I don't know, selling parcels of the right of way, 100' wide in small lengths might not be that profitable in sparsely populated central Kentucky. The rail on the other hand....

Well, normally I would have agreed with you on the real estate, but I saw a situation a few years back that changed my mind. The issue would be if the property is owned or an easement. But as you say, the rail on the other hand....

I can see some value to certain pieces of rolling stock as well. A CF-7, an Amtrak approved office car, and even a recently parked tea kettle, should each push or exceed a six figure price tag.

ETA

Of course the entire ROW might have substantial value as an easement for something like a pipeline.

I recently received my copy of the July 2012 edition of KRM's newsletter, titled The Station Lamp. In interest of full disclosure, I have made it available as a .pdf document, linked below.

Of interest, it appears that the discussion about the future of KRM on this forum has sparked a rebuke of sorts from the Executive Director. I quote from his report below:



Also some items of note:
-Some rolling stock work is being done, including new windows for an L&N steel combine.
-L&N 770, the E6A shell is under cover for the first time in years.
-A "Financial Report" from the treasurer is supplied, but it is lacking in detail.

However, from this report, we can learn that KRM owes $640,845.00 to Town & Country Bank of Bardstown, KY. This debt, was originally rung up as revolving credit, but converted to a standard collateral-backed loan, of which the bank now has a UCC filing covering all of KRM's assets, discussed several posts above. I am not a financial expert, but I find it odd that the assets and liabilities are evenly matched. Does anybody care to elaborate as to why this may be?

Of course, this is not meant to poke fun at KRM. Nearly ten months have passed since the membership was first made aware of the "financial crisis" and yet, no solid fundraising plan, or major changes have taken place. While the leadership blames natural disasters as the cause of the problem, every museum faces the same issues. The disasters and economy have just laid bare a poorly managed operation that has done almost no private fundraising and which grew complacent getting government grants. Other than the scrapping frenzy to raise some quick cash, I have not seen any substantive plans presented to the membership of how exactly to get out of this mess.

I'm using all of this as an educational tool to provoke discussion, both amongst us, and your own organizations. In my mind, KRM has made just about every bad decision it possibly could for many years, and now they are facing the natural evolution of that bad decision-making. They are over half a million dollars in the hole, and also want to raise money to return L&N 152 to service. I only wish them luck and the best, but feel that they have dug themselves a deep pit, which may be too deep to dig out of without major structural change.

Of course, now I have to worry about how, in their eyes, I'm doing myself a "disservice" by talking about this. (rolls eyes)

David Wilkins

Language in the report sems to indicate that some payments have been made, and the loan is being repaid "on time." The capital finding committee is working for funds for equipment restoration rather than debt reduction, so......perhaps things are actually resolving themselves? There's certainly a very strong evident push for development of special events rather than business as usual, this is a nice proactive approach when business as usual doesn't create much business.

Taken at face value, the treasurer's report does seem to show a bit more debt than I'd like; but this isn't the only business to be under a high degree of obligation, as pretty much everybody has been living on it for the past 25 years.

I'm not seeing anything about cost-cutting and prioritizing things that will create income without using it for operating expenses........which, as a businessman, I'd be pushing in this case. It isn't easy to understand the basis behind the figures in the treasurers report without a much more detailed analysis. I didn't see the equipment (95 pieces?) listed in the liability column, which it is insofar as cash flow is concerned since maintaining it costs dollars and it isn't bringing in revenue. Lots left unclear.

So, here's a museum that says it is hanging on and in the business of producing events to keep in hanging on. It is well worth watching as a case study from that perspective alone. Thanks for keeping us informed.

dave

Dave, I think that is a fair analysis. Right now, the museum essentially operates as a tourist railroad. The spring, summer, and fall are prime time for operations, and the resulting inflow of income means that regular payments can be made to the bank, etc. From the financial report I see about $8,000.00 in on hand petty cash and another $62,000.00 in savings and restricted. Depending on how much of that is donor restricted funds, there may not be much savings and cash on hand. What happens when winter comes and trains stop running? Where is the money going to come to keep not only the staff paid and the light bill current, but the debt service payments?

