Thursday, November 15, 2012

The E&N - there are some questions not answered


Yesterday the fourth of the five regional districts voted to fund the request by the Island Corridor Foundation.   The only one that remains now is the Comox Valley Regional District to vote in favour.  

I have often had concerns about publicly funded projects because of the ongoing track record of them costing more and taking longer than expected during the process in which the funding was sought.   The reality is there is a high probability there will be a cost over run and how that over run will be funded is important to know.   When a government directly takes on a project the answer of where more funding will come from is the government, but in the case of the E&N there is no clarity who would fund the cost over run.   Realistically I think there will be a second request of the regional districts - will they come through if asked again in a year or two?   No one knows for certain.

Qualicum is the first local government to express concerns about the costs of the E&N, I doubt they will be the last if there is a second request for money.   Qualicum council directed their member on the Regional District of Nanaimo to vote against the ICF request.

Here is a piece written by Jim Sturgill about the ICF request for money:
Call For Railway Cash Needs Scrutiny
The Island Corridor Foundation, the nonprofit organization that owns the Esquimalt and Nanaimo Railway, recently started asking regional districts up and down Vancouver Island for $3.2 million to repair bridges along the route.
 
So far, Alberni-Clayoquot has agreed to contribute $115,000, and the Cowichan Valley district has pledged $488,100. Last week, the CRD’s Finance Committee approved $1.2 million for the ICF, pending approval of the CRD board. 
CRD and all Island taxpayers need to be concerned. A CRD staff report stated the $3.2 million won’t cover the upgrades needed for commuter and freight rail services. Worse yet, the ICF has not obtained any commitment from VIA Rail to resume basic passenger service. 
Regional districts should think twice about handing over funds without asking hard questions about how the ICF will spend the money -- and how the ICF is governed.
The ICF is already getting over $400,000 a year in property tax exemptions from the very regional districts who are being asked to fund the $3.2 million, and these exemptions were approved based on the ICF not asking them for more financial aid.
 
First of all, the ICF’s claim that it will cost only $3.2 million to get all 48 bridges and trestles up to basic operational level strains credibility. A February 2012 report conducted for the Ministry of Transportation said it would cost at least $8.7 million to get the bridges operational and operating for 10 years. The ICF’s recent renovation of the Nanaimo station alone cost $2.4 million. It's not even clear if the ICF has received cost estimates from contractors for the bridge work. 
The ICF has also said they require $5.4 million for the bridge repairs and have stated they will raise the balance through fundraising and borrowing, but they have not shown any plan for how they plan to do that either. Regional districts can’t put money into a project that is not only being underestimated, but already underfunded by $2.2 million. 
Where is the ICF’s business plan for this work and their financial statements? It seems the ICF has decided that only its board members and employees need to know what its plan is for this money. The public is supposed to provide cash, and not ask any questions -- even though serious questions need asking. 
VIA Rail provided the railway with an annual subsidy of $1.2 million when it ran the passenger service. The ICF also receives $340,000 annually from Telus for telecommunications lines that run along its right-of-way. What happened to all those funds? Why has the ICF performed practically no maintenance to the railway? 
I have been a member of the ICF’s rail operations committee for several years after it acquired the E&N from Canadian Pacific in 2006. In 2010, our committee began questioning the poor condition and overall safety of the railway, but were told by ICF Chief Operating Officer Graham Bruce that this was none of our concern. In January 2011, Graham Bruce told our committee that it was no longer needed, but never explained why. Two months later, VIA stopped passenger service due to the poor condition of the track. 
What concerns me is that safety violations had to be brought to VIA’s attention before anything was done to stop the train from operating. 
The ICF was not happy about this. ICF board Co-chair Mary Ashley told a member of our committee soon afterward that VIA had decided to halt service on the basis of “inaccurate information”. 
Now the ICF admits that it needs millions to bring that track up to basic operational safety -- effectively admitting that the track was unsafe when passenger service stopped. 
In its pitch to regional districts, the ICF has given the impression that the bridge repairs were unexpected. But the problems have been known for some time: in October 2010, a different consultant submitted a report about the state of the E&N’s bridges. That report, however, has remained a closely guarded secret. The ICF refused to provide the report to our operations committee, and Southern Railway of Vancouver Island (SVI), the current operator, has tried to block media freedom of information requests for it, claiming its disclosure would “unnecessarily diminish public confidence”. What don’t they want the public to see? 
The 2012 Ministry of Transportation report covers some of these issues, but regional districts need to see the October 2010 report too, and ask why the ICF is claiming that the bridges only need $3.2 million for the next decade. The ICF seems to be basing its request on what it can get away with, instead of what the railway actually needs. Let's not forget, that the ICF's first funding request was for $103.8 million just four years ago in 2008, when there was a detailed plan presented.
Southern Railway of Vancouver Island also needs to be stepping up to the plate and investing ahead of the taxpayer with a large up-front investment, if they feel there is an opportunity to make profits operating the E&N.
 
Even though the ICF has been committed $15 million in conditional federal and provincial cash, there is still no detailed plan that shows that will be enough to repair the track component either. 
I want to see railway service return. However, I believe the regional districts should refuse the funding request until the ICF has a new executive, a transparent board, and a realistic plan.  
Jim Sturgill is a railway consultant, a former E&N locomotive engineer, and a member of the E&N Railway Action Group.
Post a Comment