By Michael Howell
On Friday, March 16, the Board of County Commissioners approved committing up to $62,000 to keep the Montana Rail Link (MRL) Bitterroot spur operating for a year. The Commission also approved the submission of an application for a $1 million TIGER IV grant that would involve a $200,000 local match to make enough improvements to the line to allow service to resume as far as Hamilton.
MRL ceased rail service to Darby a number of years ago due to flood damage at a few bridge crossings. Then following the washout of a culvert north of Stevensville near the Lee Metcalf National Wildlife Refuge, MRL invoked an emergency closure of the line and ceased all service to the Bitterroot Valley. The railroad company made the decision not to try and re-open the tracks. Instead it began the process of applying for permission to discontinue the line with the Surface Transportation Board, the public agency which oversees railroad operations in the U.S. MRL claims to be running the line at a $200,000 annual deficit.
Ravalli County Economic Development Agency Executive Director Julie Foster couldn’t sit idly by and let the line be shut down. She began working with the local companies that use the line and wrangling with MRL and finally worked out an agreement. If the Bitterroot Valley could guarantee enough shipping volume by March 15, MRL would run the line as a break-even operation and keep the line open for another year as far as Victor. MRL claims that the breakeven point in terms of shipping contracts would be about $255,619.
Foster told the commissioners and representatives from the municipalities located along the line at a meeting held last Wednesday, March 14, that it appeared the shippers were on their way to meeting those terms, but some of those commitments failed to materialize at the last moment. She said through the posting of two bonds and three irrevocable letters of credit the five shippers, including Selway Corporation, Cenex Harvest States, Energy Partners, Pfau Feeds and Lakeland Feeds, had managed to commit to $193,619.
“That leaves us $62,000 short of what MRL needs to break even,” said Foster. She said that MRL needed a commitment by Friday or there would be no deal.
Foster noted that the five businesses in question were providing 202 jobs and a tax base to the county of about $100,000. She said Selway Corporation, in Stevensville, employed 115 people.
“This represents a big loss to the economy and it would take a long time to bring it back,” said Foster.
Commission Chairman Matt Kanenwisher said, “How much to spend to save a $100,000 tax base? That’s the conversation we need to have.” He said that’s also where the towns come in.
“For some smaller towns the conversation ends where you just don’t have the money anyway. It doesn’t matter how much it is if you don’t have it,” said Kanenwisher.
Stevensville Mayor Gene Mim Mack asked how the company’s breakeven point was verified. Foster said that it was based on figures supplied by MRL.
Mim Mack asked, if the improvements were made and the line operated at a profit, what money would come back to the communities.
“None,” said Foster.
Mim Mack said he would also want to know what the real cost of losing the line would be. He wanted some hard figures or projections.
Foster said it was not just five businesses but the whole future potential of the line for the whole valley’s economy.
Hamilton City Councilor Al Mitchell said, “Given the economic times, it’s very important that we not lose any jobs.” He said the $62,000 was “just a band aid but it would buy us some time.” He noted that he could not speak for the City without going back and meeting with his council. Stevensville’s Mayor echoed Mitchell’s comments. He said all they could do was advocate for the funds, the decision would be up to the council. Although he did say that if all the arguments in favor were accepted that no one would say no and they would find a way to come up with the $30,000 if they had to.
“If we buy the arguments, we will find the money,” said Mim Mack.
Stevensville Town Councilor Desera Towle was in agreement.
“If we can’t come up with the dollars, then we can’t,” said Towle. But she said they would make a good faith effort.” Our intent is to proceed and get X number of dollars,” she said.
“We can’t ask for a commitment, but we can ask for a commitment to what you will go back and advocate for,” said Commissioner Greg Chilcott.
Towle said that she would ask for $30,000 to be placed on the council’s agenda for discussion.
Mitchell said that he would ask the City of Hamilton for $10,000. “I’ll let you know what we get,” he said.
