NETEX passes reduced budget

Infrastructure

After a nearly four-hour long session, the Northeast Texas Rural Rail Transportation District (NETEX) unanimously approved a budget that will leave them with a negative balance of $93,875 for fiscal year 2020, which improved by more than half their predicted negative balance of $225,866.76 at their Sept. 7 meeting.

CITIZEN COMMENTS

Twenty-five community members attended the meeting. Those who gave comment were Delta County Judge the Hon. Jason Murray, David Stevenson Sr. of Custom Commodities in Gilmer, Texas, Hopkins County Judge the Hon. Robert Newsom, Sulphur Springs City Manager Marc Maxwell, Matt Jasmer of Feeders Supply, Brad Johnson of the Northeast Texas Farmers’ Co-Op and Rick Anderson of Feeders Supply.

“The last several weeks, I’ve taken a lot of phone calls regarding the NETEX board,” Murray said. “I’m not sure what all is going on … I got a copy of your proposed budget, and it has a $63,000 revenue and a $289,000 expense. The only thing I’m going to say about that: If I were to prepare, propose and pass a budget that looks like this in Delta County, I wouldn’t last long. Delta County is a part of this. I don’t understand a budget with those kinds of numbers.”

“As a customer on the Blacklands Railroad and a customer to this board … I saw the same figures. … I’m concerned about the livelihood of what we’ve got going on here,” Stevenson said. “I’m just going to throw it out there — it doesn’t look we’re going to be operating very long as far as NETEX is concerned.

“We as businessmen, … I think it’s only prudent to ask, do we need to start planning for something else? We don’t need to wait up until the last minute,” Stevenson said. “We’re already starting to lose business from other people because of what they’re hearing and seeing on the internet, and the dysfunction that’s going on. It sounds like I’m a little upset. Well, I am. I want to be part of the solution.”

“I was in a meeting in Greenville with the executive committee and several judges,” Newsom said. “I asked the question, ‘You’re basically basing the entire hopes of the future of this railroad on a container facility [the Franklin County Container Terminal]’ ... and the answer was yes. I went back to the office and got out some old emails … and they’re not that old. They’re [from] June. I believe Phil [Davila, NETEX executive director] had sent something to Union Pacific telling them the dreams of the container terminal. And Union Pacific responded very negatively to it, as if ‘it’s not in our plans, and we’re not interested…’

“I’m concerned. … I always say this … we can’t afford to have interruptions, and we can’t afford to lose the railroad,” Newsom stated. “We’re being blessed right now, and we’re making it at 10 miles an hour railroad, but we have to have it for economics in Hopkins County and Sulphur Springs. Based on what I’ve heard about the budget, … if that [the Franklin County Container Terminal] is the savior you have for the budget, and it’s not going to happen, let’s change course. You can’t just go on like this and go under. Whatever it takes, … we’ve got to keep the railroad.”

“We’re very concerned of the prospect of losing Blacklands Railroad,” Maxwell told the group. “If we lose it, we may or may not have a replacement. … It may solve itself, but then again it may not. I’m here to encourage you, the board, to at least attempt to salvage the business relationship with Blacklands Railroad.

“We have a very vested economic interest in having an operator here,” Maxwell said. “I was here before Blacklands arrived, and while I am aware there was an operator at least on paper, I recall we were all very excited about the arrival of Blacklands Railroad. … After Blacklands showed up, we started having service to our local business. Blacklands moves a lot of raw materials into our city. It is a vital part of our industrial infrastructure. Please attempt to provide that.”

“In the past we have dealt with interrupted rail service. It’s not something we care to go through again,” Jasmer told the group. “With that in mind, we ask the board to be mindful of their duties set forth by the state of Texas in regards to rural rail transportation districts. The state of Texas lists financial stability, monthly board meetings, good business practices as well as ownership of rail and rail right-of-ways as elements of success of a rural rail district.

“We also ask the board to be familiar and cognizant of the Texas Open Meetings Act,” Jasmer said. “The purpose of that act is to ensure transparency and accountability. It requires state and local governments to conduct business responsibly and in accordance with the law. More specifically, we ask that the NETEX board be mindful of what can and cannot be discussed while in executive session.

“We are strongly opposed to the budget,” Jasmer said. “We would ask for the vote to reject the proposed budget. We don’t see how in good faith you can accept the budget.”

“The current executive director and leadership have made it impossible for teamwork to exist for at least the last year and a half,” Johnson told those assembled. “We in northeast Texas must refocus towards working together. The goal has to be a unified NETEX board, the contracted operator of the shortline railroad, our current shippers and receivers, our commissioners courts, EDCs [economic development corporations] and city councils working toward a common, transparent, short-term and long-term vision.

“A change is needed in at least the executive director position,” Johnson stated. “He [Davila] should recognize he has divided our northeast Texas area and step aside.”

