Kalispell, FCEDA Defend Rail Park Following Opposition Letter

City leaders and the Flathead County Economic Development Authority are defending a proposed industrial rail park and Kalispell’s application for a federal transportation grant after a downtown business withdrew its support in a letter to federal officials and Montana’s congressional delegation last week.

Attorney Tom Esch, on behalf of Northwest Drywall and Roofing Supply, sent a letter expressing opposition to the city’s application for $10 million in federal transportation funding through the TIGER program, as well as the rail park project.

The city applied in spring seeking funds for a proposed industrial railroad yard off Whitefish Stage Road that is years in the making and would lead to the removal of the rail tracks in downtown.

City leaders say the rail park would spur a wide range of possible revitalization projects in the area as part of a core area redevelopment plan. The timeframe for the entire $22 million project hinges on the aid of federal funding.

Until Northwest Drywall’s letter surfaced at the last minute, the proposed project has enjoyed widespread public support.

Yet Esch and Northwest Drywall now claim the entire project is “not economically feasible” and would lead to outsized expenses for the family-owned company, which is one of two rail users in downtown.

“It’s a boondoggle in the making,” Esch wrote of the rail park. “While the ultimate removal of rail service might someday be best for downtown Kalispell, it should not be at the loss of this business stakeholder nor with such poor planning and tremendous expense to the taxpayer.”

Esch said Northwest Drywall previously supported the grant application and proposed rail park but “did so based on assurances that moving their business to the rail park would be in their economic best interest.”

Esch claims the relocation of Northwest Drywall would lead to more debt for the company and decreased revenues due to “inferior” access and visibility.

The letter was sent to the U.S. Department of Transportation and Secretary Anthony Foxx; Montana Sens. Jon Tester and Steve Daines; Rep. Ryan Zinke; Kalispell Mayor Mark Johnson; Jeannie Luckey, vice chair of the FCEDA board of directors; FCEDA; R. Howard Hill, DOT Office of Infrastructure, Finance and Innovation; and Ted Kadau with Watco Transportation Services.

DOT officials are in the process of reviewing national grant applications and successful applicants will be announced in the coming weeks. Kalispell has fallen short twice before.

»»» Click here to read the Northwest Drywall letter opposing the Kalispell rail park.

Mayor Johnson mounted a last-minute defense by responding with a letter that outlined the benefits of the proposed rail park. The letter included signatures of support from 60 community members, including the owners of Kalispell Center Mall and the entire city council.

“This opposition is troubling as the company in question acknowledges previous support for the project and states that the removal of rail service may ultimately be best for Kalispell,” Johnson wrote. “We definitely agree that this project is what is best for the City of Kalispell as it will transform this area with long lasting improvements, creating economic opportunities, and sparking community revitalization.”

Johnson said he welcomed the opportunity to address the claims in Esch’s letter and provided contact information.

»»» Click here to read Kalispell’s letter defending the city’s grant application and proposed rail park.

FCEDA officials dispute Esch’s claim that there was a “long period of no communication” between rail park planners and the company.

Johnson and Luckey have been in regular discussions with Esch on behalf of Northwest Drywall since spring as the rail park plans took shape, according to FCEDA Project Manager Kim Morisaki.

“Every time (Johnson and Luckey) have been proposing some sort of solution to address all of Northwest Drywall’s concerns or objections, and all the proposals were made in good faith to protect Northwest Drywall from any possible negative impacts,” Morisaki said.

Morisaki said multiple options were proposed, including paying for trucks to ship products from Northwest Drywall’s current facility to the future industrial park, where it could be loaded onto rail.

“We’ve made a variety of suggestions to possible solutions, which were all rejected,” Morisaki said.

Northwest Drywall told FCEDA that in order to move to the rail park it wanted $1.2 million for its existing building and $750,000 in cash to build a new facility.

FCEDA officials balked at the request and asked for an appraisal of the company’s current building and also sought to evaluate the variety of relocation costs before agreeing on any dollar amount.

That was the last communication between the two before last week’s letter from Esch.

»»» Click here to read the signatures of support for the Kalispell rail park.

Esch, in an interview with the Beacon, acknowledged the proposal for nearly $2 million to relocate Northwest Drywall.

Esch said Northwest Drywall is not motivated by the desire to obtain a new building and the existing site is adequate. The new site would be a “significantly impaired location from a transportation standpoint,” Esch said.

“A new building would cause them to incur additional expenses without the promise of increased revenue,” Esch wrote.

He added, “In spite of their best efforts over several meetings and phone calls the parties have been unable to arrive at an agreement.”