Faced with threats of resignation from railroad director Mark Bassett and prominent donor and backer John Gianoli, the Ely City Council — acting as the White Pine Historical Railroad Foundation Board of Trustees and the White Pine Historical Railroad Foundation Management Board — approved a new set of bylaws, articles of incorporation and development agreement for Ely’s landmark attraction.
The two boards had met twice before to argue the new incorporation, and while the new documents had assimilated the language that had been agreed upon by the two groups in prior meetings, new and old arguments arose that resulted in the Board of Trustees originally voting 3-2 against the new incorporation plan, with council members Bruce Setterstrom, Jolene Gardner and Sam Hanson joining forces to defeat it.
But the negative vote didn’t last long when, after the measure was defeated, Bassett, executive director of the foundation and it’s pre-eminent fundraiser, told the board that he no longer believed in the direction of the organization and that he would resign. Earlier in the meeting, Gianoli, chairman of the management board, also threatened to walk away from the foundation and all of its politics.
With the probability of losing two of it’s most stabilizing actors, Setterstrom pushed for further discussion that led to even more intense dialogue and negotiations before the three that voted against the measure, conceded in a second vote that passed 5-0.
The marathon four hour meeting began with a comments from residents and business leaders from throughout the city and county, the vast majority in favor of the board adopting the 1.5 option, a model where a new board would be created made up of seven board members, five elected from the railroad foundation’s membership and two appointed by the city council.
Gianoli opened the two board’s discussion by stating that it was a “critical junction for the railroad” and that too much time had been “squandered” bantering over false accusations and lawsuits. He said that the city, through the development agreement, would have a high level of comfort in that they were not relinquishing ownership and that the railroad would now be able to focus on running the railroad while the city would be able to focus on running the city.
Hanson said that he had heard rumors that if the board did not approve the plan, the railroad would go out of business and that was not the truth, he said.
“That’s not the desire or intent of anyone sitting at this table,” Hanson said.
He then began a discourse on how the national parks were run with private entities operating the ancillary activities, such as gift shops, and suggested approving a six member board, with half of the members appointed by the city council so that things would be “equal.”
Management board member Randy Larson said that he didn’t feel there was a “stacked deck” in the seven board member scenario in that members of the foundation had the right to vote for their directors and that those who wished to serve on the board more than likely had the common goal of benefiting the railroad in mind.
“It’s not us against you,” Larson said.
Hanson said that the council still had a responsibility to the community and said he was concerned about bills being run up.
Setterstrom said that the railroad was given to the citizens of Ely and that they elect the trustees (city council) and that they depend on the trustees to appoint the management board members.
“By going along with 1.5, it takes it out of the hands of the citizens altogether,” he said. “I don’t feel I have the right to give that away. It should be put to a vote of the citizens.”
Gardner said that her problem with the whole thing was that the railroad had ran good for 27 years and she wondered “why now” it had to be changed.
Gianoli disagreed, saying it had been a debacle the last two years.
Whose fault is that,” Gardner asked.
Gianoli then lit into her, saying he’d played this game long enough.
“Here’s why we have a problem with the railroad,” he said. “We have people that love this railroad and love is a great motivator. But hate is also a great motivator and it destroys efforts much faster than love builds it.”
Gianoli then recapped the history of the last eight years citing former council member Marty Westland’s attempts in 2008 to get rid of Bassett and take over the railroad himself. He said that Westland, an ex-employee of the railroad with several allies on the board, told other workers that he was going to get Bassett and referred to him as an “SOB.”
Gianoli then noted the money the city spent on a lawsuit against S&S Shortline that was filed on the last day Westland spent in office by Westland’s attorney. He said that Westland also filed to form a corporation on Nov. 14, 2008, whose stated purpose was to acquire and operate the Nevada Northern Railway complex, currently owned by the city of Ely. He said Westland also used the railroad’s “Safety ‘First” logo for his city council campaign, jeopardizing the non-profit status of the railroad.
“Westland likes to imply that the management board has this hidden agenda,” Gianoli said. “Lets look and see who has an agenda.”
