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MTS responds to Baja Rail charges

Agency confident of progress on binational railroad

From YouTube video showing Tunnel Six collapse.
From YouTube video showing Tunnel Six collapse.

Metropolitan Transit System officials say that in spite of new litigation, progress is being made on the rehabilitation of the 100-year-old binational railroad.

Earlier this week, the Reader reported on a new lawsuit filed by a group of Pacific Imperial Railroad shareholders who claim the railroad company's new president Arturo Alemany and its longtime legal counsel and former president Donald Stoecklein made backroom deals to wrest control of the rail line from them. The shareholders allege that Alemany had ties with Mexican nationals who own and operate the 38-mile stretch of track south of the border, which links up to the U.S. track. During the course of the past year, the shareholders claim, Alemany brokered a deal which allowed the Mexican company, Baja Rail, to take over the lease and then, without any notice, put Pacific Imperial Railroad in bankruptcy in order to complete the takeover.

The latest lawsuit is just a small part of the larger story, which included dozens of lawsuits from investors, allegations of fraud, and drug smuggling.

All the while Metropolitan Transit System officials, including CEO Paul Jablonski, have remained on board with the company. During that time few repairs have been made to the line. Deadlines imposed by the transit agency to ensure work is occurring have lapsed.

Video:

Tunnel #6 collapsed!

As seen in a January 31, 2017 YouTube video, weeds and large boulders obstruct the track. More alarming, tunnel number six — located a few hundred yards from the Goat Canyon Trestle — recently collapsed.

According to an MTS spokesperson, despite the reports, progress is being made.

"[Metropolitan Transit System] is certainly frustrated that continued in-fighting between [Pacific Imperial Railroad's] principals, past and present, obscures the progress that is being made on this project. This legal action currently has no impact on the sublease with Baja Rail," reads a statement from spokesperson Rob Schupp.

Schupp says the Mexican company Baja Rail has shown that they are dedicated to getting the line up and running, thus opening up what could potentially be an economic windfall in establishing a quicker route from Mexican factories into the United States.

"Baja Rail continues to make significant progress. It has completed major improvements to the railroad on the Mexico side of the border. It has filed a reconstruction plan for the bridges, tunnels and rail for the 60 miles of the Desert Line that is in the U.S. [Metropolitan Transit System] is working with Baja Rail on the finer details of the plans for the bridge repair work and timelines. Baja Rail plans to start work immediately upon [Metropolitan Transit System's] acceptance of its detailed work plan. If work begins in the second quarter of this year, it is conceivable that a test train could be operated by the April 2018 deadline. [The agency's] willingness to extend deadlines is contingent upon the progress made."

Schupp says transit executives are so far pleased with the manner in which the bankruptcy court is handling Pacific Imperial's liquidation as well as claims made by the company's shareholders.

Lastly, regardless of the outcome, says Schupp, the agency will have the final say on whether to approve a new lessee.

"[Metropolitan Transit System] will focus on whether a proposed lessee possesses the ability to immediately perform under the lease, including its ability to diligently and expeditiously complete the engineering approvals and begin construction repair work. This will help ensure that the PIR bankruptcy and resulting missed performance milestones do not create impediments to Baja Rail’s ability to operate the full Desert Line rail system once its sublease repairs and other works of improvement are complete.  MTS will require any prospective lessee to have existing railroad construction and operational experience and sufficient capital to complete the repair work in a short time."

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From YouTube video showing Tunnel Six collapse.
From YouTube video showing Tunnel Six collapse.

Metropolitan Transit System officials say that in spite of new litigation, progress is being made on the rehabilitation of the 100-year-old binational railroad.

Earlier this week, the Reader reported on a new lawsuit filed by a group of Pacific Imperial Railroad shareholders who claim the railroad company's new president Arturo Alemany and its longtime legal counsel and former president Donald Stoecklein made backroom deals to wrest control of the rail line from them. The shareholders allege that Alemany had ties with Mexican nationals who own and operate the 38-mile stretch of track south of the border, which links up to the U.S. track. During the course of the past year, the shareholders claim, Alemany brokered a deal which allowed the Mexican company, Baja Rail, to take over the lease and then, without any notice, put Pacific Imperial Railroad in bankruptcy in order to complete the takeover.

The latest lawsuit is just a small part of the larger story, which included dozens of lawsuits from investors, allegations of fraud, and drug smuggling.

All the while Metropolitan Transit System officials, including CEO Paul Jablonski, have remained on board with the company. During that time few repairs have been made to the line. Deadlines imposed by the transit agency to ensure work is occurring have lapsed.

Video:

Tunnel #6 collapsed!

