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Texas City Declines to Hand Over Campground to RR

July 10, 2012 by   - () Leave a Comment

The city council in Rusk, Texas, voted to stop negotiations on the potential ownership of the Rusk railroad park and campgrounds with its current operator, with intentions of continuing negotiations with a new operator.

Officials are working on the paperwork to facilitate the transfer of the railroad from American Heritage Railways to Iowa Pacific Holdings, the Jacksonville Daily Progress reported. The availability of the 88-acre park is one of many items to be negotiated to complete the deal. The park is owned by the city, which currently allows railroad patrons use of the land at no cost to its operator.

City Manager Mike Murray said the council voted to stop negotiations with American Heritage, but intends to continue them with Iowa Pacific once the transfer is complete. He said the council does not want to hinder the success of the railroad.

“The city of Rusk has already assured Iowa Pacific that it is confident that a mutually acceptable arrangement can be worked out for Iowa Pacific to have the city’s adjoining campground and park land available to utilize in support of its railroad operations,” a statement released by the city stated.

The current operating agreement was established in 2007, when the Texas State Railroad Authority (TSRA) took over the railroad from the state of Texas and hired American Heritage to operate the line. Murray said in the original agreement, the city agreed to deed the park to the company if certain criteria was met.

“There was an agreement being negotiated and it was never finalized,” Murray said. “(It) was being negotiated with the understanding that AHR would comply with the operating agreement (they had) with the authority (TSRA), specifically running X number of trains with X number of train passengers — that didn’t happen.”

He said another portion of the never-finalized agreement pertained to the sale of the railroad, stipulating if a transfer was to happen, the city would receive $1 million for the land.

“AHR has no intentions of doing that, and the agreement wasn’t completed anyway,” Murray said. “We figured it was best to work directly with Iowa Pacific.”

Murray said not only were the terms never met, the company asked for a $500,000 loan from both Rusk and Palestine to continue operations of the railroad and later asked for forgiveness of the loans.

“In view of these developments since August 2007, the Rusk City Council no longer believes that it is in the best interest of the citizens of Rusk for the city to donate by deed the city’s campground and park land to AHR, as originally contemplated by the August 2007 sales and purchase agreement,” according to the statement.

Once the transfer is complete, the council approved the mayor, city manager and city attorney to negotiate new terms for the land’s use. City officials said they are ready to negotiate suitable terms as soon as Iowa Pacific is prepared.

Kevin Busath, vice president of strategic planning for Iowa Pacific, said he could not comment on whether Rusk’s decision hurt negotiations, and he said a closing date has not been set.

“We are in negotiations, and it would not be appropriate for me to comment,” Busath said.

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