The Village of Peoria Heights wants Pioneer to clean up the Kellar Branch, and they’re threatening to kick Pioneer off the line if things don’t improve in 60 days. They’ve retained the services of the firm of Vonachen, Lawless, Trager & Slevin, and sent this missive to Pioneer on March 31, 2008:
Dear Mr. Carr:
This law firm represents the Village of Peoria heights. Pioneer Railroad Corp. claims rights under an agreement signed on July 10, 1984. The Village of Peoria Heights is hereby placing Pioneer Railroad Corp. on 60-day notice of its default regarding the agreement presently in place between Pioneer Railcorp and the Village.
The Village shows no record of any yearly payments being made for use of the railroad tracks. The rental fee is $1.00 a year. To date, there is no record of this payment ever being made to the Village.
Pioneer Railcorp has also never supplied to the Village records on a monthly basis showing the information regarding the rail cars which have been moved through the Village. This would include “…the car number and initials, the shipper or receiver thereof; and the date of shippage, receipt of all revenue cars shipped or received by industries located on or adjacent to said tracks, including team tracks.”
Most importantly, Pioneer Railcorp 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. There is no evidence that these issues have ever been addressed by Pioneer Railcorp, leading to a decrepit and dangerous situation along the rail tracks in the Village. We are enclosing a report illustrating these drainage issues. This report was completed by Randolph & Associates, Inc. These issues are many, and have an extremely negative impact on the private properties surrounding the tracks.
These issues need to be addressed and corrected within 60 days of the receipt of this notice.
Per the default clause of the agreement signed on July 10, 1984, “The rights herein granted to the P&PU (Pioneer Railcorp) are expressly conditioned upon the performance by the P&PU (Pioneer Railcorp) of all and singular the covenants and agreements herein set forth to be performed by the P&PU (Pioneer Railcorp). In the event the P&PU (Pioneer Railcorp) shall default in the performance of any of its obligations hereunder, and such default shall continue for a period of sixty (60) days after the receipt of written notice thereof by certified mail, return receipt requested, from the CITY (Village of Peoria Heights), the CITY (Village of Peoria Heights) shall have the right at any time thereafter to terminate this agreement forthwith.”
In short, all of these drainage issues need to be corrected within this 6O day time frame, inspected and attested to by Randolph & Associates that ALL work has been completed, or the Village of Peoria Heights will send notice that the agreement is terminated, and that Pioneer Railcorp will be hereafter removed from using the Kellar Branch Rail Line for any reason, whatsoever. This also applies to the $1/year rental fee, and the reports showing the rail usage over the past 24 years by Pioneer Railcorp.
All of these listed areas need to be rectified within the 60 day time frame. Pioneer Railcorp has taken virtually no steps through the years to correct the drainage issues that have detrimental effects on the surrounding landowners. Pioneer is now on 60-day notice to have every real and potential drainage issue corrected, and verified by Randolph & Associates, along with submitting all information and monies which should have been on a timely basis through the years.
Sincerely,
VONACHEN, LAWLESS, TRAGER & SLEVIN
by M. Michael Waters
Now, before we consider the individual claims in this letter, let’s just remember that Peoria and Peoria Heights have maintained up until now that the 1984 contract expired under its own terms in 2004. Now the Heights is suddenly acting as if this contract is still in force. That potentially opens a big can of worms for them, since they are basically admitting they were in breach of contract during the years they kicked Pioneer off the line without cause and contracted with another rail carrier.
Also, it’s good to remember that the Surface Transportation Board has not taken a position on whether this contract is still in force. They’ve made it quite clear in their rulings that they don’t care if it’s in force or not. They’ve ordered that Pioneer be allowed to provide service on the Kellar Branch because that’s what they have deemed best for interstate rail transportation, and their ruling supersedes the City’s and the Village’s power to remove Pioneer from the tracks, contract or no contract. So the threat of removing Pioneer from the branch after 60 days is empty.
