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					News-Topic, Lenoir, NC, 28645 - news, sports, editorials, obituaries                                             Page 1 of 6




                                                            Caldwell County's Local News Since 1875



                                                                                                       Sunday, March 25, 2007




                                                                                                            Lenoir, NC




                             Offload opportunity

                             By Edward Terry, Editor

                             Saturday, March 24, 2007 10:37 PM EDT

                             Caldwell County may get more than it bargained for as it embarks
                             on developing a transload facility that could drive new economic
                             opportunities. Supporters of the project say it could create and even
                             save jobs.

                             The project, which will create a transload facility for railroad cars
                             near the intersection of Southwest Boulevard and U.S. 321-A in the
                             Joyceton area of Lenoir, was a key component of landing the $600-
                             plus million Google data center investment. Although it allowed
                             local leaders to keep negotiations with the Internet search giant alive
                             by closing part of the Caldwell County Railroad, the potential for
                             future economic opportunities also is being touted.

                             “You've got a tremendous opportunity, not just because of Google
                             but also spinoff opportunities that crop up,” said Rick Grandish, an
 See a photo in the paper    adviser with Harrison, Warner, Weber and Ross of Atlanta, a
 or here online you'd like   consulting firm hired by the county and state. “Transportation has
 to have?
 Get it here!
                             become critical. There's a critical shortage nationwide.”

                             The project, more than a year in the making, has gotten the attention
                             and support of various local, state and federal organizations,
                             including the North Carolina Port Authority, N.C. Department of
                             Commerce and the Appalachian Regional Commission (ARC).




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                      The Caldwell County Economic Development Commission (EDC),
                      which owns the railroad, recently gave preliminary approval to lease
                      five acres of property owned by Robinson Lumber and located at
                      2419 Norwood St. SW in Lenoir. The lease also gives the option to
                      expand in the future.

                      What is a transload facility?

                      The first phase of the transload site includes three new sets of track
                      at Robinson Lumber between the existing rail tracks and U.S. 321-
                      A. The first phase will have the capacity to serve 22 60-foot cars
                      simultaneously. Preliminary plans for the project include a second-
                      phase expansion that would increase the total capacity to 36 60-foot
                      cars.

                      The site, which has access to U.S. 321-A, will enable trucks to
                      access the site and pick up containers brought in by rail.

                      The site also had several of the requirements a project of this kind
                      needed, including a switching yard and the ability to tie it to an
                      existing wood products business, said Bill Stone, vice chairman of
                      the Caldwell EDC and the man being paid by the county and city to
                      facilitate the transload project.

                      The lease - which needs approval from both the Caldwell County
                      Board of Commissioners and Lenoir City Council - runs through
                      December 2046, with the EDC maintaining the right of first refusal
                      to purchase the site. Also, there is a provision that allows the EDC
                      to terminate the lease prior to July 31, 2011.

                      “This site has lots of potential,” Stone said.

                      Bringing railroad

                      back to life

                      Though often thought of as an antiquated form of transportation, rail
                      consultant Rick Grandish said railroad will be a key element in the
                      rapidly-changing global economy.

                      Grandish said that more than 140,000 miles of railroad nationwide
                      has been abandoned in recent years, and the fact that Caldwell
                      County has kept its short-line railroad intact and operational could




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                      be a key ingredient in revitalizing this economy.

                      “Some of our long-range planners never envisioned that railroad
                      would be a growth industry,” he said.

                      And because fuel prices are driving up the cost of highway
                      shipping, rail is becoming a more efficient and viable option for
                      businesses in the communities that offer it. Caldwell County just
                      happens to be one of those communities.

                      Google was

                      the catalyst

                      Aside from giving the Caldwell EDC a reason to seek other
                      opportunities for the Caldwell County Railroad, the company also
                      has helped fund its conversion and given a boost to efforts to secure
                      state and federal funds to build the transload site.

                      “Without Google and the initiative from Google we had no ability
                      to build this facility,” Stone said.

                      The issues that led to the decline of the railroad and Caldwell
                      County's economy existed long before Google, which in January
                      announced plans to build a data center that will employ
                      approximately 200 workers.

                      But when the California-based technology company came into the
                      picture, new opportunities began to take form as the company asked
                      if the section of track going through the property it wanted to
                      purchase could be forever closed.

                      With only a handful of customers north of the soon-to-be closed
                      section of the railroad, officials began looking for ways to
                      accommodate the request. The result, after several months of
                      negotiating, was the transload site.

                      Sealed Air Corporation, which employs approximately 150, as well
                      as Boone Lumber Company are two immediate customers,
                      according to the grant application. Other potential future customers
                      include local furniture manufacturers, Bemis, Foothills Bio-
                      Energies Company and various other existing Caldwell businesses.

                      But the potential for new customers spreads well beyond Caldwell
                      County.

                      Industry could benefit

                      With increasing growth in northern Caldwell County and especially
                      in the mountains of Avery, Ashe, Watauga and Wilkes, Grandish
                      agrees that Lenoir's strategic location at the foot of those mountains
                      is a major asset.

                      “We want it to be a transportation center,” Stone said, adding that it
                      could be marketed to other neighboring counties including Burke.