“We think it is irresponsible to pass a budget with a professional fees category three times the revenue,” Anderson said. “We also think it is irresponsible to have a $100,000 consultant fee and only budget $10,000 for track repair. … We hope this budget will be rejected.”

COMMENTS BY BOARD MEMBERS

Board members welcomed Collin County representatives Duncan Webb and Cheryl Williams. Williams and Webb both previously served on NETEX in 2013.

Although NETEX members Sam Young, Jason Lee Davis and Bonnie Hunter stated it was not typical for the board to accept members without an official vote by the board confirming their status, Webb and Williams stated they had verified their installment with the Collin County attorney and did not need NETEX approval to sit as voting members of the board.

“Judge Murray mentioned his phone’s been ringing off the hook… I have gotten several phone calls and conversations with some people in this room who have high concern about what’s going on,” Neal Barker said. “They have very strong opinions about what we’re doing. I communicated to each one of them that it makes me uncomfortable to get a situation where people want to tell me what they think, but they didn’t want to come here and say out loud what they think. I think it’s a big step, and I want to publicly say I really appreciate the people who showed up to tell us their opinion. … We’re here representing the people of all our counties.”

“They need service; they’re not getting it,” Greg Sims echoed.

“Being the newest board member, I would like to speak up in all of this,” Mark Baird said. “The one thing that I see that seems to be causing a lot of tension, … everything has to be done secretly. That is causing a lot of tension in my county and some of the people in Hopkins County. Things apparently can’t be talked about. Nothing can be discussed. People want answers. These customers want answers. Our county judge wants answers. That’s what I think is causing a lot of this division.”

The board adjourned to executive session at 1:54 p.m., and the executive session lasted until 3:43 p.m. After executive session, the board unanimously authorized their attorney, Wolf Law Firm of South Lake, to continue negotiations.

BUDGET

The following items for the budget were set to zero:

• Maintenance and construction,

• Board meeting luncheon,

• Public relations and 

• Board member travel.

The following items were adjusted: board of directors insurance — initially budgeted at $2,500, final budget $27,157.89; CPA annual audit —initially budgeted $5,000, final budget $4,500; and survey and title search — initially budgeted $5,000, final budget $1,000.

Attorney fees ($50,000) and Surface Transportation Board fees ($25,000) were approved with the stipulation that a further budget amendment may be necessary as expenditures may be more or less due to the cost of NETEX’s ongoing lawsuit with Blacklands Railroad and finding an operator through the Surface Transportation Board to replace Blacklands.

The largest expense on the proposed budget, the executive director salary at $100,000 and lodging, meals and mileage stipend of $6,800 drew mixed comments from the board.

“You really can’t afford an executive director,” Williams stated. “This board has an obligation under state law to maintain enough finances to keep the railroad open. You’ve got fiduciary responsibility not to adopt a budget that leads to insolvency.”

“I couldn’t recommend a severance from the executive director position,” Davis said. “That’s the person we have that’s capable to do those kinds of things.”

“We had not had an executive director for years and years and years,” Lee said. “There wasn’t a whole lot happening, the types of things that there are now. We’re wanting to move forward in a lot of the directions we’ve been able to.”

“We’re not expecting enough funds to cover our debt,” Mickey Barker noted. “That is dwindling by the day.”

“Is there any chance there’s something that can be taken to the RTC (Regional Transportation Council of North Central Texas) to kind of tell them the situation we’re in?” Neal Barker asked.

“They’re not going to be willing to step in, in this situation,” Webb noted. “Not until this is resolved, the litigation.”

“Your largest expenditure is professional fees,” Williams said. “That’s where we’re going to make up this budget.”

“You have to understand, everything — whether it’s a lease or a document or it’s the lawyers or it’s the filing or it’s pulling documents for the lawyers — that’s driven up by the lawsuit,” Davila said. “If the lawsuit settles, a bunch of these things go down.”

The board compromised to cut Davila’s budget to $70,000 per year with a $4,000 allowance for lodging, meals and mileage.

This cost alone still outpaces NETEX total expected revenue by $11,000 but represents a cut of $32,800 from the originally budgeted $106,800.

Davila said he still has fees outstanding in the amount of $35,000 from the 2019 fiscal year that have not been billed. Davila is usually paid $50,000 per year, he said.

ELECTION OF TREASURER

The board nominated and voted unanimously to elect Hopkins County representative Neal Barker to the position of treasurer.

Neal Barker told the News-Telegram he is “proud to serve” but had no further comment at the time.

ADJOURN

The meeting adjourned at 5:12 p.m. with no further business.

On Thursday, Sept. 19, Blacklands Railroad posted a public notice in the Sulphur Springs News-Telegram stating intent to discontinue rail service. This filing with the Surface Transportation Board is the second and final such required notice, according to Blacklands President Wayne Defebaugh, and there are “still some months before anything has to happen,” Defebaugh said.