L.A.'S GHOST RAILWAY CITY READY TO SELL ITS LINE IN NEVADA.

Byline: Dan Laidman Staff Writer

For decades the Nevada Northern Railway ran 24 hours a day, seven days a week, hauling countless tons of copper ore and loads of travelers through a sparse and snowy patch of high desert.

The storied line - which runs 140 miles from a mine near the city of Ely, Nev., to a transcontinental railway by the Utah border - bolstered development across the Southwest and helped spread the raw material for much of the country's electrical and telephone infrastructure.

For nearly two decades, the city of Los Angeles has owned this slice of Old West history after the Department of Water and Power bought it for $1 million from Kennecott Mining Corp. with the intention of using it to support a coal-fired power plant.

But the plant was never built because Los Angeles' power demand came up short of projections and officials encountered environmental and economic hurdles. And now, after years of failed attempts to reignite industry along the tracks, the Los Angeles City Council will decide today whether to sell the railway.

The sale would recoup the city's initial investment, though just barely, and would extricate Los Angeles from an increasingly tangled web of lawsuits surrounding the railway.

In Ely, where local government and the nonprofit White Pine Historical Railroad Foundation are seeking to purchase the railway, the transaction is considered key to revitalizing the region.

``This opportunity for us to get the railroad back as a functioning railroad is going to be the catalyst to some major economic development for us,'' said John Chachas, chairman of the governing body for White Pine County.

The DWP has been trying to sell the railway since the mid-1990s, when energy deregulation spurred the agency to unload far-flung resources that it no longer had a use for, said Eric Tharp, the DWP's manager of external generation.

Efforts have been hampered for nearly a decade, however, because of Nevada Northern's unique position as a historical resource in an economically troubled region.

While a company leased the line to run ore trains for a time in the 1990s, the railway has been dormant for five years, with parts now overgrown by vegetation. And three parties have gone to court trying to take railway assets under Nevada's eminent-domain rules.

The railroad has become ``a continuing source of potential maintenance and liability'' for Los Angeles, Chief Assistant City Attorney David Michaelson wrote in a report to the council last month.

This is not the first time the city has come close to unloading the railway. In 2003, the Board of Water and Power Commissioners agreed to sell it to the city of Ely for $750,000, but the Los Angeles City Council rejected the deal amid concerns about the price.

Appraisals have come up with wildly varying values for the Nevada Northern, from $669,000 to $3.7 million, although Tharp said the higher appraisals are based on a scenario in which the city would liquidate the railroad and sell the raw materials for scrap.

That would be a long shot, he said, because of the time, cost and environmental remediation involved, as well as federal rules that make it difficult to dismantle a railroad.

Because of such difficulties, as well as the litigation and the fact that Los Angeles has been unable to find a company to lease the tracks for years, the city administrative officer and city attorney are now recommending that the council accept Ely's revised offer of $1.5 million.

The Board of Water and Power Commissioners approved the new deal Aug. 2. In an Aug. 16 memo, City Administrative Officer Bill Fujioka recommended accepting the $1.5 million offer because it covers the city's investment, and the pending litigation creates the potential for more costs.

Still, he wrote, ``ideally we do not believe that DWP is getting the most appropriate return on this investment.'' If an opportunity arises to renegotiate, he wrote, the city should seek $2.5 million.

That seems unlikely since the only would-be buyers do not even have enough to fund their current offer.

Ely put together the initial $750,000 offer with a mixture of federal money and a special appropriation from the Nevada Legislature. Local leaders are hoping to raise money from a rural utility cooperative and other such sources to reach $1.5 million.

Local governments in Nevada cannot contribute much money; that state's Department of Taxation recently took over the economic affairs of White Pine County after it declared a financial emergency.

Locals link the current financial woes to the industrial past represented by the Nevada Northern, which carried ore from the Kennecott copper mine.

``When Kennecott shut down, that was the beginning of the demise of economic prosperity in White Pine County,'' Chachas said.

The 140 miles of Nevada Northern now pass through a succession of ghost towns.

A Canadian company has recently reopened the copper mine but is shipping its ore by truck. Officials in the Ely area hope to restore Nevada Northern so it is once again capable of supporting the mine. Meanwhile, Mark Bassett, executive director of the Nevada Northern Railway Museum in Ely, wants to create the ``longest railroad museum in the country,'' by expanding the sprawling complex of old rail infrastructure the museum now tends.

He plans a new tourist-train trip to show visitors what it was like to travel through the wild, spartan Old West of the early 1900s.

``There are no roads. There are no power lines. There's nothing up there,'' Bassett said. ``If I were to drop you off there with a blindfold on and ask you where you were and what year it was, you'd be pretty clueless.''

Dan Laidman, [phone]

dan.laidman(at)dailynews.com

CAPTION(S):

2 photos

Photo:

(1) An early 20th-century locomotive pauses by the East Ely Depot on the Nevada Northern Railway, owned by Los Angeles.

(2) A locomotive built in 1909 and restored to service in 1993 runs along a Nevada railway that history buffs in the state want to buy back from Los Angeles.

Joel Jensen/Nevada Northern Railway Collection