As seen in a January 31, 2017 YouTube video, weeds and large boulders obstruct the track. More alarming, tunnel number six — located a few hundred yards from the Goat Canyon Trestle — recently collapsed.

According to an MTS spokesperson, despite the reports, progress is being made.

"[Metropolitan Transit System] is certainly frustrated that continued in-fighting between [Pacific Imperial Railroad's] principals, past and present, obscures the progress that is being made on this project. This legal action currently has no impact on the sublease with Baja Rail," reads a statement from spokesperson Rob Schupp.

Schupp says the Mexican company Baja Rail has shown that they are dedicated to getting the line up and running, thus opening up what could potentially be an economic windfall in establishing a quicker route from Mexican factories into the United States.

"Baja Rail continues to make significant progress. It has completed major improvements to the railroad on the Mexico side of the border. It has filed a reconstruction plan for the bridges, tunnels and rail for the 60 miles of the Desert Line that is in the U.S. [Metropolitan Transit System] is working with Baja Rail on the finer details of the plans for the bridge repair work and timelines. Baja Rail plans to start work immediately upon [Metropolitan Transit System's] acceptance of its detailed work plan. If work begins in the second quarter of this year, it is conceivable that a test train could be operated by the April 2018 deadline. [The agency's] willingness to extend deadlines is contingent upon the progress made."

Schupp says transit executives are so far pleased with the manner in which the bankruptcy court is handling Pacific Imperial's liquidation as well as claims made by the company's shareholders.

Lastly, regardless of the outcome, says Schupp, the agency will have the final say on whether to approve a new lessee.

"[Metropolitan Transit System] will focus on whether a proposed lessee possesses the ability to immediately perform under the lease, including its ability to diligently and expeditiously complete the engineering approvals and begin construction repair work. This will help ensure that the PIR bankruptcy and resulting missed performance milestones do not create impediments to Baja Rail’s ability to operate the full Desert Line rail system once its sublease repairs and other works of improvement are complete.  MTS will require any prospective lessee to have existing railroad construction and operational experience and sufficient capital to complete the repair work in a short time."

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Comments
5

"Significant progress..." Yep, that progress is just staggering.

Feb. 3, 2017

Meanwhile, MTS can't seem to improve bus service on Route 10, which goes through North Park, Hillcrest and Mission Hills on the way to Old Town. It's often so packed with people that no seats are available. Jablonski should take a ride on the 10 sometime to see for himself. Improving it is as important as developing Baja Rail.

Feb. 3, 2017

What is the goal of this rail road? What fool would invest in this scam?

Feb. 4, 2017

"This legal action currently has no impact on the sublease with Baja Rail"? Why won't MTS answer the $1M/year question: Why the hell are they allowing PIR to keep holding the lease, let alone use it as an asset in bankruptcy court?

PIR and its predecessors repeatedly broke and should long ago have lost the lease. And if MTS is so certain that Baja Rail is the best vender, then due diligence dictates they cut PIR out of the loop and deal directly with Baja.

Schupps disclaimer suspiciously pivots on the word "currently." If it turns out they are going to allow Baja Rail to pay less than $1M/year for the sublease, then yes this legal action does currently have an impact, and there needs to be an investigation into criminal malfeasance on the part of MTS officials.

Feb. 4, 2017

In the four years I've followed this story, the ownership of PIR has been a tangled web. Lawsuits, some going back a decade, have been filed at almost every step along the way. The only way to clean it up to allow Baja Rail to take over may be in bankruptcy court. But with the objections now filed, even a bankruptcy reorganization plan may take years to sort out. There are claims and counterclaims.

PIR was, according to the original timetable as I understood it,was supposed to be running test trains on the line by early 2013. That's four years ago, folks, and there's no evidence that any work has been done on the US portion of the line, nor that any equipment has been run on those rails. What we have been treated to is a series of revisions that MTS accepts instead of the milestones in the original lease. But even now Baja Rail has not submitted anything specific, nor has it done anything on the ground in the US. It does claim to have made major improvements on the Mexican part of the line, although those are very hard to verify. So, it enjoys a small business of taking cars into and out of Mexico through the San Ysidro border crossing, to the tune of between 1000 and 1500 cars each quarter. Virtually all of them arrive in Mexico carrying cargo of one sort of another, and most leave empty. That belies all the potential that PIR claims of having for outbound traffic to ship out to the east.

Finally, Union Pacific has declined to comment on these plans, although it is that railroad that would receive the outbound shipments to their rails at Plaster City. I'd say UP knows that this is still a fanciful scheme.

And yes, MTS needs to keep its buses on schedule, something it does poorly today, and serve the riders.

Feb. 4, 2017

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