The Miles City Depot Acquisition and Restoration Project (MCDARP) team will present the project status report to the city council tomorrow, March 27, 2012. The city council meeting begins at 7:00pm. The group will make copies of the report available to the public attending the meeting.

This report concludes the Due Diligence Phase of the Miles City Depot Acquisition and Restoration Project and provides the community and city council members information about the factors which influence the feasibility of historic restoration and preservation of the depot as a platform for local economic development.

BNSF has reiterated the offer to donate the building to the city and an indefinite term lease for the land. BNSF have requested a decision by May 1, 2012. Thoughtful comments are invited in support of the city council as they work to decide the best path forward for the community.

Connie: Will an electronic copy of this report be included in the City Council meeting folder on the City Website?

Richard:

I don't know about the city website. The report is lengthy, so the MCDARP team will make copies available to the public at the meeting.

I will also try and copy and paste the report into our facebook page.

If anyone would like an electronic copy, please email me, and I will send one along by email.

This morning the MCDARP team will meet with the Custer County Commissioners to present the Due Diligence report and discuss strategies with them and the mayor, if any, for moving forward with the Depot Project.

Thursday, the team will present the report to the Miles City Area Economic Development Council Board of Directors and invite their input.

If you read the excellent article in the Miles City Star last night, you are aware that the City Council referred the issue to the Public Safety Committee for review, and asked the city attorney to draft a letter to BNSF asking for an extension of the deadline to accept the depot.

At issue of course, are the terms of the lease BNSF has offered the city for the land upon which the depot is situated.

We will keep you posted, and invite any suggestions or comments...

If the BSNF weren't acting as they usually act, we could easily move ahead on this! Sadly, the BNSF is being. . .the BNSF.

If anyone would like an electronic copy, please email me, and I will send one along by email.

Patiently waiting, [email protected]

If the BSNF weren't acting as they usually act, we could easily move ahead on this!

So this project isn't being railroaded??

It appears as though the BNSF wants to demolish the building and this is their way of getting it done, or a way to get a freshly renovated building. The city would be foolish to agree to these terms. Most people will not want to donate to this project knowing that the BN can end the lease as soon as it is completed. What a sweet deal for BNSF.

Richard--I emailed you a copy of the due diligence and it keeps bouncing. And as of yesterday, there are ironic further developments! STAY TUNED!!!!!

[This message has been edited by Amorette F. Allison (4/3/2012)]

Richard: I just emailed you a copy as well.

The following link will open a copy of our Due Diligence Report to the city and county commissioners for those who are interested.

https://docs.google.com/o...MFY4SGhmQQ

Please give it a look and ask questions or make suggestions. Any legal beagles are invited to contribute knowledge about railroad right away property or strategies that might encourage BNSF to re-evaluate the terms of the lease or donating the land.

This is a non-political issue that affects the whole community in that once the depot is gone, it is gone forever. The city and/or county governments are not being asked to fund or manage the restoration or be burdened with a building to maintain. From an economic development point of view, ask yourself if you would rather see a prosperous business in a beautiful building, or a rail operations yard flanking the park.

The other question to discuss is just what exactly is it that BNSF has in mind for that 1.44 acres surrounded by privately owned land once the building is demolished -- and will the community like/enjoy/approve? It must be pretty important if they absouletly refuse to reconsider the terms of the lease or sale/swap of the land.

It would just seem logical that in their role as a community partner, the opportunity to step up and help preserve a bit of old west and railroading history would appeal to an organization as socially aware as BNSF.

Meanwhile the Due Diligence report will be discussed tomorrow in the City Council Public Safety Committee meeting; and presented to the Miles City Area Economic Development Council Board of Directors on Thursday.

Thanks, Miles City !

Okay, okay -- not as great a techie as some -- let's try again:

https://docs.google.com/o...MFY4SGhmQQ

I have read the report and it is well done. Kudos to those responsible for its preparation.

Have a reporter from the Miles City Star contact BNSF's spokesperson, Gus Melonas, in Seattle and request BNSF's official stance on the depot and land. Is it their goal to see the building demolished and to what end?

http://www.bnsf.com/media/contact-us/

Thank you for your suggestion David. Elaine Foreman of the Star did contact Mr. Melonas and his quote is included in the Monday article. She quoted him as saying, "BNSF is interested in working with the community to preserve this historic structure and have offered to donate the building for community use. As well as enter into a standard property lease. We look forward to working with the city and are awaiting an answer."

