The latest... From the Capital Press: A $4.16 million offer this month from the Washington State Department of Transportation to buy Watco's remaining trackage and operating rights on the Palouse Coulee City short-line railroad was dead on arrival. "We told them the offer wasn't going to be acceptable. They offered it anyway. We asked them why they would do that? What part of 'This is not acceptable' don't you understand?" said Ed Mekechnie, vice president of strategic development at Watco. Barbara Ivanov, director of freight strategies and policies at WSDOT, said the state is offering to pay Watco the highest of three independent appraisals it received for the trackage and operating rights not already purchased. But Mekechnie said these "desktop evaluations" have fundamental flaws. He said the appraisers valued the steel as scrap, but some of it is of a higher quality called "re-roll" and other track is good enough to re-lay directly. He compared the state's approach to making an offer to buy every car on a used car lot for $100. "Wash-Dot just can't bring themselves to be reasonable," Mekechnie said, arguing that any agreement on the net liquidation value should be part of a process that includes his company's input. "They developed an NLV without any input and ¤ guess what? ¤ it is the wrong number," he said. "Wash-Dot clearly doesn't want to get to yes." Watco's NLV number is a little more than $5 million. WSDOT's is $2.93 million. The $4.16 million offered by the state is not a straight exchange of cash. Besides the liquidation value, it includes $324,000 for the operating rights on the PV Hooper line, $290,000 for the right of way, track structure and operating rights for spur tracks that connect shippers adjacent to the line, and $615,000 in transitional support to Watco to provide weekly service without surcharges on the CW and P&L lines for 18 months beginning in July. Although the company would continue to operate the short line under contract within that specified period of time, Ivanov made it clear the future beyond that would depend on the company's performance. "The state would like to see high-quality rail service on the line. Whoever is able to offer that, we'd be happy to work with them. It is strictly a business decision," she said. The state's offer for the short-line railroad is the latest strand in a tangled web involving the 372-mile-long PCC system. Spanning a large portion of Eastern Washington wheat country, the state owns the P&L branch line from Marshall to Pullman with a spur from Thornton to Hooper Junction and Winona. It was purchased for just under $7 million. The state was supposed to have purchased the CW line for $1.28 million, but circumstances caused in part by a death in the office of freight strategy derailed the deal. When the state came back to Watco, the business environment had changed and the price had increased. Hence the latest proposal. Ivanov said the Legislature is clear it wants service restarted on the line. "The Legislature's very clear directive was to get this sucker going," she said. "That is certainly what we are attempting to do." Ivanov said Watco could turn down the offer and make a counteroffer. If it continues to pursue abandoning the line, however, the company needs permission from the Surface Transportation Board. "They cannot act without permission," she said. "The state would have remedies, as would the shippers or any other interested parties."
Watco isn't making any friends here. There's a line of common sense they seem to have crossed. The State has been helpful to them in the past. (Are they biting a hand that's helped feed them?) In the future, they could find themselves up against it. Such as when working with STB to acquire, and that State bears witness against them..... Their idea of a market for the used rail is dependent upon actually having a need/buyer out there. With so many miles of track coming up every day in this nation, is there really such a demand? If any, it's likely rather limited. What a mess. Boxcab E50
It sounds like both the state and WATCO are both being stupid. If WATCO said from the beggining that they wanted so much for the line I do not see why they should have to back down. Somewhere someone in WADOT is not getting the price thing through there head. I feel it wil be much cheaper for the state in the long run to buy the line for what WATCO wants and rebuild it then to see it ripped out and pay for the increased road mainitanece. Kevin
I have been talking with some BNSF condutors who worked the CW branch when BN/BNSF still owned it and they are under the impression that BNSF should have to pay part or the reabilitation of the line since BN/BNSF pretty much ran the line into the ground with little maintance before selling it. They all siad they loved working the line during grain season because they were guarented 12 plus hours with pleanty of OT. This is just some of the feelings of some BNSF employees. Kevin
If that line was "run into the ground," by BN/BNSF, thereafter, the latest occupant likely did nothing. Knowing them. A lot of the rail will not be useable as re-lay. Wear pattern, etc, won't mean a thing. The rails will be bent at joints or worse. Scrap. I would like to see information on that line, about the rail itself. I have genuine doubts about how valuable it truly is, beyond scrap. What is the market and shipping cost, for lighter weight (alleged) re-lay rail? If there is really that much available for salvage. :sad: Boxcab E50
