Do you charge your organization's members to park/store their privately owned railcars, cabooses, etc on your organization's property? If so, how much?

Thanks,
Bill

We currently have one member- owned heavyweight passenger car, the ex- CNR Dental Car #15095.

John pays $200 per year for outdoor track rental. The terms of the lease include requiring him to keep the car presentable, and that the museum can use the car for visitor tours.

A car which had no display/ interpretive value to the museum would involve a higher rent, since that value was considered when setting the rate.

Another member stored a caboose at the museum for a few years under similar terms. The car now lives indoors at ECRM.

Steve Hunter
RMEO

The Western Railway Museum does not allow privately owned cars on the property.

This sort of private property resulted in a nasty court case some years ago.

I know other museums have other rules; but this is akin in the museum world to a long term loan and is frowned on. What usually happens with long tern loans is that the museum ends up caring for something that belongs to some one else.

Special exhibits for a specific period of time are something else of course.

Ted Miles

This is why a proper legal agreement, outlining the cost and obligations of both parties, is essential. Don't forget insurance and maintenance responsibilities, as well as procedures to be followed in ending such an arrangement.

If all the homework is done properly, these arrangements can be extremely beneficial.

Note that leasing equipment from a member and a member leasing storage space for his personal car are two very different situations but both require carefully worded agreements.

If assumptions are made and things aren't documented in a written legal agreement, and things turn sour, it can be damaging. Handshake agreements between friends aren't good enough, because people move on and group dynamics change.

Steve Hunter
RMEO

Any written agreement is only as good as the willingness of one party to shell out BIG $$$ to enforce the agreement with things go bad. This makes for bad blood and takes away time which should be used to making the museum better for the visitors, not writing emails and letters, dealing with lawyers, angry members, ..... One group I'm aware of had a bad experience. Best advise - DON'T DO IT. Save both of you a headacke.

There can be an issue when the member leasing space for his car loses interest, dies, or whatever. The car goes into a form of limbo while title issues are resolved. I know that at least in one case at IRM, the lease agreement stipulated that if the lessor fell behind in rent payments by a certain number of months, title to the cars automatically transferred to the Museum. He did, and it did. The cars were soon thereafter parted out.

It was donated outright to the ECRM (Elgin County Railway Museum) before it even got here, so private ownership has never been an issue.

So the ABC railroad museum allows members to storage cars or locomotives for $X per year? If you own railroad equipment, what a great reason to join! Nationally, there is a shortage of secure places to affordably store railroad equipment so there could be a great opportunity here. But perhaps a prudent museum should exercise caution.

If the fair market value of storage of a railroad car is worth more than what the museum is charging, the museum should be in a position to prove - in the eyes of a prudent person - that it received a benefit worth at least the fair market value of storage. Otherwise, my understanding from our accountant is that value could qualify as a gift or grant and would need to be disclosed on the form 990.

If current or former directors or key employees are involved, non profits also need to consider the implications of self-dealing and possible excess benefit transactions.

Another issue in some jurisdictions is property tax charged on railroad equipment. A museum should use care to ensure that it is not unwittingly enabling a below board tax avoidance scheme.

I am not a tax expert so perhaps there is an accounting-type on this board that could expand on this topic? I understand that many, many railroad museums have at one time or another allowed private equipment storage. Some have ended the practice while others have simply stopped talking about it.

--Richard

We have been on our property now 52 years. For about 35, or more, years we have had a policy not allowing privately owned rail cars to arrive on the property. All equipment had to donated prior to arrival, purchased by the Museum or gifted to the Museum upon arrival. The only exception is when a specific agreement is entered into with full knowledge of the Board -- the only ones have been with with other preservation organizations.

In the early years it was thought that free storage of a car would in time mean the car would eventually come into the ownership of the Museum. 15 years along we realized, from the experience of others, that this was not a certainty.

Have to admit that there were a number of "grandfathered" cars that took years to take care of. All but two were gifted to the museum either during the owner's lifetime or in the owner's will. One we ended up going to court over the promised gift upon arrival. The other was sold by one member to another and then removed -- it was damaged in its transit.

I once talked with the seller and he thought that since the buyer was an original member the car would stay; not the case. Turns out he never even thought of offering to sell the car to the Museum.

Although the situation with trolleys (especially in the case of broad gauge cars) is somewhat different that interchangeable railroad cars, Pennsylvania Trolley Museum long ago found that the presence of privately owned cars is not good policy. Thus they have been prohibited from museum property. This saves a lot of "my toys are more deserving that your toys" arguments. Every member thus has an equal interest in every car--or at least the opportunity to do so. In retrospect this has proven to be a very wise decision.

Our policy is to not allow privately-owned equipment to be stored on our property for all the reasons stated above. If we don't own it, we don't want it. This policy evolved from watching problems others have had and has served us well. Exceptions, such as borrowing an "outside" car for a specific display are decided on a case by case basis by our Board.

Gord McOuat
OERHA / Halton County

I've heard of a couple of instances of privately-owned locomotives at museums, when the owner went to the great roundhouse in the sky, his heirs demanded an inflated price for the engine from the museum.

These issues should have been ironed out when the engine first arrived.

Well that's the way to help to save equipment! Sounds like the old Penn-Central! You'll not be seeing any of my money. If I find any of the 30 or so groups that I give money to do this. They will be cut off!

Those "problems" probably occurred because of a poorly executed agreement between the car owner and museum.

Private car storage can be a source of revenue for the museum, may fill a gap in the museum's collection, or at least add variety to the equipment on site. People that own railcars are not bad people. These are people who have taken the risk to save a car or locomotive on their own dime, and since available rail sidings are not exactly plentiful anymore, need places where this equipment can be kept.

With that being said, there must be a legally binding an mutually beneficial agreement worked out between the two parties so that the "problems" do not surface in the future. Some of the possibe stipulations in a model agreement might contain:

1.Rental rate of x dollars per month per foot of car length. A security deposit equal to one year's rent is payable at inception of agreement.
2.Car owner is to maintain car in presentable condition at owner's expense. What constitutes "presentable condition" is to be determined by the museum's board.
3.Car owner is to maintain car in movable condition, ie, owner is not to begin repairs that would result in an inability to move the car without prior approval from the board.
4.Museum determines storage location for car and may move it as necessary.
5. Museum has right to utilize car to further its mission such as in photo trains etc.
6. Should car owner pass away, or at agreement expiration, the owner/estate would be given one year to sell and/or remove the car from the museum. If car remains after one year it becomes the property of the museum.

If these stipulations were included into a storage agreement, the museum would be paid continuously during the period of time that the car is on site, and then either the car would disappear, be absorbed into the museum's collection, sold or scrapped.