Fortress bails out Neverland
Florida-based hedge fund Fortress Investment Group, the parent firm of the cash-strapped Central Oregon and Pacific Railroad that is seeking millions of dollars from the state to reopen a key Coos Bay freight line the railroad shuttered late last year, has provided a bailout allowing singer Michael Jackson to hang onto his iconic Neverland Ranch.
The $24 million bailout, signed by Fortress on Thursday, will allow the former pop star to keep his 2,500-acre Los Olivos, Calif., ranch. The ranch was set to be auctioned off this month after Jackson, who now lives in Bahrain, defaulted on the mortgage.
Central Oregon & Pacific Railroad, which abruptly shuttered the Coos Bay line in September over safety and repair concerns regarding three tunnels along the route, had been seeking the state and others to cover about $19 million of the estimated $23 million required to reopen the 120-mile-long freight line. COPR parent Rail America — purchased by Fortress earlier this year — also said it wants the state to pay $1.5 million a year that the firm reportedly loses each year operating the line, which mainly handles wood and steel freight between Eugene and the Port of Coos Bay.
Oregon Gov. Ted Kulongoski told COPR officials in late January that the state won't negotiate over the cost of repairing the shuttered rail line until the railroad makes the repairs and reopens the line.
Jackson's bailout by Fortress, while subsidiary COPR seeks a state bailout of the rail line, has angered state officials such as Congressman Peter DeFazio, D-Springfield.
'Fortress has claimed they do not have the money to invest in the CORP rail line that provides essential service to the Southern Oregon and Northern California economies, but somehow they've found the resources to invest in Neverland Ranch,' DeFazio told the Roseburg News-Review. 'Their reported $24 million investment in the ranch is just about what it would cost to fully repair the rail line running from Coquille to Eugene and restore critical service to this regional economy.'
'It's unfortunate that (Fortress isn't) investing in the lines they have already — the Coos and Siskiyou lines,' Bob Ragon, executive director of the Douglas Timber, Operators, and spokesman for a coalition of shippers that use the Coos Bay spur and COPR's Siskiyou line between Southern Oregon and Northern California, told the Roseburg News-Review.
Roseburg Forest Products, one of the impacted businesses along the shuttered COPR line, reported last month that it was spending an extra $125,000 to $167,000 per month to ship lumber by truck since the Coos Bay spur was closed.
Other rail-dependent Coos Bay businesses said the region desperately needs attention paid to dwindling local rail service.
If Fortress 'has extra cash right now,” said Southern Oregon Timber Industries Association spokesman Dave Schott, “I could point out a couple of tunnels that could use some sprucing up and maintaining.”