Council accepts $480,000 grant for railway museum at K-25

Although they had concerns about potential worst-case scenarios, Oak Ridge City Council members on Monday unanimously agreed to accept a state grant worth up to $480,000 for construction of a railway museum at Heritage Center, a project first proposed more than a decade ago.

By approving the resolution, Council also authorized the city to enter into a construction management agreement with the Community Reuse Organization of East Tennessee and Heritage Center LLC. That agreement calls for CROET and Heritage to offer the 20 percent local match required under the grant, or $120,000, as well as associated construction management services.

City officials said the project has been under way for about 13 years. Although it had different members then, City Council agreed in 2000 to apply for the grant for the museum at the former K-25 site. Watson has said it was the oldest pending grant in Tennessee.

But the project proceeded very slowly, and last year, Tennessee officials gave the Southern Appalachia Railway Museum a “last-chance opportunity” to reach an authorization to go ahead by no later than Nov. 1, 2012, Oak Ridge City Attorney Ken Krushenski said in a memo to City Council members. In September, City Council authorized Oak Ridge City Manager Mark Watson to cancel the grant if the deadlines were not met.

However, in late October SARM board members said the museum was still on track, and Watson never sent the letter.

Krushenski said SARM had many hurdles to overcome by the deadline, including an environmental review and major design revisions and review.

The Tennessee Department of Transportation is now ready to issue an authorization to proceed on the project and has submitted an amended grant agreement to the city, Krushenski said.

In addition to providing the local match, Krushenski said, CROET and Heritage have signed an agreement with the city to assume full responsibility for repayment of the grant if grant repayment provisions are triggered.

“This guaranty agreement also specifies the city assumes no responsibility for any funds to support the museum project,” Krushesnski said.

He said CROET and/or Heritage have agreed to pay construction invoices on the museum project. TDOT will reimburse the city under the grant for invoices paid by CROET and/or Heritage.

Krushenski told Council members on Monday that CROET and Heritage will cover any shortfalls that exceed the $480,000 TDOT grant, and SARM will manage the museum. The museum will have to present a 10-year plan that satisfies city and state officials before any money is released, the city attorney said.