From the Moses Lake, WA "Columbia Basin Herald" By Matthew Weaver Herald staff writer Operator, state each reject purchase proposals COLUMBIA BASIN -- Monday marked the date a response was requested for the latest offer in the continuing saga of a rail line marked as important by area shippers to move their product. The state made an offer in May to Kansas-based Watco Companies, Inc., to purchase the last of three sections of the Palouse River and Coulee City (PCC) Railroad but Watco senior vice president Mark Blazer informed the negotiating team later that month his company did not accept the state's offer for the purchase of the 108-mile CW Branch line, which runs between Coulee City and Cheney. Watco also did not accept the state's offer for operating rights for the lines, spur tracks and right of way, according to an e-mail from the state's Office of Financial Management and Department of Transportation to interested recipients and stakeholders June 14. According to the e-mail, Blazer didn't make a counter offer, but proposed that CW line customers make a minimum commitment of 3,180 carloads per year, and said Watco would be willing to work to reach an agreement to remove their embargo and restore service with reduced or removed surcharges by Aug. 7, with service to last for one year, if the state agreed to forgive Watco's outstanding loan of $442,000 and reimburse the company approximately $450,000 to upgrade the track and waive all state-mandated crossing, signing and other costs by May 31. The company also asked that customers on the railroad's P&L line make a minimum commitment of 1,539 carloads per year, and the state forgive Watco's outstanding loan and funds track upgrades. Under these conditions Watco would be willing to reach an agreement to offer reduced or removed surcharges for one year. The P&L line runs north and south between Marshall and Pullman, and a third line, the PV Hooper line, links Hooper, Winona, Thornton, Colfax and Pullman. The state responded last week with a rejection of the proposal, and offered in response an interim operating agreement, asking that PCC end the embargo and resume operations by Aug. 7, operating regular service for a period of one year, with PCC charging Burlington Northern Santa Fe Railway tariff rates with no additional charges. The state would forgive the $442,000 loan, make and pay for necessary repairs of the CW line and be responsible for determining the necessary work and having the work performed in consultation with the PCC. Minimum carloads for the P&L line would be 1,250, and 2,600 on the CW line. The second part of the state's offer is a purchase agreement in which Watco would agree to the sale of the PCC rail property, including the CW branch, and operating rights and related rail property for the P&L branch and the PV Hooper branch within the state. The state received another response from Watco Monday rejecting its latest offer. "Some things we are getting closer on, and some things are still a ways apart, but I think it's a positive direction," said Scott Witt, Washington State Department of Transportation freight multimodal program and policy manager. "We hope to consider their response and we're looking at some options at this point. At this point, I think we're starting to move forward a little bit, so I was encouraged by their response." Witt said he thought Watco's willingness to consider some things will result in a shared feeling of willingness all around, and gave the negotiations a "little better tone." Prior to the response, Witt said they had been "fairly stressed," but he had hopes that the state and Watco were getting closer to an understanding. The state Legislature agreed in 2003 to buy and renovate the sections of the PCC Railroad from Watco Companies, Inc. In November 2004, the state paid $6.5 million to buy the P&L branch and the PV Hooper branch. But the state failed to purchase the CW branch. Watco and the WSDOT had a verbal agreement on the sale of the branch, but no signed agreement. Watco closed the line down in November 2005.
Here ya go. Exactly what I've been saying would happen. This is standard Watco operating procedure. Setting conditions. Or else.... Those guys are so predictable.......... :thumbs_down: Boxcab E50
Well they better do something with the branch soon. Parts of the line out by Cheney have become so overgrown in the last month that I can not see the tracks. Meanwhile they keep shoving more well cars up the line. Kevin
While working the Lind turn yesterday we ran up the CW line for a little ways. We only went far enough to use the "Y" in Cheney but hey, now I can say I have operated on the CW. By the way PCC pulled a string of wells down the line yesterday and BNSF picked them up, word is BNSF has to have all of them off the line soon. Kevin
Watco had a weed sprayer where I live a couple weeks back. Maybe the same contractor. Some activity gives hope the CW will survive. Boxcab E50
Or sprucing up the place for sale? You think RailAmerica would be interested? They run over half the shortlines in the state right now. They seem to make a profit out of old lines.
Well, RA is willing to put a little bit of capital into an operation. Which Watco will not. So, if it did happen they'd attain ownership, things might be better. But I somewhat doubt it. The price tag is quite high at present. If the price of scrap dropped, they'd lose on investment big time. Boxcab E50
Good News! From another site: Watco cancelled its embargo of the entire Cheney-Coulee City line effective 1PM on Friday the 14th. Coincidentally, the STB's ruling on the State of Washington's filed complaint regarding the legality of the embargo was anticipated today--7/17. The per-car surcharge remains in place, as does the State's pursuit of purchase.
I'd love to know if they did rule. And likely against Watco. Which I'd bet was a good part of why the the embargo was dropped. Now, I wonder how legitimate is the surcharge.....??? Will anyone even try to ship, under such conditions? :sad: Boxcab E50
Yeah, Watco is dishonest in dealing with the State of Washington. One one side of the fence they told the state (after getting a $400k loan for improvements) the line couldn't be profitable. So, they quoted the state a price for the line to let them run it. Later, after it was determined that there was interest in keeping it running, they changed their price higher to the state (no contract). The state has made numerous offers. Each turned down by Watco. They have a temporary agreement and are moving cars, but it IS temporary. More here: www.watcocompanies.org
