Peoria Heights is a funny place.

First, the Village kicks Pioneer Industrial Railway off the line for a couple of years, saying that their contract has expired. Then when Pioneer regains operating authority, the Village complains that Pioneer hasn’t been keeping up their end of the contract. That’s like locking the busboy out of the restaurant and then criticizing him for not cleaning the tables.

Then the Village accuses Pioneer of not doing the things that the Village is responsible for in their contract. They want Pioneer to clean up brush that is more than ten feet from the railroad bed, which is explicitly stated in the contract to be the City’s/Village’s responsibility. They send a threatening, contemptuous letter to Pioneer threatening them with eviction if they don’t clean up the Village’s underperformance.

Then the Village scoffs when Pioneer decides not to help pay for a portion of the cost of the engineering study to look at the feasibility of building a trail next to the Kellar Branch rail line. Evidently, the Heights wants Pioneer to go away but expects them to be a partner at the same time. Genius.

[Mayor] Allen said [Pioneer CEO Mike] Carr’s comments blaming the village’s stance regarding the lease are nothing more than a “cop out.”

“That’s not a surprise and I feel . . . it gives them a convenient avenue out,” Allen said.

A cop out. An avenue out. Out of what? An offer of help? He makes it sound like Pioneer is trying to get out of some sort of obligation, when he’s the one who’s picking a fight. It’s like someone offering to help you move, you spitting in their eye, and then you acting all offended when they don’t want to help you anymore. “Aw, they’re just using that spit in their eye as a convenient avenue out.” Yeah, sure.

Even though Pioneer withdrew its offer to help pay for the rail/trail study, they are still trying to cooperate with Village officials. In a letter sent to the Village on April 14, Pioneer offered to help clean up the Village’s mess if the Village would meet them halfway:

Within the [next] few weeks Pioneer Industrial Railway Co. (“PIRY”) will be performing maintenance work on the tracks, with particular attention to the minor washouts pointed out in the Randolph & Associates report you forwarded.

While weed and brush control beyond the roadbed is entirely the responsibility of the Village under the Agreement, PIRY forces will be working on the line, and we are willing to assist the Village with the brush issues in the ditches and beyond the roadbed. Specifically, PIRY is willing to provide the labor to remove some of the brush and trees, if the Village will provide the equipment to dispose of the material. I believe this is a very generous offer, and is being made in a spirit of good faith cooperation. I urge the Village to accept it.

Finally, I once again must insist that the Village take immediate action to remove Central Illinois Railroad Co. from the Kellar Branch, and address the issue of compensation to PIRY. The Village is in breach of its obligations under the Agreement, and PIRY reserves the right to enforce the Agreement, by appropriate action, if the Village does not address this matter within ten (10) days.

The Village will reveal its true colors with its response to this request. If they’re really interested in abating the situation and cooperating, they will provide for what Pioneer asked. If this was all just a set up — if it’s nothing more than the Village contriving an “out” from their contractual obligations and/or attempting to bully Pioneer off the tracks — they’ll balk at the request.

The Village of Peoria Heights recently sent a threatening letter to Pioneer Industrial Railway Co. (PIRY) demanding that they fulfill all their obligations under their 1984 contract. PIRY has sent its official response to Village officials. They are happy to comply with the contract — in fact, they’ve sent along their lease payment and reports of railcar movements, and they’ve agreed to fix up problems identified along the roadbed as the contract dictates.

However, since the Village is acknowledging that the contract is still in force, PIRY is also demanding that they be the sole rail operator of the Kellar Branch as stipulated in the contract. They have asked the Village to remove Central Illinois Railroad Company (CIRY) from operating on the line, and they want the Village to compensate PIRY for lost revenue because of CIRY operating on the line.

PIRY is also threatening to remove its “offers of compromise,” which is apparently a reference to its offer to assist with the building of a trail next to the rail line within the railroad right-of-way. They say that the Heights is acting in bad faith, and mention that they offered to meet with the Village back in December to discuss their concerns, but were rebuffed. It certainly appears that the Village has no interest in cooperating with PIRY, opting instead for an adversarial stance. That’s unfortunate. It means that the Village will end up spending a lot of money and getting nothing in return, just like the City has been doing for over a decade. I guess the old saying is true: we learn from history that we never learn anything from history.

Here’s the text of the letter:

Dear Mr. [M. Michael] Waters [of Vonachen, Lawless, Trager & Slevin]:

Thank you for your letter to Mr. Carr, dated March 31, 2008. Pioneer Industrial Railway Co. (“PIRY”) is encouraged by the fact that the Village has finally acknowledged that the 1984 Agreement is still in force. We are, however, disappointed by the fact that nobody from the Village contacted us about any of these concerns prior to your sending the letter. Had anyone done so, you might have avoided the numerous inaccuracies and false assumptions said letter makes. Not to mention the perception that the Village is continuing to act in bad faith, despite Pioneer’s many efforts to proceed in a spirit of cooperation. If the Village is only interested in confrontation, as it appears from this letter, then Pioneer will withdraw its offers of compromise.