That said, however, the claims made in the letter are largely in error. They have three complaints:
- Non-payment of lease fees. It’s easy to prove that the lease fees were paid. Here’s the receipt. They paid $6 in 1998, which would have paid them up through 2004. If the Heights didn’t get their fair share of that money, perhaps they should send a collection letter to the City of Peoria. Pioneer sent another lease payment check to the City in 2004, but it was returned to them with a strongly-worded response from City attorney Randy Ray who said, in part, “Please refrain from further attempts at payment to the City.”
- Non-receipt of reports. The monthly rail car movement reports have also been made to the City of Peoria, at least through 2004, when the City said the contract expired and stopped taking Pioneer’s lease money — maybe longer (the City’s legal department is checking). [Update: City Attorney Randy Ray states that the last report was received March 16, 2004.] It seems to me that Peoria Heights needs to communicate with the City a little better (and vice-versa).
- Non-completion of required drainage maintenance. Any maintenance issues not on the tracks or roadbed are the contractual responsibility of the City/Village, as a plain reading of the 1984 contract shows. That agreement was made originally with Peoria & Pekin Union (P&PU), then taken over by Pioneer in 1998. The pertinent clauses are 4(e) and (f). Emphasis in the following is mine:
(e) The CITY shall be responsible, at its discretion, for performance of weed and brush control not on the roadbed which does not affect rail operations or safety. Unexpected and abnormal maintenance after January 1, 1986 which is over and beyond expected problems which would be rectified by normal preventive maintenance, and which is caused by unforeseen casualty other than railroad accidents, shall be repaired by the P&PU at the cost of the City not to exceed $10,000 in any calendar year. Prior to repairing any such damage, the P&PU shall consult with the CITY as to its plan to remedy the situation and the cost thereof.
(f) The P&PU shall assume the responsibility for all maintenance of tracks, crossing protection, and roadbed including weed, brush, snow and ice control thereon, and normal yearly drainage control maintenance.
As you can see, anything not on the roadbed is the City’s responsibility (or Village’s for the portion of the line within their municipal limits); the rail carrier only has responsibility for the roadbed and tracks to ensure safety.
Now the Village has some legitimate complaints here about erosion under some of the ties and railroad ties lying in the ditches. Pioneer should take care of those issues. However, a majority of the Village’s complaints have to do with weed and brush control that is clearly the Village’s contractual responsibility to abate.
I wonder if the Village ever thought to simply ask Pioneer to help clean up some of these areas before sending them a threatening letter. Does all this bitterness and hostility achieve anything? As they say, you can catch more flies with honey than with vinegar.
Suddenly the lack of progress by the rail/trail committee makes sense. Good thing everyone is working in good faith…
Yep, Bean COunter, more bad faith and more wasted tax dollars. When are the sheep going to say ENOUGH!
The CIRY also has trackage rights on the Kellar Branch. Has the Village of Peoria Heights sent a similar letter to the CIRY? Also, since the VPH now recognizes that the PIRY contract was valid as attested by their legal action, could not the PIRY now sue the VPH for loss of revenue for the over a two year period when the PIRY was kicked-off the Kellar illegally? The VPH leadership and in particular Mayor Allen are true dunces. What a fool!!!
Mr. Ed, I have to agree with you since they have now put it in writing in public. This means that PIRY doesn’t have to continue to fight them in court. Also the P&PU did not do due maintenance while they ran the line. They also removed sidings and other various things with out notifying the City or the Village.
You can’t have it both ways. You can’t kick them off the rail and then sue them for maintenance.
Perhaps I am being naive, but what does money sent to Peoria have to do with a contract with Peoria Heights?
kcdad wrote: Perhaps I am being naive, but what does money sent to Peoria have to do with a contract with Peoria Heights?(
The City of Peoria purchased the Kellar Branch in 1984 for something like $856,000 then sold the two miles or so within Peoria Heights village limits to that municipality for $250,000. The City of Peoria has been dealing with the railroad(s) for themselves and on behalf of Peoria Heights.
It’s interesting that the Heights wants Pioneer to supply monthly traffic reports for the past 24 years when they only operated the line for less than eight! Bureacratic stupidity? Perhaps Mayor Allen can explain his position here.
Mayor Allen is a stooge for the trail nuts. He should be ashamed of himself.
CJ, CJ, CJ…..
