Anchor ads are not supported on this page.

4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

Metropolitan Transit System's been working on the railroad...

Recently released documents indicate loss of faith in Desert Line operatives

(from pacificimperialrailroad.com)
(from pacificimperialrailroad.com)

October 2015 nearly marked the end of the road — rather, railroad, for Pacific Imperial Railroad, the company that leases the 100-year-old Desert Line from the Metropolitan Transit System. According to documents released by Metropolitan Transit System, the public agency was close to revoking the lease due to lack of progress in reconstructing the line.

In a November 19 letter to Pacific Imperial's then–top shareholder Dwight Jory and his colleague and fellow Pacific Imperial shareholder Charles McHaffie, Metropolitan Transit System's chief counsel Karen Landers threatened to pull the lease from the fledgling railroad company.

"The primary cause of this default was [Pacific Imperial's] failure, after almost three years, to obtain the financing necessary to complete the milestones set forth in the lease. This failure to secure financing resulted in: [Pacific Imperial] only partially completing its Desert Line Reconstruction Plan, [its] failure to timely submit a construction schedule and specific work plan for each bridge, section of track or other work, failure to start construction in any manner, and [the company's] failure to move beyond interim management and an interim business plan."

As reported by the Reader, on several occasions, the local transit agency has had a bumpy ride with McHaffie and Jory at the helm. Since the 1990s, the Las Vegas land speculators have been accused of fraud on numerous occasions. The two have had dozens of lawsuits filed against them, many of which from investors in the Desert Line who say the pair scammed them. Also, since acquiring the lease, the railroad company has failed to meet most if not all of Metropolitan Transit System's reconstruction milestones.

Sponsored
Sponsored

Despite the poor track record, the transportation agency appeared content sticking with Pacific Imperial Railroad — after all, as part of the 2012 lease agreement, the company was paying $1 million per year to lease the 70-mile track that weaved north of the border at Campo into Imperial County.

In January 2015 that seemed to turn around. McHaffie and Jory had informed MTS that Pacific Imperial Railroad had sold the majority of shares to a New York investment firm, Conatus Capital Group Incorporated. The announcement meant the end of McHaffie and Jory's stewardship of the railroad. In response, Metropolitan Transit System chief Paul Jablonski granted the company more time to begin reconstructing the line.

But in mid-October, the agency learned that the buyout was never finalized.

Landers and Jablonski threatened to revoke the lease.

"Therefore, in a series of meetings and/or calls with you [Jory] and Mr. McHaffie during the week of October 19th, we informed you that we had lost confidence in your ability to perform under the lease, that the lease could be declared in immediate default, and that we would issue a notice of default if the Conatus Capital Group transaction had not closed by Friday, October 23, 2015."

On October 23, McHaffie informed Metropolitan Transit System that the deal was done. Additional extensions for reconstruction were granted.

Again, the agency soon learned that not all was as it seemed.

On November 18, representatives from Conatus Capital Group informed Landers and MTS brass that McHaffie tried to make last-minute changes to the buyout agreement. The deal was off.

Landers gave McHaffie a day to get the deal done. If unsuccessful, Metropolitan Transit Agency was pulling the lease.

"MTS has always acknowledged the vision of you and Mr. McHaffie in recognizing the value of the Desert Line to the San Diego and Baja California manufacturing industries and its potential as a renewed, valuable shipping corridor," wrote Landers. "However, that vision can only take the project so far, it has been clear for almost two years that new, professional management, ownership and financing was necessary to turn this vision into a reality. Unfortunately, your failure to obtain sufficient investment to perform under the Lease has eroded the value your initial efforts brought to this project."

The two sides reached an agreement and Conatus Capital took the reins from Pacific Imperial.

As later reported by the Reader, the authenticity of Conatus Capital Group has also been questioned.

In press releases announcing the buyout, the group was described as a "New York–based conglomerate." In reality, according to business records kept with the State of Nevada, the group Conatus Capital Group had been formed in August of that year, two months prior to the supposed buyout and was registered not in New York but Nevada. In fact, there is a large hedge-fund manager Conatus Capital Management Group registered in the New York area but there were no ties between the two.

And while details on reconstruction are unclear, in June 2016 Pacific Imperial announced it had agreed to sublease the rights of the railroad to Baja California Railroad, the entity that owns and operates the track south of the border, thus removing Pacific Imperial from overseeing reconstruction of the line.

The latest copy of the Reader

Please enjoy this clickable Reader flipbook. Linked text and ads are flash-highlighted in blue for your convenience. To enhance your viewing, please open full screen mode by clicking the icon on the far right of the black flipbook toolbar.

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Air toxins plague Escondido, Imperial Beach, Chula Vista, Tijuana

"The smell has improved since Mexico turned their pumps on"
(from pacificimperialrailroad.com)
(from pacificimperialrailroad.com)

October 2015 nearly marked the end of the road — rather, railroad, for Pacific Imperial Railroad, the company that leases the 100-year-old Desert Line from the Metropolitan Transit System. According to documents released by Metropolitan Transit System, the public agency was close to revoking the lease due to lack of progress in reconstructing the line.

