WILL THE BND PULL A RAILROAD JOB ON DISTRICT TAXPAYERS?

By Juan Montoya
Sources close to the board of the Brownsville and Rio Grande International Railroad (BRG) say that its administrators and board members are contemplating selling the public asset to a private buyer.
Our sources indicate that the members of the Brownsville Navigation District have been made aware of the plans and that its attorneys have addressed the contemplated sale in executive session.
If true and the and BND board approves the decision of the railroad's board to sell the BRG, the buyer would hold a monopoly on rail services to and from the Port of Brownsville, an extremely lucrative proposition.
And that buyer, our sources say, is none other than Colorado-based Patrick Broe, owner of he Broe Group, 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 board approves the sale, 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 of Cameron County, Texas.
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 of the railroad to Broe. If they do, the entire railroad complex would be owned by Broe, who would decide how it is operated, its rates, and even whether he can sell it down the road to someone else.