FORTRESS & NEVERLAND

Critics of Rail America’s handling of the Central Oregon & Pacific Railroad's embargo of the Coos Bay Branch line to the coast and curtailed service to California are having a heyday over this one.
Rail America’s parent company, Fortress, is spending some 24 million dollars to bail Michael Jackson out of losing his Neverland Ranch.
Meanwhile, the Coos Bay branch line sits idle, in need of approximately 24 million dollars in repairs.
And Rail America is asking the stakeholders in Oregon to help pay for those repairs.
On Thursday, Fortress Investment Group signed a “confidential” agreement that allows the pop singer to retain ownership of his famed property in Los Olivos, Calif.
Oregon Congressman Peter DeFazio, already a sharp critic of Rail America, blasted away, telling the Roseburg "News Review", “Fortress has claimed they do not have the money to invest in the CORP rail line that provides essential service to the Southern Oregon and Northern California economies, but somehow they’ve found the all of the resources they need to invest in Neverland Ranch.”
While the line sits idle, Roseburg Forest Products is spending an additional 125 to 167,000 dollars per month in transportation costs. Other companies have also been devastated by the embargo.
DeFazio added another comment regarding Fortress and Rail America, “I am told they run a small toy train at Neverland, perhaps that is the most rail capacity they are capable of handling.”

 

DeFazio almost always formulates just the right barb to lob at those who deserve it.

 

In favor of, of?????? I'm from Oregon, but I don't know what is happening behind all those trees. What are the rumors? Cheers, Jim CCRR

 

Rail America

Amazing how fast Fortress could come up with 24 Mil for a child molester and his toys but can't find a dime to save a rail line and jobs in our troubled economy. It is time to revoke the contract to Rail America and find a more rail oriented operator such as Genesee & Wyoming or the Washington Corporation.

 

I agree Cliff! Maybe even this new Patriot Rail that just took over at McClellan near me. Flush Fortress!

 

I agree, Cliff. I was thinking about writing something similar but was afraid of coming across as to libelous or nasty, but you captured my opinions exactly.

 

I think you got it.

 

I'm not going to argue about Fortress not being interested in running a railroad, but I would point out that if you read the FoxNews article, you'll see that Fortress MUSIC group had previously given Jackson loans with Neverland Ranch as the collateral. The $20+ million was given to jackson previously just so he could maintain the theme park which has been shuttered recently due to his troubles and all the employees dismissed.
So Fortress is just trying to recover their money in some manner.

Apparently Fortress also gave him a $300 million loan for his part of Sony/ATV which owns among other things, the rights to the Beatles albums.

So it's not entirely accurate to say they are spending money they have. They are trying to recoup a loss.

 

I'm new here and an employee of one of RailAmerica's railroads and this really aggrivates me to see this kind of baseless and mindless bashing going on because those who are posting on this forum don't care to have the whole story that's available to the public before making judgements.

So, let me point out a few things-

1) Fortress is the PARENT COMPANY. They are NOT RailAmerica nor should their actions be linked in any way to RailAmerica unless it involves RailAmerica. There are multiple units of Fortress and they are all independent of each other. It would be like blaming BNSF for something Berkshire Hathaway did.

2) The closeure was a long time coming. Unfortunately, there were those within RailAmerica before the Fortress takeover that were unwilling or unable to "pull the trigger" and do what was needed. After Fortress took over, people came into place that were willing to pull the trigger and did. It was a surprise to those affected by it, but it does not change that the tunnel (in particular) was totally unfit for continued operations through it and must be repaired before operations can resume or someone will get killed when it collapses.

3) $23 million is A LOT OF MONEY for a Class Three, who by definition, makes less than $20 million a year. Thus, how does it make financial (much less practical) sense for CORP to invest more than their yearly income to repair a line? In addition, how does it make financial sense for Fortress to loan RailAmerica (and thus CORP) $23 million in repairs for a line that will not recoup that investment for at least 30 years (if not longer because of the need for future maintenance on the line to keep it safe to operate)? Finally, how does it make sense for the railroad (a "Common Carrier") to be unable to use public funds for such a project that benefits the public because it doesn't suit the state and/or federal government to do its duty and ensure that the vital lines of communication are maintained? In any other state in the US, the railroad would have been extended loans or loan garuntees if not by the state then from the federal government with assistance in gaining it by the state's railroad commission or transportation department. I guess CORP isn't big enough to get that kind of help...

