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Hamilton commits $10,000 to keep rail line open

 

Stevensville hesitates over $30,000 commitment

By Michael Howell

The Hamilton City Council, despite criticism voiced by Mayor Jerry Steele, voted unanimously on March 20 to commit $10,000 to the effort to keep Montana Rail Link’s Bitterroot Spur open for another year.

Ravalli County Economic Development Authority (RCEDA) Executive Director Julie Foster gave the council a recap of the problem beginning with the washed out culvert north of Stevensville in May of 2011 which led MRL to place an embargo on the line and cease service. As a result the company reviewed its operations and found that the line was losing money consistently. MRL filed in November 2011 with the Surface Transportation Board to discontinue the line, a formal process that takes months to complete.

In the meantime five valley shippers with the help of RCEDA negotiated a deal with MRL to keep the line open for a year if the shippers could provide a commitment to enough rail use to make it a break even operation. MRL established that amount at about $255,000. Foster said the shippers, including Selway Corporation, Cenex Harvest States, Energy Partners, Pfau Feeds and Lakeland Feeds, initially put together commitments that would yield the breakeven point. But at the last minute due to failure of some contracts to come through in a timely manner, Selway Corporation reduced its commitment, leaving the deal $62,000 short.

The County Commissioners discussed the issue with representatives from Stevensville, Hamilton and Darby and decided to commit to cover the $62,000 to meet MRL’s deadline of March 15, with the understanding that the county’s share would ultimately only be $22,000 with the remainder coming from the municipalities. Hamilton Councilors Al Mitchell and Lynette Helgeland stated that they would advocate for a $10,000 commitment from the City of Hamilton. Stevensville discussed a contribution of up to $30,000, but the actual amount was left open in the end.

At its March 20 meeting, Mayor Jerry Steele expressed his concern that the deal would only guarantee one year of service for five shippers. He did not believe it could be sustained. He said the shippers were still doing business without the rail service and would probably continue to do so.

“For $10,000 I don’t see a lot of economic benefit for the City of Hamilton,” said Steele.

Councilor Al Mitchell agreed that it was a ‘band aid’ for a very serious problem with no guarantees. But he saw it as a necessary investment in infrastructure important to the valley’s economy now and in the future.

“It buys us a year of time to figure out how to keep rail service as a reality,” said Mitchell.

He said the $10,000 commitment represented only 16 percent of the shortfall and less than 4 percent of the total project cost.

Hamilton Councilor Joe Petrusaitis said it was kind of a gamble but he saw it as a “temporary commitment we can live with” and hopes it doesn’t become a “a monster that keeps growing.”

Hamilton Councilor Lynette Helgeland said, “We don’t have to solve the problem, but we can create the time, one year, to look for some solutions.”

Stevensville Councilor Desera Towle did place the item of the Town of Stevensville’s commitment of $30,000 to meet the MRL shortfall on the March 22 agenda, but that motion fell short of approval. The matter was ultimately placed on the agenda of the next Committee of the Whole meeting for further discussion.

Stevensville Councilor Ron Klaphake questioned the fairness of the deal. He said that an economic recession was at the root of the problem. It made running the line unprofitable for MRL. But having no rail meant an increase in trucking, another part of the transportation industry.

Klaphake also stated the county should be taking on the major portion of the commitment because it had the greater resources and stood to be more affected. He said that the jobs lost, if any, are mainly held by county residents. He said all town residents are also county residents and pay county taxes. He said that $30,000 from the town with only $22,000 from the county was not a fair deal.

Councilor Towle called it “an investment to buy us time” and said that preserving a few hundred jobs was worth it. She said it was a form of economic development.

Mayor Gene Mim Mack said that he had met with the managers of Cenex and Selway Corporation. He said Cenex has five permanent employees and eight seasonal ones. He said he was told that the difference in cost between trucking and rail service was negligible, close to a 1 percent difference.

Mim Mack said that Selway Corporation had been operating without the rail service. Although the value of the company is increased by being on a rail line it is not necessary. He said that Max Downing of Selway Corporation told him that the company is not facing any big layoffs due to lack of rail and that the company was committed to doing business in the Stevensville area and had no intention of moving.

Stevensville Councilor Robin Holcomb said that $30,000 may be too much but that some participation would be beneficial to the Town.

“The biggest chunk should not come from Stevensville,” she said.

“I think we are committed,” said Councilor Bill Perrin, “but maybe not to $30,000.” He said that looking to the taxes from the newly created Tax Increment Finance District, that includes the Selway operation, to pay for a commitment of $20,000 seemed more realistic.

A member of the audience stated that. if the Town agreed to put up some money, he would consider matching it one dollar for every two dollars the town put up.

Towle moved to commit to $30,000.

Klaphake said that he was not ready to commit and moved to postpone the decision for a discussion at the next Committee of the Whole meeting. He said some new information had just been submitted by RCEDA and he needed time to consider it. A motion to place the MRL commitment on the COW agenda for April 19 at 6:30 p.m. was approved unanimously.

The County Commissioners have subsequently placed the matter on their agenda for reconsideration today, Wednesday, March 28, at 10:30 a.m.

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