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Railroad knew ethanol plant would overload tracks Union Pacific Railroad could have told ethanol plant and Sioux City, Iowa city officials months ago it that its railroad spur into an industrial tract could not handle the trains needed to deliver grain to the plant. Instead, Baard Renewables officials continued planning to construct the facility near Sioux Gateway Airport. Earlier this week, that proposal to build a $140 million plant near Sioux Gateway Airport was derailed by the railroad. "You don't just pick a site and then come to the railroad," Wayne Borg, senior business manager for Union Pacific's industrial development, told The Journal on Friday from Chicago. "The point is in today's environment, when there is more business on the rail in the history of railroads and to say this is my site and bring the rail here -- those days are over. "It just doesn't work that way. We could have saved them a lot of time." He said he first learned of the proposal in February after a city official called him. Baard officials announced their plans to build the plant last November. "We run every new prospect by marketing, engineering and operating. I'm not sure to what extent they spoke to the rate folks either." Baard officials said they had been discussing rate charges all along with UP officials. Borg met with city leaders and ethanol plant representatives Tuesday to discuss the rail spur issue. At that time, he said he told them Union Pacific is not interested in spending $2 to $3 million to upgrade the track to Bridgeport West, the new industrial site near the airport. Mayor Craig Berenstein told reporters at Friday's morning press conference that construction of the ethanol plant in Bridgeport West "is not likely to occur." He further elaborated on comments he made Thursday to The Journal about the stunning news that the ethanol plant won't be built at that location. The council had planned to approve a development agreement at Monday's meeting, paving the way for construction to begin. "We will continue to look for other locations," Berenstein asserted. Construction of the plant would have been the single-largest capital investment in Sioux City in recent memory. Don Willoughby, the city's business development coordinator, told the Journal Thursday, "Baard's initial discussions with Union Pacific had led them to believe the only problem might be on rail charges. Union Pacific said they were not going to spend the $2 million to $3 million necessary to upgrade the Wickham Spur, which serves all of Bridgeport, part of Expedition Business Park and the future development of Bridgeport West, because the spur is at maximum capacity now." The tract in Bridgeport West is owned by The Siouxland Initiative, which has partnered with the city on the project. Baard officials said that site is no longer desirable if grain can't be delivered to the plant by rail. The company also planned to move grain by barge on the Missouri River. "Everybody's disappointed on this," Craig Conner, Baard's vice president of finance, said from Cincinnati, Ohio. "Information like this coming up this far into the process usually doesn't happen. That Wickham Spur was designed and built for smaller loads than what we were going to be putting on it. That's where our due diligence fell down." Baard switched developers mid-project, which resulted in the rail spur issue not being checked thoroughly. "That probably was a piece of information that didn't get handled real well. That's why you do these things," Conner noted. Baard officials have been talking to Union Pacific representatives throughout the planning stages on rate charges. Willoughby said those discussions took place with UP's rate division and not its industrial development division. "That's basically what happened," Conner said. Berenstein said, "We're very disappointed that this location does not appear to be a viable location. We will continue to work with Baard to find an appropriate location in this city. There was a lot of hard work we put into this. We're not going to let it go. It's still viable." Conner said, "We're still interested in the Sioux City area. We like the area. The city has been helpful with us. They're a very knowledgeable group of people." Last November, Baard executives announced they planned to build an ethanol plant, which would produce between 55 million to 60 million gallons of the fuel additive. Conner recently told the Journal the company planned to double the size of that plant, producing between 100 million and 110 million gallons. Ethanol typically is blended with unleaded gas to make fuel burn cleaner and to meet federal air pollution requirements. Willoughby showed Conner several alternative sites this week. However, those tracts of land are in private ownership. "In a sense we're not necessarily going back to Square One, but close to starting over. In looking at other sites, we have to make sure the utilities and rail service are there," he said. The city has not asked if UP would expand the spur if the city foots the bill. "This just happened Tuesday night," Willoughby explained. "They said it would take a minimum of 80 acres to put in the necessary trackage because of the rail curvatures. You would have a big circle (for the track) and the plant would have to sit in the center of it. The Bridgeport West acreage is more rectangular than square. We would have to have some additional discussion with The Initiative on that. ... We're not going to quickly make a snap decision" to offer to pay for the spur. City officials plan to meet with The Siouxland Initiative officials to look at options. Conner said, "I think there's a better solution that the railroad would like better, the city would like better and we would like better" at a different location. City and the Initiative have planned to expand industrial development in Bridgeport West. "We have a large industrial area we're trying to fill up and a lot of other vacant spaces out there in Bridgeport West and the Expedition Business Park," Willoughby acknowledged. "Now they're saying the spur's full and they can't handle any more cars." Railroad accessibility would be a requirement for a number of companies, but not to the degree that an ethanol plant would require. "They said a unit train would block four intersections at a time as it came into the Bridgeport West area," he said of a train transporting grain to the ethanol plant. Berenstein said he would be willing to discuss the impasse with Union Pacific executives, adding, "I'm not convinced that would be very productive." The Siouxland Initiative owns that 109-acre site. As part of an earlier public-private partnership, the city spent $1.4 million to put in utilities and other infrastructure for the bare land. The city had planned to buy about 60 acres needed for the project at $10,000 an acre, the same price the Initiative paid for it. In turn, the city planned to sell that land to Baard Renewables for $1. In return, the company would agree to a minimum assessed valuation and to create between 50 and 55 new jobs. The city's no-cost offer of the shovel-ready land, which has a market value of about $35,000 per acre, played a major role in Baard's decision to locate in Sioux City. Baard Renewables is the renewable fuels division of Baard Energy, a Vancouver, WA-based company. The renewables division has two other ethanol projects in Raveena, NE, Coshocton, OH. - Lynn Zerschling, The Sioux City Journal.
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