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News / Business

Port’s rail project quietly chugs along

Officials expect $275M to deliver jobs, economic jolt to Clark County

By Aaron Corvin, Columbian Port & Economy Reporter
Published: June 30, 2012, 5:00pm
2 Photos
The Port of Vancouver is expanding its rail system from 16 miles to 44 miles of tracks.
The Port of Vancouver is expanding its rail system from 16 miles to 44 miles of tracks. Photo Gallery

Railroad tracks and shipping terminals may never capture public attention in the way that images of a future Vancouver skyline of swanky condo towers and offices stir a feeling of progress and prosperity.

Yet the massive public investment the Port of Vancouver is making to remodel its rails and to lure private investment — a venture that has cranked and clanked away largely unseen by the public — could give Clark County a much-needed push toward a more visible progress and prosperity.

The vehicle for the port’s play to pump up the economy is the West Vancouver Freight Access project, a $275 million local stimulus program that marks the largest capital project in the port’s 100-year history.

It’s just about the only big, infrastructure-building game in town as the timeline for the proposed Columbia River Crossing gets pushed further out and as controversy over light rail smolders.

The publicly funded project, with no groundswell of public opposition, promises thousands of construction and full-time jobs.

This year, construction continues toward a goal of wrapping everything up by 2017. Port Executive Director Todd Coleman said he expects to nail down the final terms of an agreement with the Federal Railroad Administration this fall that will put an $80 million “bridge loan” in the port’s pocket. That expected loan will enable the port to continue building the freight rail project as it negotiates a deal to bring BHP Billiton — the Australian mining giant — to Terminal 5 to export potash. Once BHP Billiton is up and running, the company will generate revenues for the port to reinvest in the project.

‘Exponential’ growth

It’s a heady time for the Port of Vancouver — the third-largest port in Washington and the second largest on the Columbia River. Counting everyone from China and Japan to Europe and South America as trading partners, the port’s business is 85 percent exports and 15 percent imports. It handles everything from steel and wind turbines to automobiles and bulk minerals. Occupying four miles of waterfront, the port has no encroachment problems from urban development. Its 2,127 acres of property includes more than 100 acres ready for development and — on its west side — more than 500 acres planned for future development.

“All of our engineering contemplates continuing to move west,” said Curtis Shuck, the port’s director of economic development and facilities.

Indeed, the freight rail project is all about movement. On the drawing board since 2004, the project’s improvements include enlarging the port’s internal rail yard, building a loop track and creating a new port entrance that goes underneath the busy north-south mainline tracks.

The idea is to enable the port to handle more cargo and at a faster rate, with smoother internal operations and the elimination of chokepoints that have slowed connections to the nation’s rail network and international commerce.

In a way, the port’s focus on long-term investments to attract business echoes history.

When the Great Depression gut-punched the economy in the 1930s, the port, like so many other enterprises, wobbled as its overseas trade plummeted.

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But it still managed to make investments, attracting a new export facility, welcoming a new post-Prohibition tenant — Great Western Malting — and purchasing property for expansion.

Fast-forward to today.

The Great Recession casts a long shadow, with Clark County at 9.4 percent unemployment.

And, once again, the port is busy trying to help turn things around — only this time on a much larger scale.

Before he retired as the port’s executive director in April, Larry Paulson spoke about the port’s work during the Great Depression and what it’s doing now to make things better. “The port’s current investments have not only helped us during the recession with some of our most successful years in terms of cargo,” he said, “we have also positioned the port to grow. This growth has already begun, and will be exponential in the coming years.”

Indeed, the freight rail project will expand the port’s rail tracks from 16 miles to 44 miles. It will increase the number of rail

cars the port can handle from 50,000 per year to 160,000 per year.

Altogether, the rail improvements, coupled with new private investment and other projects, will, by the early 2020s, catapult the port from handling about 5 million tons of freight annually to 15 million.

What’s more, the port expects to create 1,000 permanent jobs in the next five to 10 years as it increases its rail capacity, helps existing companies expand their operations and builds out Terminal 5.

And the port estimates the $275 million project will create about 4,000 construction jobs over its lifespan.

Early estimates pegged the project’s cost at $150 million. But port officials have revised that number to include acquisition of right-of-way. They’ve also adjusted the project’s budget as customer demand has grown and as opportunities have risen.

“These are not cost overruns or major changes in scope that we didn’t anticipate,” said Coleman, the port’s executive director. Bid packages have been coming in below the port’s estimates, Coleman said, and project change orders are running under 2 percent.

Altogether, the $275 million cost includes $85 million in property acquisitions and $190 million in construction expenses.

For that public investment, the port expects to generate some $500 million in private investment. Port officials say the West Vancouver Freight rail project already has lured new companies to town, including BHP Billiton and Farwest Steel.

And it has prompted large investments and improvements by existing tenants, including United Grain Corp. Shuck, the port’s director of economic development and facilities, said the port expects the freight rail project to attract more companies and more private investment in the years to come. It will serve, he said, as a “platform to create additional jobs.”

But some businesses in Clark County haven’t had to wait for the rail project’s benefits to kick in. They include Vancouver-based Rotschy Inc., a private, family-owned excavation and construction company, which has completed at least four multi-million-dollar parts of the port’s project. It plans to bid on more of the port’s rail work.

“It’s been a wonderful thing for us,” said Cornell Rotschy, vice president for the company. The economic crash battered Clark County’s construction market, leaving “contractors like ourselves to rely extensively on public works projects,” Rotschy said.

In tight times, he said, the company, which employs 150 people, expands its geographic boundaries to look for work, which means more travel for employees. Rotschy said the port’s rail initiative, however, has meant just the opposite — not only has it kept the company’s employees busy, he said, but it allows them to work close to home.

Tremendous headache

Not everyone is a fan of the port’s freight rail project, however.

Victor Winkler, president and CEO of Metro Metals Northwest, Inc., the parent of port tenant Pacific Coast Shredding, calls the project a “headache.” Construction of a key, 600-foot-long rail segment of the port’s freight rail project will cut into just over an acre of Pacific Coast Shredding’s operations.

It’s enough of an impact to upend Winkler’s operations, forcing him to reorient the metal processing company’s giant shredder, relocate its truck scales and entrance, demolish an administration building and make other changes.

Although he’s still working through how much it will cost him, Winkler expects to shell out millions to make way for the port’s rail tracks. “Our business is extremely strong,” he said, but that doesn’t mean the port’s project isn’t causing problems. “It’s causing us tremendous headaches,” Winkler said.

He wants the port to pay for all of the costs involved in rearranging his operations. Negotiations on the matter continue. Shuck, the port’s director of economic development and facilities, said the port and the company are “working together in good faith” to resolve the matter.

Port officials said the project is otherwise going smoothly, staying on time and on budget. And they point to the positive impacts it’s had — and will have in coming years.

For now, as more of the rail project’s segments are pieced together, this year will stand as “the busiest construction year in the port’s history,” said Theresa Wagner, the port’s communications manager.However, she added, “we anticipate the next three years being even busier.”

Aaron Corvin: http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com.

Columbian Port & Economy Reporter