A reporter from another newspaper in the state is working to contact the BNSF officials directly involved in the negotiations. We await their response. Perhaps they will be able to provide insight into BNSF intentions regarding demolition specifically; and perhaps intended use if the building is demolished.

[This message has been edited by Connie Muggli (4/4/2012)]

Thanks Connie. I hadn't read that article yet.

What terms did BNSF give in Billings with that depot project? Did BNSF sell the land? Lease? How about in Livingston? What's different about this project vs. those projects?

Thanks to you and all of the MCDARP members for your hard work on this project. If the building is lost, it won't be for a lack of effort.

At one point, BNSF said because the land had been granted to them by Abraham Lincoln, there were no original deeds and they couldn't sell land. When it was pointed out that the land on either side of the depot HAD been sold a few years and that the BSNF offered to sell the land a few years ago, they waffled.

Big corporations need to keep their lies straight.

David -- the Billings project operates under a lease from Rail Link, who in turn leases the land from BNSF. Other depots in the western portion of the state are dealing directly with Rail Link, who have offered a long term lease at a low fee. BNSF did recently sell a building to a private business owner in Billings, however, and again it was Rail Link that assisted the realtor in negotiating that transaction.

The Whitefish Depot operates under a lease with the same terms offered to Miles City. The difference with that project is that the building is still used as a depot for AMTRAK, and that BNSF rents office space in the restored building. I do not know if BNSF contributed funding to the Whitefish restoration.

Thank you Richard and David on behalf of the MCDARP team! The team was formed as a "task force" for the city and given the mission of discovering alternatives to the demolition of the depot while working to identify and mitigate potential risks and liabilities to the community. We have had the usual headaches related to any project of this size, but have enjoyed it immensely.

Thanks, Connie. So, does BNSF admit that the terms of the land lease are almost certainly and understandably a deal-breaker for saving the depot building? Do they offer any reason for taking such a difficult stance? Have any of Montana's U.S. Congressmen been contacted regarding this matter? What, if anything, do they say?

So, does BNSF admit that the terms of the land lease are almost certainly and understandably a deal-breaker for saving the depot building?

No. As Gus Melonas said -- they characterize the lease as a "standard" lease.

Do they offer any reason for taking such a difficult stance?

No.

Have any of Montana's U.S. Congressmen been contacted regarding this matter? What, if anything, do they say?

Senators Baucus and Testor have been supporters of the project, and their staff has remained in touch with us throughout. They have been invaluable in providing encouragement and guidance on various issues. At the moment, we don't have a reaction from them. Both have said they would like to see the depot saved if possible.

[This message has been edited by Connie Muggli (4/4/2012)]

I don't understand how BNSF considers this a "standard lease" when they are knowingly attempting to illegally transfer their environmental liability to another entity. That doesn't sound very "standard" to me.

Well, in the words of a wise lawyer -- there is no such thing as an illegal lease. If you agree to the terms and sign it, a court must enforce it. Basic contract law. The city and the EPA both decided that the terms of the lease or Temporary Occupancy Permit were unacceptable.

To make sure the record is straight, BNSF said that if the EPA wished to do Phase II environmental sampling, they (the EPA) would be required to negotiate another agreement directly with BNSF...the EPA declined.

..."there is no such thing as an illegal lease..."

As long as the terms of the lease do not violate the law... right? (Not suggesting the terms of the BNSF lease violate the law. Just suggesting that a contract that violates the law is an illegal contract.)

Perhaps someone from MCDARP should ask Gus Melonas (put the onus on *him*) to organize a meeting between him (or his appointed BNSF rep.) and public officials (including inviting the U.S. Congressmen) for a public hearing/meeting to openly discuss this project, the proposed lease terms and what impact the lease terms have on the viability of any depot project. BNSF should come to the meeting prepared to explain why they appear averse ("adverse"?) to seeing this project come to fruition. They should also be prepared to show that the lease terms are in fact "standard" for this type of project in communities throughout the U.S.

Securing funding for the project is probably a non-starter if BNSF remains steadfast in its onerous lease terms. The decision may be BNSF's prerogative, but I don't think it's unreasonable to request an explanation for their position. If they have a valid business case, so be it. Otherwise, why does BNSF have such an anti-community stance?

