are better now then ever before. So far, I have turned down two customers who wanted to store cars because we did not own the track. Could we develop into a warehouse community? Look at Fernley. It is the fastest growing community and newest city in northern Nevada. It is home to, Trex, and Quebcor. These companies employ hundreds of individuals apiece. A few years ago, Fernley was just a wide spot in the road, but it did have rail service. Now its population is greater than all of White Pine County.

Then there is the Union Pacific Railroad, our connection with the outside world. In a historic announcement, it stated it was looking for opportunities to partner with local agencies that have an interest in developing rail served industry and/or in developing team tracks in their jurisdiction as a means to create economic development, and to experience the benefits of jobs creation and expanding local tax base. The Union Pacific is interested in working with communities in its new drive to develop traffic. In the past, the Union Pacific was only interested in traffic that went cross-country.

The purchase of the tracks is a long-term project. The real work begins with the finalization of the purchase. We will need to develop this resource by upgrading the track, finding customers, and providing service. Ely’s past has been tied to that rusting railroad track and so is its future. We need that track if we want to turn around the economic health of the community. It is a challenge worth taking on.

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