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City-owned railroad at risk of not repaying $6 million debt

Post by Kim Bradford on April 16, 2012 at 1:25 pm with No Comments »
April 16, 2012 1:25 pm

State auditors are warning the City of Tacoma that a city-owned railroad might never be able to repay a $6 million loan from the city’s general fund.

The audit finding, released today, urges city officials to “refrain from making any new inter-fund loans to the Tacoma Mountain Rail Division,” a 132-mile railway the city acquired two decades ago.

The loan isn’t due for repayment until December 2017. Tacoma officials, in response to the audit, said they are negotiating an agreement with Sound Transit for its past and future use of 1.3 miles of the line. They expect the proceeds of that arrangement, along with “revenue growth from new businesses located on the line,” to allow the debt to be repaid.

The line, once envisioned as home to a “Train to the Mountain,” has long been a drain on Tacoma’s coffers. Prior to this year, the city had been booking most of the railroad’s costs as a “loan” from the city’s general fund.

That loan reportedly was one of the stumbling blocks preventing the city from moving forward on transferring the railroad to Tacoma Public Utilities’ Tacoma Rail, which has been operating the railroad for the city.

Late last year, the city finalized a long overdue update to its operating agreement with TPU. City officials said under the terms of that agreement, the city is not incurring additional debt.

Categories:
Auditor, Tacoma
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