Texas State Railroad Board approves tentative contract with Arizona company

Published: Mar. 29, 2017 at 4:07 PM CDT|Updated: Mar. 29, 2017 at 6:32 PM CDT
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Source: KTRE Staff
Source: KTRE Staff
Source: KTRE
Source: KTRE

RUSK, TX (KTRE) - During a meeting Wednesday morning, the board for the Texas State Railroad gave its approval for a tentative offer to have the Arizona-based Western Group to take over operations of the railroad.

The railroad's contract with Iowa Pacific is scheduled to end in May. The board sent a 120-day termination notice to Iowa Pacific in January if the company could not pay back on their estimated $2 million in loan payments owed to the cities of Rusk and Palestine.

At today's meeting the board's legal counsel noted that he was called by Iowa Pacific and told that the group did have an investor on the way that would be good for money and the plan was for them to start making IRS payments. Iowa Pacific had offered the TSRA $500,000 up front as long as they could remain the operator and set up a payment system for the rest.

The tentative contract with the Western Group would call for a five-year term on the lease and an up-front initial payment of $150,000. The proposed contract also calls for current Texas State railroad employees to be allowed to stay on and retired employees to continue receiving retirement coverage.

The Western Group was selected in front of three other groups that submitted proposals for taking over the operations. The other groups were Progressive Rail,First Transit, and Railmark Holdings. Rio Grande Pacific did turn in a letter of interest but not an actual proposal. TSRA president Bob Goldsberry pointed out that all of the proposals were very professional and took time.

"Iowa Pacific has shown that the railroad can be profitable, and I think that's what has gotten us the kind of quality of folks that said they could run it," Goldsberry said.

According to the Western Group's web site, the company operates five lines. Four of the lines are freight. And they run a tourist line two hours north of Phoenix, Arizona that takes riders into an old mine town.

Goldsberry said the group has visited the depots on the line and believe there are many things that can be done to bring in more profit. Goldsberry admitted that the line does not have some of the views that the Arizona line does, but it does have a strong history here in East Texas.

The Western Group will pay $150,000 toward the contract, and will pay an additional $50,000 a year, starting in January of 2018. Additional funds will be paid toward the loan and infrastructure loan, and the company will work on long-term planning.

The plan calls for the Western Group to upgrade the Texas State Railroad's two depots and the train cars. The company's representatives said they will not alter the railroad's historic nature, and they will add a fully equipped café in Rusk. A full gift shop will be provided as well.

"We want to keep the railroad as a living, breathing museum but then also find a way to develop both counties and bring jobs and industries to our counties as well," Goldsberry said.

The TSRA members at the meeting today were happy in their talks but also hesitant to get to excited over the deal.

"We have been told this before and promised this before. and you see where we are," one board member said.

The TSRA board members and workers all were in agreement with the understanding that things might change but there is some hope on the horizon.

"I can't speak for all the employees but I think everyone is excited that there is potential and this place will continue and that the board is behind them," said TSRR GM Greg Udolph.

In the meantime, the railroad is continuing to run as normal. The Dogwood Trails Train this weekend is sold out. The next event on the schedule is the Easter trains. Udolph said the trains line has only sold about one-third of the tickets they had last year.

"The big part of my job for this first quarter seems to have been trying to get the word out that we are open and we are bringing this great service to East Texas.

For more information on the Texas State Railroad, click this link. Visit this link to learn about the Western Group.

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