RAIL-PARK IMPACTS: Two firms, two different stories

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View from the CHS grain elevator at the intersection of 5th and Center on Friday morning, October 30, in Kalispell. (Brenda Ahearn/Daily Inter Lake)

Two businesses that will be most affected by Kalispell’s upcoming rail park and downtown rail-line removal have very different outlooks on the future.

Northwest Drywall and Roofing Supply says it can’t afford to move to the new rail park while CHS is enthusiastic about changing locations.

As the only two remaining rail users in the downtown Kalispell area, the two companies are in line for major changes with Kalispell receiving a $10 million federal grant for the project.

The $10 million Transportation Investment Generating Economic Recovery grant will pay to remove the railroad tracks running through Kalispell and establish a new rail park on the east side of town.

Northwest Drywall owners are concerned about the possible prohibitive cost of relocating the company to stay on the rails or from staying at its current location and losing railroad access to the rails.

Tom Esch, attorney for Northwest Drywall and owners Mike and Pam Mower, said it was disappointing to hear that the grant had been awarded to the project.

“I’d like to congratulate the city but I just feel sick about it because of the uncertainty of how this business will be sustained,” Esch said.

Many city officials and business leaders view the Glacier Rail Park as one of the biggest opportunities for business development that Kalispell has had in years.  

Planners say that simply removing the tracks will change the face of downtown Kalispell forever, and allow the next generation of business to grow in a more pedestrian-friendly incubator.

 

CHS, the biggest of the two businesses that use rail service in Kalispell, is anticipating both growth and sustainability from the relocation.

Moving the CHS grain elevators at the intersection of Center Street and Fifth Avenue West is a critical piece of the rail park and city revitalization plan.

The agricultural services and supply business is working out a lease agreement with the Flathead County Economic Development Authority, which owns the rail park. CHS sent a team of lawyers and engineers from the corporate office to oversee the transition and will be presented with a memorandum of understanding on Wednesday.

Adopting the memorandum is crucial to the downtown core redevelopment plan.

CHS Kalispell General Manager Mark Lalum said the company is looking forward to the opportunity to benefit the city and its own business.

“It’s huge for us,” Lalum said. “We’re bringing semis through town and that causes some transportation and safety issues. And we can provide easier access to our suppliers.”

Lalum said the designs for a new CHS facility at the rail park have already been completed by CHS engineers. The new storage bins will house 200,000 more bushels of grain and 1,500 more tons of fertilizer.

“It’s a win-win,” Lalum said, “For the city and for the agriculture business.”

Kalispell won’t see any change at the current Fifth Avenue West location for a year, maybe a year and half, he said, because CHS doesn’t plan to stop production.

Once the tracks come out, CHS will be waiting and ready on the newly laid lines.

The only other company already set in the future rail park at the east edge of Kalispell is BNSF Railway.

CHS has been in negotiations about the relocation process and price for almost two years, Lalum said. He said it’s been a long, drawn-out process, but that’s the cost of getting to the next tier in business.

“Part of what I’ve learned through time is you keep working forward, and things usually work out in the end,” Lalum said.

The situation is not as clear for Northwest Drywall.

In August, Northwest Drywall actually pulled its support for the federal grant, saying the cost of moving the business to a new, larger facility at the rail park would mean destruction of the company.

According to attorney Esch, when the Mowers had originally agreed to pledge their support to the project for the grant application, the conditions included moving to a new facility that was “apples-to-apples” from a financial standpoint.

In April, a consultant for the project told the Mowers the minimum amount of land available would be three to five acres — two more than they needed — at a price of 40 cents per square foot.

“Their point was that there’s no sense in moving if their business wouldn’t be sustainable,” Esch said. “They couldn’t produce any more revenue; they would actually go into a significant amount of debt.”

Now the business faces a difficult decision. If Northwest Drywall decides to stay at its current location, the company won’t have access to supplies by rail, which account for about 50 percent of its incoming materials, according to Esch.

In the company’s letter to U.S. Department of Transportation Secretary Tim Foxx withdrawing support from the grant application, Pam Mower included letters from five different suppliers saying they wouldn’t be able to ship the materials by truck if Northwest Drywall moved off the rails.

“Without the ability to ship to your locations via rail, you could be in a position where your business could not function due to lack of product to sell,” Greg Palandrani, regional sales manager for one of their suppliers, CertainTeed, said in a letter.

“Losing the ability to support rail shipments into your Kalispell branch would change — for the worse — fundamental components of our business relationship. It is my hope that you are able to secure your rail-side access for many years to come and we can continue growing our business together,” said Jeff Richey, territory manager for Tamko Building Project.

Esch’s letter also called the situation a “boondoggle” created by the Flathead County Economic Development Authority and the Kalispell City Council.

Earlier this year, Northwest Drywall made upgrades of its own: a new facility in Helena and a new roof on its Kalispell building.

But as the grant announcement grew closer, Esch said the reality of the tracks coming out was setting in.

“What happens with the TIGER grant is it accelerates what may have been inevitable: the rail service being take out of Kalispell,” Esch said. “But it also frees them up with their resources to be more fair to these people.”

Esch said he and the Mowers have been discussing options. These options included keeping the business in operation at its current location, finding a completely new location in or near the new rail park, or closing the business entirely.

Two weeks ago, Esch said Mike Mower received a call from Kalispell Mayor Mark Johnson hoping to open negotiations. According to Esch, it was the first time anyone from the Northwest Drywall camp had been in contact with the city or economic development authority since the Mowers’ letter to Foxx.

“There has to be a substantial and constructive way to let this business be sustained,” Esch said. “The rail service to them is so essential.”

Nothing has been determined yet, nor has Johnson called again, but Esch said he feels the dialogue has opened up again.  

“The only thing that was really different recently was the effort [phone call] that was made, and that was very appreciated,” Esch said.


Reporter Seaborn Larson may be reached at 758-4441 or by email at slarson@dailyinterlake.com.

Railroad tracks lead to Northwest Drywall in west Kalispell. (Aaric Bryan/Daily Inter Lake)

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