Vt. Railway, OMYA may pay $22 million for rail projects

February 5, 2003

By BRENT CURTIS Herald Staff

MONTPELIER — State transportation officials were told Tuesday they might not need to chip in for rail projects in Rutland and Middlebury worth more than $120 million.

Transportation Secretary Patricia McDonald and other officials in her agency got the word from OMYA Inc. and Vermont Railway Inc. at a special meeting Tuesday in Montpelier. About 30 state and company officials gathered to discuss plans to move the Rutland railyard and build a three-mile rail spur to a quarry in Middlebury.

The state has invested almost $1 million for planning on the railyard project alone and the Agency of Transportation has included $100,000 in the coming year’s budget.

But the state wouldn’t need to pitch in any more money if an agreement between OMYA and Vermont Railway works out as planned.

Presidents from the two companies said Tuesday they have agreed to pay a combined $22 million over the next 23 years. The money would be used as a match to get $110 million in federal grants that planners are depending on to pay for the bulk of the projects’ expenses.

“OMYA is committed to it and we are, too,” said David Wulfson, president of Vermont Railway. “We’re both very comfortable with the arrangement.”

The two companies have agreed to pay surcharges on the freight they receive for the next two decades — 60 cents a ton for OMYA and 30 cents a ton for Vermont Railway.

“The lightbulbs really started to click on this last summer,” OMYA President James Reddy said after the meeting. “It works for us economically and if it works for the city and the state, that’s great, too.”

But there may be a catch.

Planners want to count payments on the principal and interest of a federal loan toward the local match requirement. The $11 million Railroad Rehabilitation Infrastructure Finance loan would accrue about $11 million in interest over 23 years, organizers said.

It’s unclear whether federal officials will allow interest on the loan to count toward the match.

“We’ve heard of some precedence for this, but we haven’t confirmed anything yet,” said OMYA spokeswoman Lee Khan.

The new transportation secretary said after the meeting that the finance proposal and other elements of the two projects sounded good, but she wanted more time to research the projects.

“There are a lot of key issues we need to look at,” McDonald said. “A lot of great ideas have been put on the table and we’re clearly interested in pursuing them, but we need to look at the scope of the projects more.”

“There are real economic implications here and the governor has talked about the importance of economic development,” McDonald said.

Reddy said his company is already investing more of its resources in rail. OMYA has ordered 550 rail cars to augment the 1,600 currently in operation.

“We intend to grow by rail. It’s important to us,” he said.

Right now that growth is curtailed, he said, by the lack of a rail spur to the company’s largest quarry in Middlebury.

Vermont Railway is also pushing the limits of the Rutland railyard’s capacity, said Wulfson and Matthew Sternberg, executive director of the Rutland Redevelopment Authority.

“(Vermont Railway) estimates that in two years they will max out the existing capacity,” said Sternberg, who has been using state funds to plan the relocation.

Moving the railyard out of downtown Rutland to a 77-acre parcel south of the city would expand Rutland’s economic horizons by opening up future industrial sites that are now inaccessible, Sternberg said.

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