Railway inks $2.1M deal for car storage

If you think there’s nothing good to be said about a recession, think again.

Traffic on the Wallowa-Union Railroad will increase soon, as Union Pacific Railroad starts moving cars northeast for storage on the Joseph branch.

The Wallowa-Union Railroad Authority said Tuesday it has signed a deal with Union Pacific to store UP cars on sidings and tracks between Wallowa and Joseph.

Union Pacific will pay $59,400 a month, or $2.1 million over the three years of the lease.

“It’s an amazing opportunity for us to capture this kind of revenue,” said Mark Davidson, a Union County commissioner and a member of the Wallowa Union Railroad Authority board.

Davidson said the WURA board first heard about UP’s need for storage space from a Friends of the Joseph Branch volunteer who formerly worked for UP.

“We said we’d be interested and he got us a name,” Davidson said. “We had ongoing discussions over several weeks and struck the deal.”

He said UP signed the contract this week. UP cars will be arriving in Wallowa County soon.

The arrangement will allow WURA to hire or contract with crews to transport freight cars for storage, with the first cars in to be the last out. WURA will upgrade the track to prepare it for increased use.

Davidson said cars will be moved from La Grande to Elgin by Idaho Northern and Pacific Pacific crews. WURA crews will take over from there.

Davidson said the Wallowa-Union will collect $75 per car, both going in

and going out. UP will pay the fee in addition to the lease payments.

The lease agreement is for three years, during which time the local railroad will be paid on a monthly basis.

Either party has the ability to get out of the agreement for good cause, with six months advance notice.

Among other things, funds from the lease will help reduce WURA’s debt, Davidson said.

In 2002, Union and Wallowa counties bought the line, which runs from Elgin in Union County to Joseph in Wallowa County, from Idaho Northern and Pacific.

Funding sources included a $2 million grant from the Oregon Lottery and a $5.5 million loan from the Oregon Economic and Community Development Department.

Later, WURA was awarded $4.5 million in federal money to pay down the loan. According to current estimates, the railroad owes OECDD $850,000 in principal and $1.1 million in interest. Currently, the railroad is negotiating with the department for new loan terms.

Davidson said funds from the lease agreement will help retire the debt on the railroad while providing operating money and allowing upgrades and repair on WURA’s rolling stock and track.

Income from the lease may also provide enough funds to improve the passenger cars used for the Eagle Cap Excursion Train.

Friends of the Joseph Branch is a non-profit volunteer group devoted to helping the railroad.

In partnership with that group, WURA is restoring a vintage Union Pacific caboose, repairing engines and improving the interior of the passenger cars.

The caboose will be used for excursions and freight operations.