October 18, 2016

Watco, Crapo Eye Major Rail Expansion Project

Burley, Pocatello, Idaho Falls benefit under short line rail investment

Burley - Idaho Senator Mike Crapo joined executives from Watco Companies, LLC; Burley Mayor Merlin Smedley, and other local officials today in Burley to announce a major expansion of short line railroad service that will bring jobs and expanded economic activity to south-central and eastern Idaho.  The rail shipment and storage facilities being established by Watco Companies LLC, a Kansas-based firm, could quadruple the amount of commodities and other products shipped out of Idaho via short line rail.  

 

Federal tax incentive legislation introduced and passed by Crapo is credited in part for the rail expansion project, whose effects will be felt from Burley to Pocatello, to Idaho Falls, Twin Falls and Boise.  Crapo is now working with Senator Ron Wyden (D-Oregon) and others to make this change in the tax code permanent.  The bipartisan measure is one of the most co-sponsored bills in the Senate. 

 

Watco purchased the former Keystone RV manufacturing facility and will use the 156,000 square-foot facility to establish a new warehouse and distribution facility taking agricultural and other products to market by rail.  The company estimates it may increase by five times the short line shipping of commodities in the immediate region through efficient use of climate controlled facilities and state-of-the-art faster rail loading facilities.  Another 100 acres surrounding the project can house future businesses related to rail shipping.

 

"Project Perishable:  Idaho's Agricultural Gateway to the Nation's Markets" is being established in a partnership among Watco Companies, LLC,; Union Pacific and other class one rail operations, and Idaho producers and commodity distributors.  The new plan vastly reduces turnaround time for shipping and loading of rail cars to get products to markets across the U.S.

 

Crapo, as a senior member of the Senate Finance Committee, has been a lead sponsor for federal legislation to improve investment tax credits for short line railroads.  The 50-percent tax credit on investment in rail improvements for short line operations Crapo introduced in 2009 and later passed has led to improvements and expansions on short line track and assisted with the Burley-Pocatello operation.  Crapo is presently working with fellow Finance Committee member Wyden on the Building Rail Access for Customers and the Economy (BRACE) Act.  This legislation is targeted at long-term rail improvements by providing certainly to rail operators making use of critical tax credits for infrastructure improvements.  The BRACE Act would make permanent a critical tax credit used to repair and upgrade short line railroad operations.  Since 2006, Congress has acted periodically to extend the credit, often retroactively and often almost a year after expiration.  The uncertainty can cause private investment to decline, limits investments in safety and customer service and provides uncertainty to businesses, farmers and employers that cannot be globally competitive without freight rail. 

 

"Short line railroads are proven to be extremely efficient at moving Idaho goods to customers worldwide and the vision Watco demonstrates with this endeavor will make it an example for many other rail operations," Crapo said. "Watco and its rail partners employ more than 150 Idahoans.  We know that number will increase with the added shipments and storage sure to be realized under Project Perishable."

 

"We appreciate the strong support Senator Crapo has given to our agricultural shippers in the Magic Valley," said Ed McKechnie, Watco's Executive Vice President for Global Strategy.  "Investments in rail infrastructure allow us to connect Idaho farmers to east coast consumers of Idaho products and the 45G Tax Credit certainty helps with those investments.  Senator Crapo has been a terrific leader for Idaho agriculture and transportation needs and we appreciate his leadership."  

 

Crapo toured the new Burley facility today, accompanied by Owen Zidar, Senior Vice President of Strategy and Customer Development for Watco Companies, with Mayor Smedley, members of the Burley City Council, Cassia County Commissioners, and Idaho State Senator Kelly Anthon.   Watco chose southern Idaho as the starting point for "Project Perishable" in part because of the robust potato market and Idaho's reputation worldwide for quality potatoes.  Watco says the shipping and storage facilities will include operations in Pocatello and they expect to expand into the Idaho Falls area in the coming months.