NOW THAT YOU MENTION IT, WE DID TALK TO BROE

By Juan Montoya
After first telling us that there had been no contact between the Colorado-based Broe Group and the Brownsville Rio Grande International Railroad owned by the Brownsville Navigation District, we were pleasantly surprised to learn that indeed, some record of that contact did exist.
BRG Railroad President and CCO Norma Torres emailed us that it had slipped her mind that representatives from the Group had indeed addressed the board on "trying to do some business for their railroad."
"In going over my files from last year I did find that the Broe Group did come and do a presentation to the BRG Board last April 2013 please find a copy of this agenda attached," Torres said.
(It is item 2 on the BGR's agenda at left. Click to enlarge.)
When we asked her whether she had a copy of their presentation, she at first remembered that she had a bound copy of it and said that we could have one if we went over to the BGR's office on South Pdre Island Highway (Highway 48).
A few minutes later we got a phone call and she told us that it had been a Powerpoint presentation and that it was just an introduction of their company and what it offered the port. In fact, she said, we could get the same thing form the Internet.
Now, what the Broe Group and its closest railroad holdings under OmniTrax to Brownsville (east of Amarillo) could offer the Port of Brownsville's in-port railroad eludes us.
The Broe Group is known for its agressive purchase of small railroads to maximize its profits. How they could drum up business here to proifit their panhandle line eludes us.
Now, if they – as we have been told – were trying to buy, lease, or manage the BRG, that would be another matter.
Colorado-based Patrick Broe, owner of he Broe Group, manages a diverse multibillion-dollar portfolio that spans the length of the U.S. and Canada and ranges from office buildings to oil and gas wells to a shipping port on Hudson Bay. The Broe Group's involvement in rail began in 1986 when it purchased a portfolio of real estate assets from the bankrupt estate of a large industrial company, including a railroad in Northern Colorado that became Great Western Railway. Many more railroad acquisitions followed, and The Broe Group now owns one of the largest privately held railroad companies in North America, called OmniTRAX.
OmniTrax runs the largest privately held short-line railroad system in North America, with 17 rail lines and 2,000 miles of track.
If the BGR board were to approve the sale or lease and the commissioners of the Port of Brownsville went along with it, Broe's OmniTrax Inc. would take over the BRG's 45 miles throughout the Brownsville Navigation District and 5 miles into the city of Brownsville itself. The railroad was established as a separate entity from the Port of Brownsville in 1984 and claims to provide the port and its customers with affordable, direct access to two Class 1 railroads — Union-Pacific and Burlington Northern — and an intermediate connection via U.P. to Kansas City Southern De Mexico routes across the Rio Grande.
The BRG has six yards and more than 1,000 cars on hand. It boasts of being "armed with an array of services to offer shippers anywhere in the United States. Steel, scrap metal, agricultural and food products and other bulk materials have always been major commodities for the BRG, but chemical shipments have skyrocketed in recent years."
The BRG board consists of five trustees who were initially appointed by the commissioners of the BND 1984. Vacancies on the Board since then have been filled by appointment by the board of trustees of the railroad, in short, a self-appointed board.
The current members are like a list of the usual suspects: Dr. Martin Garcia is the chairman, Grady Deaton is vice-chair, IBC President Fred W. Rusteberg is a trustee, BND commissioner John Reed is a trustee, and building contractor Terry Ray is also a trustee.
The BRG is a short line railroad, organized for the purpose of providing exclusive common carrier rail transportation to all facilities located within the Brownsville Navigation District.
It operates on behalf of the Brownsville Navigation District, but under separate management and control from the District. All traffic is being interchanged with the Union Pacific Railroad Company (“UP”) at its Olmito yard.

Interchange with Burlington Northern Santa Fe Railroad Company (“BNSF”) is accomplished via a haulage agreement between UP and BNSF where UP hauls BNSF traffic from Houston to Brownsville and interchanged with the Railroad. Interchange with the Mexican Railroad carrier “KCSM” is done via an intermediate switch with UP at the Brownsville and International Matamoros Bridge.The board of trustees establishes policies, rules and rates and approves all contractual obligations of the railroad.According to most media reports, Broe demands that all his deals be conducted under the utmost secrecy and some of our sources indicate that one of his conditions is that that the negotiations for the potential purchase of the BRG be kept under wraps until it is a done deal. In fact, some news stories indicate that he requires a written agreement to that effect when he's trying to negotiate a deal.News reports on his corporate style indicate that he is a ruthless negotiator who will squeeze every last dollar he can from his opponent.A Denver Post business story says that: : "Despite the company's closely held ownership and Broe's penchant for privacy, he is a well-known figure in Colorado. His 37 years of operating a Denver-based business have placed him on the buying or selling end of dozens of transactions, making him an iconic figure in the commercial real estate sector.

"He's a registered Republican, a confidant of former Gov. Bill Owens, an Owens appointee to Colorado State University's governing board in 2003, and has served on the Wyoming Business Council, an economic development group."

Don Elliman, director of the Colorado Office of Economic Development and International Trade, said Broe was "a complex guy who rubs some people the wrong way, but he has an enormous amount of accomplishments.
"On balance, I like dealing with him," Elliman said. "Would I do a deal with him? Absolutely I would. But I'd have my hand on my wallet and I'd have a damn good lawyer with me."

Ultimately, it will be up to the commissioners of the Port of Brownsville to approve the sale (or lease) of the railroad to Broe. If they do, the entire railroad complex would be controlled by Broe, who would decide how it is operated, its rates, and even whether he can resell or or sublease it down the road to someone else.
We'll keep at it to see if other documentation appears down the rails.