                      The next closest transload facilities are in Statesville and Charlotte,
                      Stone said. Much of the railroad freight that makes its way to




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                      Caldwell first comes by rail through Charlotte, he added.

                      The construction industry could benefit by having easier access to
                      bulk raw materials such as concrete, lumber, nails and other
                      building materials. Other industries such as plastics, biodiesel and
                      even local furniture manufacturers.

                      According to a grant application submitted to the ARC, Broyhill,
                      Bernhardt, Kincaid, Fairfield Chair and other local furniture
                      manufacturers bring approximately 12,000 containers per year into
                      the county. These containers are shipped to the United States mostly
                      from Asia and then are brought to local plants and warehouses by
                      truck.

                      “They have indicated an interest in using this transload facility if the
                      size and cost are similar to their current mode of delivery,” the
                      application states. “In fact, they are having more and more
                      challenges in getting deliveries because of the nationwide increased
                      volumes.”

                      But the benefits to industry may not stop with Google, furniture
                      manufacturers and various customers of the transload facility. It
                      could help North Carolina develop a larger role in the global
                      economy.

                      According to the ARC grant application, Thomas Crump, director
                      of the Furniture Export Office International Trade Division, has met
                      with local officials and now is involved in policy discussions to
                      expand business at the Wilmington port and increase rail service
                      associated with its growth.

                      That kind of synergy could make Caldwell County and Lenoir into a
                      potential “inland port” with ties to major coastal ports, urban centers
                      and the rest of the world.

                      What will it cost?

                      The estimated start-up cost of the project is $1.45 million, but local
                      taxpayers aren't expected to foot any of the bill, Stone said. The
                      county has secured approximately $1.2 million in grant funds, from
                      the NCDOT Rail Division, N.C. Department of Commerce and the
                      ARC, with the remaining expenses to be shared by Caldwell County
                      and the City of Lenoir.

                      Caldwell County and Lenoir will split the cost of the lease
                      payments, which has been set initially at $3,633 per month through
                      February 2008. The rate then increases steadily before topping out
                      at $6,812 per month in March 2008.

                      Increased rail care usage prior to 2011 could trigger the maximum
                      rate sooner. In addition, the lease rate will be adjusted every five
                      years to account for inflation.

                      “I know that the lease is fairly expensive,” Stone said. “I also know
                      that was the best site we had on the northern part of the railroad.

                      “It made sense to look at that particular piece of property and the
                      connectivity to an existing business that could help us operate the




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                      business.”

                      The ultimate goal of the project is to make the transload facility
                      completely self-sufficient, rather than being subsidized by local
                      government dollars.

                      During the first five years, the county and city will pay the rent on
                      the property. Those funds will come from a pool provided by
                      Google after the final agreements on incentives were reached in
                      January.

                      The only subsidy for the project once it's built will be the rent,
                      which will be paid from the $3 million, split evenly between the
                      county and city, Google provided for its part of the railroad project.

                      “Google is paying the rent, giving the business time to get its
                      volume up so it can take the rent,” Stone said.

                      From day one of operation, the Caldwell County Railroad is taking
                      operation of the site 100 percent, Stone said. At the end of the first
                      five years, local government is not subsidizing anything after that.

                      “We have kept local tax dollars out of this equation, totally,” Stone
                      said.

                      “We're going to be building this thing and we're not spending any
                      local tax money on it. It's been given to us,” he added.

                      Environmental impact

                      The potential impact of the project has focused mainly on economic
                      opportunities so far. But another potential impact that's being
                      considered includes cutting down on the number of trucks on local
                      highways.

                      That will help with the area's already-fragile air quality and improve
                      overall quality of life, a factor that many Caldwell County leaders
                      are counting on for future growth.

                      “One rail car is equal to five to six transfer trucks,” said former
                      county manager Bobby White, who now serves as a special project
                      and grants coordinator for the county. “Greater use of rail will help
                      air quality and if we can grow rail car use, we can reduce truck
                      traffic on U.S. 321.”

                      Stone saw an example of this in action a few days ago when a
                      shipment of lumber, headed to New River Building Supply just
                      north of Lenoir, passed by the future site of the transload facility.

                      “I saw seven truckloads (of lumber) on one car,” he said. “Those are
                      the kind of commodities we could be a hub for.”

                      What's next?

                      For now, the Caldwell Economic Development Commission and
                      others working on the project are focused on getting the lease
                      approved and getting the site operational so the track can be closed
                      ahead of an Aug. 31 deadline.




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                      The city of Lenoir and Caldwell County are expected to consider
                      approval of the lease the week of April 2, Stone said. The lease was
                      approved earlier this month by the EDC and Stone doesn't expect
                      any changes to it before it is considered by the city and county.

                      Once the lease is approved, Stone said, the bidding will begin for
                      grading and construction on the site. The next goal is to get the
                      transload facility operational and on its way to being self sufficient.

                      In order to accomplish that goal, local leaders are working on a
                      business model for the site and are consulting with Norfolk
                      Southern about other potential opportunities, Stone said.

                      As for making the project successful, Grandish expects the track to
                      be a straight one.

                      “Everything you're going to be doing has already been done
                      somewhere else,” he said. “You are just putting together all of the
                      pieces.”

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