The Ely City Council approved a new forensic audit of the Nevada Northern Railway’s books in their meeting held on June 26 in the National Guard Armory.
The council approved spending up to $10,000 to take another look into the railroad’s books. Though the council had formed an “ad-hoc” committee consisting of both members of the city council and members of the railroad’s management board, Councilman Marty Westland said it hasn’t help answer the council’s questions.
“We haven’t gotten answers to the questions we had from the committee,” Westland said, who’s one of the two council members appointed to help conduct the audit. The other councilman involved is Sam Hanson.
Mark Bassett, executive director of the NNRY, took serious issue with Westland’s comments and the council’s participation, or lack thereof, in the ad-hoc committee.
“The trustees have never given a written request of concerns to the management board, so how are we supposed to give answers when we don’t even know the questions,” Bassett said. “What Westland forgot to mention was that there were no city council members in attendance at the last ad-hoc committee meeting.”
After a similar complaint was raised by a representative of the railroad’s management board in the public comment section of the city council meeting, City Treasurer Jennifer Winkle said she was in attendance of the meeting as a representative of the city.
Westland said he doesn’t know yet who the city will use to help him and Hanson conduct the audit, but he said they will be looking for possible misuse of grant funds and again address the remaining “red flags” brought up in the railroad’s last audit.
Bassett responded saying the city is wasting time and money on an additional audit as one will be performed by the city’s auditors at the end of the year.
“I am absolutely frustrated,” he said. “I would say I spend around 35 percent of my time these days trying to come up with paperwork for the council.”
Westland also brought up issues he had with the “car storage agreement” the rail yard had with railroad company S&S Shortline. In the meeting, Westland addressed his concerns to S&S’s manager Mike Williams, who flew in from Missouri to speak with the council.
The history of the matter goes back to 2009, when the City of Ely entered into an agreement with S&S to store rail cars along a section of track that runs north of the McGill Junction, a section not associated with the historical foundation’s track, though still owned by NNRY.
S&S’s owner, Steve Flanders, rehabilitated 40 miles of track to store cars on, running a bill of $750,000 for the city to eventually pay back, according to Westland.
“As a city councilman, it is my job to worry about the future of the city and that debt hanging over our heads is a serious concern for me,” Westland said.
Williams said he believed the total amount due to S&S was much less, approximating the figure to be somewhere closer to $400,000. He also stated that S&S does not expect to be paid back until the railroad is operational again and making profits as to not bankrupt the city.
Again Bassett disagreed with the council’s tone, saying S&S has long-term plans to work with the railroad to bring it back to an operational state.
“To have a person interested in our railroad with a major cash investment is unheard of and we should be celebrating it, not having one city council member negatively impact that relationship,” Bassett said.
Westland clarified after the meeting he looks forward to working with S&S and wants nothing but the best for the railroad, but he wants to make sure that everything is handled properly.
Other matters addressed at the meeting was the approval for the replacement of stop signs at the intersection of Avenue H and 14th Street. The council quashed a motion to hire a non-contractual City Engineer, opting to keep current City Engineer BJ Almberg in the position.