By Kelly Young

RUSK — City Council chose Thursday night to emulate their counterparts in Palestine by agreeing to loan the Texas State Railroad Operating Authority $500,000 to fund the trains’ operating costs.

During a special meeting Thursday night, the members of Rusk’s council passed a motion directing the city’s attorney to begin the process of amending Rusk’s contract with American Heritage Railways. Although the final document won’t be ready to be signed for weeks, the council agreed to commit half-a-million dollars of the Rusk Economic Development Corp.’s money to the continued operation of the Texas State Railroad.

“I think what we want to do is have REDCO transfer $500,000 to the city of Rusk, which will then loan that money to the railroad authority. The authority would then hold on to the money until it is needed by AHR,” said Charles Hassell, president of REDCO. “They need the money immediately — the first $500,000 is already spent. American Heritage started Sept. 1, with 30-odd employees and no income coming in. All this time they have been paying for insurance, advertising and things like that.”

The operating authority initially believed $500,000 in funding would be forthcoming from the state of Texas;, however, House Speaker Tom Craddick recently announced it may be illegal for the state to loan money to a private company.

The council voted unanimously Thursday to assist the authority, but several council members were hesitant to part with such a large amount of money — even if only temporarily.

“The city of Rusk doesn’t have a lot of money; it definitely doesn’t have the same resources that the city of Palestine has with its alcohol tax. I don’t think we are going to be able to come up with more money should anything else go wrong,” said council member Kris Morgan. “It seems to me that this economic development money is kind of like pennies from heaven to the city of Rusk right now — it seems to be in the right place at the right time.”

If $500,000 is taken from REDCO for the purpose of supporting the TSR, the corporation will only be left with about $60,000.

Assuming all goes according to plan, AHR will use this initial million dollars from Rusk and Palestine to get the operation up-and-running, and then will start paying back the loans in 2011.

The operating authority is also attempting to secure $2 million from the Legislative Budget Board to match $10 million in grant money from the Texas Department of Transportation. An additional $2.3 million grant is also available, but the entire $14.3 million in potential financial aid must be used on capital expenditures, not operations.

Ron Stupes, city attorney for Palestine, said the agreement will need to be approved by all parties before any of the money starts changing hands.

“We don’t have the details decided yet, but everybody has said verbally that this is a workable deal. American Heritage has said this is a way that they can do it. The Speaker of the House’s office has said that they will be agreeable to it. But until we get people’s names on the line, I can’t promise you that everybody is going to come through, but at least this appears to be a path out of the problems we have been having,” Stupes said.

Rusk City Council may be forced to call a special meeting in the next week for the purpose of approving the amended contract.

Results from the Nov. 6 election wer canvassed during the meeting, and the minutes from last month’s council meeting were approved.

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