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Grant for EBT Shops Stabilization

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1-27-99

Valley Log, January 27, 1999. Courtesy of Phil Padgett.
By Steve Kemp

Meeting at the Mount Union Senior Citizen's Center on Saturday [Jan. 22, 1999], the Huntingdon County Heritage Committee heard "a welcome report" that EBT owner Joseph Kovalchick has applied for financial assistance from the state for maintaining some of the properties the EBT currently owns in Rockhill. "This approach has been taken before by other groups," County Planner Rich Stahl commented. "That the EBT management is doing it now is a very good sign." He feels it represents a commitment to finding some way of preserving the shops and outbuildings that had not been realistically addressed up until this time.

Significantly, the proposal would contain, as a "match" for receiving public money, the offer to "donate the shop complex to a non-profit group" which would hold title to it, from that point on. The EBT would continue to use the facilities to maintain its rolling stock under some sort of mutual agreement. This could well be the first step, Stahl noted, in the process of obtaining an appropriation for upgrading and restoring the entire railroad. So far, politicians have been fairly supportive of the idea, but are waiting for the management of the railroad to respond in some way.


5-20-99

Altoona Mirror, May 20, 1999. Courtesy of Dave Padula.

ROCKHILL--A penny wedged against each drive wheel on a steam locomotive will keep it from rolling, even if the engineer opened the throttle wide, old railroaders say.

Money also is the obstacle stalling a $46 million project to restore the narrow-gauge East Broad Top Railroad.

However, on Wednesday the project nudged a little closer to its goal. Officials announced a $1 million grant to stabilize a complex of maintenance shops at EBT headquarters in Rockhill, plus the extension of a state heritage park to include the 33-mile-long rail line.

"Every journey begins with a single step," said Randy Cooley, executive director of the Southwestern Pennsylvania Heritage Preservation Commission. "But once you begin, you have inertia."

Once a hauler of local coal from Robertsdale north to the mainline at Mount Union, the EBT now only runs summer tourists five miles out and back from Rockhill. Still, it's the only complete shortline railroad left in the nation, and the Smithsonian Institute in Washington, D.C. calls it the finest, Cooley said.

The study calls for rehabilitating the tracks and for refurbishing the shops, locomotives and rolling stock to allow for excursions along the entire line and a connection with the mainline--boosting ridership from 12,000 annually to 100,000.

EBT owner Joe Kovalchick, Indiana, PA, obtained the Transportation Enhancement Act for the 21st Century money by applying for it himself. He will need to put the shop complex in a nonprofit trust to receive the public funding, officials said.

Kovalchick's father, Nick, bought the line in the mid-1950s to sell for scrap, but he held off the sale because of depressed prices. He tried a tourist excursion for a local centennial in 1960. Joe Kovalchick took over in the mid-1960s and continued the excursions.

"It was part of our family heritage," said Kovalchick, who said he loses money on the tourist runs.

Stabilizing the deterioration of the shops and making improvements that might allow tourists to appreciate some of the operation will probably cost about $2 million, Cooley said. In the year it will take for the formalities to acquire the TEA-21 money, agencies hope to get the rest through matching funds from the state capital budget, private foundations.

The shop complex includes a roundhouse for engines, a blacksmith shop, machine shop, boiler shop, a foundry, a car shop, a sandhouse, a coaling dock, five storage buildings and a stone farmhouse that predates the railroad, said Stanley Hall, who manages the operation.

The project will need a consultant to evaluate what needs done and set priorities.

"If it's a choice between fixing a building falling in and polishing a machine, it's obvious," said Jane Sheffield, executive director of the Allegheny Ridge Corp., which manages the Allegheny Ridge Heritage Park in northern Somerset, Cambria, Blair, and now Huntingdon counties, with the extension that includes the EBT.

As the shop stabilization proceeds, it will help build steam to raise funds for additional work, Cooley predicted.

As the project advances, preservation agencies will develop a business plan to ensure it can remain solvent, relying on tourist income, sponsorships and fund raising that cites the project as a good cause, Cooley said, in response to a question citing current financial difficulties of the Altoona Railroaders Memorial Museum.

"No question that as each (heritage project) gets built, better business planning is occurring," he said.

As a coal-hauling transport line, the EBT ties in with the themes of the 7-year-old state heritage park, which is creating a trails path to link sites that illustrate the area's industrial heritage of coal mining and transportation, plus iron and steel making, Sheffield said.