After reading all the posts in this forum, articles from the Miles City Star and Billings Gazette, the one thought that struck me the most is that there is a possibility of apprising Warren Buffett of the situation. Railroads and governments are alike in that personal preferences and feelings are not taken into account in situations like this. It would seem like an appeal to Warren Buffett himself as chairman and CEO of Berkshire Hathaway, Inc., which now owns BNSF might work, thus bypassing the BNSF officials. I would think that if enough people wrote him expressing their personal feelings on this issue, it just may appeal to his philanthropic or human side. In addition, if he would intervene in this, it would give additional press to him and his holdings.
It does seem like there are a lot of people in MC and people who grew up in MC are very passionate about keeping and restoring the depot that would write letters if we knew just where to direct them. I for one would write and I know of several others who would.

For a sizable cash donation we could name put in a cafeteria style restaurant and name it after the owner of BNSF...

[This message has been edited by Richard Bonine, Jr. (4/5/2012)]

Thank you David and Mary Pat for your great suggestions. We started working on both today. Actually, we had considered going up the chain of command earlier, even to Buffet if necessary, but decided to remain within the departments we had been working with. We will discuss the options and make a decision quickly.

There are other strategies being considered. The most important thing folks in this community can do right now is show their support, ask questions if they are worried about any aspect and make suggestions like those we have heard here!

Incidentally -- everyone thought Richard's idea was wonderful - corny but wonderful.

[This message has been edited by Connie Muggli (4/5/2012)]

Thank you for the updated information, Connie!
Good luck negotiating with BNSF. Is MCDARP working with Rail Link at all or can they help you negotiate? Any other possible partners with more pull? Maybe an environmental organization would be interested from a cleanup standpoint?
Thank you all for working so hard on this worthwhile project. The depot is still a beautiful, viable structure, and the community will be richer when it is restored and in use!!

Thank you for the encouragement mandyrosy! The MCDARP team is a great group of people and the community has really contributed a great deal in time, energy and thought to the project in many, many ways. The most important of which has been in expressing the wish to see the Depot brought back to life.

The depot here in town is not affiliated with Rail Link at all, so they haven't been part of the negotiations. That said, we have received the name of a contact up there that we will visit with for ideas.

Glad you mentioned environmental groups. You might be thinking of some of the private groups, which we haven't worked with - none of come forward. But I have to mention the incredible support we have received from both the Montana Department of Environmental Quality and the EPA Region 8 offices in Denver. Both agencies have devoted a lot of time to this project -- and grants to perform the Phase I and we hope eventually - the Phase II environmental assessments.

The building was listed on the National Register of Historic Places on April 1, 2010, and you are right -- the community will be richer when it is restored and in use.

We are working very hard right now to come up with strategies that will encourage BNSF to change their position -- wish us luck!

[This message has been edited by Connie Muggli (4/6/2012)]

I was taking a look at the BNSF Charitable giving website..

http://bnsffoundation.org/giving.html

and...can't help but think that the MC endeavor would fit nicely in one or more of their categories. We have visited Museums in various sites where there is Railroad History...and, can see where, if a portion of the rennovation would include an interesting corner dedicated to BNSF history...maybe they would be encouraged to see the purpose of retaining the wonderful, historical building. Also, could be very interesting to visit.

I know that there are so many Railroad Buffs out there that it could really become a place of interest.

I am sorry, but have not read all that has been done so if this is repetitious, sorry.

Thanks Geri! And you are right about the BNSF Foundation, BNSF even encouraged us to apply through them for funding, however.........

We can't apply to them or any other agency for funding until we can gain access to the property to begin work. We can begin the funding process once we have accepted the donation of the building and arrived at acceptable terms for the land - either through an amended lease, or ownership. Under both the TOP and the lease, the liability to the city, and contractors performing the work is just to great. It would only take one instance to bankrupt any group working in the building under the lease.

It took over a year to negotiate the terms of the Termporary Occupancy Permit (TOP) that granted us access to perform the environmental and structural studies. The TOP only allowed that work to be done.

We have always assured BNSF that a portion of the depot would be reserved to serve in the future for a depot should the southern passenger service be restarted, and for railroad history.

As far as railroad buffs, boy have we enjoyed hearing from a bunch of those people! What fun to hear their stories! Even the Northern Pacific Historic Society has pledged their support, speaking of history groups!

The MCDARP group would like to appeal to ALL the milescity.com community -- lurkers and regulars alike. Let's make this a 150 comment thread at least!


Please contribute to this thread -- whether it is a short cheer or sneer we don't care. (Almost rhymes!)

