It's down to two in a race to operate the V&T

Two rail operators are vying to run the $40 million Virginia & Truckee Railway, which will be operational by 2010 and attract an expected 160,000 tourists a year.

And the existing railroad in Virginia City is looking to make a deal with whomever gets the contract.

The rail operators had until Tuesday to submit their qualifications to the state commission in charge of reconstructing the historic right-of-way that will stretch from Gold Hill to east Carson City.

A California company that operates both tourist and freight trains and one that operates the highly successful Durango, Colo., railroad have submitted proposals, according to Stone Consulting & Design. Homegrown company Virginia & Truckee Railroad has also submitted a proposal for it to continue operating on its two miles of track and then contract with the larger operator.

There were no surprises about who applied, a consultant working on the selection process said, though more operators were expected to show interest.

"Those are the ones I expected," said Randall Gustafson, vice president of operation for Stone Consulting & Design. "I had another operator that was interested, but it was too late to respond to it under the bid procedure we'd established."

Sierra Railroad Co., American Heritage Railways and the Virginia & Truckee Railroad submitted proposals by the deadline.

The Nevada Commission for the Reconstruction of the V&T Railway will have to choose between two large, out-of-state operators. But until now, the role of the little track owned by the Gray family has been unclear. According to commissioners, the Gray family has been reluctant to state exactly what they want to do in the grand operation: sell or strike some sort of operating agreement.

Though he was hesitant to comment this early in the process, V&T Railroad owner Bob Gray said he would like to set up a cooperative agreement with the larger railway operator.

"There's a lot of gambling with this thing, and I feel more comfortable with doing that," Gray said Tuesday.

At a Sept. 11 commission meeting, the board will decide which operators are eligible to submit a full proposal and business plan, which is due in October.

John Tyson, a V&T railway commissioner, said he is familiar with all the applicants and is looking forward to seeing their business proposals. Tyson said he wants a business-savvy company that can ensure the train is going to make it up to Virginia City.

"I will be very anxious to see what these people are going to bring to the table," he said.

Sierra Railroad executives have visited the area and are eager to enter the market, said Chris Hart, president of the company's tourism division.

"We spent a week touring the V&T this winter, and that's why we're bidding," he said Tuesday. "It's a great opportunity. There's certainly a lot of work to be done, but we feel like we've done our homework on this."

In addition to its freight operations, Sierra Railroad also runs three profitable tourism trains in Northern California: the Sierra Railroad Dinner Train; the Skunk Train and the Sacramento River Train. It has about 200 employees.

"I think one of the assets there is you have a number of existing tourist destinations that you can work with," Hart said about the V&T.

"And the state of Nevada and the local counties are making a huge investment in the line, that's a huge asset. That gives this operation a real advantage over others."

American Heritage Railways is interested because the V&T has serious planning and funding behind it, said Jeff Jackson, senior vice president.

The company owns the Durango & Silverton Narrow Gauge Railroad, which has a $14 million annual budget, and the Great Smoky Mountains Railroad in Western North Carolina.

"The Durango and Great Smoky are two of the five most profitable business-ran types of operations," he said. "In a good year, we'll carry 400,000 customers and gross $20 million."

Jackson said his company has experience running a line on similar terrain as the V&T, which climbs up the Virginia Range.

"Running a historic operation in the mountains is a whole lot different than operating on flat land," he said. "There are a lot more issues in terms of running on steep grades and tight curves. And Virginia City is similar to Silverton, Colo. Both organizations were built to haul miners up to mining towns and to haul gold and silver out.

"It's a unique situation because there are not very many of these places left."

• Contact reporter Becky Bosshart at bbosshart@nevadaappeal.com or 881-1212.

Applicants

Operators who have submitted proposals to operate on the V&T Railway:

• Sierra Railroad Co.

In addition to freight, the Northern California company operates three tourism trains.

The Sierra Railroad Dinner Train in Oakdale, an excursion train, has several different tourism venues, such as a murder-mystery show, Christmas train and a "raft and rail" ride. It carried about 25,000 passengers in 2005.

The Skunk Train runs 40 miles between Fort Bragg and Willits. It runs steam, diesel and motor cars for excursion or "ride and dine" trains. It carried 55,000 passengers in 2005.

The Sacramento River Train is a 28-mile round-trip railroad that's a recent acquisition. It runs both a dinner train and "ride and dine," which is where passengers get out to eat. Visit www.sierrarailroad.com.

• American Heritage Railways

The Durango, Colo.,-based company operates two tourism trains.

The Durango & Silverton Narrow Gauge Railroad still operates with a locomotive, the way it did as a mining train in 1881. It's a 50-mile-long excursion track.

The Great Smoky Mountains Railroad in western North Carolina is a 50-mile track that runs with both steam and diesel engines.

Both these lines carry about 400,000 passengers and gross a combined $20 million a year. The company employees 150 year-round and another 250 in the summer. Visit www.durangotrain.com

• Virginia & Truckee Railroad Co.

Bob Gray reconstructed the first rails along the historic short line's right-of-way in Virginia City in 1974. It was operational two years later. His family-owned and operated railroad has been traversed by a diesel engine since the locomotive was taken out of commission. The railroad has a staff of about 12 people and has an average annual rider count of 50,000. It runs two miles from VC to Gold Hill.

Sources: Sierra Railroad Co., American Heritage Railways and the Gray family