Railway operation proactive, says McFadden

Chatham-Kent’s Deputy Economic Director Stuart McFadden said the municipality is being both proactive and transparent in its handling of WDC Rail, the entity created to hold the ownership of the rail line purchased by the community.

McFadden said a good example of that is the $150,000 allocated for a loan to WDC by council to cover operating expenses in 2015 and 2016.

McFadden said the term “operating expenses” may be somewhat misleading since the funds are being used for property taxes, interest on the municipal loan, the auditor fee, safety issues and maintenance to the lands along the track.

“Much like any municipally owned property, we need to make sure the land is maintained according to property standards,” he said. “It’s also a matter of being a good neighbour to property owners whose land abuts the track. We don’t want weeds and debris adversely affecting their properties.”

Part of the maintenance is simply asset protection, he said. “If we have ties which require work, or a tree begins to grow near the track we need to make sure those items are taken care of.”

McFadden said the railway purchase was set up to make the railway company a separate legal entity fully owned by the municipality.

“Gord Quinton (municipal finance director) has made the handling of finances clear so that council and the public can accurately track everything,” he said.

McFadden said the municipality is still open for offers for the railway that it purchased in October of 2013.

“We still have active files we’re working on and remain hopeful that we will be able to attract a purchaser, but as time goes on we have to realize that whether it works out or not, we have a valuable asset,” he said.

“The municipality is not a five or 10 year entity, and right now we have an asset which would cost far more to purchase than we paid for it. If it isn’t used as a rail line, we have the option of selling the rails and using the corridor for anything from a high-speed Internet corridor to a pipeline to a trail. We don’t know what the future will hold. The only thing we know for sure is that if we hadn’t acquired it, there would be no future opportunity.”

The 2014 operating loss was $98,287 but McFadden said that was as a result of a lot o remedial work that had to be done.

“Moving forward, we expect there will be less work and we may be eligible for some sector specific funding from senior levels of government,” he said.

According to Quinton’s report, WDC Rail purchased the land and rail assets of the former CSX rail line on October 3, 2013 and immediately sold the rail assets to another party, leaving its only capital asset being the land itself. Council purchased the track assets this year.

The municipality loaned the company funds to buy the property and to fund operating expenses and has established a $1 million reserve fund option.

It lent $1 million for land purchase and operating costs and another $3.65 million for the assets.

Including the $150,000 lent for 2015-16 operating expenses, WDC Rail owes the municipality $4.8 million.

The company is charged interest on the loan equal to the rate earned by Chatham-Kent’s surplus fund.