THE FOLLOWING IS FOR INFORMATIONAL PURPOSES ONLY AND IS SUBJECT TO REVISION AND CORRECTION WITHOUT NOTICE. PLEASE CONSULT THE HERR LLC PRIVATE PLACEMENT MEMORANDUM, WHICH IS CONTROLLING AND WHICH IS AVAILABLE UPON REQUEST.
Pacific Charter Financial Services Corporation, with the assistance of Humboldt Eastern Railroad LLC, is seeking to create an "American Gateway" with the construction of the Pacific Northwest Railroad rail lines, docks, and hub terminals.
For a number of years there has been an economic decrease in Humboldt County and the adjacent areas of Northern California due to the decline in the Timber and Fishing Industries. In addition, due to a lack of rail and highways to Humboldt County, very few industrial and manufacturing shippers and their investors have been drawn to the area.
The port of Humboldt Bay currently has little shipping activity. It is a deep water port (35-38 feet) located between San Francisco, California (258 miles south) and Coos Bay, Oregon (180 miles north). Among the docks on the West Coast, Humboldt Bay is the shortest direct route to Asia by two and one-half (2 1/2) days or five (5) days round trip. For this reason, this port has great potential. There has not been rail service to the Port for over 20 years due to destruction of the previous railway line, which followed a North-South route to Napa. There are no plans to rebuild that route.
It is anticipated that the completion of the Pacific Northwest Railroad connection to the national rail network in the Central Valley near the towns of Red Bluff and Gerber will have some effect on population increase in Upstate California, thereby increasing the economic activity in the area. The number of residents currently living in the immediate communities and geographical areas to be served or affected by the Port, Rail and Hub Terminals is estimated at 9 to 11 million. These areas extend from the Gerber switching yards near Red Bluff and include Sacramento north to Medford, Oregon, and the Sierras west to the Pacific Coast.
We believe that the following benefits of a port and rail "land bridge" as proposed by PNR can be expected:
I had a bit of a break last week and spoke to Steve Strawn, longtime County Treasurer and Tax Collector, who is now retired. He is a supporter of our efforts. I asked him how to determine the total value of real property on Humboldt County’s tax Assessment Roll. He suggested I talk to the Tax Assessor. I did, and her name is Mari Wilson. She immediately sent me a copy of the last 25 years of the Secured Assessment Roll and the Net Assessment Roll. The current total Net Roll value of assessed real property in Humboldt County is $12,764,000,000.00.
I then did a little calculation as follows: it is estimated that the three green marine terminals on the Samoa Peninsula will be constructed at a cost of approximately $5 billion. It appears evident that about $5 billion dollars would be added to the Tax Assessment Roll. $5 billion added to $12,764,000,000.00 would result in an increase of the total assessed valuation of 39%. The annual revenue derived from the improvements on the Samoa Peninsula, at a minimum of 1% tax rate, would amount to a $50 million increase for local government in Humboldt County. Noteworthy is the fact that I think 62.5% of that would go to the public schools in the county.
I then got to thinking about the likely assessed value of a railroad in Humboldt County. The experts with whom we are working believed that the two-track railroad in its entirety to the Red Bluff area will cost probably about $4 billion. Assuming that about a minimum of $2 billion will be expended for construction of the railroad in Humboldt County itself, you then have an additional $2 billion more added to the increase in the County Real Property Tax Assessment.
To confirm my assumption, I followed Mari Wilson’s suggestion and spoke with the Interim County Auditor Controller, Cheryl Dillingham, this week. I explained the purpose of my inquiry and asked if private railroads were taxed in California. She immediately emailed me the answer, indicating that “Yes, private railroads are taxed.” She then gave me the breakdown on how revenue from property taxes is expended in Humboldt County.
The upshot of all of this is that the proposed port and rail project in Humboldt County is likely to add $7 billion to the Secured Tax Assessment Roll, a 54.8% increase. From that there will be approximately $70 million in tax revenue generated.
Please note that the special assessments that are collected on top of the General Property Tax are not included in my calculation. But the areas in which the green marine terminals will be constructed do include the Fairhaven Fire District Town of Samoa, and Peninsula School District.
Bill Bertain - November 2, 2018