Nice to see that you have access to documents internal to Pioneer Rail, yet aren’t “on the payroll” for them. While you may not be receiving compensation, careful or you’ll be labeled (to paraphrase the Mouse) “a stooge for the Rail nuts” – where are you Elaine????
There is nothing that shows the $6 payment is payment for prior years rather than future years. Also, the letter from the Mayor clearly indicates (as clearly as legalese can) that since Pioneer is claiming they have a valid contract, that they should live up to the terms of the contract. There is no admission that the City of Peoria Heights agrees with the position that the agreement is valid, only that if Pioneer claims it is – they have breached the agreement. It’s actually pretty smart lawyering. If the City were to lose and a legal interpretation was made that the agreement is still valid, this is a way to end run it.
And if Pioneer has a legal agreement with the City of Peoria Heights, Pioneer making payment of lease rates and issuance of reports to the City of Peoria won’t fulfill their obligations to the City of Peoria Heights. If Pioneer wants to be clean, they should provide the payment and the documents post haste.
Not having read the entire contacts or fully understanding what areas the City of Peoria Heights want maintenance performed on, I’ll withhold comment on the drainage issues.
Like the sands of time through an hourglass, this saga continues.
What Mouse said. Shame on you Mr. Mayor.
Vonachen, Lawless, Trager & Slevin – Those guys aren’t cheap.
Peo Proud wrote: There is nothing that shows the $6 payment is payment for prior years rather than future years.
The lease agreement between the Pioneer and Cities became effective in February 1998, and so the former paid $6 dollars for each of the next six years – 1998-99, 1999-2000, 2000-01, 2001-02, 2002-03 and 2003-04. Pioneer tried to make the lease payment after that but the City attorney returned their check. Pioneer is not paying for P&PU’s use of the line (1984-1998).
Also, the letter from the Mayor clearly indicates (as clearly as legalese can) that since Pioneer is claiming they have a valid contract, that they should live up to the terms of the contract
Where does it say this? The letter’s wording uses a lot of “is” (present-tense) and assumes Pioneer’s contract is valid, which the City of Peoria (and presumably, Peoria Heights) claimed expired on July 10, 2004.
Peo Proud, Peo Proud, Peo Proud — Pioneer didn’t take over operation of the line until 1998. Hence, the $6 was for future use, not past. And the contract says that reports and fees were to be paid to the City, not the Village. The letter from the Village lawyers referred to this 1984 agreement, not any subsequent agreement that would have required the double-payment or double-reporting you suggest.
And yes, I understand the way they tried to word the letter (Pioneer “claims rights” under an agreement), but the Village can’t have it both ways. If they’re going to say it’s a valid agreement and try to hold Pioneer to its terms, then the Village also has to be held to the terms of the agreement. If they’re going to say that the agreement is expired, then they can’t hold Pioneer to its terms after the claimed 2004 expiration date. It’s a double-edged sword.
12 comments and counting. I never understood the passion that this issue generates on both sides. My observation: build or trial or use it as a real railroad. Get on with it and do something.
Sorry, build a TRAIL or ***
dd, the passion comes from this:
Railroad and small number of supporters have the correct position on the issue (rail is a “need” and trail is a “want”).
Vs.
Peoria City Council (except Gary Sandberg), Peoria Park District, Rep. Ray LaHood, RTA, FRITI, area developers, i. e. a large majority, long ago adopted the incorrect position that a gap in the trail system must be filled at the expense of an operating railroad.
The issue is one of many examples of what is wrong with our city government.
David – you should be on syndicated news…you’re so “Fair and Balanced” 🙂
Really, now – the only way for a compromise is for BOTH sides to realize that they’ve made bad choices and decisions in the past and look to the future. This also requires both sides to acknowledge the value of both a rail and a trail to a healthy community. Unfortunately, it appears that neither side will be satisfied until the other side is wiped out of existence.
I’ve actually changed my thoughts on the value of this line through the City during the time this issue has been kicked around. Properly run, I see it as an asset (though one that should be privately run, operated, and maintained). However, I still have significant concerns about Pioneer (maybe baseless but there nonetheless) given their historical actions and complete disregard for the community.
CJ – ok…better understand point on payment now. However, the City can have it both ways…they do not have to acknowledge the validity of the contract in order to legally posture for that possibility.
