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Wednesday, 27 April 2011 19:47

Dillsboro could be on the hook for railroad loan

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Depending on which town leader you ask, Dillsboro is prepared to co-sign on a more than $300,000 loan for the Great Smoky Mountains Railroad — or, short of that, the town is inclined to help the railroad in some significant, still-to-be-determined manner.

That loan amount is nearly double the town’s annual budget of $171,610.

“We’d sign if need be,” Dillsboro Alderman David Gates said flatly. “If they have adequate collateral, we said we would.”

Gates’ fellow board member, David Jones, was a bit more circumspect about the potentially controversial agreement: “We’re interested, and we certainly want the railroad here — we’ve agreed to listen to more details.”

The railroad is privately owned by businessman Al Harper, who has asked Jackson County commissioners for $95,176 in cash and $322,000 in the form of a loan to keep the tourist trains coming to Dillsboro on a regular basis. This is less than Harper originally sought. In early March, he asked for more than $800,000 from Jackson County in the form of grants and a loan, but later downsized the dollar request.

Swain County has contributed $25,000 to help the railway, and the Swain County Tourism Development Authority has kicked in another $25,000, said Bryson City Mayor Brad Walker.

“It’s an economic engine for Bryson City,” Walker said in explanation of the willingness in Swain County to fund a private, for-profit enterprise. “I call it our Harrah’s.”

That would be a reference to Harrah’s Cherokee Casino, the money machine for the neighboring Cherokee Indian Reservation.

The railway recently bought an old steam engine — which is currently in Maine — and wants to put it in service along with its diesel-powered engines. Harper said the money from the county would help make that vision a reality.

In return for the loan from the county, the train in exchange says it will run 110 to 120 days of service each year out of Dillsboro.  

Harper told commissioners the excursions would create 15 to 20 new jobs in Jackson County, and bring in least 20,000 visitors annually to the tourism-dependent town.

Dillsboro served as the headquarters of Great Smoky Mountains Railway, an excursion railroad catering to tourists. About 60,000 people a year rode the train, and Dillsboro boomed — until the train pulled out in 2008.

Last year the Great Smoky Mountains Railway began limited, seasonal trips out of Dillsboro again. The company said in January that Dillsboro was put back on the schedule because the scenic little town of about 220 residents is a drawing card for the business. Currently, the train is advertising excursions from Bryson City to Dillsboro five days a week during the summer and four days a week during fall, according to its online schedule.

Dillsboro leaders would like to cement more spots in the train’s schedule.

According to draft minutes of the April 11 Dillsboro town board meeting, Mayor Mike Fitzgerald told his fellow board members, “Jackson County commissioners would like the Dillsboro Board of Alderman to co-sign the loan, provided that the GSMR gives adequate collateral to cover such a loan. David Gates made motion that the board agrees to support the Jackson County commissioners, providing sufficient collateral is given by GSMR. The motion was seconded by Tim Parris, and passed with four ayes, one abstention.”

Interim County Manager Chuck Wooten said county commissioners have not taken any formal action to ask Dillsboro to co-sign at this point.

“However, informal discussions among the commissioners generated this concept as an idea,” he said. “I believe Chairman (Jack) Debnam asked Mayor Fitzgerald to poll his members to determine if this might be something they would consider. Based on their action, it appears they would endorse this action once they feel comfortable with the pledged collateral to secure the loan.”

The county hasn’t yet received a formal loan application from the railway, Wooten said, adding, however, “I suspect the commissioners will feel more at ease approving a loan if Dillsboro is willing to co-sign.”

Wooten has previously explained that the $95,176 grant would be used to restore and paint the steam locomotive and exterior of first-class coaches. Wooten said he intends to consider this grant in the upcoming fiscal-year county budget, which commissioners have final say over.

“We will discuss their grant request during upcoming budget discussions ...  I’m still hopeful I will have a budget document to submit to the commissioners on Monday, May 2,” he said.

The $322,000 revolving loan would pay for moving the newly purchased train from Maine to North Carolina. The county’s economic development arm manages the revolving loan fund. It would be up to county commissioners whether to approve the loan request.

Harper’s company, American Heritage Family Parks, owns two other tourist railroads in Colorado and Texas. Harper is one of the principle investors and owners of Ghost Town in the Sky amusement park in Maggie Valley, which has been in bankruptcy for two years. Harper has made an effort to buy the park out of bankruptcy, but has been unable to secure financing. Harper at one point had lined up a loan using the railroad as collateral, but the deal fell through. A new deal is pending, which involved transferring 49-percent ownership in the railroad to a newly created corporation for the purpose of piecing together a Ghost Town rescue.

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