We would really like to demonstrate to BNSF how many folks are interested in seeing the depot preserved and revitalized in our community. It is very important to indicate the importance of the depot and the influence it has had in our history.

And a very humble thank you to you all

Its location with parking would be nice for a railroad museum.
One side museum of local RR artifacts and historical archives with a coffee shop to keep it alive. Other side a model railroader museum with huge active layouts of Montana routes depicted. It would need a model railroader club to build and maintain and operate.
A letter to Omaha might get sweet results. Warren and his friend Bill G are big train buffs.
Museums are economic development when they draw out of area people in as destination. Railroad enthusiasts are huge in number.
As an aside...the one in Dillon was UP and they reportedly were generous. Building is now venue for live entertainment and traveling exhibits. Its location is more conducive to that as is on main street adjacent to the existing museum.
Whatever you do with it will be a nice addition to Miles City.

Here's my family's short cheer.....rah, rah, rah, MCDARP!

We are so proud of how Miles Citians will pull together to tackle head-on difficult tasks such as the Depot. It is a beautiful building that we hope to see restored to its former glory. The building has so much potential, and we would support any and all businesses that would endeavor to occupy the building.

Thank you so much, MCDARP, for all of your efforts, and here's a big "Pretty Please" to BNSF. Lol.

I wholeheartedly support your efforts to save and restore the NP Depot. BNSF should be grateful for this effort and partner with this movement, not make it more problematic. It is a beautful old building and offers a great location in a part of town that needs some attention.
The community could certainly use a performing arts center (watching the CCDHS chorale or band perform in the gym is less than optimal) if the structure could accommodate one, and I would like to see it receive a LEEDS (isn't that the name for a green certification?).
It goes without saying that I could not have attended Gonzaga in Spokane 50 years ago were it not for easy and convenient rail travel back in the day. Would that the southern route could be restored. But, I guess moving people around just can't compete with King Coal.
Best of luck,
Jean Lemire Dahlman

Preserving the depot is the only way to go as so much of Miles City's architectual history has disappeared. In many communities throughout the U.S., the depot has been preserved and turned into restaurants, art galleries, offices etc. Of course, rather than turn it into something else, I would love to see the trains become a passenger service again.....wouldn't that be glorious? As I get older and realize driving might not be an option, I would love to be able to still travel and it would be on the train!

I, too, am happy to hear of your effort to restore the NP depot. I rode the train many times during my growing up years in Miles City going to Billings to visit my Grandmother, to Bozeman to attend college and from St. Louis in later years to visit my family. Gary worked at the woolhouse and depot during his high school and college years. We love that old depot. What can we do?
Jen and Gary Jensen

Something else to consider that I have heard from folks who still live in MC. Some would like to see passenger service returned to MC and I for one, as Jen mentioned, would use it instead of driving. It just might be harder to persuade the RR to consider passenger service with no depot there. A depot would be necessary for passenger traffic and if there were not one, it would be one more good reason to refuse this request. The depot is so large that part of it could be used for passengers/ticketing and something else could be done with the rest.restaurant, for concerts, etc.
My whole family were railroaders. Most worked on the Milwaukee in various capacities since it first came to MC. I worked in the NP freight office for several years before moving away. I used the train service between Cleveland OH and MC several times after moving and would dearly love to travel that way again.

Those who remember what an eyesore the old Holy Rosary Hospital had become and then had a chance to tour the award-winning Cornerstone Building after the project was completed understand how important the reclamation of the NP Depot is to downtown redevelopment.

Need another example? Consider the Sears Building project in uptown Butte http://historiccredit.fil...ilding.pdf. Upon completion, the taxable value of one property was lifted from $10,000 to $7,889,797. Imagine what the annual tax revenue from that kind of project could do for Miles City.

The City Council would be foolish not to do everything in its power to see that the NP Depot is suitably redeveloped!

I thought the same as Mary, in that someone seriously needs to attempt the contact of Warren Buffett, no matter how large of a task that may seem. I can't see the depot being lost under his watch, as he's fairly well known for being partial to small America, and almost certainly knows nothing of the issue. Sometimes you just have to pick up the phone to see how far you can get. Mr. Mayor, where are you?

Mr. Mayor, where are you?

Following the biblical injunction found in 1Cor 9:27 ASV "I buffet my body".

I made a plea to Berkshire Hathaway. We'll see if it gets anywhere. Probably won't, but there's always hope.