The 2011 IRS Form 990 is not avaiable online yet. Going by the 2010 that has been posted and discussed here, payroll alone for the museum at that time was over $200,000.00. If you could find ways to cut costs, which I also do not see here, including paid staff, you could really make a dent on the debt, and have cash on hand to get through the lean months.

I also think it is going to be very difficult to do any kind of serious fundraising witht the debt albatross hanging around the neck. I could understand if the debt was for property purchase, and the like, but essentially the serious foundation and institutional donors will scour the books and conclude that the debt was run up to keep things going on as normal. Would you invest in a private business that operated as such? If not, then why would you donate? Serious questions, tough issues, no easy answers.

Instead, they are doing more for the same result, and I'm not sure how long that can sustain itself.

I'm not sure that sustainable is under consideration......survival, maybe. There's not much outright desperation demonstrated in the newsletter. So, as always, time and actions will tell.

No reason events can't be run in the winter, too..........if I were working in this situation I'd be inventing and promoting anything I could sell to get an audience in the door.

dave

Apparently all is well. I understand that they have purchased a GP-7 from Larry's Truck and Electric, LTEX 309. Glad to see that Reading's rich Kentucky history will be well represented at KRM.

It'll go well with the NYS&W painted passenger cars.

Seriously, where did they get the $$ to make this purchase? According to their recent financial report, they didn't have any money to spend on a locomotive.

Did they trade? Was the money for it donated? Why not try to buy an L&N/NC&STL/B&O/C&O/Southern/IC locomotive (Kentucky Heritage)?

Then again, what do I know about regarding the health and future of the Kentucky Railway Museum and it's (sic.) collection?

Dave, I look at it like this; if they have the money, then there must be a plan. Consider that nearly every major railroad owned at least a single GP7 at any given time. Diesels, unlike many steam locomotives (barring some industrial engines that were built to the same designs), are like cars. Paint is also a wonderful thing. For all we know, the plan could be to paint this former LTEX GP7 as a locomotive from one of the railroads that has Kentucky heritage.

Dylan,

Then it's a fake. Why go through the machinations to do that, when locomotives of Kentucky heritage are and have been avaiable in the past. There's also a Monon BL2 on the property that has been deemed "unreliable" which could probably be made very reliable with some work.

Actually, I understand now that they traded for the GP7. They traded two ex USAF RS44TCs to LTEX and got the GP7 and cash in return, which also makes me wonder about the quality of the GP7.

In the end, insanity is doing the same thing over and over again, and expecting a different result. After years of purchasing non-historic equipment while the historic collection literally rots, I see no major changes. The "plan" you speak of is to do the same thing they've been doing the past 25+ years, and we see where that got them.

It sounds like they are seriously lacking good direction and focus. One of the problems I've seen many times in similar organizations is everyone agrees a change needs to be made but nobody has the time or is willing to take on the responsibility of making things better. Could this be the case here?

Tom,

I think that's a fair read of the situation. The leadership who put the museum in its current plight are the ones who now say "change" needs to happen, and they are the ones to lead it. Of course, the "change" is more of the same. Once upon a time it was a Santa Fe CF7, and some Air Force locomotives. Now it's an ex RDG GP7.

In the end, the voting membership bears the blame for this. They let the situation go on long enough that now those in power are entrenched. I'd like to think most other reasonable people would have tossed the leadership long ago.

The lesson is to be an active member, and love your museum, but question its leadership.

[quote="daylight4449Dave, I look at it like this; if they have the money, then there must be a plan.[/quote]

Huh? If plans and money went together, we'd all be running many interesting projects with ample resources to carry them out. This is about as realistic as "if you build it, they will come." Please reconsider this very broad perspective.

Seems like there were trades but no cash.......OK, I'm certainly comfortable with the idea that trading unproductive and not particularly useful assets / liabilities (remember that rolling stock is both) for something demonstrably useful is a form of progress.....but what is the larger plan concerning the potential difference in usefulness (value) between what was traded out and what was traded in?

I think we need to know more of the story here.

dave

I will look at the bright side; perhaps one day soon there will be a blue and cream "L & N" Geep to pull the passenger train in lieu of the ex-Santa Fe CF-7.