Derailed? A detailed look at the state of Vancouver Island rail service

Observers wondering if a recent series of setbacks could mean the end of the line for the E&N railway

Southern Rail employees connect heritage passenger cars bound for an excursion tour at the Wellcox railyard on the Nanaimo waterfront Tuesday

Southern Rail employees connect heritage passenger cars bound for an excursion tour at the Wellcox railyard on the Nanaimo waterfront Tuesday

On April 8, passenger rail returns to Vancouver Island in the form of a classic locomotive pulling four heritage rail cars on a series of tours in the Nanaimo area.

Celebrating the 130th birthday of Island rail, organizers had hoped the event  would make a bold statement that its future is very much alive.

Instead, recent events have threatened to turn it into a funeral procession.

After five years of hard lobbying to obtain the support and co-operation of a variety of federal, provincial and business authorities to oversee a $20.9 million track restoration, the project seems on the brink of crumbling from within.

In late December, the Nanaimo-area Snaw-Naw-As band — one of 11 First Nations that originally partnered with five regional districts as the Island Corridor Foundation to purchase the line in 2003 — launched a lawsuit asking for the return of their portion of railway land because no trains were running.

Then, earlier this month, the Capital Regional District requested a formal financial and governance review of the ICF through the Association of Vancouver Island and Coastal Communities due to what it considered substandard management.

And what may have been the last spike came Tuesday night when the Regional District of Nanaimo decided it was pulling the nearly $1 million it had promised for the restoration project.

According to Island Corridor Foundation executive director Graham Bruce, the only thing previously preventing the track improvements that will relaunch passenger service was the federal minister signing off on a promised $7.5 million grant.

Politicians in Nanaimo and Greater Victoria say their moves don’t spell the end of the line for Island rail. But with each parcel of restoration funding being contingent on every other partner bucking up as promised for this star-crossed project, they may have a hard time proving it.

*****

From a distance it might be easy to interpret the recent moves to mean a political loss of faith in the viability of Island rail.

Skeptics on that level certainly exist, however a larger factor may be local government frustration over the way the restoration project and the corridor itself are being managed.

Fuelling municipal angst is the idea that communities are being unreasonably milked by an operation that they indirectly own.

Loquacious longtime Langford Mayor Stew Young’s problems with the non-profit ICF are twofold: he has questions with no answers, and fees with no service.

“You’ve got a corridor owned by the public that seems to have no transparency,” he said. “There’s a limit to what taxpayers will pay for the service they aren’t getting.”

Although ICF directors — like chairman and Nanaimo Mayor Bill McKay, and Duncan Mayor Phil Kent — typically come from member bodies, they are restricted from acting as representatives of those bodies or reporting directly back to those bodies due to conflict-of-interest laws. As a result, ICF policy is not set by its member bodies. Distance separating the communities and the ability to attend meetings is a factor in communication.

Young is among a number of officials who don’t believe local government is getting answers to important questions about financial and policy matters.

According to a financial statement filed for 2014 and available on its website, the ICF holds about $340 million in assets. It paid expenses of $490,239 with money collected from donations, grants, rental income and fees from crossings, leases and other services.

The $109,000 collected from fees — which all affected municipalities pay — is a particular sticking point with Young. He has ordered Langford not to pay its annual bill of $35,000. He said the fee amounts are arbitrarily set and unnecessary in the absence of train activity.

“They’re making money on it without doing anything,” he said. “All of us are getting charged.”

Bruce is sensitive to the criticism the ICF isn’t doing anything. He said people tend to overlook the fact the foundation is a land owner in charge of of 651 heavily regulated hectares passing through a majority of Vancouver Island’s population centres. This means a lot of bureaucratic and maintenance work even when the trains aren’t running.

It owns and maintains four heritage train stations and a handful of smaller buildings, and manages more than 200 right-of-ways and road crossings, including things like pipes, cables and utility lines.

It operates with a staff of two, including Bruce, out of an upstairs office inside the ramshackle Southern Rail industrial building near the Port of Nanaimo and contracts Southern Rail to operate and maintain the line based on B.C. Safety Authority standards. Bruce said maintaining the track is cheaper than deactivating it.

“It’s a regulated environment. The entire line must be considered active even if there are no trains on it,” he said. “All the crossings have to be maintained. The option of not doing it means tearing up the track.”

He points to Vancouver recently paying $55 million for the nine-kilometre Arbutus rail corridor and how that compares to ICF acquiring its 289-kilometre main line and sub-arteries for $1.

He said all senior staff from member communities have been invited to meetings and also pointed out the ICF is funded by its own revenue streams, not taxation.

Young said the taxpayer is paying for everything indirectly. He’d like to see a better explanation of how prices are being set and how revenues are being spent. He said he’s asked repeatedly and not received a satisfactory response.