I agree with Mary Pat Brady.
Dear Warren Buffet
Lived in Omaha 9 years, loved it. Lived in Miles City MT 18 years and loved my historic Miles City much more. You would love it also, especially being a RR buff. Your NP depot is a beautiful asset to a sparkling little city. MC would treasure and preserve it. But it appears a land lease is untenable. Would you consider donating the land or selling it? Demolition is so heartless.
Jane Kearney McCauley

I keep thinking how it would be great for the Barn Players!

In the event that my first message did not make it to the discussion, I will just summarize my points. I was born and raised in Miles City, the daughter, granddaughter and niece of about seven railroaders. I see the railroads as a major piece of Miles City. How much would the site have been settled without the land grants that spurred the railroads? Those same railroads were an important part of the economy and culture, and served as Mile City's window on the world. I see the depot as a unique building which will never be duplicated in Miles City or anywhere else. Perhaps my most important point is that, having lived in the Washington, DC area for many years, I find the history and unique beauty of Eastern Montana just as compelling as the beautiful and memorable monuments and artifacts that I drive by daily. I truly believe that tourism and perhaps retirement living and/or summer homes are or should be (given the approval of Eastern Montanans) the future and a source of a tax base and jobs. And, I have to admit that I harbor a hope that the railroads will be revived as part of our plan for energy independence-at which time an historical building would pay for itself.

Lynn Kearney
Arlington, VA

A heartfelt "Thank you" goes to everyone here, especially Larry, in taking the bull by the horns and going straight to the top! Keep us posted on any response!

We were excited that Mr. Buffett would take the time to deliver the key-note address at the Montana Economic Summit in Butte a few years ago, and were impressed with his down-home remedy for issues with BNSF. He advised that if anyone has an issue with BNSF they should talk to Matthew Rose, the CEO. Interestingly, in his 2011 letter to Shareholders, Mr. Buffett relies on a quote from Ben Franklin regarding the societal obligation of regulated companies:

Many years ago Ben Franklin counseled, "Keep thy shop, and thy shop will keep thee." Translating this to our regulated businesses, he might today say, "Take care of your customer, and the regulator - your customer's representative - will take care of you." Good behavior by each party begets good behavior in return.

The open letters to BNSF and Berkshire Hathaway in this thread very eloquently express the wish of this community to preserve the historic NP Depot. For several years now, the MCDARP team and the city have worked to convey to the BNSF folks how important this building is to our community. There is no doubt that this thread, along with the comments shared on the Miles City Depot facebook page will lend credence to our effort.

For those of you who wish to contact BNSF directly here are a few email addresses and phone numbers for the folks we have been dealing with along with contact information for those within the organization which, as some have stated here, may not be aware of how important this building really is to our community:

The author of the letter to the city is Mr. Richard Bartoskewitz who is the General Manager of the Montana Division. His contact information is:

Richard Bartoskewitz, General Manager (406-256-4035)
Montana Division
1555 Campus Way
Billings, MT 59102
[email protected];

MCDARP and the City have been working with:
Steve Kuzma, Manager (817-352-6135)
Shortline Abandonments,
Demolitions and Signboard Mgmt.
[email protected]

Barbara Ranf, (406 443-2102 or 406 256-4047)
Exec. Director, Govt. Affairs
825 Great Northern Boulevard, Suite #105
Helena, MT 59601-3340
[email protected]

Public Relations Contact:
Gus Melonas (206-625-6220)
Director, Public Affairs

The Land Revenue Management Division oversees the Shortline Abandonments and Demolition Department.

Dave Schneider, General Director (817-352-6469)
Land Revenue Management
[email protected].

Mathew Rose, Chairman and Chief Executive Officer
BNSF Railway Company
2650 Lou Menk Dr. 2nd Floor
P.O. Box 961057
Fort Worth, TX 76161-0057
Phone: (817) 352-1000
No email address given.

The county commissioners, the city council and mayor are working to obtain a delay in the May 1st date, while investigating other options to identify a win/win solution which will protect the community from liability. The MCDARP team also continues to pursue all opportunities to preserve the depot.

Preservation of the building makes sense from every perspective when weighed against the alternative. It is obvious this community prefers a beautifully preserved building, housing a profitable business which contributes to the socio-economic fabric of our community rather than an empty lot. An empty lot, which although zoned commercial, cannot be used as such given BNSF terms for leasing the land.

The proposal from BNSF is actually very workable. In 1989 I was involved, as a member of the board of directors of the Beaverhead County Museum, with the acquisition of the Oregon Short Line (Union Pacific) depot from the Union Pacific. It had been vacant for a number of years.

