QUEENSBURY — The owner of Saratoga & North Creek Railway told Warren County leaders Thursday that he plans to shut down the railroad unless someone buys a northern rail line from his company for $5 million.
Ed Ellis, president of the railroad’s parent company, Iowa Pacific Holdings, said SNCR’s tourist trains will not run this summer unless the county, state or “somebody” is willing to “invest” in his company to keep it functioning.
That investment would entail purchase of the so-called Sanford Lake/Tahawus rail line north of North Creek, and Ellis said $5 million would be what is needed to get the rail company through the end of its current five-year contract. It would allow the company to try to work with a contractor who bought a former mine at the end of the Sanford Lake line in Tahawus with plans to remove stone.
Ellis came to Warren County on Thursday at the request of county leaders who had not been able to get him to respond in recent months to questions about past due revenue payments.
He came loaded for bear, and was quite combative as he quickly told supervisors that his company could not afford to take the losses it has absorbed to run SNCR, which operates on rails owned by Warren County and the town of Corinth between Saratoga Springs and North Creek.
He explained the company has lost millions of dollars because it has not been able to develop freight traffic to balance bills for its tourist train, which does not produce enough revenue to support itself.
The uproar last fall over storing tanker cars on the rail line north of North River, in the state Forest Preserve, chased away potential storage customers, and the county’s vote to oppose car storage “broke” his company’s relationship with county leaders.
“We aren’t able to continue the operate the railroad financially and lose money,” he said. “There is either a purchase of the Tahawus line or we are done.”
He also said the company also can not afford to pay Warren County the $28,880 that is owed under the contract as a share of the rail line revenue.
Ellis said the “pivot point” in his relationship with Warren County occurred last fall when county supervisors took a stand and voted against tank car storage after renewing a contract that allowed storage of cars that did not contain hazardous materials. (The vote, which was technically to support Essex County’s vote against the storage plan, was non-binding, because Ellis’ company owns the line on which the cars are being kept.)
He said the issue became a political one, and customers looking to store cars will not do business with his company in light of it.
“You created a devastating financial situation for us,” Ellis told county supervisors.
Some questioned whether a contractor’s plans to ship more stone out of Tahawus via the rail line would help, but Ellis said his company can not absorb losses until that business develops.
“I’m willing to do it, I’m just not willing to do it on my own nickel,” he said.
Glens Falls 3rd Ward Supervisor Claudia Braymer said it might be time for the county to consider getting out of the rail business, to which Ellis responded, “I’m giving you the option to throw me out.”
Ellis’ tone softened as the meeting went on, and said he was willing to entertain lower offers for the northern line, for which he paid $1 million and said he invested an additional $2 million. He said he has enjoyed getting to know the people of Warren County, and the towns through which the rail line passes. But he reiterated that the tourist line would not run this summer under present conditions.
County leaders made it clear that there was no interest in buying the line, however.
“That’s not going to happen,” said Warrensburg Supervisor Kevin Geraghty, the county’s acting administrator.
Ellis said he wrote a letter to the state offering to sell the Sanford Lake line to it, but got no response.
The 80 or so tanker cars that have been stored on the line are scheduled to be removed, but weather has delayed the move, he added.
Iowa Pacific Holdings owns railroads around the country, and began operations of SNCR in 2011.