Edgerton now in negotiations for BNSF intermodal
Earlier this year in a farsighted move, the Edgerton City Council hired the community’s first city administrator so that it could take advantage of opportunities from a planned Burlington Northern Santa Fe rail hub in Gardner.
“We were positioning ourselves to get the crumbs off the plate,” Edgerton Mayor Donald Roberts said. “Now we have the whole plate.”
The plate is BNSF’s planned intermodal to be built between Gardner and Edgerton in southwest Johnson County and the associated warehouse complex called “the logistics park,” which the Allen Group Inc. will construct next to the new yard. The intermodal will load and unload containers, many filled with cargo from Asia, from railroad cars to truck trailers.
The 1,300-acre site immediately southwest of Gardner is bounded by Interstate 35 on the south, U.S. Highway 56 to the north and is astride the BNSF’s main transcontinental rail line.
The $750 million project came Edgerton’s way when, last month, the Gardner City Council, with three new members, voted 3-2 to rescind existing agreements with the developers.
The vote came after BNSF officials first informed Gardner officials in February it was putting the project on a “variable” schedule because of a recession-related dip in freight and revenue.
Then in May, it was learned the Kansas Department of Transportation would apply for $50 million from the next round of federal transportation stimulus grants in an attempt to get the project back on schedule.
With that and the change in the Gardner City Council, the BNSF and the Allen Group sought reconfirmation of three previously negotiated but still unsigned contracts with the city.
“I don’t think the three unsigned agreements would benefit the residents of Gardner,” said Gardner Councilwoman Mary Peters, who returned to the council in April after two years away. “Everything seemed meant to benefit the railroad and the Allen Group.”
Since the vote, a recall petition has been started to remove the three council members who voted to rescind the agreements negotiated over two years. Peters is undeterred, saying she made her opposition to the agreements clear during her campaign.
Still, the Gardner City Council has announced a willingness to renegotiate the contracts. But neither Peters nor Gardner Mayor David Drovetta, a supporter of the project, expect much to come from that decision now that negotiations have started with Edgerton.
“I personally don’t think the majority of the council will go back to the type of agreements that are going to work for the developers,” he said. “I think the developers will find Edgerton to be more amenable.”
Steve Forsberg, BNSF public affairs director, said the railroad and the Allen Group were in talks with Edgerton on the same set of three agreements the Gardner City Council rescinded.
Although the project now has an undetermined start date, the railroad is committed to the project, Forsberg said.
“We’ve already invested $60 million in the project for land, overhead cranes and engineering,” he said. “We’re going to proceed with the project regardless of what taxing jurisdiction it ends up in. The only question is when construction begins.”
Grant to determine timeline
That will depend on the success of the KDOT application to secure $50 million for the project from the next stimulus transportation package offered by the U.S. Department of Transportation.
Joe Erskine, KDOT deputy secretary of finance and administration, said the intermodal would be among the five to 10 projects for which the agency would make application for a so-call TIGER Grant.
“There’s $1.5 billion to be awarded nationwide,” Erskine said. “It’s a pot of money everybody will compete for. We imagine it to be way oversubscribed.
“In Kansas, we’ll be happy if we get one or two projects funded.”
The application deadline is Sept. 15 with the winning projects to be announced in February 2010.
The grant’s selection criteria gives Forsberg confidence that the intermodal project will be selected. Projects will be chosen based on their long-term benefits to a metropolitan area, region or the country. They will also be judged on their job creation, economic benefit, innovation, safety enhancement, integration with other transportation systems and board-based partnerships.
The intermodal/warehouse project gets a check mark in all those categories, Forsberg said. As for job creation, a Southwest Johnson County Economic Development Corporation study conducted more than three years ago found when fully built out the intermodal and warehouse complex would create 3,396 jobs in Gardner in the next 20 years and provide the economic stimulus to add another 3,800 jobs in Johnson County.
The project also has the advantage of being shovel ready, Forsberg said. Should the project receive the grant, work will start in 2010, he said.
Gardner council members were aware the project would go forward on the city’s doorstep regardless of the city’s participation, Drovetta said. He said he suspected some on the council didn’t think Edgerton was prepared to pull together such a complex deal.
Drovetta said he didn’t share that view because Edgerton officials would benefit from the interest Johnson County and the state have in making the project work. The Kansas Legislature passed a statute in 2008 that allows the state, rather than cities, to back bonds issued for intermodal infrastructure, he said.
The intermodal project is much more complex than anything his city has ever considered, Roberts conceded. It is a big responsibility, he said, because it would not only greatly benefit Edgerton but all of Johnson County and communities in neighboring counties.
Since negotiations with the railroad and the Allen Group began early this month, the city has hired professional law and financial firms to help with the negotiations and is looking to add engineering firms, Roberts said.
Edgerton is using the three agreements the Gardner council rescinded as a starting point, Roberts said. They would cover the annexation of the property, public financing of infrastructure improvements and an overall definition of the intermodal and logistics park.
The previous financial agreement identifies nearly $50 million in roads, bridges, sewers and other public improvements for the intermodal and logistics park to be completed in three stages. Johnson County would be responsible for roads amounting to $14 million of that total, and the city responsible for about $20 million more.
The city would contribute 100 percent of the franchise fees and utility and excise taxes collected at the intermodal site to a fund dedicated to paying off public improvements.
In addition, individually owned warehouse projects in the logistics park would be eligible for a 20-year 50-percent property tax abatement. Also,15 percent of the property tax collected on individual warehouse projects in their first 10 years will be used to pay for their needed public infrastructure improvements.
Another public infrastructure component is a KDOT commitment to build an Interstate 35 interchange for the intermodal within four to five years of its opening, Erskine said. Unless there is an unexpected revenue shortfall, the agency should be able to pay for the $15 to $25 million interchange from program revenues, he said.
As the two developers started negotiations with Edgerton, the U.S. Army Corps of Engineers released a draft environment assessment of the project. The developers must receive a permit from the corps before work can start on the project.
The Corps’ preliminary finding was that the project would not “result in significant adverse impacts on human health and welfare, including municipal and private water supplies.”
The report found consequences to air quality to be minor but did note a concern about trucks stirring dust on roads.
Although Drovetta said he thought Gardner residents were reassured by the water quality findings in particular, Peters found the report lacking and said a full environmental-impact study should have been done on the report.
Public comment on the easement will be taken through Aug. 9. The draft assessment can be viewed at: http://www.nwk.usace.army.mil/regulatory/BNSF/Draft_EA.pdf.