City council has accepted a recommendation to not sign a final agreement with Railmark Canada regarding the operation of the passenger rail service between Sault Ste. Marie and Hearst.
Railmark has failed to produce a required line of credit.
"One of the preconditions (for the city to sign) was financing in the form of a line of credit (from Railmark), so we cannot at this time recommend we proceed with the signing of the agreement," said Tom Dodds, Sault Ste. Marie Economic Development Corporation CEO and interim chair of the ACR passenger service stakeholder working group, speaking to council Monday.
"What I'm saying is now we have to look at other options (other operators to run the passenger rail service)," Dodds told council.
Looking at those other options has already started, but doesn't necessarily rule out Railmark, Dodds told council.
Meanwhile, Railmark Canada President B. Allen Brown said Railmark will continue rolling along from the Sault to Hearst and back at his own expense until he gets that line of credit.
"It (council's decision) was something I was expecting," Brown said, speaking to SooToday.
"I'm really disappointed because we're working very hard, we're just a little bit away from the finish line (securing the line of credit)."
"I intend to return to Michigan to get the rest of the requested financial information together and finish the process," said Brown, a U.S. businessman.
"I'm not a quitter," Brown said.
"We've already got the licensing (rail operator certificates and insurance) to do all this."
Council, in an unanimous recorded vote, accepted the recommendations from Dodds, as interim chair of the stakeholders working group, to not sign the final agreement with Railmark, explore other options in terms of a third party operator for the Sault to Hearst service, and write to both the federal government and CN requesting their continued assistance in keeping the line alive.
CN previously operated the Sault to Hearst passenger rail service with $2.2 million in annual federal funding.
After the federal government announced in 2014 it was ending that subsidy, a group comprised of a wide range of stakeholders was put in place, known as the ACR Passenger Service Stakeholder Working Group.
Two of the stakeholders were the city of Sault Ste. Marie and the Sault Ste. Marie Economic Development Corporation.
After much lobbying, including the efforts of Sault MP Bryan Hayes, it was announced March 31 the federal government (Transport Canada) agreed to provide $5.3 million in funding to Railmark over the next three years to keep the Sault to Hearst passenger rail service running, with the hope the company can turn the service into a self-sustaining, enhanced rail experience for tourists.
Under the new arrangement, the city of Sault Ste. Marie found itself handling the federal financing for Railmark, and members of city council have expressed concerns Railmark may not live up to all the necessary pre-conditions, with the city being left on the hook.
"What we've said is 'it's a bit of a time out' and look at all the options…even today there was a meeting with the stakeholders and Railmark to talk about what are the other things we can do so that it's in everybody's interest to go ahead and sign the agreement," Dodds said, speaking to SooToday.
"Our objective is to grow that business…during this period we would expect we'll have from Mr. Brown the information as to a line of credit in place, so we can come back with something with substance for the passenger service."
"Where there is certainty is that the government has made a commitment in terms of five million dollars over three years for another third party operator, Dodds said.