SNOHOMISH — If you were hoping to bring your relatives from Kalamazoo to town this summer on a brand new tourist train, don’t hold your breath.
Troubles in federal bankruptcy appear to have put the kibosh on those ambitions.
A U.S. bankruptcy judge’s ruled June 7 that GNP RLY Inc., the company promoting the idea, owes creditors at least a half-million dollars. Whether the Tacoma company survives, and who exactly is owed money, are still issues the court needs to work through.
Company founder Tom Payne originally announced that trains would begin service in 2010 between Snohomish’s First Street and Woodinville’s winery district. The start date was pushed off to July 1 this year.
Now “it seems unlikely that it’s going to begin any time soon,” Snohomish City Manager Larry Bauman said.
Snohomish leaders were hoping an excursion train would bring customers to Snohomish’s historic district. They also saw it as a nice fit with the city’s long-term plans to extend the Centennial Trail to the riverfront and to build up a high-density, pedestrian-friendly neighborhood called the Pilchuck District.
“We are in a concerted effort between our local government and our local business community to create an enhanced tourist destination,” City Councilman Greg Guedel said. The train “would give a lot of people a way to conveniently and easily come to town.”
GNP, which owns no locomotives or railroad cars, does have a permanent easement to run freight trains between Snohomish and Woodinville.
According to court records, in 2010 GNP had more than $700,000 in operating expenses and almost that much in net loss. Creditors in February filed a petition to force the company into involuntary bankruptcy. One of those is the Ballard Terminal Railroad Co., which runs freight trains on behalf of GNP on the Snohomish-Woodinville route.
The court case arose after Payne tried in January to force out the company’s other director, Doug Engle. Each accuses the other of corporate malfeasance, unauthorized corporate activity and poor business judgment, court records say.
Payne fired Engle and accused him of trying to take control of the company. Engle has questioned Payne’s right to fire him.
U.S. Bankruptcy Judge Brian D. Lynch issued his ruling on June 7. Another hearing is scheduled next week in Tacoma.
Engle on June 8 said the company would still like to start the train service.
“It’s always been GNP’s intent to operate an excursion service, and I believe that the demand is clearly there,” he said. “But obviously nothing can be done until this situation can be ironed out.”
Engle declined to comment on the judge’s order. Payne did not return a call for comment.
Payne, a former railroad engineer from Canada, had success in rail operations in his native Canada. However, a more recent operation in Tacoma, Golden Pacific Railroad, broke down under crippling debt and lawsuits.
The bankruptcy case isn’t the only obstacle for the tourist train.
Bauman said GNP would have to finish about $100,000 in repair work to the Snohomish River Bridge before starting the service.
GNP also wants to extend the route from Woodinville to Redmond, but King County and Redmond are opposed. The longer trip and access to the Redmond market could potentially boost business. The federal government’s Surface Transportation Board, which resolves railroad disputes, is expected to decide that issue.
There’s also a lawsuit three people filed last year to challenge the Port of Seattle’s right to buy the Eastside Rail Corridor. The corridor runs from Snohomish to Renton, including the segment where GNP has the easement.
The suit in King County Superior Court contends the port lacked the right to acquire the Snohomish County portion of the corridor because it lies outside the taxing district’s authority in King County.
The port in 2009 used $81 million in taxpayer money to buy the northern portion of the rail corridor from Burlington Northern Santa Fe Railway. The railroad donated the portion from Woodinville to Renton. Port of Seattle officials said they planned to use the corridor for passenger trains and recreation trails.
Noah Haglund: 425-339-3465, nhaglund@heraldnet.com.
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