As for the specifics of your letter, let me start by pointing out, once again, that Pioneer Railcorp has no interest in the Kellar Branch, and never has. Your continued insistence on referring to Pioneer Industrial Railway Co. by the name of another corporation is vexatious at best.

Your allegation that Pioneer failed to pay the agreed rental is incorrect. Section 6 requires payment to the City (of Peoria), which PIRY did. Attached is a receipt for payment of 6 years rental in 1998 (covering 1998-2004); a check for $20.00, for the next twenty years from 2004; and letter from the City Attorney refusing said check and directing that no more checks be sent. The 1998 receipt references both Peoria and Peoria Heights. If the City did not give the Village its share, I suggest you take it up with the City. At no time was PIRY advised that the rental was divided and we should make separate payments.

I am, pursuant to your demand, enclosing a check for $20.00, make payable to the Village. I trust you will forward the City’s portion to them.

Your next point is the monthly reports. Once again, you are incorrect. Reports were supplied to the City (of Peoria), per the Agreement, including the Railroad Commission, on which the Village had a representative. Enclosed is a report covering the months since operations resumed, pursuant to the Surface Transportation Board’s order. If, after a diligent search, you cannot locate your copies from 1998-2006, we will endeavor to obtain copies from our records.

Your statement that the railroad (PIRY) is “contractually bound to maintain drainage and correct drainage issues and problems along the tracks within the corporate limits of the Village of Peoria Heights” is also patently inaccurate. Section 4(e) of the Agreement provides that the City (now, presumably, the Village, as successor to the City within its corporate limits”) is responsible “for performance of weed and brush control not on the roadbed which does not affect rail operations or safety.” PIRY is responsible only for the maintenance of tracks, crossing protection and roadbed”. Roadbed is defined in Section 1(b) as “all that property and appurtenances located within ten (10) feet of the center line of the track”. To the very limited extent that your report deals with roadbed drainage issues, our maintenance forces will correct the very minor washouts you point out. The weeds, brush and other issues in the ditches and beyond the roadbed are entirely the responsibility of the Village.

PIRY also categorically rejects the suggestion that it has to comply with the dictates of any third party engineering firm hired by the Village. There is nothing in the Agreement that provides for that. In addition your “report” provides photographic evidence that three individuals trespassed upon the railroad tracks, without notice to PIRY.

Your references as to anything pertaining to the P&PU are also totally without basis. I enclose a copy of the Consent to Assignment signed by the Village that specifically states “Village does hereby release P&PU from its obligation to continue rail service under the Agreement dated July 10, 1984, and agrees that P&PU has performed all of its duties and obligations under said Agreement to the Village’s satisfaction. The Village expressly releases P&PU, its agents, employees, and assigns from any and all claims or demands arising out of occurrences on or after the effective date of this Assignment.”

Your threat that Pioneer may be “removed from using the Kellar Branch Rail Line for any reason” if your alleged defaults are not corrected to the satisfaction of Randolph & Associates, is, as you well know, a threat to interfere with interstate commerce in direct violation of the Interstate Commerce Act, and in open defiance of the Order of the Surface Transportation Board. There is case law that provides recovery of attorney fees should PIRY be required to file an action in Federal Court to enforce the Board’s Order.

Finally, as you know, the Agreement provides, at Section 4(c), that PIRY shall have “sole control” over the operation of the Kellar Branch, and gives PIRY the right to serve all industries on the track (Section 3(b)). As you also know, the Village has been a party to the admission of Central Illinois Railroad Company (“CIRY”), which currently operates on the Kellar Branch, without a contract. Please advise immediately what steps the Village intends to take to remove CIRY from the Kellar Branch, and what the Village intends to do to compensate PIRY for the loss of business it has suffered due to CIRY’s operations.

In my letter of December 4, 2007, to Mr. Trager of your firm, we offered to meet with the Village and discuss its concerns, as an alternative to litigating this matter. That offer was ignored.

Too many taxpayer dollars have already been wasted in this misguided effort to force an unneeded trail upon our railroad line. I ask that the Village cease and desist from this transparent attempt to disparage PIRY, and renew its commitment to resolving this matter in good faith, in the interest of all parties, and in accordance with the law.

Sincerely yours,
Daniel A. LaKemper,
General Counsel

April fools!

The Kellar Branch “Rail/Trail Committee” hasn’t met since February 15 and therefore missed their April 1 deadline. Why?

