(The following story by Brad Cooper appeared on The Kansas City Star website on May 18, 2010.)
KANSAS CITY, Mo. — Veiled by the Kansas debate over cutting services or raising taxes was a $35 million gem that lawmakers left for BNSF Railway.
As the Legislature passed a sales tax increase to avoid deep spending cuts, it also cut a deal that will allow BNSF to start work this year on a controversial Johnson County freight hub that’s been delayed by the economy.
The project is “is a critical part of Kansas’ new transportation plan, which will invest billions of dollars in the Kansas economy over the next 10 years while putting tens of thousands of our fellow Kansans back to work,” Gov. Mark Parkinson said in a statement.
The railroad gets the money in exchange for agreeing to start the project this year, officials said.
BNSF couldn’t be reached for comment, but state officials said the company has signaled that it will move ahead.
The incentive will come from state sales taxes paid on utilities serving the entire 1,000-acre project, which includes the nearly 500-acre freight yard plus a warehousing complex being developed separately.
State officials note that the freight yard and warehouses will pay taxes that they could have potentially avoided in the long run.
“The reality is we’re getting them to agree to pay those (taxes) when they probably would have been granted an exemption,” said Joe Erskine, a deputy state transportation secretary.
The railroad gets the money in exchange for agreeing to start the project this year, officials said. The project has been in the works since at least 2005.
At one point, BNSF had eyed starting construction in 2007, but getting a required federal environmental permit took much longer than expected.
The company announced last year that it was indefinitely delaying the project because of the recession and shrinking freight volumes.
It was immediately unclear how BNSF will proceed, but one local economic development expert was optimistic.
“I am confident that this project has remained in their long term plan. My hope is with this incentive that was created by the Kansas Legislature, we may see this project move ahead sooner than it otherwise would have,” said Bob Marcusse, president of the Kansas City Area Development Council.
Now located in Edgerton, the proposed rail hub is one of the metro area’s biggest economic development projects, promising to invest hundreds of millions of dollars and create thousands of jobs.
BNSF said it needs the new freight center because of increasing demand and space limitations at its Argentine yard in Kansas City, Kan.
Some residents have argued vehemently against the project, saying it poses environmental risks not only for their community but for the entire Kansas City area. They have even joined with a national environmental group trying to force BNSF to conduct a more extensive environmental review of the environmental impacts.
Eric Kirkendall used to live neaer Gardner and has been fighting the project for several years. Now a Lawrence resident, Kirkendall blasted the proposal on Monday.
“This was stealth legislation to help the richest man in America, Warren Buffett, his BNSF railroad company, and their developers,” he said.
“The warehousing and trucking this mega-facility generates will impose traffic congestion, diesel exhaust pollution, and illnesses on the citizens of Johnson County. This is a lose-lose proposition for all Kansans,” he said.
The Natural Resources Defense Council, along with several area residents, have asked a judge to block the permit issued for the rail yard by the U.S. Army Corps of Engineers, which found that it wouldn’t have a significant effect on the environment.
The plaintiffs claim that the corps failed to adequately evaluate the environmental effects of the rail hub, which would about 30 miles south of Kansas City.
The lawsuit contends that the hub, along with a proposed warehouse complex next door, will generate substantial air pollution.
State Sen. Karin Brownlee of Olathe didn’t support the tax bill that contained the incentive.
But the money in the bill “does jump start a very important project that’s going to be a true economic boost in the region,” Brownlee said.
The senator noted that opposition to the project isn’t necessarily monolithic.
She noted that neighboring Edgerton jumped in to the annex the project after Gardner decided it didn’t want it within its boundaries.
“Edgerton quickly embraced it. When the door of opportunity opened they ran though it,” Brownlee said. “In that sense, you do have a community down there that could see that this could be very beneficial to their community.”
State Rep. Mike Kiegerl of Olathe also voted against the tax bill. While he thinks the rail project would be positive for the community, he opposed giving any kind of financial incentive to a wealthy company like BNSF. He said can’t be bow to pressure to give BNSF money so they it won’t delay the project any longer
“I do not believe in corporate welfare. I do not believe in all those stimulus programs. Somebody has to pay those sooner or later,” Kiegerl said.
“This is a very profitable corporation. Thirty-five million is a drop in the bucket for them. I know they would like to have it. I would like to have more money. Everybody would.”