MASK-WA OO-TA-BAN BEAR TRAIN PASSENGER TRAIN SERVICE BUSINESS PLAN TABLE OF CONTENTS MASK-WA OO-TA-BAN BEAR TRAIN PASSENGER TRAIN SERVICE BUSINESS PLAN CONTENTS 06 Executive Summary 56 Economic, Employment & Tax 08 First Nations Reconciliation Generation Impact Initiative 58 Appendix 1 10 Benefits of the Bear Train 60 Appendix 2 Service 62 Appendix 3 Impact of the Lack of 12 64 Appendix 4 Passenger Rail Service 66 Appendix 5 16 Impact on Local Business 68 Appendix 6 17 Remote Communities 69 Appendix 7 20 Mitigating Climate Change 72 Appendix 8 21 Governance & Management of Mask-wa Transportation 74 Appendix 9 Association Inc. 76 Appendix 10 26 Operations Plan 77 Appendix 11 35 Inter-Community Travel 78 Appendix 12 36 Tourism 80 Appendix 13 48 Events 84 Resolutions of Support 50 Marketing 98 Addendum – Weekend Only Services 52 Five Year Financial Projection 103 Glossary of Acronyms MISSANABIE CREE FIRST NATION 726 Queen Street East, Sault Ste. Marie ON P6A 2A9 T: 705-254-2702 | [email protected] | www.missanabiecreefn.com 2 BUSINESS PLAN MASK-WA OO-TA-BAN (BEAR TRAIN) PASSENGER SERVICE Cover photo: Virgil Knapp LETTER: RICHARD LANDE LETTER FROM RICHARD LANDE LANDE LANGFORD AVOCATS/BARRISTERS & SOLICITORS TRANSPORT LAW Richard Lande, B.A., LL.L. F.C.I.T., Ph.D. Honorary Consul General Union of the Comoros 5375 Blind Line, Burlington, ON L7P 0B1 phone: 905-319-1244 fax: 905-331-8580 email: [email protected] Michel Langford, LL., B. 6020 Jean Talon East, 700, Montreal, QC H1S 3B1 phone: 514-257-9999 fax: 514-257-7339 To the Bear Train Working Group: Our firm has reviewed and updated the financial analysis and business plan which was provided by BDO in 2018. We have also reviewed the corporate strategy plan which was drafted with the assistance of Al Errington in 2016. In fulfilling this more recent mandate, our firm’s railway and accounting expertise included: Gerry Gionet who has worked in railway operations for over 40 years and is presently CEO of GIO Rail and Trillium Railway which operates short line trains in Port Colborne and Orangeville. He worked as a trainman, conductor and locomotive engineer, road foreman, manager of road operations and then superintendent at CP Rail from 1971 to 2014. Richard Lande, railway lawyer who has worked for BNSF, CN, CP, Wisconsin Central and Soo Line for 44 years. He was President of Quebec Central Railway and Massawippi Railway. For the past 20 years he has been the Administrator of the Orangeville to Brampton Rail Access Group which operates twice a week on what was the former CP Rail Owen Sound Subdivision. Frank Lekivetz is a financial expert who has decades of experience in analyzing financial statements and preparing economic forecasts. Frank has his MBA from Queen’s University and worked for multinational accounting firms such as Arthur Andersen and Deloitte and Touche from 1988 to 2015. The Missanabie Cree First Nation (MCFN) hired Kevin McKinnon who was formerly with the Railway Association of Canada to lead the project of successfully applying for a Railway Operating Certificate (ROC). Kevin started his railway carrier in 1977 with CP in Sudbury, Ontario and served as a conductor, engineer, train master and instructor of operating practices in North Bay. He then served as the general manager of the Goderich Exeter Railway and the regional manager of safety and operating practices for Rail America (Eastern Canada region). He was the director of regulatory affairs for the Railway Association of Canada until 2015. Under Chief Gauthier’s instructions, Mr. McKinnon worked with CN and Transport Canada in 2017 and 2018 to obtain the ROC. Therefore, as soon as the Missanabie Cree First Nation receive the necessary funding from Transport Canada, the Algoma passenger train service will be ready to commence operations in Northern Ontario. The Missanabie Cree First Nation also engaged the services of Ken Bitten who has been the president of Northern Central Railway, Indian Head Central Railway and Mid Atlantic Rail Car. He has also worked MISSANABIE CREE FIRST NATION for the Iowa Pacific as a passenger car mechanic, locomotive engineer, director of passenger services 726 Queen Street East, Sault Ste. Marie ON P6A 2A9 and general manager. Ken contributed the sourcing for the passenger equipment which is available for T: 705-254-2702 | [email protected] | www.missanabiecreefn.com purchase or lease in the summer of 2019. Cover photo: Virgil Knapp BUSINESS PLAN MASK-WA OO-TA-BAN (BEAR TRAIN) PASSENGER SERVICE 3 LETTER: RICHARD LANDE Chief Gauthier has met several times with senior executives at CN Rail, who have assured him that CN respects the rights of the First nations and will cooperate with regards to the transition to reactivate the Algoma passenger service, provided their requirements regarding insurance and the selection of an experienced GM are met. This rail line between Sault Ste. Marie and Hearst is already operating for CN freight