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Saturday, June 3, 2023
June 3, 2023

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Lawyer says Chelatchie rail lease not valid

He claims deal with business in violation of county code

By , Columbian political reporter

Critics of Clark County’s plans to allow industrial development along the Chelatchie Prairie Railroad argue that an agreement key to the project allows a company to use a large county asset rent-free and is based on faulty legal grounds.

Since last year, the Clark County Council has been seeking to change state law that allows freight-dependent businesses to set up along a stretch of the rail line in Brush Prairie. Local environmental group Friends of Clark County and Seattle-based land-use group Futurewise have questioned the necessity of the initiative and criticized it for being dominated by business interests. They’ve hinted at taking legal action.

Now a lawyer for Friends of Clark County has questioned if the county properly approved the lease with Portland Vancouver Junction Railroad, the company that operates the rail line. Attorney David McDonald also questioned the fairness of the terms of the lease. The agreement has so far allowed Portland Vancouver Junction Railroad to avoid paying rent to the county.

“It seemed to be an extremely one-sided document, whereas all the benefit went to the railroad and no benefit went to the county,” said McDonald.

But Eric Temple, the president of Portland Vancouver Junction Railroad, said that the lease is “absolutely valid.” He said he’s operated the railroad for years without a profit while also making the business more viable.

“If anything, this lease is unfair to me,” said Temple. “It’s definitely one-sided to the county.”

Unleashed lease?

In late October, McDonald wrote to Clark County Chief Civil Deputy Prosecutor Emily Sheldrick about the lease for the railroad. In his letter, he pointed to a provision in the county’s code that requires all county leases to be approved by its governing board.

“However, the records I have received do not show any board approval of this lease at all, much less at the time of it’s (sic) execution,” wrote McDonald.

He pointed out that the 2004 lease was signed by Pete Capell, then the county’s public works director. McDonald further wrote that the lease is void without the approval of what was then the board of county commissioners.

He asked Sheldrick to consider his letter a public records request for any documents showing that the commissioners had approved the lease. McDonald said that he has not heard back from Sheldrick (who couldn’t be reached for comment).

The lease runs for 30 years, with two options to renew. McDonald further argued that Clark County code limits the term of any lease to 10 years unless the county makes a finding that it’s in the public interest and meets one or more conditions about the value of the improvements made to the property.

“If the county determines that the lease does not comply with the code, what action will the county take to terminate the lease, if any?” wrote McDonald.

Futurewise Director of Planning and Law Tim Trohimovich said in an email that his group agrees with McDonald’s analysis. The Columbian’s archives include coverage of the lease’s approval but make no mention of a vote by the county commissioners.

Temple signed the lease as vice president of Columbia Basin Railroad in 2004. Temple said that he later purchased the lease for Portland Vancouver Junction Railroad in 2012, with the approval of the commissioners, to have more control over it.

He said that there’s nothing in the law that kept the county commissioners from delegating their authority to the Public Works director to authorize the agreement. He argued that the county commissioners and later the county council tacitly reaffirmed the lease by adding amendments and memorandums of understanding to it.

In a follow-up email, he said that the county guaranteed the lease’s legality, which he called “ironclad.” Temple also said that McDonald misread the county code and overlooked exemptions that allow for the terms of the lease, which he said have been reviewed by multiple county prosecuting attorneys.

“He’s not the right attorney to interpret this lease,” said Temple. He added, “It’s a ridiculous argument; they are just throwing stuff at the wall.”

Calling the situation “confusing,” Clark County Council Chair Marc Boldt said that no one can find if the lease was actually voted on by the county commissioners.

“I don’t think the lease is valid but I’m not a judge,” said Boldt in an interview on Clark County Focus, a show on the CVTV government access channel. Boldt, who lost his recent bid for reelection, said that the county may need a short-term lease followed by a long-term lease. He said the issue may end up in court.

But Boldt said that the county doesn’t have the capabilities of operating a railroad and a serious challenge to the lease could put the county in a difficult position.

Rent free

Under the terms of the lease, Portland Vancouver Junction Railroad pays no rent to the county until it transports 1,000 carloads in a calendar year by rail. After that, the county charges $10 per carload for the next 1,000 carloads, which gradually increases to $30.

The lease holds Portland Vancouver Junction Railroad responsible for paying required permits, fees and taxes, as well as maintenance. The lease also allows the company to deduct up to half of the rent to offset taxes and fees.

Jerry Barnett, the county’s railroad coordinator, said that the company has yet to reach a thousand carloads but got close last year, when it transported 853.

Boldt questioned if the lease is reasonable and pointed out that under its terms the county won’t be able to make any money unless traffic significantly increases, which, he said, would impact residents.

“When you wake up a railroad like this there’s going to be a lot of impact,” said Boldt. “So I don’t think that lease is really valid, you know, at that point.”

McDonald said that he doesn’t know how much money Temple has made from the lease but said he suspects he would have gotten out of it if he was losing money.

A story that appeared in The Columbian shortly after the lease was signed in 2004 states that the “railroad, formerly operated by the Lewis & Clark Railway Co., is in poor shape and has been a money loser.”

According to the story, improvements to the track could cost Columbia Basin Railroad, the company that first signed the lease, between $6 million and $9 million. At the time, Temple told The Columbian that he hoped to entice tourists bound for Mount St. Helens to take a side trip on a dinner train.

Now, Temple said he has “made no money at all” from the railroad. In a follow-up email, he pointed to county documents showing that the rail line has required significant maintenance and capital upgrades.

He said that he’s solicited millions in grants and other money to improve the condition of the railroad. When he took over the lease, he said the railroad was moving 43 cars per year, which he called “completely unsustainable.”

“The county has been greatly enriched by this contract,” said Temple.

Temple said that he took a gamble on taking the lease to operate the railroad. He said it will pay off when the industrial development along the railroad gets going. In the process, he said it will create family wage jobs while increasing the value of the railroad (which the county once considered scrapping) to $50 million or more.

“I’m excited about the future,” he said. “I don’t have any desire to step away from this.”

Columbian political reporter