Face the State

Employee Alleges Railroad Is Risking Passenger Safety
Face the State Staff Report

The Colorado Historical Society, operator of the historic Georgetown Loop Historic Mining & Railroad Park, is facing the outrage of train aficionados and government watchdogs alike after it failed to meet a scheduled Memorial Day weekend opening. Critics allege the delayed opening, now scheduled for three weeks, is only the latest operational failure in a saga of waste, mismanagement, huge cost overruns, and safety concerns.

Opened in 1973, the Georgetown Loop Railroad was operated by a local private company, Georgetown Loop Railroad Inc., for its first 31 years. While the state owned the land and railroad tracks, the company provided the historical engines and cars, operated the train, marketed the railroad, and even maintained the tracks and rail bed. On top of that, the company paid the Colorado Historical Society a yearly concession fee for the privilege of operating.

Things changed in 2003, however, when the company's contract and a one-year extension expired. Following a proposal by the Georgetown Loop Railroad, Inc., according to the former railroad, the CHS demanded impossible, non-negotiable conditions, such as a tenfold insurance increase, a short-term time frame, and no possibility of a profit. “They handed us a contract and told us to take it or leave it, saying ‘we are the only game in town for you folks,’” said Mark Greksa, one of the managers for the Georgetown Loop Railroad Inc. “They wouldn’t negotiate terms, and we left the meeting after about 10 minutes.”

Instead the CHS issued a new contract to Railstar, a company from New York without experience in mountain railroading. At the same time, the CHS took much closer operational and financial control. The result has been a disaster. Riders say new service is substandard – Railstar and CHS can only transport about half the passengers as before. Ticket sales are down dramatically, with CHS selling just half the approximately 132,000 tickets the Georgetown Loop Railroad Inc., sold in its last year of operations as concessionaire. With CHS unable to meet demand, revenue has plummeted and the local economy has suffered.

Part of the historical allure has also vanished. When the train does run, it often uses a diesel engine either alone or to assist the steam engine – not exactly common in the 1800's, because diesels weren’t invented until the next century. At the same time, the train derails, breaks down, or simply stops running. Newspaper headlines over the past two years tell the story, with more than nine highly critical articles documenting the situation running in Denver and Georgetown-area newspapers. Engine failure, train shutdowns, "learning lessons," and maintenance problems all grabbed headlines.

Railroad Hemorrhaging state money

Even as it struggles to provide service, the CHS is hemorrhaging state money. The state took responsibility for all engines and rolling stock, since Railstar did not bring any of its own equipment. And although the Georgetown Loop Railroad, Inc. offered to lease or sell its former equipment, there has been no agreement on terms. According to internal records, as of April, 2005 the CHS spent over $878,000 in start-up costs (see the summary here) and recent estimates are that the CHS has spent millions more trying to acquire equipment, maintain the operation, and market the train. Before taking over operations and hiring a new vendor in 2005, however, the CHS annually received about $80,000 from railroad operations. But now, with a budget of slightly more than $10,000,000 in 2006, the CHS lost $161,000. It is unknown how much the CHS spent on the railroad operations, since it doesn’t include Georgetown as a budget category.

The frequent shutdowns and high costs have drawn plenty of criticism, with railroad experts taking notice. The Narrow Gauge Railroad Discussion Forum, as well as the Clear Creek Courant, provide plenty of details, often involving technical maintenance and operation jargon. At the end of the day, however, the critics have been proven correct – in only its third year of operation, the CHS did not start train operations for the first time ever.

Some also voice substantial fears that safety has suffered. Last year Railstar had no operating rulebook, and one employee refused to run Engine No. 9, fearful that the engine could not go downgrade safely. But the company ran the engine anyway, with a full load of passengers. Likewise, the company regularly ran train cars with the brake lines cut. As the employee wrote “I really hope they do not kill anyone this year, but you can only dodge the odds for so long.” The full email is here.

Safety training is also a concern. Last year’s rules class centered on a 1920's Pullman manual that discussed how to remove a dead body from a train – something that was downloaded from the internet a few minutes before the training class.

Finally, the local merchants have suffered the impact of this mismanagement, with reduced tourism and little communication from CHS. The restoration and maintenance problems causing the current shut down were well known last winter, but the CHS failed to warn that it would not open for Memorial Day Weekend until three days before the scheduled May 26th opening.

It appears that public outrage may result in fundamental changes concerning the railroad. In late May, Georgiana Contiguglia resigned as president and CEO of CHS, and is expected to be replaced by Boulder businessman Edward Nichols. Contiguglia, along with Facilities Director Joseph Bell, oversaw the decline of railroad operations at Georgetown.