David, I appreciate your response. At the risk of sounding like I’m advocating for one side over the other, it seems that the railroad is not a “need” because its not being used as a railroad. I noticed that one train traveled the length of the road a month or so ago and that was NEWS. It seems that if the railroad were really a “need” it would currently be used as a railroad. It seems to me that this issue is really just a rallying point for some philosophical discussion about government and politics and such. I guess my point would be, if it is “needed” as a railway then USE it as a railway. But, if its not being used, then get out of the way and let somebody else (“a large majority”) USE it for whatever they want. Am I missing something?
I think Pioneer actually ran it this week, but I am not positive on that.
It doesn’t matter if you (general you) think rail is a need or a want. Rail, because of its role in interstate commerce, is a different animal. At the end of the day it is a federal government issue. Trail vs. Interstate Commerce, I think years ago Peoria could have made an educated guess how that was going to turn out and started work on alternative plans. But instead all that time has just been spent trying to one up/get back at the other party. I thought the rail/trail committee was a fresh start. Then this happens and it is right back to the same old, same old. Peoria is its own worst enemy.
dd,
When trail proponents initially targeted the Kellar Branch for abandonment in the early 1990’s, regular service was provided to three customers (yes, I know one of them, O’Brien Steel, was unaffected, but it contributed valuable revenue and traffic for the operator). Efforts to turn the line into a trail and disinterest by then-operator P&PU halted any new business or the return of past users.
Then, after assuming P&PU’s contract in early 1998, Pioneer Railcorp demonstrated that they could increase business, bring back business (Peoria Plastic) and turn a profit, but trail proponents continued to pursue the line’s abandonment.
A reconfiguration of rail service to Pioneer Park, i.e. via a then-Union Pacific, now City-owned spur from that railroad’s north-south mainline had many flaws, yet the city council went ahead with it anyway, eventually spending some $2.3 million to build just 1,800-ft of track, right-of-way and protective fencing.
During this time, Gateway Milling quit using the line, instead recieving railcars at Federal Warehouse in E. Peoria. When the railroad (TP&W) serving that facility accepted $1.65 million for track serving industries in that area, Gateway was forced to have Peoria Barge Terminal accept its boxcars of salt. Meanwhile, the company moved to Bartonville, magnified its costs, filed for bankruptcy and liquidated its assets in 2005. Poor management and possible pressure from the City led to the destruction of this company, the largest rail user at Pioneer Park during city ownership.
Peoria Plastic went out of business, unable to compete with cheaper imports.
Such casualties are common and railroads as well as any transportation firm must aggressively market its services to new and existing clients. If they do not or cannot, their business contracts. The City’s efforts to close the Kellar Branch and replace it with an inferior “western connection” deterred such marketing efforts.
Rising fuel prices have brought about a marked change in transportion economics in which the railroads are gaining back business once thought forever lost to trucks (note PMP Fermentation, in town for 23 years, only began using rail service in early 2007).
The City’s actions since the early 1990’s nearly succeeded in killing off the remaining traffic on the Kellar Branch. But Pioneer Railcorp fought the good fight and won, and by the time of the federal Surface Transportation Board’s Nov. 17 decision restoring Pioneer Railcorp’s operating rights, Carri Scharf Materials and Globe Energy ECO-Systems have come forward with plans to use the line. There are apparently others interested in using the line, though the details have not been provided to me (okay, I can speculate on one of them, which I think is pretty obvious since it’s a past user).
If the City of Peoria could remove the scales from its eyes and recognize the value of rail transportation pertaining to true economic development (logistics and light manufacturing), it would get on board and tout its railroad, and its neutral connections to multiple railroads.
In closing, one thing to remember is that the only parties who truly have the right to decide what constitutes adequate business is the railroad and the shipper(s). One car a month is relative.