He said that it can be ascertained who is at fault in the lawsuit between the two boards by reading the judge’s comments. He said the lawsuit cost Ely taxpayers $46,000, the investigation over $30,000 and that the current lawsuit cost the city between $50,000 and $60,000.
He said that the party line from the followers of Westland on the board was that they didn’t need to do anything about this — that they’d find someone to run this railroad,.
“No one in the world can match the experience of Mark Bassett,” he said.
He said that the railroad was a business with a million dollar hole in the budget every year, a hole that Bassett filled every year through fundraising.
“Anybody that wants to come in and run this railroad is coming to make money,” he said. “You’re not finding anyone to run it and the railroad will be down their rusting.”
He said that the enemies of Bassett and the management board were using freedom of information act requests to get information to harass donors and agencies the railroad was applying for grants from.
“They write to everyone of our grant agencies and ask for 10 years of records,” he said. “There’s one reason they do this; destruction.”
He then asked the board members, who had earlier proclaimed to have listened to the people, to remember the voting results when current board member Kurt Carson defeated Westland by 71 percent of the vote.
“Are you listening to voters?” he asked.
He then brought up one-term current county commissioner Mike Coster, who recently lost a primary election for his seat by a 60 to 40 percent margin after Coster was part of a well publicized “break-in” of the railroad depot offices where Coster crawled through a window and opened the door for others.
“It was highly unethical,” Gianoli said about the misadventure. “The average person in this community thinks it’s a horrible thing. I was born and raised here. I care very much about this community and this railroad”
Bassett said that all they were asking the trustees to do was allow the foundation to grow and to take heed when the largest donor tells them, “I’m tired.”
“Justice Rowe, in his ruling, said don’t kill the goose that lays the golden egg,” Bassett said. “Your largest donor is telling you, if you don’t fix it, you’re going to lose the railroad. The fact of the matter is, for me to go out and raise a million dollars a year, I have to believe in this organization.”
Bassett said that his payroll is 30 percent higher than it was last year because he has to pay people now due to the fact that volunteers are no longer showing up.
“They’re not having fun anymore,” he said.
He reminded Hanson that he was told by a grantor that there would no more grants until everyone learned how to play together.
“Our donors and grantors say, until you guys figure this out, the checkbook is closed,” Bassett said. “If you don’t vote for 1.5, I cannot manage under this situation. The wheels are beginning to fall of the train. Grants are down and so are volunteers. If you want to turn this around — if you want to prevent a train wreck… we are going to have a train wreck if I can’t get our members, donors and grantors to get excited about the railroad. I don’t know where our money is going to come from. Where is that million dollars going to come from.”
Bassett said that only 30 percent of revenue comes from train tickets.
“That means 70 percent has to come from other sources,” he said. “I need cold hard cash to do this. All we’re asking for is no more board of the trustees, no more management board — we’re asking simply that people who put their cold hard cash in have votes for five and the city gets two.”
After a recess, Hanson suggested that they create another organization where the membership takes responsibility to fund a position of development and public affairs for Bassett while the city commits to funding someone to run the railroad on a day-to-day basis.
“That will set you free to do what you do so well,” he told Bassett.
He suggested going back to the five member board model and developing a concessionaires agreement similar to the national parks system.
Hanson’s proposition went nowhere and the conversation then shifted to the deeds concerning the transfer of the railroad to the city and the foundation.
Bassett pointed out that according to the deeds, the city had to pony up half of the maintenance costs but that the development agreement that they were voting on would put the onus on the foundation to cover all costs. Bassett then brought up the board’s constant reminder that they put out $60,000 annually for insurance and an annual audit.
“You give us $60,000 and we bring you $1 million, $1.2 million, $1.5 million, $2 million dollars,” he said.
Board member Kurt Carson made a motion to approve the 1.5 model and it was seconded by Trustee Pat Robison.
Robison said that everyone who had spoke at the meeting (approximately 10) were people from Ely and that they were all in favor of model 1.5.
