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Railroad deal still in the works

 

By Michael Howell

The effort by local government bodies to shore up a deal between several Ravalli County shippers and Montana Rail Link (MRL) to keep the rail line open in the Bitterroot for another year took a positive turn last week when two county commissioners and the mayor of Stevensville, along with Ravalli County Economic Development Authority (RCEDA) Executive Director Julie Foster, met with MRL President Tom Walsh.

MRL, which had initiated the process to discontinue service to the Bitterroot, agreed to make necessary repairs and keep its rail line open at least to Victor for a year if the shippers could guarantee enough shipments for the railroad to break even on the operation. The breakeven point was estimated at around $256,000. Five shippers made commitments to meet that requirement, but at the last minute some commitments were reduced, leaving a $62,000 shortfall.

The county commissioners agreed to commit up to $62,000 to meet the potential shortfall in MRL’s profit in running the line, with the intention of actually putting up only $22,000 with the municipalities involved putting up the remainder.

But commissioners learned last week that MRL was expecting a check for the $62,000 commitment. At a meeting last Wednesday the commissioners agreed that the requirement to put the money up front was not acceptable. The commissioners were in agreement that they wanted to support the shipping deal on the same grounds as the shippers, that is, as a commitment to make up any shortfall up to $62,000, not a payment in advance.

Commission Chairman Matt Kanenwisher stated flatly, “To me what is off the table is any payment in advance of the loss.”

Commissioner Greg Chilcott agreed, saying if the county paid in advance and the company got more than enough shipping business to break even, then the county would have subsidized the company’s profits.

“I cannot in good conscience subsidize a profit,” said Chilcott.

Foster said that she was “frustrated and a little confused by the constantly changing targets” presented by MRL.

It was agreed that Commissioners Kanenwisher and Chilcott would visit with MRL President Tom Walsh the next day and discuss the issue.

Stevensville Mayor Gene Mim Mack, who joined the commissioners at that meeting, said that it was a fruitful meeting, but that some variables continue to change. He said that Walsh was agreeable to dealing with the government commitment in the same fashion as the shipper’s commitment and not demand any payment up front. The county would only be committing to cover any actual shortfall in the end, up to $62,000 if there was any.

“If the company finishes the year at break even or makes a profit, then the county owes nothing,” said Mim Mack.

But Mim Mack said the estimate of the shortfall has changed again as a result of another shipper reducing his commitment by $12,000 and MRL including a $4,200 charge to increase the number of weeks the line would be in operation. This would bring the prospective shortfall to $78,000.

Mim Mack said that the new estimate may be revised downward as another shipper has suggested he may come forward with an additional $6,000 commitment.

“The final numbers are still in flux,” said Mim Mack, “but the Stevensville Town Council is meeting on Wednesday, April 4 to decide if they will participate in the deal and how much.” He said the council appears to be committed to the deal and is currently discussing a commitment in the range of $15,000 to $20,000.

“If we can pull in a few more commitments from shippers we might get in range of a deal acceptable to everyone,” said Mim Mack.

Mim Mack said the deal would really be between the county and MRL. He said Hamilton, which has already authorized a $10,000 commitment, and Stevensville would make their own separate deals with the county.

MRL issued a press release following the meeting that said simply, “An agreement regarding the potential revenue shortfall was reached today, and once final approval by the Ravalli County Commissioners has been received, a timeline to resume service will be developed. We are pleased a tentative agreement has been reached and look forward to partnering with the Bitterroot shippers and the county.”

Kanenwisher said that the most important thing to emerge from the conversation with MRL President Walsh was the agreement that the county was not being required to put any money down up front, but only to cover any potential shortfall at the end of the year.

“The bottom line, however, is that the projected shortfall has risen from the initial discussion of $62,000 to $78,000,” said Kanenwisher. He said the commission would have to wait and see what, if anything, the Town of Stevensville decides to commit at its Wednesday night meeting.

“Then we will take a look at it on Thursday and see if we can afford to make up the gap,” said Kanenwisher. The commission meeting is scheduled for Thursday morning at 9 a.m.

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