“I got busy at work and some things with the City Council and (other) things came up,” [4th Dist. Councilman Bill] Spears said. “We went to schedule it and obviously Easter hit. We had people on vacation.”

I’m sure the Journal Star Editorial Board will figure out a way to blame this latest setback on Pioneer. Spears says the committee will “likely meet next week,” according to the paper.

UPDATE: The Journal Star has inexplicably taken down the article; I haven’t checked the print version of the paper today to see if it’s in there. In any case, if you were wondering what it said, I happen to have a copy here:

Continue reading “April 1, 2008, is the target date for the committee’s findings.” →

You may recall that Pioneer Industrial Railway wouldn’t give their permission to the Recreational Trail Advocates (RTA) to do a “clean up” along the Kellar Branch line. It appears the RTA is going to ignore that denial. Their minutes record:

H. Status of spring cleanup-David Pittman discussed the hoops had to go through to set up the April 26 trail cleanup with the City of Peoria. He was given written permission by City of Peoria Attorney Randy Ray to proceed but he was told to get the permission of the two railroads—Central Illinois Railroad (CIRY) and Pioneer Railway Corporation (PIRY). CIRY said the clean up was fine but PIRY refused to give RTA permission for the trail clean-up. Peoria Park District (PPD) has liability insurance for the event. Bruce moved we go ahead with the clean-up having the permission of the City of Peoria attorney; Joyce seconded; motion carried. The section to be cleaned will be from Pioneer Parkway to Northmoor Road with PPD property on Knoxville and Northmoor Road as the staging area. Lunch will be provided and the lunch will be served at the homes of Matt and Steve Jaeger who live close by on Oak Point Court.

I would point out that Ray’s permission was contingent on the RTA getting permission from the railroad companies, which they did not get. And it wouldn’t be “trail cleanup” because there’s no trail there. It’s a railroad track on a railroad right of way.

It also appears they’re trying to go around to neighborhood associations to drum up support. Elsewhere in their minutes, it’s stated:

F. Progress on contacting homeowner associations–Dave Pittman has divided the 136 home owners’ associations into 3 groups sharing with Mike Pula (northern city) and Mike Rucker (central city). The associations have been approached initially about supporting the conversion of the Kellar Branch into a recreation trail and have been offered an opportunity for RTA members to come their meetings to answer any questions they may have. The goal is to have the associations adopt a resolution of support for the trail. It was noted that 20 property owners’ associations were within ½ mile of the Kellar Branch. Steve S. felt the home owners should be warned of diminishment of their property value if the rail remains intact. Mark K. offered to help with the association contacts.

One of the neighborhood associations Pittman has contacted is the Neighborhood Alliance. I was invited to give the other side of the story at that association meeting, which will take place in April. Perhaps I should ask the property owners if they feel comfortable supporting an organization that has no qualms about trespassing. Residents in older neighborhoods just love trespassers.

If you’re interested in the rest of their plans, here are the complete minutes:

Continue reading RTA decides to trespass anyway →

Recreational Trail Advocates requested permission for access to the Kellar Branch right of way so they could “clean up trash” along a portion of the line. They were denied:

Dear David:

I am writing to respond to your request for our permission to allow the RTA [Recreational Trail Advocates] to clean up trash along a two mile section of the Kellar Branch, on Saturday, April 26, from 9:00 a.m. to 12:00 p.m. While I appreciate and support the RTA’s desire to take care of the environment in this manner, it is my opinion that this activity is only being scheduled as a publicity campaign to bring more attention to your group’s failed efforts to convert the Kellar Branch into a recreational trail. I am certain you would not support my Company operating a locomotive down a local bike trail. That being said, my primary concern is safety, and I do not think it is safe for people to be on an active railroad right of way, that is operated by two railroads. Depending upon business demands, either PIRY [Pioneer Industrial Railway] or CIRY [Central Illinois Railroad] may be operating a train that day, and it is my understanding that CIRY has storage cars on the line. Further, your people may or may not be properly trained or equipped to perform such work, nor have you shown any insurance coverage. Finally, you are advised that, as an operating Class III railroad, Federal Railroad Administration regulations require that people working on the right of way undergo Roadway Worker Safety training and pass an approved test. As an operating rail line, we maintain the track and roadbed in a manner that is safe for rail operations and trained personnel, but not for untrained individuals performing weekend publicity stunts. Therefore, I do not give my approval for your group to occupy the railroad right of way for this purpose. We believe that unauthorized entry onto the right of way would be unlawful, and we will have no alternative but to hold RTA responsible should any damage result from such entry. I would like to suggest to your group that there are many other areas in the community that would benefit from a clean up activity by your group and I hope you consider cleaning these areas.