David, again thanks for the info. In a time when everybody seems to have an opinion on everything, I hope you accept as genuine my statement that I really don’t care one way or the other on this. After reading your last post, I see that you seem to have a level of knowledge on this issue that goes deeper than just an informed observer. I would defer to your expertise if I were “voting” on this issue. My original question was, however, why the passion. Most of the posts on this issue, both pro and con, yours being the exception, seem to me to be the usual Rush Limbaugh or Al Franken variety, meaning have a global view and then take a postion on each issue based on that global view and no need to really dialouge to solve a problem. I think if this is an example of anything, it might be that when nobody wants to listen to anybody else, then after 18 years, you got an essentially useless piece of property that nobody is really benefiting from.
dd,
Pioneer Railcorp has offered $750,000 to buy the line from the owners, and even $100,000 toward parallel trail construction. The issue doesn’t have to be either or. It can be both and benefit everyone. Most of the trail forces, however, are uncompromising.
If you don’t care one way or the other than that’s your right, and is okay. However, some of us take an passionate interest in the issue for various reasons.
dd: your last comment — “I think if this is an example of anything, it might be that when nobody wants to listen to anybody else, then after 18 years, you got an essentially useless piece of property that nobody is really benefiting from.”
And this has unfortunately been the mindset of the majority of the decision makers over the past fifteen years that I have lived in Peoria and the many decades previous to that time period. Every election cycle we have a new plan and so doing really changes. High hopes, false startes, incomplete finishes and then dashed hopes.
It goes back to no vision/mission statment from the bowels of our community to provide buy-in and direction that would engage citizens to be part of the solution rather than be part of the problem by whining, apathy, marginalization, or outright illegal behavior.
A great quote from Norman Vincent Peale (a great man who I had the opportunity to talk with while in my youth)
“Empty pockets never held anyone back. Only empty heads and empty hearts can do that.”
We need to find to capitalize on the citizens of Peoria to make Peoria great — which is to utilize the passion and energy of its citizens which is the most underutilized commodity in our community and work together rather than against one another.
What?!! $750,000 for the line and $100,000 toward a parallel trail? That’s $850,000 to build a new trail. Problem solved. Take the deal and move on. Now, can somebody tell me why this is not a good solution? Seems win-win to me. I am starting to get passionate about this!
dd — maybe because it’s less than what the Cities paid for it?
I’m in favor of them selling it but on the open market – have an auction, bidding, something other than a blind acceptance of Pioneer’s initial offer (that was made during a period of much posturing by both sides) to see what that rail is truly worth.
I’m not a venture capitalist, but I don’t think anyone would bid $850,000 to buy this railroad so that they could take the cities’ place as Pioneer’s landlord. I still don’t have a position on this issue, but I gotta tell ya’, I’m startin’ to get one. I thought the goal was to get a trail, not a capital gain on a piece of real estate. If the area would benefit from both a functioning railroad and a funtioning trail, and selling the railroad to Pioneer would acheive that goal, then do it.
dd,
That is most of the “pro-rail” people have said, win-win. In fact most of the people that have been labeled pro-rail, like myself and others, are actually pro dual use not just one or the other. Where as, in my understanding, the pro-trail side is trail only nothing else.
For me, the passion has come from my rail fan/Civil engineering background. The fact that the pro-trail that rail transportation of goods and people is good for shippers and receivers of goods. And it is better for the environment to ship 1 boxcar over using 2-3 semis. More trucks that are on the road are also harder on the roadways. That is where my passion comes from.
Sorry, that should be “achieve.” Doesn’t this dam thing have a spellcheck.
Peo Proud,
The City of Peoria and Village of Peoria Heights paid for the railroad with grant money, so $750,000 would be mostly profit minus funds allocated for some grade crossing work. Property taxes levied on adjacent business landowners and also property and sales taxes collected from the line’s users have most certainly made up for such costs, however.
It’s doubtful CIRY would offer to buy it, but like you I would prefer a competitive bid as well (open to common carrier railroads, excluding parties such as the Peoria Park District, RTA in the unlikely event they could raise enough funds to make a serious bid).
But again PIRY is the only to present an offer (the first of which goes back to 1986 if i’m not mistaken).
Karrie, you are right, but the problem is the cabal that runs Peoria doesn’t want to hear from the people. We are here only to be fleeced for their pet projects. This issue is Exhibit #1. And you only have to go as far as the people that were appointed to that laughable Kellar Branch committee. All insiders who, with but one exception, already are on record as favoring the trail. Both railroads, Carver Lumber and Globe Energy got the cold shoulder, as usual.
