Saving the Battle River Railway

Apr 1, 2010

On the Right Track

When Peter Wallis talks about “renewal in rail,” he tends to reference larger proposals and projects as proof. Transportation of goods by train, for example, would be fundamental to Port Alberta. Now in its early planning stages, the Edmonton-based transport and warehousing hub would deal in inter-national goods received by rail.

Also, the possibility of a Calgary-Edmonton high-speed commuter railway has recently re-emerged, thanks in part to a study by the University of Calgary-based Van Horne Institute, the transportation think-tank for which Wallis serves as president and CEO.

Despite its relatively small size, the Battle River Railway short line branching southeast of Camrose is a part of Alberta’s railroad renaissance. It, too, recognizes the long-term value of maintaining the mode of transportation.

“Where you’ve got an existing system in place and you’re collecting a product like grain destined for international markets – which is going to be carried by rail as opposed to by truck to the ultimate shipping point in Vancouver – this makes a lot more sense,” says Wallis. “I think you’d be hard-pressed to make an argument that trucking these grains would be more efficient over the long haul.”

What’s more, that the gauge of the short line matches that of the trunk line to Vancouver rules out costly upgrades he notes have sunk other short-line operators in Canada.

“They have the opportunity, as long as they maintain the rail,” says Wallis. “I think the economics are favourable for them.” – Scott Messenger

To further entice locals – producers and otherwise – to become share-holders as opposed to just stakeholders (and to get them to buy in for anywhere from $1,000 to $10,000 a share with 3.5% dividends to come after five years), Enright hints other businesses could contribute to the BRR’s viability. Though the deals have yet to be made, the line could, for example, export gravel from the region and import fertilizer and even municipal waste, the latter from bigger centres with landfill capacity issues. Enright is even convinced of the possibility of one day using the line to help establish the region as a rural tourism destination.

In other words, the economic impact wouldn’t be limited to shareholders. Potentially, neighbouring communities will also benefit. For a model, Enright points to Saskatchewan, where 11 independent lines are currently operating. There, short-line rail systems have actually reversed the trend of young farmers leaving for jobs in the city, as president Ken Eshpeter claims.

Ten years ago, for example, producers purchased the line from Assiniboia to Pangman in southern Saskatchewan.

“We were the first, and it was a tough go because we had to borrow a lot of money and pay off the loan,” says Lonny McKague, a director of the Red Coat Road and Rail Company, operator of the Saskatchewan short line. “Now this line in Alberta has some models to go by.”

According to McKague, the effort has proven worthwhile. “The economic spin-offs are huge. The whole community benefits because we lower costs for grain transportation, we created employment, it helps the environment by using rail instead of trucks, the land has increased value.” And, perhaps most importantly, the company has paid about $300,000 in education and land taxes to rural municipalities.

With the Regional Children’s Centre set to open this year in the village of Bawlf, 30 minutes east of Camrose, Mayor Jerry Iwanus is also seeing economic potential in securing the short line. From a community-building perspective, the two could act in concert: the line employing more and new residents, and the centre filling the child-care gap from which so many of Alberta’s rural residents currently suffer.

“In my opinion, the benefits to Bawlf for something like this are more long-term and indirect, since it’s not one of the communities that border the railway line,” says Iwanus.

For one thing, it could free up congested highways, leaving transportation of goods and materials to the rail line, “where it was initially meant to be and where it really belongs.” For another, the strengthening of those communities along the line will make the region a more attractive place to live and work. “Which means that Bawlf will ultimately benefit as well.”

“I think that people around here will look at this railway as the leading edge of what can be accomplished in the rural areas if we who live here decide to co-operate,” Iwanus adds.

The question remains as to just how much co-operation the BRR will be able to encourage. As Red Coat co-founder McKague warns, “The more money they raise in shares, the better.”

Though the BRR’s bid of $4.8 million was accepted, beating that of Salt Lake City’s K and S Materials, the largest rail steel salvage company in North America, the co-op didn’t actually have the money at the time. Instead, seven board members kicked in about $500,000 collectively to get the project rolling and show their commitment to its success. After that, 15 BRR salespeople, Enright and Eshpeter among them, began knocking on doors, offering, Enright half-jokes, the chance to own a mile of track for $90,000.

Securing the line depended on the BRR’s ability to raise $1.8 million by this past January. By the middle of that month, it had approximately $2.8 million from investors who contributed anything from $1,000 to $100,000. The remaining deficit will be made up through financing by Agriculture Financial Services Corporation’s lending division. This April, the group will take possession of the short line, perhaps to the benefit of shareholders and stakeholders alike.

“People will look at this with a sense of regional pride,” says Iwanus. “And that’s good for everyone.”

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