Thursday, May 20, 2010

Warren's BNSF Finally Get Kansas Logistics And Rail Freight Park Approval

Sales Tax will pay for Development Grant
Shipping News Feature

US – Controversy always surrounds the development of large scale intermodal transit projects wherever in the world they are proposed as many of our previous stories can testify. For more than four years developers have tried to persuade local residents and the authorities of Topeka, Kansas of the benefits of a multi modal rail freight and logistics park covering over 1000 acres which they wished to construct alongside I-35 in Johnson County.

Now Warren Buffetts recent acquisition, the Burlington Northern Santa Fe Railway (BNSF) and headquartered in neighbouring Texas, are to receive a state funded grant of $35 million on condition they commence construction this year. The desire for job security, Kansas Department of Transportation say around eight and a half thousand jobs lasting the ten year development time will be created, seemingly outweighed the fears of residents centred around pollution produced by the thousands of trucks needed during construction.

To fund the project Kansas have come up with an interesting solution. For the next 35 years tenants on the site will have to levy a 1% sales tax payable back to the authorities against utility bills. This type of scheme is funded by the state issued STAR bonds, the acronym for a Sales Tax Revenue scheme.

Rail freight traffic had been declining yet BNSF still needed to move from their Argentine City premises which they appear to have outgrown, and the local authorities obviously felt a stimulus to ensure the project proceeded was essential. Had the new funding scheme not been arrived at it is likely that tax concessions would have been demanded anyway by incoming tenants.

Photo: 9th Street Trestle Kansas City (over a century ago) source: Kansas City Public Library