Not all the sites are completed. The sites include the gateway Coal Heritage Center, the Arcadia Theater and Miner's Memorial Park in Windber; a gateway heritage discovery center (on which ground was broken Wednesday), the downtown flood museum, the Wagner-Ritter House and the Cambria Iron Company in Johnstown; a former silk mill in Portage; the gateway Canal Basin Park (going to bid this summer), the Chimney Rocks Accessible Park (just opened) and canal worker houses in Hollidaysburg; the gateway Heritage Discovery Center (to be finished in October), Heritage Plaza and the Southern Alleghenies Museum of Art in Altoona.

Allegheny Ridge is working with trail groups to prepare and open sections of trails to form the backbone of the park.

So far, the Lower Trail from Alexandria to Williamsburg with an extension to Canoe Creek is the main completed segment.

The Allegheny Park and its new extension into Huntingdon County are part of a Pennsylvania Mainline Canal Corridor envisioned by the Allegheny Ridge Corp. and agencies like the state Department of Conservation & Natural Resources.


8-17-99

FEBT Press Release, August 17, 1999, included with the Timber Transfer

Inclusion of the EBT in the Allegheny Ridge State Heritage Park and the awarding of $1 million in TEA-21 funds came in response to a grant application prepared by the Kovalchicks in consultation with Stone Consulting and Design, Inc., of Warren, PA. In a telephone interview, August 11, 1999, Gary E. Landrio, VP Rail Operations for Stone Consulting and Design, said that Mr. Kovalchick would meet with state officials near the end of August, 1999 to clarify the next steps to be taken in the complex process of establishing the trust, which would own the facilities and manage their restoration and maintenance.

Mr. Landrio pointed out that the plan outlined in the Kovalchick's application, which is now in the public record, valued the EBT shops at $2 million. The plan envisions combining that in-kind contribution with the $1 million in TEA-21 funds for a total $3 million to be matched by an equal amount from the state capital budget. These funds would come from the $30 million state capital budget authorization for restoration and preservation of the EBT approved by the state legislature in June, 1994 [See Timber Transfer, Vol. 10, No.4, Spring, 1994] and according to Mr. Landrio, that authorization still stands.

But, while the governor is authorized to spend capital budget funds, he is not obligated to do so. Therefore, evidence of public support for Governor Ridge to match the $3 million combined shops contribution and TEA-21 grant with $3 million from the state capital budget is a necessary element in the success of the planned restoration of the EBT shops, according to Mr. Landrio. It is important, he noted, for members of Friends of the East Broad Top who live in Pennsylvania, to write to their state representatives and senators, as well as directly to Governor Ridge, to support such action. Correspondence to Mr. Ridge may be addressed to: The Governor, Room 225, Capitol Building, Harrisburg, PA 17210. Comments may also be faxed to (717) 783-1396.


10-25-99

From field observations and word-of-mouth reports:

During the Sunday (not Saturday mind-you) whistle salute during the 1999 Fall Spectacular, Joe Kovalchick made some interesting comments. Paraphrasing, he said that they were still working on the arrangements to receive the grant and that the next few weeks would tell whether the effort would be successful. Furthermore, he said that he believed that if the grant went through that events would start to snowball toward overall restoration. Reportedly at a small ceremony at the Spectacular honoring Mr. Kovalchick and the FEBT member who funded the work at Saltillo, Mr. Kovalchick made an additional statement to the effect that an agreement was near.

On the more concrete side, the EBT did a bang-up job cleaning up inside the shops for the Fall Spectacular shop tours. Both the Foundry and Blacksmiths Shop had been completely cleaned up. All the junk piled up had been removed, parts and supplies had been sorted and stacked, the floor leveled, bird droppings removed and gravel paths made around the interior. The change was like night and day in the Blacksmiths Shop. The Boiler and Machine shops had also been cleaned of dirt and bird droppings and the old machine signs replaced with new plastic easier-to-read ones. A large sodium vapor security light was mounted in the east rafters of the Machine Shop pointed west and another similarly positioned in the Boiler Shop. In past years relatively little work had been done inside. The fact that such effort was placed there lends more evidence that the EBT is quite serious about Shops restoration.


Commentary

by Chris Coleman, 12-11-01.

The key to this proposal that places it in a better position to succeed than it's predecessors is the fact that it has the full support of Mr. Kovalchick. All previous efforts have not been able to succeed in negotiations with Mr. K. This proposal, since conceived by him, is not belabored by that. He can form the trust to his satisfaction and get the ball rolling.

