Rail project costs jolt city council members

The council earlier this year gave its commitment to add the rail extensions to IML Containers Iowa, which is constructing new facilities in the industrial park.

Le Mars Public Storage, located in the industrial park as well, is also anticipated to be affected by the rail extension project.

Both companies met with city staff; Neal Adler, executive director of Le Mars Business Initiative Corporation (LBIC); and Bill Jones, of Antioch International, Inc. of Texas.

Jones was retained by the city to work with Canadian Northern (CN) railroad officials on the track extension project.

Sharing cost figures with council members in their afternoon session, Jones cautioned the numbers were based on "historical reference" and actual costs could be 10 to 15 percent less than those estimated.

Jones indicated that IML Containers Iowa and Le Mars Public Storage would also face significant costs for the spur track extensions.

The city's estimated cost was determined to be $935,225.

The figure includes $552,400 for new track between 24th and 27th Streets, "rehabilitated" CN track at 18th Street, and removal and repaving at 24th Street.

Also included in the total expenditure was an additional $382,825 for run-around track between 18th and 21st Streets and site turnout.

IML's cost for the track extension project work was estimated to be $253,050. Le Mars Public Storage's price tag was estimated at $251,125.

Expressing what he termed his "disappointment" at the cost figures received, Councilman Rex Knapp emphasized that council members gave the commitment to IML and said Jones had done "a great job" for the city in negotiations with rail officials and assembling cost estimates.

"But there's no lucky number or fairy godmother at this time, or indication as to where we'll get the money," Knapp said. "These are scary numbers."

Councilman Ken Nelson also brought up the top of surcharges on rail cars coming into the industrial park. He also suggested trucks rather than rail could provide a transportation possibility for businesses there.

The "concept plan" as brought forth Tuesday by Jones indicates the railroad needs an immediate extension of the rail line through the industrial park to serve companies located there. The other option was a phased-through plan.

Citing CN's needed approval for the extension project, Le Mars City Manager Scott Langel and Jones pointed to the immediate concern from CN as well as other rail carriers of safety issues.

Langel, acknowledging the city's initial intention to eventually run the rail line through the industrial park, noted current city plans had focused on phasing in the line as needed for future development. That plan is counter to the wishes now being expressed by railroad officials.

Langel agreed potential funding of the project is a major question currently in that it is unclear as to whether money from the Railroad Economic Development Fund will be available.

Other payment options, he observed, were monies from Joint Urban Renewal or increased sale prices of future development sites in the industrial park. Money from the Joint Urban Renewal would involve Tax Increment Financing (TIF) dollars, any increase in tax dollars due to new development that occured after the urban renewal was created.

The possibility of using the TIF money requires a meeting and future recommendation from the Joint Urban Renewal Board and a discussion with both the Plymouth County Board of Supervisors and the city council, Langel said.

Council members have indicated they are withholding a final decision on the plans presented Tuesday pending such a meeting and additional project details.

Langel said he will contact Siouxland Interstate Metropolitan Planning Council (SIMPCO) representatives relative to continued discussion the grant potential for Railroad Development money mentioned in earlier project discussions.

The LBIC's Adler said, following the Council session, that he felt what caught the Council by surprise with regards to the projected construction plans; was the significant increase in cost estimates due to the railroads requirements in order to service IML Containers Iowa and/or Le Mars Public Storage in the new industrial park.

The rail line, at present, ends north of 24th Street. If extension is approved, it would be extended to 27th Street.

"We knew that this would be the case at some point but had intended to do it in an as-needed situation," Adler said.