Railway revival: Trendy Whitefish neighborhood now seeing signs of recovery

Two years after the threat of contaminated property derailed growth in Whitefish’s Railway District, the historic mixed-use neighborhood has made strides toward recovery.

And to further the economic viability of the Railway District, a neighborhood council for that area may be on the horizon.

The quaint neighborhood became a haven for economic development about seven or eight years ago when the Flathead Valley was experiencing record growth.

More than $5 million was invested in those years, and 13 new businesses moved to or started up in that area. The Railway District, once characterized by rows of narrow railroad tenant houses, is located near the railroad and stretches between Baker to Miles avenues.

It’s now a trendy blend of historic homes, residential and commercial condominiums and neighborhood shops.

In early 2009 — the same time the national recession was sinking its claws into the Flathead economy — BNSF Railway Co. mysteriously began buying up property surrounding its Whitefish rail yard. The railroad initially was mum about its intentions, and speculation that it was buying properties contaminated by railyard petroleum pollution sent Railway District residents and business owners into a tizzy.

Although the railroad never said publicly why it bought multiple properties both in the Railway District and the area east of Whitefish Middle School, city officials suspected it was connected to a 2006 Montana Supreme Court ruling that required an oil company to pay for the cleanup of contaminated land, even if that restoration costs far more than the property is worth.

The city of Whitefish spun into action, securing a state grant to conduct soil borings in November 2009 to test the area for possible contaminants. Results showed contaminant concentrations are well below the Department of Environmental Quality’s screening levels.

Even though the Railway District was cleared, public perception of the area took a hit. Some property owners likewise took a hit.

Bill Kahle, who along with Peter Rack developed the multimillion-dollar mixed-use Conductor’s Row condominium project, lost the project to foreclosure largely because of the uncertainty painted by BNSF’s land grab.

“The timing couldn’t have been worse,” recalled Kahle, who is a Whitefish City Council member.

He and his partner had parties interested in leasing and buying units in Conductor’s Row, but when they disclosed the possibility the property might be contaminated, clients backed out. Freedom Bank is the current landlord for Conductor’s Row, Kahle said, adding that he has continued to help the bank as a consultant for the facility.

BNSF offered to buy Conductor’s Row, Kahle said, but the appraisal process was cumbersome and in the meantime the city got involved with testing the area, so the transaction never was made.

“The word slowly is getting out” about the neighborhood’s clean bill of environmental health, Realtor Alan Elm said. “The damage was partially created by BNSF, but the economy” also was a big factor.

Elm, who owns the Whitefish RE/MAX office, said real estate sales are picking up in the Railway District, with three or four residential sales in the last six months, along with three or four commercial transactions.

Jan Metzmaker, director of the Whitefish Convention and Visitor Bureau that’s housed in Conductor’s Row, said she has noticed more tenants in the building.

“It seems to have stabilized,” Metzmaker said of the district.

Ian Collins, a Whitefish businessman who developed several mixed-use buildings in the Railway District several years ago, said the goal now is to turn a negative into a positive. He’s the chairman of the city’s Railway District ad hoc committee tasked with overseeing neighborhood issues in the Railway District.

The group was formed specifically to create a dialogue with railroad officials.

“For the neighborhood, one of the important things that will come out of [the collaborative effort with the railroad] is a long-term relationship between BNSF and the Railway District,” Collins said.

Elm agreed, noting that BNSF is “committed to getting the word out” about the viability of the area.

BNSF’s most tangible sign of support has been an offer to donate and transfer ownership of three of the homes it purchased to the Whitefish Housing Authority. The deal is in the final stages, according to Housing Authority Director SueAnn Grogan.

“Two of the homes are in good enough shape to rehab as rentals,” she said. “Those are assets to us and to the Railway District community.”

Kahle said that while he supports the Housing Authority, he believes there are other options for BNSF’s donated properties that may have benefited other Railway District property owners, such as using the lots for parking space.

The committee is working on a proposal to establish a community council for the Railway District to represent the interests of residents, property owners and businesses in the neighborhood.

The Whitefish City Council would have the final say whether to create such a council that would offer advice on neighborhood issues.

Similar community councils operate in Great Falls, Billings and Missoula as a way of promoting increased citizen involvement in government, Collins said.

While the Railway District council would stay in touch with BNSF and the state to ensure ongoing environmental health, that’s not the only issue facing the historic area, Metzmaker noted.

“Like any neighborhood, there are many issues,” she said, citing snowplowing and trouble with transients from the rail yard as two concerns.

BNSF Railway representative Bill Langdon, who attended last week’s committee meeting in place of BNSF committee member Doug Schuch, said railroad officials have indicated they would like to have a nonvoting member on the neighborhood council to remain impartial in any Railway District discussions.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.