Regards,
Mike Carr
[President/CEO, Pioneer Railcorp]

It’s worth noting that Pioneer is still willing to cooperate with efforts to build a safe recreational trail on the right-of-way adjacent to the tracks (there’s a committee working on that possibility now). They’ve also done improvements to the tracks to make operation of trains safe along the line. After Nichting’s infamous “Meigs Field” comment, I don’t blame Pioneer for being a little worried about letting trail advocates onto the line.

Here’s an article from the Wall Street Journal I hope hasn’t escaped the notice of the Journal Star, Junction Ventures, the Sierra Club, and Maloof Realty (not to mention the City of Peoria and Village of Peoria Heights):

Railroads are generating development in the same way they spawned towns and industrial sites over a century ago. Warehouse complexes are popping up next to new rail yards designed to load and unload trains carrying containerized goods. Major distribution operations have opened or are planned in places like Elwood, Ill., Kansas City, Mo., and Columbus, Ohio.

The social consequences are evident in developments like AllianceTexas. In the late 1980s, Hillwood Development Co., founded by Ross Perot Jr., son of the former presidential candidate, built a cargo airport outside Fort Worth, thinking that would be the best way to attract companies to 17,000 acres of land north of the city. As an afterthought, the company says, it made room for a rail yard.

A decade later, it’s the rail yard that has attracted huge warehouses, for companies such as J.C. Penney Co. and Bridgestone Corp. These and others get container loads of jeans, electronics, tires and such from Southern California ports. “I never would have thought having a rail hub in the middle of our development would have attracted so much interest,” says Thomas Harris, a Hillwood senior vice president.

The development, which employs 27,000, has spawned a nearby minicity of shopping centers, a golf course, a racetrack and 6,200 houses. More than 300 of the homes are high-priced models in gated communities.

Railroads have found friends among environmentalists, who see moving freight by train rather than truck as a way to reduce fuel burning and emissions.

Isn’t that interesting? A rail hub in the middle of the development. Attracted huge warehouses. Employs 27,000. Spurred retail and residential development. Not just cheap residential development either — “high-priced models in gated communities.” Helps the environment by reducing emissions. Too bad we don’t have something like that.

Oh, wait….

The Journal Star Editorial Board is clearly still stinging over the Surface Transportation Board’s ruling in favor of continuing rail service on the Kellar Branch, so they published these sour grapes Monday. They don’t think the city is being aggressive enough in demanding fees from the railroad companies for their use of the Kellar Branch.

Indeed, the city and village have been subsidizing service over Kellar since they purchased it. But if it’s the gold mine that rail carriers and their backers claim it is – why, it’s practically a sure thing – then there’s no need for those freebies. Just think how much Peoria and Peoria Heights residents would benefit by collecting a per-car fee or a yearly percentage of Kellar’s fair market value, up to $200,000. Those dollars could fund core city services, such as fixing potholes, plowing roads, building sidewalks. Isn’t that what the back-to-basic-services crowd has demanded?

This would be a sound argument, except for the fact that the Journal Star’s position is that this corridor should be leased to the Park District for $1 per year for 99 years so they can convert the corridor to a linear park. They have claimed that a linear park will be a catalyst for development. Perhaps they would support a special assessment on the businesses and developers along the proposed linear park — perhaps a yearly percentage of Kellar’s fair market value — since those private businesses would be profiting from the Kellar corridor, too.

To that end, the municipalities should enter into formal negotiations with the carriers over a usage fee. If a deal can’t be reached, the cities should file a pleading with the STB. While it’s rare, the STB has helped resolve disputes over contracts and conditions. Surely the feds could find some reasonable compromise between $1 and $200,000.

Yes, by all means, spend more money fighting the railroads. It’s proved so fruitful over the past decade and a half. If they’re really serious about wanting to get money out of the Kellar Branch, there are a couple of ways it could be done:

1. Sell the line. Pioneer has had a standing offer of $750,000 to purchase the Kellar Branch from the city. This would get the city completely out of the railroad business, and give them three-quarters of a million dollars to boot, which they could use to help finance the CSO project or other needed things.
2. Negotiate a long-term lease. There’s a legal dispute over Pioneer’s contract with the City. The City says it’s expired, and Pioneer says it’s still in force. Since neither side wants a legal battle over that, and since the STB has already ruled the line has to stay, the City could negotiate a lease that would be better than the disputed one. I believe Pioneer would welcome such a lease, even if it had higher lease rates for the line, provided the rates are reasonable and proportionate to the amount of traffic the line gets. It would take out all the uncertainty and finally put this issue to rest.

Or, the City could try to have the STB set the rates, which would be costly, time-consuming, and only exacerbate an already adversarial relationship, like the bitter Journal Star Editorial Board wishes. Here’s hoping the City ignores their advice and looks for a more constructive solution instead.

PeoriaIllinoisan knows that he can always get a link from me whenever he posts about the Kellar Branch. His post today is especially clever.