Montgomery County loses intermodal challenge

By Jeff Sturgeon, Roanoke Times – 11/5/2011

Lifting a major obstacle to the building of an intermodal rail yard in Elliston-Lafayette, the Virginia Supreme Court ruled Friday that most of the cost can be paid by the state.

The Montgomery County Board of Supervisors, which had decided to challenge the massive freight-handling yard proposed by Norfolk Southern Corp., saw its three-year legal challenge end unsuccessfully.

County Administrator Craig Meadows said he was disappointed by the ruling, “but we respect their decision on this matter.”

Now that the lawsuit is over, that doesn’t mean that Norfolk Southern will break ground immediately. The construction phase is at least a year away.

State officials expect the facility to open about the same time as crews complete improvements to North Fork Road that are not scheduled to begin before 2013.

NS spokesman Robin Chapman said another factor is the railroad business in the current economy. When the project is built “is kind of dependent on market conditions,” he said.

Montgomery County will receive real estate tax revenue from the project, Chapman said.

Dubbed the Roanoke Regional Intermodal Facility, the $35 million freight handling yard would take out several farms to establish an expanse of rail sidings, loading pads and cranes for handling boxed freight. Trains up to 10,000 feet long are expected to stop to unload or take aboard freight containers carried in and out of the facility by truck. Container volume along the route is expected to jump by 150,000 units a year.

The area of 1,300 people will gain about a dozen direct jobs from the facility.

While some residents of the area fear the complex — to operate 12 hours a day initially — will detract from the rural lifestyle and hurt real estate values, others see prospects for regional spinoff business growth.

The chosen spot for the private facility, one of 10 area locations considered by rail and government authorities, is a flat, 65-acre area beside an existing track. The track is part of the east-west Heartland Corridor, a Norfolk Southern rail line running between the Virginia ports and the Midwest.

Right now, Heartland Corridor freight trains go right past Elliston without stopping.

While the case wound through courts, the railroad has become busier with freight.

The intermodal business at Norfolk Southern was up 8percent during the third quarter of this year compared with last year.

Getting a jump on the Elliston project, the railroad bought property in 2009 from multiple landowners.

But railroad officials ceased land negotiations some time after the county sued. The current status of those negotiations is unclear.

Frank and Joyce Howard, who live on a family farm, learned in 2006 the railroad earmarked their land for the project. Then in 2008 the county sued to block it. They have said they don’t know whether to move or stay. They don’t know whether to keep up their home or let it go.

Joyce Howard was crying when reached by phone Friday.

“I think she’s just glad it’s over,” said her son, Allen. “I don’t know if they’re happy tears or sad tears.”

Because local zoning doesn’t apply to railroads, county officials had little option for opposing the project except in court. The county argued the project’s funding plan as unconstitutional. The railroad has said it would not build without state money.

But after spending $225,191 on legal fees through Aug. 22, the county’s legal challenge is over.

“This would be the end of the line for the case,” said Virginia Beach appellate lawyer Steve Emmert, who writes about judicial rulings.

The justices upheld an agreement under which the state Department of Rail and Public Transportation, with approval from the Commonwealth Transportation Board, agreed to reimburse the railroad 70 percent of Heartland Corridor development costs in this area, or nearly $27 million — most of it for the intermodal yard.

County lawyers argued that, under the Virginia Constitution, the state cannot get involved in building or paying for internal improvements other than roads and parks. The justices ruled that the railroad project is sufficiently tied to roads.

Norfolk Southern is required “to operate the facility in such a way as to effectuate a large-scale diversion of truck traffic from Interstate81 to rail,” the justices wrote.

If that happens, the state will have essentially bought more capacity on I-81 with its subsidy of the Elliston rail yard, the justices said. A related benefit would be lower maintenance costs, the justices said.

The state said shipping volume on the rail line at the site must rise by at least 150,000 freight containers a year after five years of operation, or else Norfolk Southern has to repay some of the money, the justices said, quoting the agreement.

The county also cited the state’s inability, under the constitution, to extend its credit to a private company. The justices ruled the agreement involves a grant, not an extension of credit.

The project appears likely to cost Lafayette, a community of 450 people half a mile away from the site, in the form of more noise, lights, emissions and truck and train traffic.

The rail yard is expected to initially generate 87 or 88 truck trips of 50 miles or less per workday and almost three times that after 10 years. A good portion would likely use Interstate 81 through the Ironto interchange.

The closest link to I-81, winding North Fork Road, will need more capacity. It is now scheduled to be reconstructed with two 12-foot lanes and an 8-foot outside shoulder at a cost of $17 million in state funds, according to plans.

Some nearby residents are cheering the railroad on.

Don Robertson, a former railroad employee, said he predicts some warehouses will locate in the area because of the rail yard, a good thing because “Montgomery County needs to improve its industrial tax base.”

A consultant at HDR Decision Economics predicted in 2008 that the rail yard will create 740 to 2,919 additional jobs at businesses during the first 15 years. That’s based on an analysis of several intermodal yards in other states.

The Elliston site sits, however, in a narrow valley bounded by mountains on the south and the Roanoke River and Interstate 81 to the north.

Ralph Williams, who is with commercial sales and leasing at Thalhimer, said he is marketing several industrial tracts near the Ironto interchange whose value would be enhanced if the rail yard is built. However, he said he believes most of the intense, intermodal-related development is probably going to happen where land is more plentiful such as in Pulaski County, site of a nearly 1,000-acre business park with no tenants.