By Marty Bachman
The Ely City Council, acting in the capacity of the White Pine Historical Foundation Board of Trustees, and the White Pine Historical Foundation Management Board, held a marathon three-and-a-half hour meeting Monday night at the Ely Volunteer Fire Hall, to discuss the management board’s submitted Code of Bylaws for the Nevada Northern Railway Foundation, Inc.
The new bylaws were submitted by the management board to provide a layer of separation between management and the council in the hope of finding greater funding for the railroad, thus securing it’s fiscal future.
Ely Mayor Melody VanCamp, who sat on the sidelines during the extended debate, spoke during the opening public comments asking the board to give her, as mayor, the power to disqualify anyone appointed by the membership, a request that went ignored.
Former council member Marty Westland also spoke during opening public comments, stating that Kennecott, which willed the railroad to the city some 30 years back when it abandoned its local operations, knew what it was doing and that the current board of trustees had forgotten their duty as to the operation of the non-profit.
He accused the board of believing everything they had been told by contractors and that they signed contracts without seeing them.
“When I was on the council, we asked for all kinds of information and we were summarily dismissed even though the city paid for the insurance,” Westland said.
Present at the meeting were city attorney Chuck Odgers, representing the Board of Trustees, and Chris M. Stanko of the Reno law firm of Maupin, Cox, Legoy, representing the management board. Attorney Gus Rossi of the Maupin Cox Legoy law firm was on hand to answer questions over the phone.
Trustee Bruce Setterstrom questioned the enlistment of the law firm, saying he didn’t remember hiring a new law firm to come up with new bylaws.
“Not that I’m opposed to this,” he said. “I just want to know how we got from there to here. None of the trustees knew about it.”
Stanko walked to the podium and told how he had ties to the area, with parents who graduated from White Pine High School and how his grandfather still lived in McGill. He said he was there on his own time when Setterstrom quickly shut him down stating he just wanted an answer to his question.
Stanko said they were there on behalf of the corporation under the direction to draft articles and bylaws.
While the meeting agenda called for the discussion and possible action on the adoption of a development agreement, the bylaws and the articles of incorporation, the two boards only discussed the bylaws, skipping the other two for a later meeting date, stating that all three needed to be adopted at the same time.Discussion included a debate on the address of the corporation and then as to whether include certain corporate assets in the bylaws.
Stanko said that the conveyance of assets was not was not appropriate in relation to the articles or bylaws.
“This is not the proper place to reference certain assets owned by the corporation, he said, noting that the bylaws and articles were to determine how the corporation would be managed.
With that issue settled, Setterstrom then protested the inclusion of the White Pine County Tourism and Recreation Board being named in the new bylaws, claiming they had threatened to take legal acton against the city at their recent board meeting. That group was then removed from the bylaws draft.
The meeting then became contentious as discussion centered on memberships, which cost $30 a year and would give each member a single vote to elect directors. Trustee Jolene Gardner asked whether it was possible that someone in New York would be voting for a director in White Pine County and was given an affirmative answer. Management Board Chairman John Gianoli said that one body, one vote was standard corporate practice.
Trustee Chairman Sam Hanson suggested that the majority directors had to live in White Pine County while Setterstrom said that all of the directors should have to live in White Pine County.
Nevada Northern Railway Foundation Executive Director Mark Bassett, a member of the management board, explained that the vast majority of revenue comes from members and that it is the directors who go out and raise money for the railroad.
Citing a member who was employed with the Smithsonian museums in Washington, D.C., as an example, Bassett said it was important to have such relationships to sustain the non-profit.
“We don’t have anyone in White Pine County to reach these connections and hit them for money,” Bassett said.
Setterstrom said that the railroad is owned by the people of White Pine County and specifically the people of Ely.
Gianoli said that the issue was how a non-profit functions — it survives on donations.
“Most of the people who run these things are people who give money,” he said.”That’s what keeps it afloat.”
“Setterstrom said that by moving in that direction, pretty soon it becomes someone else’s railroad, that it would no longer be owned by the people of Ely.
“You’re asking us to allow people from outside to run it,” he said.
Hanson said the city needed to have some oversight and control.
Gardner agreed, saying, “I believe the city should have control likes it’s always been.”
Setterstrom cited how now trustees are elected by the residents of Ely and “if you don’t like things, you vote them out.”
Trustee Pat Robison said she was “really torn” but that it was a non-profit and that people were donating from outside the city and county.
“If people from the city are interested, they’ll become members,” she said, citing that only 45 people from Ely were members.
Gardner said that local people didn’t have the money to be a member.
“We don’t want someone from New York being on our board,” Gardner said. “They don’t know nothing about us.”
Management Board member Randy Larson suggested that people around the world know what goes on with this railroad more than the people that live here.