The Union Pacific offered the Museum the depot with the same requirements... including requiring us to erect a fence between the station and the tracks... and an agreement to lease the land at a very reasonable charge. The railroad also included the 30-day moving notice.

Over the past 23 years it has been a very good relationship... we did need to move the name of the lease from the Museum Association ( a friends group) to the Museum itself, which is a county entity, and in doing so the depot and the land lease were all county.

There was no difficulty in obtaining serious funding from the federal TCEP program... several grants over the past years, totaling nearly $400,000, with just a 10 percent match. Most of the match came from donations, sale of a history book and the building of 1,700 feet of boardwalk, selling boards at $25 and branding buyers' names in the boards.

The facility is now home to a theater, a major birds of Montana taxidemy, exhibit, museum work, office and display areas.

It has been an excellent arrangement for 22 years and one I was pleased to have been part of for many years before I moved from Dillon.

The key here, is not to look at what you can't do, but what you can. With the property in city hands, grants are available, with work, of course. Community help in preparation, and other areas (one electrician donated $10,000 worth of work). can make it work.

Do not be afraid of the lease arrangement... this is pretty much standard with railroads throughout the country, including BNSF and the UP, especially if the right of way is still in active railroad service. In the case of abandonments, then sometimes sale or donation of land is a possibility, generally, however, it is not.

The possibility of eviction being required to move the building, is very remote, if the basic agreement is upheld by whoever is getting the building.

Miles City has a wonderful opportunity, and rather than coming up with all the reasons not to accept the gift, but rather trying to find the ways it can and will work, the community can benefit all the way around.

Good luck on a great project...

John Barrows, Helena MT

Wow, Mr. Barrows, you're a breath of fresh air! From your keyboard to the inbox of every member of the city council and the mayor, urging acceptance of the BNSF land lease and the NP Depot.

Thank you, sir.

Maybe our 'standard lease' offer is just that. It appears it's worked in other communities. Maybe we should stop looking for special treatment and accept what has been presented.

Or next month we can all post many pictures of the past glory of the depot juxtaposed to the demolished trash pile that appears to be in the near future.

How sad.

Thank you for the positive comments.

In looking over the earlier comments, the concerns over liability come up.

In Dillon, once the county assumed ownership of depot and became the lessee, it was able to cover the liability under the county's insurance policy through the Montana Association of Counties. The city has a similar insurance arrangement with its organizations.

And by leasing the ground, rather than assuming ownership, any liability as to environmental issues from railroad operations still lies with BNSF... an important factor that sometimes occurs (i.e. Livingston).

John Barrows

The MCDARP team would like to thank everyone for their encouraging words in this forum. We have emailed Mr. Barrows inviting a discussion of the strategies used for their project to determine what has changed since 1989 in the BNSF "Standard Lease" that would send attorneys, grant funding agencies and insurance providers running when they read the lease BNSF offered Miles City.

While we might sometimes wish our City Council members and County Commissioners had a little more daring, in this case they are working to find a way to accept the donation of the depot building under terms that will allow both grant funding and attract potential investors, while at the same time protecting the community. There will be plenty of opportunities to bash city council and county commissioners in the future -- this isn't one of them. The Mayor and the members of the City Council's hands are tied -- they cannot act against the advice of the City Attorney in regard to the terms of the lease, and BNSF has not negotiated the terms of the lease they have offered Miles City for almost three years now.

That BNSF won't negotiate is what folks need to be outraged over.

The city is not asking for anything out of the ordinary or special treatment of any kind. We are simply asking for a lease with a definite term (like 10, 20, 30, 99 years) that will allow a granting agency or financial investor to see a return on their investment; and insurance and indemnity clauses in keeping with Montana Statute in regard to indemnity, and code in regard to municipal insurance pools. What BNSF calls a "Standard Lease" does not.

As part of the due diligence process MCDARP team members have interviewed grant funders and financial institutions, including CTEP and all agree that they cannot fund a brick and mortar project under an Indefinite Term Lease -- or what amounts to a thirty day lease.

Further, in discussing the lease with potential insurers, including MMIA which oversees the municipal pool, they have advised that they cannot and will not accept the insurance terms in the lease, nor will private insurers exclude coverage for common perils from policies they would offer a non-profit or private investor. Although the lease requires specific insurance amounts be carried, additional clauses also require any loss above those limits become the responsibility of the city. This town simply could not afford to assume the liability for BNSF regardless of fault, without the right of recovery or subrogation, assume the costs of defending BNSF in court AND pay injured parties should an incident occur, as this lease requires.

