January 22, 2002 11:00 pm

By Alice Perry Linker

Observer Staff Writer

Union County moved one step closer Tuesday to buying a railroad.

The county commissioners voted to enter a confidential agreement with Idaho Northern Pacific Railroad to begin negotiations to buy the line running from La Grande to Joseph. The decision followed an executive (closed) commission meeting.

The purchase is far from a done deal, but the agreement allows the county to research the railroads history and financial situation before making a decision as to whether to buy. Wallowa County was expected to sign the agreement, probably today.

The price of the line has been estimated at $15 million. Two years ago, the price of the line from Elgin to Joseph, abandoned by the railroad in 1994, was said to be $7 million to $8 million.

If the two counties can buy the full length of the line, which hauls freight from Elgin to La Grande, the railroad can generate revenue to pay for maintenance and, perhaps, part of the purchase price.

Rio Grande Railroad of Fort Worth, Texas, owner of Idaho Northern Pacific, has consistently insisted that negotiations take place in confidence. The counties would not say how much, if any, money has been placed in escrow while the negotiations continue.

A consultant, Gary Hunter, has contracted with the counties to research the railroad records, including its financial condition. Union County Commissioner John Howard said Tuesday that the counties will pay between $25,000 and $35,000 for the research.

Weve not set a specific amount, he said.

The 2001 Oregon Legislature voted to allow $2 million from lottery bonds to help the counties buy the line, but those funds will not be released until after the Oregon Supreme Court rules on a challenge to the lotterys legality. Some state funds are expected to be loaned to the counties for the negotiating process.

Commissioner Steve McClure said after Tuesdays meeting that he has been talking about federal funding with the states delegation in Congress.

I think there is an opportunity for funding for short-line railroads, McClure said. It might be difficult for us to get $15 million.

The commissioners have consistently said that property tax dollars will not be used to either buy or maintain the railroad. If federal and state funds are not available, the counties will not buy the railroad, they have said.

Howard, who has led the effort to purchase the line, said the state funds will be used for the preliminary research. He did not say how the research would be funded if the county decides not to buy the railroad.

The county has hired La Grande lawyer Ray Baum to represent the counties in the negotiations.

I can assure the people of Union County that we are not spending their property tax dollars on this project, Howard said.

Howard and McClure said the decision to try to buy the rail line was based on the threat of abandonment in Wallowa County.

Wallowa County has been significantly impacted by the federal timber policies, McClure said. This (purchase) is probably not as important to us as it is to Wallowa County. Once (the railroad) goes, the chances of getting it back are pretty slim.

A preliminary decision on the purchase is expected by the end of March.