City will expand railroad tracks for industry

The railroad addition is a line of tracks that will extend to the new $5 million IML Containers Iowa which is in progress in the southern part of the industrial park. Earlier this year, the council committed to building this rail spur.

Originally, the project was set to cost slightly less than $1 million and be completed at one time.

Under the new plan, approved by the Le Mars City Council Tuesday, the project is broken into two parts.

The first part, with a $794,000 price tag plus the cost to purchase right of way, is what IML Container Iowa needs to connect their new facility to rail access.

This construction will extend the Canadian National (CN) rail line just north of 24th Street, stopping approximately 100 feet north of the incomplete 27th Street.

Part I also includes a 14-car runaround that will help both IML Containers Iowa and future industries.

Part II of the plan, to be completed in future years, is extending the rail across 27th Street and south.

"By getting service to IML, we are not getting service to everyone that might ultimately want service," said Bill Jones of Antioch International, the company hired by the City to negotiate with the CN Railroad. "At the point in time when Le Mars Public Storage wants service, that will involve having to build across 27th."

The two phases together, Jones said, will ultimately result in the full nearly $1 million cost earlier presented.

The second phase includes rehabilitation the track, extending the rail south of 27th Street is estimated to cost about $230,000 plus the purchase cost (negotiated by Antioch International).

This phase could also be split up, completing the rehabilitation and purchase in 2010 or 2011, and waiting to extend the track south of 27th Street until industries built there and requested rail service, City Engineer Scott Langel said.

The council approved the plan.

Members also agreed that the money to pay for the project will be borrowed from Tax Increment Financing (TIF) revenue from the Le Mars Urban Renewal area and the Joint Urban Renewal area. This money is paid back by property tax from new or expanded businesses in that area.

Some money to pay for the project can come from land sales in the industrial park, added Neal Adler, executive director of the Le Mars Business Initiative Corporation (LBIC).

"The (price) would be recouped in about 8-9 years total if we paid for every penny of the track expansion proposal and 14-car runaround with nothing but TIF dollars," Adler said. "We don't anticipate doing that. We anticipate having more land sales."

According to the wishes of the CN railroad, when the transaction is complete, the City of Le Mars will own this extended railroad track. That originally was going to cost $60,000.

"We went to work on them to explain that this didn't seem fair or right, and they have come down substantially on what they are saying the cost would be to transfer ownership," Jones said, mentioning that it was down to about $10,000 at this point. "That's still an ongoing conversation."

Ownership means the city will also be responsible to maintain that segment of rail.

Councilman Ken Nelson suggested adding a fee for rail cars going in and out of the railroad track addition -- that fee would help pay for maintenance of those tracks

"We'd have some sort of maintenance fund for the future so that we're not backed up against a wall," he said.

Langel said he supported that and would investigate the idea and bring more information to the city council.

The overall project cost is still near the $1 million price tag that gave the council members sticker shock at the Dec. 8 meeting.

"This is the cost of doing business," Langel said. "There are a lot of private jobs at stake."

Mayor Dick Kirchoff agreed.

"By making this move, in the event that any industry would like to take a look at Le Mars down the road, this is probably the first thing they're going to ask for -- what's your rail structure," Kirchoff said. "This would certainly open up some doors for the possibility of securing some industry down the road."

One councilman noted that the railroad access would also make the property more valuable.

Using money from the Joint Urban Renewal Area, shared between the City of Le Mars and Plymouth County, requires permission from the county board of supervisors.

The county board granted that Tuesday morning.

"We are approving the city's expense," said Supervisor Chairman John Schneider. "The county will not write a check. The county will not enter into any bonding for this."

Schneider explained through the Joint Urban Renewal Area with the city, the county has loaned money toward the industrial park and is guaranteed to get that back what they loaned.

"As the LBIC, sells this property, the price is hopefully set so these kinds of costs are covered in the sale price and the city can be reimbursed," Schneider said. "But in the case that the sale price does not cover total structure costs then it would go to TIF to pay it all."

Adler told the supervisors the Joint Urban Renewal Advisory Board met Monday and made the same recommendation the county approved.

"The reason to do this now is we do have a company out there, IML, which has steel going up and they are putting skid on that steel at this time, and they hope to be in there by April or May and they do need rail," Adler said. "So we are trying to work as fast as we can to fit their timeline."