Third in a series
SHAMOKIN - Accusations by Northumberland County commissioners that SEDA-Council of Governments Joint Rail Authority (SEDA-COG JRA) has built itself into multimillion-dollar business with exuberant spending is unfounded.
That's the argument from the authority's board chairman and director, who provided financial statements that show the JRA had an average monthly balance from January to October last year of $1.15 million.
"We're not sitting on a nest egg," said Director Jeff Stover.
"We don't have a lavish way of doing business," added Chairman Jerry Walls.
Stover and Walls discussed SEDA-COG JRA's finances as part of a Dec. 29 interview at The News-Item as they seek to inform the public of what they say is a transparent agency that's helping the local economy and isn't taxing the public.
Their effort to explain JRA's performance comes on the heels of a resolution passed by Commissioners Vinny Clausi and Merle Phillips, who has since left office, on Dec. 13. It says the authority had built assets totaling more than $40 million with an annual profit of more than $1 million. Commissioner Chairman Frank Sawicki, who voted against the resolution, like Phillips was not re-elected in November, but will still serve on the JRA board until 2013.
$100 million in value
Stover and Walls maintain the authority doesn't have a lot of cash on hand, but they do recognize their operation is valuable - very valuable. In fact, the county's $40 million estimate for assets is probably well under the actual value, they said.
The $40 million figure is based on the book value of the authority from an outside auditor, but Stover said the fair market value could be $100 million or more. In fact, in a list of "frequently asked questions" presented by the JRA the day the county passed its resolution, that value was placed at $125 million.
Those higher estimates are based on the sale of separate rail lines in Lackawanna and Monroe counties that fetched $432,000 a mile. With 200 miles of track and at the same value per mile, the JRA total would be $86.4 million, plus property, locomotives and other assets.
Operator fee is key
The main source of revenue for the authority comes from the operator fee, in which JRA gets 10 percent of profits from North Shore Railroad Co., Northumberland, with which it has a 10-year contract to operate trains on JRA tracks.
Stover provided monthly statements from January to October 2011; the average monthly income from the 10 percent fee during that time was $131,000. The JRA also receives revenue from utility license agreements and trackage rights fees. (See accompanying financial statement.)
It is anticipated that total revenue for 2011, once the final report is compiled, will be about $1.7 million, but Stover said any profit is allocated back to railroad projects.
The JRA, meanwhile, gets very little money from the eight counties that make up its service territory. There were only two times local money has been used: $50,000 from Centre County in 1984 and $25,000 from Northumberland County in 1988. Both these contributions accounted for less than 3 percent of the projects they helped fund.
In fact, while JRA does receive state and federal grants and low-interest loans, it requires no tax dollars to survive, Walls and Stover said.
In the next 24 months, the JRA will oversee $25 million in capital upgrades and construction over more than seven miles of new track. Since its inception, the authority has invested $43 million in local rail lines to put them in a usable state.
Seventy-five percent of its budget is used for reinvestment on rail projects, while the remaining 25 percent is used for staff services, Stover said.
With a staff of 12 employees and 16 volunteer board members, it is far from a "bloated bureaucracy" as has been suggested, he said.
Stover and Walls complimented former state Rep. Bob Belfanti (D-107), who accompanied them to the Dec. 29 interview, for working hard to provide SEDA-COG with money and state grants.
"When there's money out there for a grant, the first place I looked was SEDA-COG," Belfanti said, noting his confidence in the operation.
Perks, benefits
At the Dec. 13 meeting, Claus said the authority has a $22,000 monthly budget for food, gifts and other expenses he deems unnecessary - but Walls and Stover said those numbers are wrong.
In 2010, Stover said the budget for lunches was $5,600 and for gifts, $2,615. Typically, JRA budgets between $1,000 and $2,000 a year for gifts, he said.
Walls said the authority has board meetings once a month that start in the morning with committee meetings and can last for hours. There are 16 board members, staff, others there on business and sometimes members of the news media - more than 30 people at times. Lunch is provided for the group, and it's typically sandwiches or a hot meal, Walls said.
Stover said he has never been questioned about his ex-wife, Susan Stover, of Lock Haven, providing the catering services for the meetings. The arrangement was made after their divorce, Stover said, adding, "They (the members) said the food got better."
In October, the bill for Susan Stover's services was $481.40, which, for 30 people, would average $16.04 per person.
He said board members spend between 60 and 100 hours in meetings and travel times throughout a year. They receive no income, but to reward their effort and expertise, gifts are sometimes purchased. In 2010, it was jackets with the JRA logo on them, which, beyond showing appreciation, serves as marketing for the rail service, Stover said.
Walls noted no authority funds are used to pay for alcohol, but said there might be alcohol at holiday parties in the form of cash bars or provided through donations.
All JRA meetings are advertised and open to the public. Authority minutes since 2007 are at its website at www.sedacograil.org, and the authority can provide copies of any minutes from 1984 until 2007, Stover said.