The formation of the trust, being the responsibility of Mr. K, will likely not satisfy everyone in it's process or makeup, but I feel it is best for the EBT right now to get an effort in motion. The EBT cannot wait much longer and momentum must be created soon to preserve the balance of the line. The Kovalchicks have kept the EBT from the cutter's torch and operating for nearly 40 years and would not have done so without an appreciation for the line. Give Mr. K the benefit of the doubt in getting the trust moving (albeit we all will keep our eye closely on the future of our favorite line.)

As a reminder, this trust, if formed as proposed, will manage only a small part of the overall EBT. The shops are the single greatest asset of the EBT (spare perhaps the locos), but they comprise only a part of the story and environment of the line. Nevertheless, with stabilization work on Saltillo and Coles (assuming the present work is not the extent of the work to be done there) I consider the shops the highest priority. Also they are the most visible symbol of the EBT's decrepit condition and could equally become a symbol of it's imminent rebirth.

Also important to note is that the overall plan for the procurement of the funds includes using the state matching money from the $30 million. Putting these funds to work in their intended purpose (assuming that the Governor releases them) will go a long way toward keeping the balance of the funds available to the effort.


12-11-01

It has been over two years since the announcement of the tentative TEA-21 grant award and Heritage Park expansion. And then we waited... and waited. After Mr. Kovalchick's words alluding to the grant during the 1999 Fall Spectacular Sunday Whistle Salute, there were no public statements on the status or lack of status on the grant process. In late 2000 the second round of TEA-21 final awards were funded and the EBT was not on the list, confirming that the negotiation needed between the tentative grant announcement and actual funding had not been successful.

No further public word on the grant came until the Fall Spectacular 2001 Sunday Whistle Salute when Joe Kovalchick stated that he had declined the funds because "there were too many strings attached". One string mentioned was a requirement that continued operation of the railroad be guaranteed for a certain period of time after the grant award. The other strings were not mentioned in his comments.

So, why really did the grant application go bust? Details are sketchy, but here is the word on the 'street'. The root of the problem seems to be that the appraised value of the shops was $2 million, which Mr. Kovalchick offered to donate as matching funds to the original $2 million TEA-21 funds requested in the original proposal submitted by the EBT. In the tentative TEA-21 award only $1 million was awarded rather than the requested $2 million. This created a quandary: if the shops were donated, $1 million of their value would essentially be wasted, no longer being available as a match for any future funding. That fact may have precipitated the withdrawal of the donation offer of the shops by the EBT, that some sources have reported.

In place of the outright donation of the facilities, both parties were willing to substitute a lease agreement. Here, another set of sticking points arose. In most cases, government grants require a lease in the 50-100 year range. That ensures that the activities funded by the government grant will remain under the control of the receiving entity for a reasonable amount of time. Kovalchick Salvage, by contrast, seems to deal almost exclusively in year-to-year (single year renewed) leases. Again, according to reports, both sides gave substantially from these distant opening positions during the negotiations over lease terms, but were still unable to reach a compromise.

So who was at fault? To attempt to place blame at this point is unproductive. The position of the government is quite understandable, that they are obligated to assure a measure of stability to a project before committing a large amount of taxpayer money to it. At the same time, Kovalchick Salvage has an understandable wish to protect their assets. If a separate entity which had a lease on the property later engaged in activities that were detrimental to the EBT, the owner would need greater recourse than would be available under a long term lease.

Still, it is perplexing that a compromise could not be reached on a lease option considering that both the Mount Union Connecting Railroad and Railways to Yesterday were successful in securing TEA-21 funds on property under lease (presumably year-to-year in both cases) from Kovalchick Salvage. However, in both cases the grant amounts were much smaller than the Shops grant. Also it seems that the lease period was not the only issue of contention in the negotiation of the Shops grant.

So where does that leave the EBT itself with regard to much-needed public funding? In the same public address at the 2001 Spectacular, Joe Kovalchick mentioned that the EBT was pursuing another grant. The nature and source of the grant request remains a mystery at this point. There is a third and final allotment of TEA-21 monies to be dispersed under the existing Federal authorizing legislation, and it is possible that may be the funding opportunity referred to. If so, we can expect a decision on the grant in the following 12 months or so. In any event, time will tell.


5-17-03 (revised 6-2-03) - Second grant application unravels

Note: This installment is based on information pulled from articles appearing in the Broad Top Bulletin by John Baughman and the Pittsburg Post-Gazette by Tom Gibb, as well as copies of the first and second TEA-21 grant applications.