Addressing Gardner, Gianoli said, “What you’re espousing, Jolene, is to leave it the way it was. If you think we’re going to survive, then we don’t need to discuss it anymore.”
Odgers said that if the city wants to run it and leave it the way it was, “then we don’t need to be here.”
Setterstrom said that the railroad was a gift to the city of Ely and it was set up so that the trustees picked the management board.
“And its worked out fine,” he said.
Management board member Carl Marsh said that if they couldn’t agree on the initial bylaws being discussed, then they were back to where they started.
Setterstrom questioned why, if they didn’t agree to this, they needed to quit and go home.
Gianoli explained that if they remained with the status quo, then there was really no reason to study the rest of the documents.
Setterstrom asked why they couldn’t continue to allow the mayor to pick the trustees, wondering aloud why the agreement wouldn’t work without changing the way the board was chosen.
Bassett told Setterstrom that it wouldn’t work, stating that the foundation and the railroad had grown and that the principal job of the board was to raise money.
“What we are doing is going to the people who are putting in the money, saying you have the right to vote as to who steers the corporation,” Bassett said.
Setterstrom claimed that the city paid for the annual audit and insurance, among other expenses, and that two percent of the city’s room tax, over $200,000 was gifted to the foundation by the city.
Bassett said that the room tax money did not come from the city of Ely but from visitors to the town and that the money from the city of Ely totaled “zero.”
Setterstrom said that he would concede to two members being from White Pine County but if what was being offered by the management board was unchangeable, then it was time to quit.
Bassett said that the foundation had evolved and grown and that they needed to raise millions and millions of dollars.
“That money isn’t in White Pine County,” Bassett said.
Setterstrom said he agreed with most of what Bassett was saying but that control needed to stay with the city.
Hanson agreed, saying the city was still on the hook if anything went wrong. He suggested setting the issue aside for a later meeting, seeing as two board members were uncomfortable with giving up that control. He said that he concurred with them, that the city needed to retain control.
Bassett asked Setterstrom how much money he had raised for the foundation.
“Not my interest, not my job,” Setterstrom told him.
“It is your job as a trustee,” Bassett said. “You want your cake and to eat it, too.”
Gianoli said that this was an effort to clean up the situation and put it the way he believed it should be. He said that while it was just his personal opinion, if the board didn’t “square this around,” the town was going to lose the railroad. He said that while there are people out there that believe if the railroad goes bankrupt, the city will never let it go away, the truth was the city can’t afford to keep the railroad running.
“If you lose your fundraiser, there won’t be a railroad,” he said. “…I don’t think it will even make it until the end of the year. I believe that’s a fact. I believe this a very reasonable and very well thought out resolution. This is all about keeping that railroad going for the citizens of this community.”
Gardner said she understood the problem needed to be fixed but that the railroad was not going to go away if they didn’t fix the problem right now.
Gianola sharply responded: “The railroad will be there and it will be rusting because you don’t have the ability to fill an $800,000 to million dollar hole. I will not go through this another two years.”
With the meeting getting heated, Odgers suggested a break for the meeting participants. After their return from the break, Odgers announced that the lawyers had reached a compromise that, hopefully, addressed the trustees concerns of the railroad being taken over by outsiders.
He first proposed that the board be increased from five members to seven, that two members be appointed by the mayor of Ely and that the other five be elected according to the terms of the bylaws with three having to be current residents of White Pine County. The other two members could be chosen from outside the county.
Odgers proposed, also, that the bylaws and articles concerning the appointment and election of directors could only be changed by a majority vote of the city council. This, he said, would prevent a hostile takeover of the railroad by an outside organization.
He said that the compromise was probably not “palatable” to either side but both sides agreed to it.
“No one is really happy,” Odgers said, “but it’s something we can live with.”
Hanson said it was a very good compromise.
Gianoli said that at the end of the day, the city will have the same ownership they had before and that the city will have some input into how the board operates. He said he was OK with the clause that stated the configuration of the board of directors would not change without approval from the city council.
“I think that’s appropriate and makes everyone feel more comfortable,” he said.
Conversation then shifted to the location of the annual membership meetings, the election of officers, specifically the appointment of a secretary, who would sign the checks and the ability to encumber the foundation.
Odgers said that any loans sought by the foundation above a certain amount not agreed to in the development agreement, which will be discussed at the next meeting, would have to go before the city council.
As an example, Odgers said that if the foundation has not raised the money and they need $500,000 above what’s agreed upon in the development agreement, the council would have the authority to agree or disagree.
He said that the development agreement will protect the city from the standpoint that if the foundation fails, the amount of that debt would be manageable and clear.
Bassett said that there would be two checks in the system in that no loans shall be contracted unless authorized by the board of directors, which will include two council members, and the second will be finalized in the development agreement.
The two boards plan to discuss the terms of the development agreement at their next meeting on Monday at 5:15 p.m., at the Ely Volunteer Fire Hall.