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Home My WebLink AboutPeterson_dh2.doc June 23, 2000 VIA FACSIMILE (208 885 5580) Steve S. Peterson Center for Business Development and Research University of Idaho Moscow, ID 83843 Re: Analysis Concerning the Abandonment of the Camas Prairie Line Dear Steve, Last Monday evening, the Idaho Public Utilities Commission held its public hearing in Craigmont regarding the abandonment of the Camas Prairie RailNet’s Grangeville line. Many of the public witnesses testified that the abandonment of the railroad would have severe and adverse impacts on the adjacent communities. Although I am not quite sure when I will receive the transcripts of the hearing, I thought I would pass along some of the comments made at the hearing in case they may be helpful to your research. Bruce Walker from the City of Grangeville testified that the abandonment will adversely affect the City by inhibiting its opportunities for economic development, reducing property taxes, and impacting the city streets by additional truck traffic. He did say something about the loss of 250 jobs but I am not really sure what the reasons were for this statement. Mr. Patton, a farmer, also testified that loss of railroad service would hurt agricultural production and injure highways by increasing truck traffic. He particularly noted that all the malt barley grown on the Camas Prairie goes by rail. The reason for this is that the malting barley houses are only set up to receive rail shipments, not truck shipments. So in order for farmers to continue to ship malting barley, they would have to truck the grain to a railroad facility and reload. This subsequent handling and transportation may eliminate the market for barley. The chairman of the Barley Commission, Doug Scoville, testified there were 670 local grain growers that would be harmed by the abandonment. I believe he indicted there was approximately 74,000 tons of barley all moved by rail. He estimated a 5% increase in transportation costs plus additional handling fees. Abandonment would further stress the local economy and adversely affect highway safety and road maintenance. Ron Frei, President of the Idaho County Farm Bureau, testified that 10-12,000 trucks would beat up the highways. If the railroad abandonment was approved, he was concerned about noxious weeds on the rail bed. He also reiterated the concerns about barley production. Several witnesses testified that abandonment of the railroad would have a detrimental economic effect on the communities. Don Johnston representing the Craigmont Chamber of Commerce testified that railroad “speeder clubs” pay $100 per speeder per day to tour rail lines like the Grangeville line. A “speeder” is a small railroad motor car usually used to transport 2-3 maintenance persons by rail. When these speeder cars are no longer necessary, the railroads sell them to people in speeder clubs. He indicated that at the present there were 40 speeders running on the Grangeville line for three days. Dodd Snodgrass of the Clearwater Economic Development Association indicated that the abandonment would further stress the economic development in the rural communities. He indicated that it would destabilize economic potential and that contrary to the Railroad assertion, approximately 15% of the economy-base in the Idaho and Nez Perce Counties are manufacturing. Lori Cox testified for several entities including the Grangeville Chamber of Commerce and the Idaho Central Tourism Board. She indicated that there were 300 speeder car clubs in the United States. She estimated that each speeder car generates approximately $247 in economic infusion per day and there were two speeder car tours in May and September 1999. She indicated that there were also two tours scheduled for June and July of 2000, with 40 cars in June. She also indicated that when the new movie “Wild Wild West” starring Will Smith was shot on the Camas Prairie, the movie production company paid $185,000 to Camas Prairie Railroad. She also indicated that the Idaho Movie Bureau indicated that the production of the movie in the area pumped $1.0 million into the local economies. Several other witnesses testified about the lost economic opportunity if the railroad were to abandon the Grangeville line. Besides the two speeder club cars and movies, several witnesses indicated that the railroad could bolster tourism by running the existing dinner train over this line. Currently, the dinner train runs at $75 per person every trip. Ms. Davison testified that the Grangeville line and its structures have historical value of national significance found nowhere else in the nation. Other witnesses indicated that rail tourism could be linked to the upcoming Lewis and Clark bicentennial as well as intermodel connections from Portland cruise ships that travel up the Columbia River from Portland. For instance, every three weeks you could sail up the Columbia and then rail up the Camas Prairie. As an indication of the local shipper support, when the Lewiston Grain Growers’ elevator burned down in Craigmont in 1993, LGG built the new elevator on non-railroad property. It subsequently spent over half a million dollars to put in a high-speed loader and multiple rail sidings for rail loading facilities. LGG also had plans to upgrade their rail elevator at Fenn (and possibly at Nez Perce) but have held further infrastructure improvements until the outcome of the abandonment proceeding. This is just my quick outline of the public testimony at the proceeding. At the hearing, I presented the testimony of two of our experts. Ed Morse testified about the net liquidation value (NLV) of the railroad right-of-way (ROW) if abandonment were granted. Although the Railroad calculated that its NLV land value was approximately $758,000, Ed believes the more appropriate range is somewhere between $250,000 and $500,000. Ed’s estimate was a preliminary estimate because he has yet to fully determine the amount of reversionary versus non-reversionary land in the ROW. Of course, the larger the amount of non-reversionary land (which means that the Railroad owns it) the higher the market value. The major issue yet to be resolved is the fact that 47 miles of the 66.8 mile line traverses the Nez Perce Indian Reservation and may not be owned by the Railroad. 10. Joe Plaistow also testified for the Staff that the line has a potential for profitability. He calculated that Camas Prairie made approximately $237,000 in revenues in 1999 and would make approximately $277,000 in revenues for the STB forecast year (May 1, 2000 through April 30, 2001). If you would like to see any of the economic exhibits, please let me know and I will fax them to you. As we near the end of FY 2000, my fiscal officer has asked me if you could submit a bill for the amount of work that you have performed so far. We could then pay this in FY 2000. You could then receive a portion of your compensation now instead of waiting until the end of the research project. If you have any questions, please contact me at 334-0312. Sincerely yours, Donald L. Howell, II Deputy Attorney General Enclosures cc: Tom McFarland Vld/L:Peterson_dh2 Steve S. Peterson June 23, 2000 Page 3 1 3