Reconstruction -- Then and Now, A Story of Unmet Expectations

No. 39 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles

VIRGINIA AND TRUCKEE RECONSTRUCTION COSTS/PLANS -- THEN AND NOW

Let's compare claims made in 1995 to today's reality. Way back in 1995 there was a hearing in the Nevada Legislature. A groups of local politicians from Carson City were asking the state to provide a loan of $5 million to help reconstruct the Virginia and Truckee Railway from Carson City to Gold Hill. They also planned to buy out the existing private Virginia and Truckee Railroad, owned by the Gray family. The Gray's have now run their operation without government funding for over 30 years.

Let's take a look at what claims were made back in 1995 vs. today's reality:


SUMMARY OF CLAIMS MADE IN 1995

-- Total costs, soup to nuts, will be $20 million
-- $10 million of this is for equipment
-- Contradictory claim also made that operator provides equipment
-- The railroad's revenues will pay for the project in the long run
-- The V&T Reconstruction project is similar to Colorado's Durango & Silverton RR.
-- Private fund-raiser says he can raise $7 million
-- Private foundation ready to donate up to $10 million
-- State loan would be repaid at $1 per ride, based on $15 ticket price


INITIAL CONSTRUCTION ESTIMATES WERE $10 MILLION

1995 Claim: Total costs would be $20 million. Long-time commissioner Ron Allen said half those costs would be cars and locomotives, making the initial construction estimates $10 million:

Mr. Smith responded the railroad cars would each
cost from $250,000 to $300,000.  The engines
could cost from $750,000 to nearly $1 million.
Ron Allen, President of the Virginia and Truckee
Historic Railroad Society, estimated the physical
assets would be at least half of the total project
price.  He noted the estimate would have to
include right-of-way, physical assets and the goodwill of
an ongoing business.

This was apparently contradicted earlier in the hearing with this statement:

Chairman Marvel asked if the Commission had already
purchased the necessary rolling stock.  Mr. Dini
responded the operation of the V & T would be leased
to private enterprise.

Now, in this Nevada Appeal article, the estimate is over $70 just for construction. They have already raised and spent $40 million, and say $30 million more is needed.

In addition, different camps among the V&T Reconstruction Commissioners differ on who should own the rolling stock. Mayor Marv and Bob Hadfield, long involved in this project, had often claimed that Sierra Railroad would be the operator (covered in another section) and that Sierra would bring $3 million of assets to the project. At the same time, the Ron Allen-John Tyson camp has long lobbied for the Commission to purchase their own trainset. So far the Commission has spent over $500,000 on equipment. Some of this equipment has been abandoned before it's even used.

THE RAILROAD WILL ULTIMATELY SUPPORT ITSELF

In 1995, Greg Smith, Chairman of the Tri-county Railroad Commission, said:

the railroad could break even the first year of operation
and would make money by the second or third year of operation

This is funny, for years (right up through the 2006 Sierra Railroad "business plan") the public line was that the railroad would either "support itself" or "pay for itself."

The idea that revenues would pay for construction has long been abandoned, but now even the idea that revenue would support operations has been abandoned. See the Nevada Appeal article from November 2 and my previous blog post detailing Chairman Millard's claim that "running that train ... will never be profitable."

THE V&T IS COMPARABLE TO THE DURANGO & SILVERTON

Back in 1995 the claim was made that:

The Durango & Silverton Railroad in Colorado is comparable
to the Virginia and Truckee.

Now, this claim is still often made. In this case the message has not changed -- it's just been wrong all along. The Durango and Silverton is quite different from Virginia and Truckee Reconstruction in many ways, including:

-- The D&S right of way was never lost, and did not need to be repurchased
-- The Colorado Rockies are much greener and more beautiful than the proposed V&T route, which includes wrecking yards, a race track, industrial buildings and brothels in Mound House, and the existing and abandoned mining/milling areas of American flat.
-- The Durango and Silverton is over 40 miles one-way and follows a forested river route
-- Silverton is much more cohesive as a tourist destination

A PRIVATE FUND-RAISER WILL RAISE UP TO 70% OF CONSTRUCTION COSTS

In the 1995 hearing Chairman Greg Smith claimed:

Carl Dubois, a nationally recognized fundraiser,
has estimated that approximately $7 million could
be raised through the private sector.

Now, it is clear that this never happened. It's common for Commissioners to claim that private funds can no longer be used because federal funds are involved. This claim has always been invalid, because in 1995 the plan was to use $2 million of federal ISTEA funds.

A PRIVATE FOUNDATION WILL PAY UP TO 100% ($10 MILLION) OF COSTS

In 1995, Chairman Smith tesitifed:

Mr. Smith indicated a private foundation has
expressed the intention to provide up to $10 million

Now, it's not even clear who this foundation was. Although the Northern Nevada Railway Foundation is currently the recipient of more Commission funds than they have donated back, it seems in 1995 the "private foundation" was Ron Allen's secret society, the Virginia and Truckee Historic Railroad Society. This group has never donated a dime to the project, let along $10 million.

In progress, more to come.