trains every week. Therefore, it is not necessary for the Missanabie Cree First Nation to maintain the track, signals, bridges, crossings. By paying CN the rental of the right of way, this would therefore forego any of the requirements for the Missanabie Cree First Nation to oversee the capital expenditures on the line as well as to manage the safety requirements of the line such as evaluating the results of a track geometry car, replacing ties, inspecting bridges, and complying with Transport Canada safety regulations pertaining to the track. We have vetted the financial and business plan of BDO, and we have further reviewed the train schedule which was included in the corporate strategy plan as well as the operations plan. We are of the view that the Algoma passenger rail service can be reinstituted according to the attached report. There is no technical or structural reason why this service which existed 102 years, cannot be revived as soon as the federal government gives the necessary funding. The Algoma Passenger Train provided an essential public service for Canadians in Northern Ontario for 102 years. It was originally owned and operated by the Algoma Central Railway until 2000, then by Wisconsin Central, and since 2003 by CN. When CN purchased Wisconsin Central, they acquired all the obligations to provide regular rail services which were an integral part of Wisconsin Central and formerly Algoma charter. If the charter of the ACR required it to provide passenger service in exchange for land grants, then CN retains those same legal obligations. There is no other way, other than by the rail line, of accessing a multitude of remote Northern Ontario communities along this corridor. Residents of these communities depend upon the rail line to get their food and supplies and to access their properties and businesses. CN received a Remote Rail Subsidy of $ 2.2 million per year to support their passenger operations on the Algoma line from Sault Ste. Marie to Hearst. In addition, CN would have received all the revenues of the passengers. It is important to consider that CN currently operates a profitable freight service on the Algoma line. Therefore, they are maintaining the line according to the Canadian Transport Agency and railway safety regulations irrespective of whether there is a passenger service. It would clearly be in the better interests of the stake holders of Northern Ontario to have an operator who had the requisite experience and long-term motivation to operate this service which is essential to the community of First Nations and other residents and communities of the affected regions. Since the discontinuation of the Algoma Passenger Train in 2014, there have been hundreds of people who have been disenfranchised. Some have had to abandon their homes; others have had to risk unsafe passage on the logging roads to get to their properties. The commercial lodges and outfitter businesses have been decimated. Those who venture to use the private industrial roads often have to travel in on an all-terrain truck and carry buzz-saws with them, since the logging companies do not regularly maintain their roads. In fact, use of these private industrial roads is not open to the public. They are marked with “No Trespassing” signage. The Provincial and Federal governments have exhibited an inconsistent support for passenger traffic in Northern Canada. For example, VIA Rail has this year been given $2.5 million to support the rail line from Mattawagan to The Pas in Manitoba. Ironically, a government contribution of $5 million was recently authorized for a new rail passenger station in Sault Ste. Marie. This begs the question of why a new passenger rail station is being subsidized by Canadian taxpayers if there is no passenger service, other than a seasonal tour train to Agawa Canyon. 4 BUSINESS PLAN MASK-WA OO-TA-BAN (BEAR TRAIN) PASSENGER SERVICE LETTER: RICHARD LANDE The five-year budget which has been presented herein, has been drafted in an intentionally conservative manner. For example, the ridership on the Algoma Passenger Service is only estimated to commence at an average of 15 passengers paying $100 for a round trip. By contrast, the VIA Passenger Service between Sudbury and White River, Ontario reported 6,312 passengers last year, generating revenues of $233, 000. Both lines are almost identical in length (the VIA line is 480 km and the Algoma line is 476 km) and travel through very similar remote territories. This in turn prompts two questions. First, why would a similar line also in Northern Ontario, exhibit such popular usage, if not for the demand of residents, tourism, Indigenous communities and mining and forestry workers being the same as the discontinued Algoma Passenger Line? Second, why should these communities have rail access when the Indigenous First Nations on the Algoma line have none? In summary, the burgeoning demand for rail service between Sault Ste.