Railyard parties resolve dispute

Ending a quarrel with the state that threatened its entire project, the developer of Sacramento's downtown railyard Saturday agreed to donate two historic shop buildings to the state parks department for a museum of railroad technology.

In a deal brokered by state Sen. Darrell Steinberg and Assemblyman Dave Jones, both Sacramento Democrats, Thomas Enterprises also received assurances that the state would raise the money needed to build a high-quality museum.

"We've reached agreement on all the major business terms, but the lawyers are still exchanging documents that will be finalized in the next couple of days," said Suheil Totah, vice president of Thomas Enterprises.

Totah said he expects a signed agreement to be in place before a scheduled Tuesday vote by the Sacramento City Council on the entire railyard project.

The agreement, which Jones called an "elegant solution," was approved unanimously Saturday afternoon by the Railroad Museum Foundation board. The lawmakers got directly involved about three weeks ago in talks between Thomas Enterprises and the state Department of Parks and Recreation.

"With this agreement, we've removed a big impediment that was going to sideline the railyards development," Jones said.

"We've strongly protected the state's interest by making sure they get two buildings, and we've strongly protected Thomas Enterprises' interest in making sure there is follow-through and the money to put together a good museum."

California State Parks Director Ruth Coleman said Saturday the agreement allows her department to "realize the 25-year dream" of creating a new museum focusing on railroad technology to complement the existing museum in Old Sacramento, which focuses on history.

"We will demonstrate how we can raise the funds to make sure it's a lively, exciting, world-class museum that everybody wants," Coleman said.

Under terms of the deal, Thomas Enterprises will immediately transfer ownership of the former boiler shop to the state Department of Parks and Recreation, provided the state verifies it has the money to rehabilitate it.

Transfer of the boiler shop also is contingent on the State Lands Commission releasing its legal claim on 25 acres of the railyard that once formed the bed of the American River before its mouth was rerouted to Discovery Park, Totah said.

The tin-clad boiler shop is now used to repair rail cars and engines for the California State Railroad History Museum. The state will use $13 million it has already raised to rehabilitate the boiler shop and create public-viewing areas, Steinberg said.

"People can go in and watch the artisans work, ask them questions," Coleman said. "We can bring students in for internships, so they can get vocational training. We think it will be a fun place to visit."

The red brick-erecting shop also will be transferred to the parks department, but not until it raises the money to rehabilitate the shell of the building and pay for 25 percent of the exhibits planned in the new museum, Steinberg said.

The department will have to raise the money in three years or lose the erecting shop, unless Thomas Enterprises fails to deliver streets, sewers, utilities and other improvements in that time. If such necessities are delayed, state parks gets more time.

"It's not fair to hold the museum to a deadline when people can't get to it or there are no water or electric lines to it," Jones said.

Both parties have agreed to hire an independent consulting firm to determine what should be in the museum and how much it will cost to create.

"We're requiring that the facility include activities open to the public in the evenings, which maintain the same hours as the other shop buildings," Totah said.

One of Thomas Enterprises' main concerns has been that the museum would become a dead zone at night in the middle of what it hopes to turn into a lively dining, cultural and entertainment district.

In recent months, State Parks and Thomas Enterprises squabbled over the fate of the erecting shop, some of whose walls date back to 1868 and the birth of the transcontinental railroad.

The state parks department had been promised the erecting shop by Union Pacific, former owner of the railyard, but Thomas Enterprises balked at the transfer of two large shop buildings that could be used for restaurants and other attractions. It had agreed to donate only the boiler shop. Parks officials said they couldn't build a new hands-on technology museum in the boiler shop, which is needed to restore trains.

Steinberg said he's relieved that the museum issue has been dealt with before the entire railyard project heads to City Council on Tuesday, and before the city and Thomas Enterprises apply to the state for as much as $150 million in housing bond funds to help build streets, sewers and other infrastructure.

"It's a big win for the developer because they now have the wind at their back and have everybody on the same page when it comes to rallying for state infrastructure dollars," Steinberg said.

The transfer of the two shops to the state is also a crucial step in resolving the State Lands Commission claim to a piece of the railyard. Commission officials could not be reached for comment Saturday, so it was unclear if they would remove the claim before the buildings were transferred.

As part of the deal, the parks department is giving up about four acres of land it owns on the riverfront near the railyard.

"We need to discuss it with (State Lands), and everybody has to agree, but we feel it meets our needs," Coleman said of the deal.

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