Carson said that the reason he was in favor was because if the management board leaves, he didn’t think the city could afford the cost of keeping the railroad open.
Carson and Robison voted in favor of the motion but Setterstrom, Gardner and Hanson voted it down.
“I cant see taking this away from the citizens,” Setterstrom said, after the vote, suggesting it be taken to the polls for a vote of Ely residents.
“The voters actually voted you into office to make decisions like this,” said management board member Carl Marsh. “That is your job.”
City Administrator Bob Switzer said a special election would cost the city approximately $4,500 and City Attorney Chuck Odger said that it would be two and a half months until an election could be held. He suggested the city send out a mass mailing and get an un-scientific opinion on where residents stood on the issue.
Gardner said the railroad was not going to shut down so Bassett asked her how it was going to run. He then gave notice that he was going to resign and that he had six months vacation due him.
“It’s your choice,” Gardner said. “We didn’t ask you to leave.”
“If you take the tools out of the tool box, I can’t do my job,” Bassett said.
Gardner asked if the board was expected to give the railroad away because one man was walking?
“This one man has brought in 86 percent of the money,” Robison responded.
Gianoli said that all Bassett was asking for was a situation he is comfortable in.
Gardner said that the board has been there for a long time and that they don’t interfere, which brought laughs from the audience.
Gianoli said that this council has not interfered but previous councils have.
“My problem is that you’re the five people today but we don’t know what it will be in five years,” he said.
“…We need stability in the organization and that comes from being able to depend and have certainty about how you’re going to be dealt with in the future,” Marsh said. “If there’s no certainty, it makes it impossible for us to make plans.”
Hanson said that it works both ways and returned to his gripe about not being able to access records that he felt belonged to the city.
“We have a whole list of things, too,” he said, noting that he didn’t want to give away the city’s interest in the railroad.
“You’re not giving it away,” Gianoli said. “You own 50 percent.”
Robison said that the foundation knows more about the railroad than the council and the council should be focusing on the city.
“We have a lot of projects going on and we need to be focused on what’s going on there,” she said. “None of us knows more than the railroad managers about what they’re doing.”
Hanson said that as long as the city owns half the railroad, it was the council’s business.
When Setterstrom questioned what would happen if the city had concerns or didn’t agree with the new board over operational matters, Bassett said that the management board had done upgrades at no cost to the city, saving six buildings from collapse.
“I just don’t understand — we’re improving one of your assets at no cost to you,” Bassett said.
“We own something and we have no say in it,” Setterstrom responded.
Saying he didn’t mean to hold the city over a barrel, Bassett said that he was being asked to raise money for something he no longer believed in.
“I’ve been doing this for 15 years and what we’ve done here is nothing short of a miracle,” he said. “We’re just asking you to allow the foundation to continue the miracle. You won’t be able to decide how the money is spent, but then, you didn’t raise that money either.”
Gianoli suggested building something into the development agreement that would resolve any impasse that might come between the city and the board. Another recess was called and this time Odger and Gianoli went outside to discuss the matter. When they returned, Odger proposed a mediator or a three person panel that would mediate conflicts between the board and city council, should matters reach a head.
With the new language added to the agreement, Setterstrom then moved to accept the bylaws, articles of incorporation and the development agreement. Gardner seconded the motion, then Hanson demanded 24/7 access to the financial records of the railroad for council members.
It was noted that the city council had two members serving on the board and that they would have that type of access during business hours, but after much discussion, it was agreed upon that council members could access the financials during business hours when the railroad was open, as well, and that 48 hours written notice had to be given to have copies of records made. It was also noted that the records of the corporation were not public record and that disclosure of the private corporation’s records would have consequences. The board then voted 5-0 to accept the new incorporation documents and the management board followed with a 4-0 vote in favor.
After the meeting, Gianoli said that he was appreciative of the trustees action and that it was time to put all the conflicts behind them and move forward.
“I know it was a hard decision for them to make,” he said. I’m thankful that they trusted us enough to move forward with this.”