RAIL LINE OWNER DISPUTES STATE'S BID

August 08, 2001 11:00 pm

By Gary Fletcher

Observer Staff Writer

ENTERPRISE The company that owns the 62-mile railroad line from Elgin to Joseph will resist efforts to sell the line to the State of Oregon for less than $2 million.

Rio Grande Pacific Corp., parent company of the Idaho Northern and Pacific Railroad, will file a response next week to an Oregon Department of Transportation petition.

ODOT has asked the federal Surface Transportation Board to cap the lines value and disallow its abandonment.

Theyre trying to force a sale for $1.89 million, and thats not going to happen, Richard Bertel, president of Rio Grande Pacific, said by telephone from Fort Worth, Texas. Theyll find they are in error about the law.

The states petition contends that the rail lines abandonment automatically expired one year after it was granted.

Bertel said the law requiring renewing abandonments was not in effect when the abandonment was filed with the Interstate Commerce Commission in 1994. That commission expired. Its successor, the Surface Transportation Board, granted the abandonment in 1997.

Also, under federal law, Wallowa County has no jurisdiction to require a conditional-use permit to allow a salvage company to pull up the rails, Bertel contends. The federal abandonment order allows the rails to be pulled after Aug. 15, Bertel said.

Klamert Railroad Salvage of Silesia, Mont., has put more than $1 million down and agreed to pay within 30 days considerably more than the $2 million that was previously reported to salvage the rails, he said.

Why would we sell the whole line to the county for less than that? asked Bertel. He said he turned down a $4 million offer made May 25 by a committee in Union and Wallowa counties.

Seven years ago, Bertel said, the line was offered to be leased to the state, but that was not accepted.

Bertel said he has never been contacted by some of the people reported in news stories as want-ing to buy the line. Neither have either of two Wallowa County mills contacted him about using the short line for their freight, he said, and Oregon House Speaker Mark Simmons of Elgin has not returned his call.

The line was appraised at $7.2 million by the Arthur Anderson accounting and consulting firm, a foremost railroad appraiser from Chicago, Bertel said.

The states recent appraisal of $1.89 million is likely the first railroad appraisal done by their appraiser, Bertel said. He suspects the appraiser might have simply used the value of undeveloped land per acre and multiplied that times the 790.12 acres (valued according to the state at only $235,000), and thus ignored the real value of the land as a transportation corridor with bridges, drainage structures and roadbed.

Were just a small business, trying to get out of business from Elgin to Joseph gracefully, Bertel said, adding that the line from Elgin to La Grande will continue to operate.

Bertel said he would welcome a call at 817-737-5885 from a serious and financially qualified buyer. Such a sale would be subject to negotiations with Klamert Salvage, whose representative said the company would not stand in the way of a deal to save the line.

Any purchaser could then sell parcels to all the farmers who want them added to their holdings, Bertel said.

We own the vast majority of it fee-simple title, with the exception of a couple of state road crossings, he said. This is not subject to a reversionary law, as were some railroads that were simply granted a perpetual easement, allowing property to revert to the landowner once the railroads operation ceased, he said.

The Elgin-to-Joseph line ceased to operate when Boise Cascades lumber mill in Joseph was shut down and dismantled. Since 1994, Boise Cascade has closed five mills on Bertels companys lines. These include Cascade and Emmett, Idaho, in June.

A 100-mile excursion train has been operating successfully out of Emmett and Horseshoe Bend for three years. It is sold out several times a day on weekends, Bertel said. His company is committed to operating the excursion train another year, but he doubts it can survive after that without the addition of freight. That line too will be abandoned.

Id like to see an excursion train run from Elgin, Bertel said, But my board of directors wants someone else to own it.

If someone buys the line to operate an excursion train, Bertel said Idaho Northern and Pacific could operate it as a contractor, or could sell locomotives and cars to the new owner.

There is some $1 billion available from the U.S. government for Railroad Reconstruction Infrastructure Loans, Bertel said.

If someone would pay the $7.2 million for the line, Bertel said he would likely throw in a restored 1901 Baldwin 2-6-0 steam locomotive and its oil tender.

We could have it in Elgin on a flatcar in 30 days, he said.