 

Boxcab, we are a private company. We will not nor are we required to release private information. If you want to e-mail or write Boca Raton for the information, feel free, but it won't get you anywhere and I will not be a part of releasing confidential information. CORP's classification as a CLASS III railroad is well known and as part of that classification it's revenue must be less than $20 million/year to stay a Class III with the mileage they operate. This is public information.

As for the management, as RailAmerica is a safety-oriented company and has been stressing safety for the last 5+ years, the "order" is a standing one - when you find unsafe situations, they are to be addressed. The situation with the tunnel was not addressed and thus there were changes made. It would have happened for any RA railroad under similar circumstances. If a safety problem is not addressed at the local level, then the regional or corporate level will address it and the events at CORP only reinforce that safety is an area where RailAmerica has no desire to have tolerance.

Let me be clear, I am not disparaging the former management at CORP. They did run the operation well and kept the railroad solvent and their employees safe for the most part. However, they did not address that (and probably other) issue(s) and those above them made the decision to change the management. Part of that change included putting the embargo in place.

Finally Boxcab - From the STB 2004 Annual Statistics report (the most recent released) -

I looked at the previous 3 years and the same definition is on the header.

 

Well, for some reason my first attempt to reply posted for 10 seconds and then dissappeared, but anyway...

Boxcab -

1) RailAmerica is a private company. Even if I were in a position to access all of the CORP's documents, I would not release them as there is no legal requirement to nor would it be ethically sound to do so (in fact, for a public company it would be unethical to release those documents under any circumstance without a request for information filed and approved by our corporate office).

2) Those whom have made statements in the media are not stupid. This does not mean that they're not willing to twist the truth or flat-out lie to forward their agenda. You're talking about a politician. His only concern is to make his constituents happy. He sees CORP as a threat to those constituents so he is doing what he feels he should to eliminate a threat and look like he's fighting the "Big Bad Railroad".

3) Per the STB's 2004 Class I Statistics Report (the most recent I could find published on their website) -

Bill-

1) First, let me be clear that I have nothing against the former management nor do I really think they did a bad job. However, RailAmerica has been stressing safety and zero tolerance for safety-related failures and this was part of that policy. I do not know where the decision originated to change management, but there has been a lot of management changes going on since the Fortress takeover and most were on the heels of safety failures. As well, it may be that the closeure was not handled in an exceptional manner, but from our end, the issue is safety. When the true deterioration of the tunnel was fully revealed, the need to close the line immediately was clear. How would this have played out had a train gone through the tunnel during the 30-day notice period and the tunnel collapsed? Yes, it's a "what if" question, but the point still is that RailAmerica took action to protect its employees and not take the chance that the tunnel would last another 30 days of operations without failure.

2) If I remember correctly, tunnel 13 and 14 were comparatively small costs to rebuild and were in much better shape prior to rebuild. As well, CORP was able to raise the haulage rates on the line to help support those costs. In this case, the rise in rates would be unacceptable (and most likely litigated with the STB by the shippers as oppressive and/or unreasonable) and the lack of any supporting funds by the state and/or shippers only makes the issue worse. The State or Oregon's track record with the CORP has been dismal in the past and some decisions were probably made on that in mind. In most (if not all) other states that RailAmerica has operations, such major projects get at least some support from the State or Federal government as these projects benefit the public as much (and usually more) than they benefit the railroad and thus it should not be the responsibility of the railroad to pay the entire price with no realistic possibility of recovering that investment. I will say it again, had the investment of $23 million to repair the tunnel made fiscal sense, it would have been done without question. But at the time of the decision (and even now), the investment was of dubious quality as it again is well in excess of the annual income of the railroad and while a "one time" investment, its effects will prevent the railroad from being fully solvent for many more years than anyone is willing to take.

 

Strange? Looks like it did go in eventually.