In a November 19 letter to Pacific Imperial's then–top shareholder Dwight Jory and his colleague and fellow Pacific Imperial shareholder Charles McHaffie, Metropolitan Transit System's chief counsel Karen Landers threatened to pull the lease from the fledgling railroad company.

"The primary cause of this default was [Pacific Imperial's] failure, after almost three years, to obtain the financing necessary to complete the milestones set forth in the lease. This failure to secure financing resulted in: [Pacific Imperial] only partially completing its Desert Line Reconstruction Plan, [its] failure to timely submit a construction schedule and specific work plan for each bridge, section of track or other work, failure to start construction in any manner, and [the company's] failure to move beyond interim management and an interim business plan."

As reported by the Reader, on several occasions, the local transit agency has had a bumpy ride with McHaffie and Jory at the helm. Since the 1990s, the Las Vegas land speculators have been accused of fraud on numerous occasions. The two have had dozens of lawsuits filed against them, many of which from investors in the Desert Line who say the pair scammed them. Also, since acquiring the lease, the railroad company has failed to meet most if not all of Metropolitan Transit System's reconstruction milestones.

Sponsored
Sponsored

Despite the poor track record, the transportation agency appeared content sticking with Pacific Imperial Railroad — after all, as part of the 2012 lease agreement, the company was paying $1 million per year to lease the 70-mile track that weaved north of the border at Campo into Imperial County.

In January 2015 that seemed to turn around. McHaffie and Jory had informed MTS that Pacific Imperial Railroad had sold the majority of shares to a New York investment firm, Conatus Capital Group Incorporated. The announcement meant the end of McHaffie and Jory's stewardship of the railroad. In response, Metropolitan Transit System chief Paul Jablonski granted the company more time to begin reconstructing the line.

But in mid-October, the agency learned that the buyout was never finalized.

Landers and Jablonski threatened to revoke the lease.

"Therefore, in a series of meetings and/or calls with you [Jory] and Mr. McHaffie during the week of October 19th, we informed you that we had lost confidence in your ability to perform under the lease, that the lease could be declared in immediate default, and that we would issue a notice of default if the Conatus Capital Group transaction had not closed by Friday, October 23, 2015."

On October 23, McHaffie informed Metropolitan Transit System that the deal was done. Additional extensions for reconstruction were granted.

Again, the agency soon learned that not all was as it seemed.

On November 18, representatives from Conatus Capital Group informed Landers and MTS brass that McHaffie tried to make last-minute changes to the buyout agreement. The deal was off.

Landers gave McHaffie a day to get the deal done. If unsuccessful, Metropolitan Transit Agency was pulling the lease.

"MTS has always acknowledged the vision of you and Mr. McHaffie in recognizing the value of the Desert Line to the San Diego and Baja California manufacturing industries and its potential as a renewed, valuable shipping corridor," wrote Landers. "However, that vision can only take the project so far, it has been clear for almost two years that new, professional management, ownership and financing was necessary to turn this vision into a reality. Unfortunately, your failure to obtain sufficient investment to perform under the Lease has eroded the value your initial efforts brought to this project."

The two sides reached an agreement and Conatus Capital took the reins from Pacific Imperial.

As later reported by the Reader, the authenticity of Conatus Capital Group has also been questioned.

In press releases announcing the buyout, the group was described as a "New York–based conglomerate." In reality, according to business records kept with the State of Nevada, the group Conatus Capital Group had been formed in August of that year, two months prior to the supposed buyout and was registered not in New York but Nevada. In fact, there is a large hedge-fund manager Conatus Capital Management Group registered in the New York area but there were no ties between the two.

And while details on reconstruction are unclear, in June 2016 Pacific Imperial announced it had agreed to sublease the rights of the railroad to Baja California Railroad, the entity that owns and operates the track south of the border, thus removing Pacific Imperial from overseeing reconstruction of the line.

Comments
Sponsored

The latest copy of the Reader

Please enjoy this clickable Reader flipbook. Linked text and ads are flash-highlighted in blue for your convenience. To enhance your viewing, please open full screen mode by clicking the icon on the far right of the black flipbook toolbar.

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

A rope course designed to resemble the Giant Dipper at Belmont Part

Maruta Gardner Playground - a parent's playground
Next Article

Quill & Arrow Law is Saving Drivers Around California with Lemon Law

Comments
Ask a Hipster — Advice you didn't know you needed Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Drinks All Around — Bartenders' drink recipes Excerpts — Literary and spiritual excerpts Feast! — Food & drink reviews Feature Stories — Local news & stories Fishing Report — What’s getting hooked from ship and shore From the Archives — Spotlight on the past Golden Dreams — Talk of the town The Gonzo Report — Making the musical scene, or at least reporting from it Letters — Our inbox Movies@Home — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Outdoors — Weekly changes in flora and fauna Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Sheep and Goats — Places of worship Special Issues — The best of Street Style — San Diego streets have style Surf Diego — Real stories from those braving the waves Theater — On stage in San Diego this week Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close

Anchor ads are not supported on this page.

This Week’s Reader This Week’s Reader