To go against legal advice in this matter would potentially have very serious consequences for this city and county. Should an incident occur everyone would be outraged that the city had signed such a lease in the first place

The representatives of BNSF mentioned earlier in this thread have received the city's request for a delay of the May 1st deadline and have agreed to meet tomorrow to discuss granting the delay and further negotiation of the lease terms. Their decision will be conveyed to the city attorney early next week.

If you want to see the depot saved, under terms the community can live with, I would urge you to call or email the following folks before tomorrow and urge them to come to the table with the same level of good faith the city and MCDARP team have shown them over the past three years.

Richard Baroskewitz, 406-256-4035
[email protected]

Steve Kuzma,817-352-6135
[email protected]

Barbara Ranf, 406-443-2102
[email protected]

Thank you everyone!

Sounds grim. Sorry to hear it.

What is so disappointing is when this all started, more than three years ago, we met with BNSF representatives and they were all cooperative. They said they wanted to see us succeed. I hate to think that they lied. I think they just didn't realize that the corporation they worked for would be so uncooperative.

Connie--you have worked heart and soul on this and it breaks me heart to see BNSF being its usual buttheaded corporate self, unable to see what people with vision could do if given the chance.

I feel a bit sick.

Sigh.

In reviewing the posts in the thread I realized I missed some information in Mr. Barrows post - and it is a huge issue:

And by leasing the ground, rather than assuming ownership, any liability as to environmental issues from railroad operations still lies with BNSF... an important factor that sometimes occurs (i.e. Livingston).

This is definitely one clause that has been changed in the standard BNSF lease. The lease offered Miles City would require the lessee and its agents, to indemnify BNSF against liability for any pre-existing environmental issues on the property, regardless of fault.

The language actually rattled cages all the way up the chain at the Region 8 offices of the EPA in Denver, and precluded the EPA from conducting Phase II Environmental Testing on the property. The lease deemed the EPA an agent of the city and therefore also liable and responsible for cleaning up any environmental hazards discovered during the Phase II testing. As the EPA succinctly informed the city and BNSF -- the US Government cannot assume liability for that which it regulates. The EPA has graciously held our grant funds for that purpose for in the future, should the lease be renegotiated.

Although the Phase I Assessment was thorough and indicates very little threat of serious environmental contamination, Phase II testing would confirm that, and serve as a baseline for in the future.

Random thought: Is it possible for the City to use Eminent Domain and condem the land. Clearly, we can demonstrate a higher use than BNSF is providing. Maybe just hanging that carrot out there would cause BNSF to reconsider and negotiate in good faith.

Great idea Richard....if there ever was a good use for Eminent Domain, this is it....

Richard and Howdy are right -- Eminent Domain is an option worth investigating. Although we have been told that the BNSF response to that is "get in line". They are sued almost daily for eminent domain. It does remain an option that we are looking into, but it would require incredibly strong community support for the city/county to pursue it. It would be a very elegant solution for each party.

Amorette your post brings up another aspect of this situation that bears discussion and understanding in the community. BNSF is a big nation-wide corporation with a huge risk management system populated by some of the most brilliant lawyers in the country. Railroading is an inherently dangerous industry, and it is the job of BNSF legal team to manage risk to the fullest extent possible. The lease is an extremely elegant lease - if you are BNSF. Each and every clause in the lease is there to address a legitimate concern of the company. For a few BNSF employees to advocate for a change in boilerplate language that protects the organization so well is an uphill battle in a company as big as BNSF is.

Likewise, small municipalities like Miles City must also manage risk albeit on a smaller scale than BNSF. Some of the clauses in the BNSF lease put Miles City at risk. So, when the two business partners sit down to the table to negotiate the terms under which they will do business, each must consider the others' concerns and find a happy medium.

There are some basic "Risk Management 101" guidelines for negotiation:
1. You must assume some risk, therefore
a. You must assume the risk inherent to your business
2. You can only assume a certain amount of risk, therefore
a. You must not assume the risk inherent to the other business
3. You can expect to be indemnified against risk that isn't your fault
4. You can indemnify your partner against risk you are responsible for
5. Neither can insure nor indemnify against all risk.
6. Both must understand that some level of risk is acceptable

BNSF and Miles City are business partners. Each benefit or profit from that partnership. While BNSF just wants to move cars of freight, Miles City is tired of industrial blight and wants to build a safe, beautiful city that offers a variety of business and cultural opportunities for its citizens.