In conjunction with pulling the funding, the RDN board also passed a motion saying it “does not support the retention or continuation of Granneke Management by the ICF board.” Granneke is Bruce’s consulting firm.

The ICF was scheduled to spend $174,000 in 2015 and an additional $72,500 in 2016 for management and administration, on contracts scheduled to expire on May 30.

****

Aside from a few regularly running propane freight cars, the E&N rail line has been mostly out-of-sight, out-of-mind since passenger service was discontinued because of track safety concerns in 2011.

The ICF came up with a $20.9 million plan to upgrade the track and get it operational again. But heavy public criticism about that plan’s perceived inadequacies and the slow, choppy way it moved forward — particularly an embarrassing, premature announcement of a deal with VIA Rail — fuelled the skeptics.

Despite this, the ICF eventually secured agreements with Southern Rail to operate the line, VIA to allow the passenger service, and federal, provincial and local authorities to provide the capital.

A provincial commitment for $7.5 million last summer appeared to have cleared the last hurdle, but weeks turned into months without the final federal sign-off.

Bruce blamed the election and subsequent government reorganization for the original delay. The federal infrastructure ministry pointed to the Snaw-Naw-As lawsuit as the reason nothing has happened since.

“The lawsuit is in respect of a claim about the lands subject to a right of way for the portion of the project’s rail corridor that traverses the Nanoose Indian Reserve,” Infrastructure Canada spokeswoman Jen Powroz said. “Infrastructure Canada is reviewing the lawsuit to understand any potential impacts.  The project proponent will be contacted about the project and possible next steps when it is appropriate.”

A question about that delay drew a sigh from Southern Railway B.C. president Frank Butzelaar. He sees it as just another obstacle of the many the project has overcome.

Southern is the contractor responsible for E&N operations since 2006. It currently employs 14 people on Vancouver Island.

The same day the RDN bombshell was dropped, some of those employees were busy unloading the 130th-anniversary heritage train that had been shipped by barge from the Lower Mainland.

Butzelaar said to expect confirmation soon that train will be used as a signature Vancouver Island tourist attraction.

“There’s going to be an announcement. That is the train we are preparing to use tied to cruise ship service.”

Tourist excursions are one of four spokes in Southern’s plan for revitalizing the rail line.

Heritage excursion locomotiveThe most active spoke at the moment is freight. While activity on the main line is limited, Butzelaar said a significant amount of transloading to and from rail barges and trucks is happening at the Wellcox Yard on the Nanaimo waterfront.

He anticipates more clients eventually using the E&N to ship products like lumber, pulp and paper supplies, and cars through that facility in the future.

“(But) that can only happen when we can give them some certainty,” he said.

The third spoke in the revival wheel is the one that gets the most public attention: passenger service under a redesigned schedule. Southern is confident enough in its potential that it agreed to underwrite any losses that aren’t covered by the federal VIA rail subsidy. Butzelaar says that service can start as soon as rail upgrades are complete.

“That’s what the $20 million is for, to restore inter-city connections.”

The final element — and the farthest away — is commuter rail, initially focused in the Langford-Victoria corridor.

“That’s a work in progress.”

Initial provincial government studies that placed the cost of a complete line upgrade at between $70 to $130 million have fuelled skepticism that this initial investment will not be enough. The planned $20.9 million upgrade is not up to the same standards, but the province has signed off on it as meeting the safety requirements for the service that is planned.

Butzelaar acknowledged that further repairs and upgrades beyond the current project will eventually be needed but said concerns expressed on that front by critics have been overstated. What he said this investment will do is allow activity to start again and provide the operators a 10-year window to demonstrate the line is worthy of further investment in the future.

“This $20 million will show people the value of the rail corridor. It will bring people back to the railway.”

*****

The ICF has declined comment on the RDN funding pull prior to a full board meeting.

During a conversation prior to that announcement, Bruce was full of enthusiasm for the line’s future. He talked about the restoration job done at the Nanaimo train station, the potential for fixing up the station in Courtenay and how the excursion train could re-ignite some passion for rail with the public.

Black Press spoke to Butzelaar prior to the funding pull as well. During that discussion he did make the following statement.

”We’re invested in Vancouver Island. We aren’t going anywhere.”

Young isn’t surprised by Butzelaar’s support. He said Southern Rail and Bruce’s management consulting firm are each in a position to make money. It’s the people paying the freight who aren’t getting a return on their investment.

He said he still believes Island rail may have a future under different leadership and does not see the RDN’s move as the end of the line.

“What it does is kill the way we are trying to do it,” he said. “It doesn’t mean that if we get a new governance model that it can’t come back.

“I have a belief, as stupid as that might be.”

 

 

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