It is little wonder that things were kept quiet during negotiations. Since they have ended what has come out is so convoluted that even I have trouble unraveling it. The plot has thickened to the consistency of tar with the latest round of haggling over federal money for the EBT. The above entries pretty much cover the life and death of the application made by the EBT during the second round of Penn DOT TEA-21 dispersements. Then comes the second life and death of the proposal. What follows is my best attempt to explain the events that transpired in 2001 and 2002 regarding the grant based on the limited news articles and documents that have made their way into public access.

With the failure of negotiations in the first go-around a new player entered the fray. The Allegheny Ridge Corporation, the group responsible for getting the EBT added to the Allegheny Ridge State Heritage Park, entered a new proposal. According to the Broad Top Bulletin ARC submitted a request to Penn DOT requesting that the award monies for the EBT from the second round of TEA-21 dispersements be held and an additional dispersement be made from the third and final round of TEA-21 dispersements.

Again, according to the Broad Top Bulletin the scenario of this proposal proposes two separate entities to take possession of the East Broad Top. The non-profit was to be established by and report to the ARC. The for-profit was to be the East Broad Top Acquisition Company, made up of private investors.

According to both the Broad Top Bulletin and the Post-Gazette, EBTAC would have paid (and this offer is assumed not to include peripheral timber and coal lands) $2 million for the railroad. The initial $1 million would come from the second TEA-21 dispersal, a second $1 million from the third, and five hundred thousand in private donations. The plan was for the for-profit to purchase the railroad for $2 million and immediately sell certain assets to the non-profit for $1 million. The remaining $1.5 million would be used to restore the shops complex per the original TEA-21 grant application. EBTAC would use the $1 million purchase price to rehabilitate the excursion operation.

Therein begins the more horrifying aspect of the proposal. According to both the Broad Top Bulletin it proposes a breakup of the ownership of the current EBT railroad property (Mount Union to Robertsdale) between two entities. The non-profit entity would own the line from Mount Union to Shirleysburg and Rockhill to Robertsdale as well as one mikado steam locomotive, switcher #3 and the shops complex. The for-profit entity would own the current excursion line from Shirleysburg to Rockhill, the roundhouse and the other five mikados.

Curiously, this was not part of the contention that doomed the proposal. According to both the Post-Gazette the point of contention was the sale price of the railroad. Under the plan the railroad would be sold for $2 million. The article states that in 1992 an appraisal was performed by the Southwest Pennsylvania Historic Preservation Commission that quoted a value of $7.2 million as operating. In a Pittsburgh Post-Gazette article a source quotes the SPHPC figure and calls it optimistic. Though the validity of the value has been questioned, it is doubtful that it could be off by more than a factor of 3 and a half times, as it would have to be for the value to be what was offered. Kovalchick was reportedly insulted by the amount of the offer and turned it down flat, despite offering support for the plan as a whole. It is unknown whether Kovalchick knew the amount that would be offered at the time he offered his support for the project. Another figure offered as an apprised value was $9.7 million, as stated in the same article. The source of that appraisal is unknown.

With prices so far apart, negotiations again collapsed in April of 2002. The ARC subsequently withdrew its request to Penn DOT for the TEA-21 funds. The funds were subsequently distributed to other projects. In May ARC released a memorandum they called a "Finding of Fact", which through certain persons found it's way onto several discussion areas including the EBT-List. In this memo, the ARC flatly placed the blame on Kovalchick for refusing to enter into a sales agreement. This memo is clearly stilted from ARC's point of view. Kovalchick Salvage has not responded to this accusation, as it is their habit not to. The memo served only to throw gas on the fire and nearly sabotaged efforts by the Friends of the EBT to start restoration work on the Rockhill Shops, even though they had been completely unaffilated with either the ARC or EBTAC.

TEA-21 funding is dead for the second time amongst clouds of controversy. ARC blames Kovalchick, but there is likely more than enough blame to go around. Where does this leave the EBT? Back about where it started as far as the large public grants are involved. Furthermore ARC and EBTAC have burned the bridges behind them. Additional funds could be applied for, but the ARC may well have to be the organization negotiating their release and that is unlikely to go well now.

Despite visions of doom and gloom in the Post-Gazette article, the EBT continues to soldier on and is actually on the upswing through 2002 after a rough 2001. FEBT is conducting restoration work on the shops, three unused diesels have been sold to the D&S generating capital, and the process of overhauling the locos to FRA specs has begun with #15. Though the story of TEA-21 funding appears to be over the story of the survival of the EBT is not.


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