Mayor Rick Scheele from Darby said that without the rail line even reaching Darby there was not much chance of getting anything from his council. He did believe that a few large companies and the Forest Service were interested in possibly using the rail line, for environmental clean-up work in the area and for forest logging. But there was not much that could be done with such a short deadline.
Kanenwisher said that there was no way to get this done and meet the deadline except by the county “going out on a limb” and approving the funds at a meeting they would schedule for Friday.
Also on the table, with a deadline of March 19, was a possible application for TIGER IV grant funds to do rehabilitation work on the line.
MRL expressed no desire to pursue the grant funding that RCEDA had identified as available for the type of infrastructure improvements needed on the rail line. The company refused to offer any matching funds for the project or to help in making the application. Foster is pursuing the prospect nonetheless.
Initially MRL suggested a $5.62 million grant to get the line open to Hamilton. Foster said it would take an additional one to two million dollars to get it to Darby. At a twenty per cent match to make it competitive in the awards process it would take a local match of about $1.13 million just to get the line to Hamilton. Seeing no hope for that she prepared a minimal match option of $1 million with a $200,000 match. The truth is she sees little hope in getting the minimal request. Not with over a thousand applicants.
Commissioner J.R. Iman pointed out that when work first got going on the grant it was assumed that Lake County and Missoula might partner in the rehabilitation of the lines. That turned out not to be the case. He said there are no shippers in Polson and only one in Ronan and that one was already making other plans. He said Missoula was not interested either.
There appeared to be consensus that the grant application had merit, however. A meeting was scheduled for Friday to make some decisions.
At Friday’s meeting Commissioner Chilcott moved to “commit the county to $62,000 with an understanding it means $22,000 to the county to be taken out of reserves.”
Commissioner Iman said, “This will buy us one year of time.”
Commissioner Suzy Foss said, “I think it’s an absolutely wonderful example of how much, working together, we can achieve.”
She read an e-mail from Commission Chairman Matt Kanenwisher who was not in attendance.
Kanenwisher said that he could support committing up to $25,000 to secure the shippers’ agreement.
“Given the county’s financial position, the decision is not an easy one but the probable reduction in tax base with the loss of the line and the potential for economic growth with its operation leads me to support the expenditure,” he wrote.
He also supported the TIGER IV grant application. He said the county should “begin to plan for supporting the potential debt load of the match.”
Foss said, “We have so much going for us right now. We have too much on the line for this not to work.”
The vote to commit the $62,000 was three to zero with Kanenwisher and Stoltz absent.
When it came to considering the grant application, Foss said, “This has got to be a forever commitment. I am not someone who thinks in one year. We have to make this work.”
Chilcott said, “I hope our chances are better than I expect them to be. I would advocate moving forward.”
Iman said that the board had to consider alternatives. He said that he had talked to two lumber brokers who said there are some advantages to rail such as larger volume and loading facilities but that the actual cost was not that different. He said he could go for a $1 million grant, but he couldn’t go for the $5.62 million, “because all this money goes to one company. Take that five million dollars and spread it out among 50 truckers in the Bitterroot Valley.”
“Even though this looks like it might work and bring some opportunities, we are not dealing with the most generous company to assist us,” said Iman. “We have a partner that doesn’t care.”
Foss disagreed. “I think they’ve eaten a loss over the years that amounts to a lot of money. I think they tried to keep their services going and they stuck with us for quite a while. Do we expect the big guy to be Santa Claus?”
Chilcott said, “This action on our part demonstrates a good faith effort to secure the rail for the future.” He moved to submit the grant and said he hoped to get help from the communities in the valley and other partners to meet the grant match.
The motion to submit the grant application for $1 million was approved 3 to 0 with Kanenwisher and Stoltz absent.
Foster said on Friday that Jim Lewis from MRL had visited the valley that afternoon and that she considered it a done deal.
“I talked to Mr. Lewis and they are mobilizing the effort to make the repairs necessary to get the trains moving and working on a schedule to accommodate the shippers,” said Foster.