Village approves $20K payment for unbilled railroad maintenance fees

The village is on the hook to ...

HOLLY, Michigan – The village of Holly is digging deep into its pockets again after receiving a costly bill from CN Railroad for traffic signal maintenance fees dating back to 2007.

The matter was discussed during the Oct. 9 Village Council meeting.

“We received some information from CN Railroad with regard to traffic signal maintenance which we had not been invoiced for, for the past six years, unfortunately,” Clerk/Treasurer Cathrene Behrens explained. “The short version is we owe them $19,740 in back maintenance costs for the streets I have listed – Oakland, Broad and Saginaw.”

Because the three locations are considered to be major streets, Behrens said the invoice could be paid from the village’s Major Streets fund which current carries a balance of $186,441.

“They stated they would work with us over time to pay these fees, but they were talking quarterly, whereas we were talking a few years,” Behrens said. “So in looking at our fund balance which is around $186,000, we’re recommending that we just pay it and be done with it and then next year during the budget process, we’ll obviously budget for these costs that we, up until now, didn’t know existed.”

Cathrene Behrens

The transaction, Behrens said, will take the Major Street fund balance to $166,701, still what she considers to be a “good balance” for that particular fund.

Councilman Jason Hughes asked how the track maintenance went unbilled for nearly a decade without anyone noticing, and also asked if the matter has since been rectified so that it doesn’t happen again in the future.

“It was part of the transition when CN bought Grand Trunk, and somehow during that transaction, we were lost in the shuffle on the billing process,” Brian Klaassen, director for Holly’s Department of Public Works said. “That’s the only answer that I got – we sent the supporting documents where they had billed us in the past, but it stopped in 2007.”

Village President Jeff Miller asked Behrens if CN Railroad was willing to give the village any “leeway” on the payment.

“I think the ‘leeway’ they were willing to grant was quarterly versus us paying it now,” Behrens said. “It we pay for it now or if we pay it in three months, the money is still going to come from the same place.”

Village Manager Jerry Walker concurred with Behrens, adding that the village has no choice but to pay it per Public Act 354 of 1993, or that is, the Railroad Code. “The error truly was on their part, however, we really do not have a choice as to whether we pay ot not,” he said. “It’s just how we do it – whether we do it in quarterly installments or if we do it in one lump sum.”

Councilwoman Jackie Campbell’s motion to pay the amount in full was seconded by Hughes. The motion passed 6-1 with Councilman Tom Clark casting the dissenting vote.

Behrens said railroad traffic signal maintenance fees will now become a part of the fiscal year 2013 budget, and all budgets to follow.