The fact is, BNSF could drop a ca-zillion bucks on the depot, write it off to PR, and receive a return on that investment many times that amount in good will and favorable press. Win-win. Many citizens in Miles City would just dig in and fix the depot up so that it would contribute to the socio-economic culture of our city, if we had access to the building. Win/win, again.

But, convincing risk management specialists with battle scars from many, many court battles to see it that way is difficult. This negotiation quintessentially represents the conversation ongoing in our nation today.

Both sides need to recognize the legitimate concerns of their business partner and seek solutions that address them within reasonable limits of risk vs reward.

I believe the folks in Livingston are in court in Great Falls right now over the pollution at the site in Livingston. Part of the BNSF fear is if they allow Miles City to access the depot site for tests, that would set a precedence forcing them to allow testing at the heavily contaminated site in Livingston.

Argh.

Truth be known, environmental disasters lie beneath every inch of railroad track everywhere. The last thing any RR company wants to do is stir that pot. There isn't enough money in the universe to fix it. Just mentioning it sets people off.
It's my understanding that if a contaminated property changes hands, the new owner has to clean it up. As long as it sits untouched the present owner can ignore it. Is that true?

Jeff - Glad you asked. The Remediation Division of MT DEQ is a great resource of information about this issue. Here is the link, but I'll paraphrase and summarize at bit:

http://www.epa.gov/compli.../bfpp.html

There are in fact, protections available under Brownfields Law to people who purchase or otherwise acquire previously contaminated land. Among the protected categories there are:

 Bona Fide Prospective Purchasers (BFPP)
 Innocent Landowners (ILO)
 Contiguous Property Owners (CPO)

The bona fide prospective purchaser (BFPP) provision in the 2002 Brownfields Amendments dramatically changed the Superfund liability landscape for landowners. Persons may now acquire property knowing, or having reason to know, of contamination on the property if they:
 acquire property after January 11, 2002,
 meet the threshold criteria and ongoing obligations outlined, and
 do not impede the performance of a response action or natural resource restoration.

The qualifying element of each category is that they must perform "all appropriate inquiries" prior to acquiring the property and demonstrate "no affiliation" with a liable party.

This is why it was so critical that MCDARP perform the Phase I and II Environmental Assessments, in order to qualify Miles City as a Bona Fide Prospective Purchaser, eligible for protection and assistance. An Environmental Assessment represents a part of the "all appropriate inquiries" or due diligence we have been working to accomplish this past couple of years.

As BNSF blocked and/or impeded Phase II testing, Miles City or a future tenant might also qualify as an ILO:

Entities that acquire property and had no knowledge of the contamination at the time of purchase may be eligible for the "innocent landowner" (ILO) defense to Superfund liability if they conducted all appropriate inquiries (AAI) prior to purchase and complied with other pre- and post-purchase requirements.

Superfund distinguishes between three types of landowners:
 Purchasers who acquire property without knowledge of contamination on the property
 Governments acquiring contaminated property involuntarily or through the exercise of eminent domain authority by purchase or condemnation.
 Inheritors of contaminated property

Like contiguous property owners (CPOs), persons desiring to qualify as innocent landowners must perform "all appropriate inquiries" prior to purchase and cannot know, or have reason to know, of contamination in order to have a viable defense as an innocent landowner.

An ILO must also satisfy the following obligations:
 compliance with land use restrictions and not impeding the effectiveness or integrity of institutional controls;
 taking "reasonable steps" with respect to hazardous substances affecting a landowner's property;
 providing cooperation, assistance and access

In addition to protection against Superfund Liability, there are grants available through a competitive process available to government entities, as well as low cost Revolving Loan Fund dollars available to assist land owners in the above categories in cleaning up any contamination.

[This message has been edited by Connie Muggli (4/20/2012)]

It's my understanding that if a contaminated property changes hands, the new owner has to clean it up. As long as it sits untouched the present owner can ignore it. Is that true?

That is usually true if there is no Phase I RCRA Assessment conducted prior to the sale.

In the case of the depot there has been one conducted. So any contamination of the site belongs to BNSF. As I understand it, one of the terms of the lease shifts responsibility for any contamination to the City, which is an unacceptable risk.

That is correct Richard. Thanks!