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Plans for freight-rail yard stir debates
May 31, 2013
Supporters of a massive freight-rail switching yard near historic Picacho Peak are increasing pressure on the Arizona State Land Department to auction its farmland there to let the proposal happen.

State and U.S. lawmakers urged the state to sell the land between Tucson and Casa Grande in southern Arizona quickly, and a leading Arizona economist issued a report faulting the state’s reasons to proceed cautiously.

The Union Pacific Corp. wants to buy 950 acres of state-owned land to build a 6-mile-long, 75-track-wide classification yard southeast of the peak, on the other side of Interstate 10. The yard would be the largest between Los Angeles and Texas. It would improve the freight hauler’s efficiency by enabling it to reconfigure trains from ports for specific cargoes and destinations, including Phoenix and Tucson.

Union Pacific officials say the so-called Red Rock site is the only suitable one in Arizona. The company first expressed interest in the laser-leveled farm in 2006.

Last September, the state land agency released two consultant’s reports that questioned the economic value, environmental consequences and engineering needs of the Red Rock Classification Yard. The reports said that the site was not economically competitive, that jobs benefits had been inflated and that Union Pacific would have to spend many millions of dollars on construction just to ready the site.

The State Land Department’s job is to get the best deal for the best price at the best time, to raise money mostly for education. Sometimes that means auctioning, sometimes waiting.

The agency owns enormous swathes of land east of Red Rock and wants to preserve that area’s economic viability. A rail yard could act as a barrier, the state fears, so it wants Union Pacific to pay in advance for the work needed to keep state land accessible and ready for development.

But within weeks of the state reports, Republican leaders U.S. Rep. Trent Franks and state Senate President Andy Biggs urged the State Land Department to quickly sell the property.

Supporters commissioned a study by Elliott D. Pollack & Co., which they released late last month. The Pollack report found that the state’s consultants studied the wrong market when they compared Pinal and Maricopa counties’ industrial bases.

“This property will not compete with the Phoenix market, but it will serve the Tucson market,” author Rick Merritt said.

Raw materials and manufacturing components will reach metro Phoenix less efficiently without the yard, he said. That’s because Union Pacific wants the site to minimize the amount of backtracking from its main line about 25 miles south of Phoenix, which is served by a spur.

Pinal County added fuel to the political fire. Supervisors passed a new resolution urging a quick state auction, and county assessor Douglas Wolf publicly criticized one of the state’s key findings.

“Land values will not go down,” Wolf said. “It doesn’t follow anything I’ve known for 30 years.”

Pinal County leaders want Red Rock to help diversify a local economy that still suffers from 16 percent unemployment, he said.

In the short term, county officials expect the project to create about 250 permanent, well-paid blue-collar jobs.

“If that’s all it was, it would still be worth doing, but the long-term ripple effect is tremendous for us,” Wolf said. He called the rail yard “fertilizer” for that effort.

He, Merritt and county economic-development manager Tim Kanavel all envision a freight-logistics hub and ultimately an inland port.

The idea is that other firms will locate next to Red Rock with rails spurs and warehouses on land already zoned for industrial use. They would take advantage of the location: along I-10, near Interstate 8, next to a double-tracked transcontinental freight line and a few miles from the Pinal County Airpark. It’s at a key crossroads for freight heading west and north from Nogales. And it sits in a foreign trade zone.

“We are trying to do something in Pinal County that we’ve never done in Arizona,” Kanavel said. “We want to make this the central hub by air, rail and road.”

Improvement of the airpark is the catalyst and a key to the county’s strategy. By lengthening runways to accommodate jumbo jets, they hope to create a cluster of manufacturing, distribution and warehousing.

Widgets from Mexican factories could be assembled there and final products, such as cellphones, flown out. Or raw materials such a lumber could be carried in by rail and loaded onto trucks to supply regional homebuilders.

The State Land Department and Union Pacific met last week.

State Land Commissioner Vanessa Hickman said she’s sympathetic to Pinal County’s economic-development goals, but has to protect the long-term interests of the land trust. The agency stands by its reports and handling of Union Pacific’s application, Hickman said.

Project supporters have criticized the department for the slow pace of negotiations and suggest that the reports were written as a pretext to kill the project. They argue those up-front development costs are inflated and a red herring, and can be worked out after the sale.

“It doesn’t work well for the Land Department to take it on faith from a developer that it will be handled in the future,” Hickman said.

She bristles at the suggestion her agency is somehow anti-business, and points out that last year the state “sold more land than any other year,” earning $430 million in a down market, including to big companies, such as mining giant Freeport-McMoRan Copper & Gold Inc. and Caterpillar.

Talks are slow, she said, because the parties have to work through the nitty-gritty engineering details. Also, Union Pacific has never publicly stated a timetable to begin work on the rail yard.

“Though there is currently no construction timeline for the terminal, we are committed to purchasing the land to secure the site for this planned rail facility,” Union Pacific said in a statement, declining to elaborate.

Neighboring landowners, county leaders and lawmakers appear more eager.

“I continue to be baffled at the interminable delay in bringing this sale to auction,” Biggs wrote to the State Land Department in October. “The state will not be better off leaving this land undeveloped for another generation.”

“It is imperative that this auction be scheduled by the end of the year,” he concluded.

The auction was not scheduled.

Hickman said she’s aware of the political force behind the rail yard, but is waiting for Union Pacific to act.

“Nobody has quoted a price today that Union Pacific is willing to pay. I can’t make a determination without a number. There’s a potential to get to a negotiated number,” she said.


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