Skunk Train property sells for $4.15 million in internal transfer to sister company that operates freight rail shipping
FORT BRAGG, 5/21/23 — Mendocino Railway, owner of the Skunk Train, has sold part of its properties in Fort Bragg for $4.15 million. The buyer of all eight parcels was Sierra Northern Railway, a sister company of Mendocino Railway. What does the transfer mean? Nothing has changed as far as who is managing the local operation. Speculation has ranged from something as simple as differing tax liabilities for two related corporations to different legal liabilities to something to bolster the company’s claim that the railroad is a public utility. Both companies operate under the umbrella of Sierra Railway — and management hasn’t told us yet.
Over the past five years, Mendocino Railway acquired about 350 acres of property around its existing Fort Bragg depot, including most of the remaining property from the former Georgia Pacific Millsite and sold a portion of that property- apparently about 100 acres.. And it is now embroiled in perhaps the biggest controversy in the history of the line, which dates to the late 19th century. The railway is involved in lawsuits with the City of Fort Bragg and the California Coastal Commission, the railroad contending, so far not successfully, that it is a public utility not subject to city and Coastal Commission regulations. During this time, the railroad completed repairs and upgrades, including fixing broken windows and putting in secure fencing, which are among the issues that the Coastal Commission considers violations. The railway now has cases filed in federal court in hopes of proving it is a public utility.
Recently, a Mendocino County judge struck a blow against the railroad’s claim, ruling in favor of a Willits area landowner who resisted the appropriation of his property by eminent domain.
The Mendocino Voice picked up the late December property transactions at a records check in January, met with Skunk Train top brass Robert Pinoli and Chris Hart, but have gained no information about the property transaction so far. While internal transfers happen all the time and are not generally big news (although would normally be reported when it involves a high profile company), the difference here is that actual money changed hands. In most internal transfers a box would be checked saying no money changed hands, thus no taxes would be collected. In this case the county collected $2,200 in transfer taxes for a transaction, which shows the money paid to Mendocino Railway by Sierra Northern Railway was $2 million on that deal. The Mendocino Voice found two others, where $1.8 million and $350,000 changed hands.
Mendocino Railway was formed in 2004 when a locally owned group went bankrupt. Mendocino Railway purchased the assets of the California Western Railroad out of bankruptcy in 2004 with the approval of the United States Surface Transportation Board. The owners of the privately held company, Sierra Railway, said to be primarily Hart family members, sought to bring back the railroad through their ownership of Mendocino Railway . Pinoli was among the owners involved in the local group and is now involved in ownership of the company. Robert Pinoli signed the sales deeds on behalf of Mendocino Railway transferring the properties to Sierra Northern Railway. When asked, he said the sales were not him selling his ownership but represented something done for tax reasons that he would need to further research. The Mendocino Voice will add follow-up information to this story as it comes in.
In 2003, the Sierra Railroad and the Yolo Shortline Railroad merged to form the Sierra Northern Railway. West Sacramento-based Sierra Northern says it now operates over 100 miles of track in Mendocino county, and also operates in Tuolumne, Stanislaus and Yolo counties, according to its website. Sierra Northern provides rail shipping to all of California through interchanges BNSF and UP. With access to several railyards and public warehouses, ports, and industrial complexes, Sierra Northern coordinates the storage and distribution of thousands of carloads annually.
You can find our previous reporting on the Skunk Train here.
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