Then this goofy letter from the Heights. Ya, they want to coooperate. Sure they do. Just so they get their way, and to heck with everybody else. Situation normal…. (you know the rest of it).
“The City of Peoria and Village of Peoria Heights paid for the railroad with grant money, so $750,000 would be mostly profit minus funds allocated for some grade crossing work.” When Pioneer took over the Kellar in 1998 they had to redo all of the crossings at their own expense. They have all the records for this. During the time P&PU had the line they did little or no maintenance and the Village of Peoria Heights didn’t complain then or sue them. Now they want Pioneer to pay for all of it from way back 24 years, long before Pioneer took over the line. Pioneer has sunk a lot of money in maintenance in that line and CIRY has done nearly nothing, yet they are not being asked to clean it up or repair it. Why is it that Pioneer always gets picked on for everything and yet they are the only ones that pour money into it and have since day one and still offer to buy it out and support putting in a trail?
dd – you misunderstood me. I meant, if Pioneer wants to buy it, then they should. At the price that the open market will provide. While I wasn’t thinking of anyone other than a railroad purchasing it…I’m also open to allowing anyone to purchase it if they have the money and are willing to deal with the Federal Regs that come with that purchase. Hmmm…perhaps the Park District can buy it (since they always have money) and contract with Pioneer to operate. HA!
DPJ – I agree mostly with you but think that ANYONE willing to purchase it should be given the opportunity. If as you say (and I’m trusting you on this) that the Fed Regs will regulate who can and can not operate over it, why limit it only to railroads. While I don’t think seriously that the PPD would purchase, there may be enterprising entrepeneur wanting to break into the choo-choo business and this gem will be their foothold.
I hate it when my opinions change over time…..stop making me think about issues!
I don’t believe there are any specific guidelines as to who can buy a railroad or not, but remember the STB has sole power to authorize abandonment and/or discontinuance of service. A winning bid by a trail proponent wouldn’t automatically mean a recreational trail built within days of the transaction.
If Elaine Hopkins had the winning bid, on-line shippers would still demand someone service them, and she’d have to either contract with someone to provide it or start her own – otherwise, the STB would designate a carrier to provide service. It would be best if any sale be limited to operating railroads, thus avoiding drawn out battles such as could be created by the above scenario.
(Now isn’t it too bad Ms. Hopkins is banned from commenting here 🙂
DPJ –
Not fair to bait an unarmed (or unable to comment – in this case) individual. I completely understand that anyone would have to follow STB authority…no problem there at all. Anyone purchasing would know that up front. I’m not in favor of limiting the right to purchase simply to “avoid a drawn out battle” when the net effect of that might limit the value the City gets for it.
Since I can’t eliminate all snarkiness today (two many drinks in the airport lounge and another three hours of flying ahead of me) I would note that with the current use of the rail, a few donkeys and some heavy rope could probably handle the movement of cars along the Kellar as of late.
Well, CJ is free to edit my comments if he agrees.
Anyhow, railroads are the only likely serious bidders if all are aware of the laws involved.
Peo Proud, as I recall CIRY already tried the donkey and ropes plan. It didn’t work too well. As for “limiting the value” the City gets, this has gone on for over 10 years and the City has already wasted way too much money on this. They should be looking to cut their loses and get out of this as fast as possible. George Burrier may want this battle to last 100 years, but he isn’t paying for it. OPM is easy to spend.
So what is the estimate for the legal fees for the respective parties involved —- City of Peoria, Village of Peoria Heights, Peoria Park District, RTA, Pioneer? Did I forget anyone?
Would there be a minimum bid amount at the auction?
It would be best to have the bidding limited to operating railroads — let’s get this project done — rail and trail or rail only. (Ditto to The Mouse’s comment — situation normal… unfortunately.)
Good reporting and good commentary.
I just came out of the Rail/Trail Committee meeting. I have to give them kudos. This was the first time I have heard all concerned really trying to do things fairly for both sides. I think this committee is going to make some great improvement in the situation. I will not give details here because it is not mine to give. But I do applaud all present for their efforts and their ability to see both sides.