Charles City rail and truck transport project gets state support
By Bob Steenson, email@example.com
A proposal to rehabilitate the old White-Oliver tractor manufacturing location in Charles City would turn the 62-acre brownfield site into a railcar and truck loading facility for propane, renewable bioproducts and other specialized fuels, and create 20 to 25 good-paying jobs, according to an application that recently received state funding support.
The Iowa Transportation Commission announced that it has approved a $240,000 grant and a $900,000 10-year, 0% interest loan for the project, which has a total cost estimate of about $9 million.
The proposal is by a new company called Charles City Rail Terminal LLC. Dennis Rippentrop of Charles City is listed as the vice president on the state funding application.
Rippentrop told the Press that the terminal is sorely needed in the area, especially as a way to stabilize access to LP gas.
When the Cochin pipeline in New Hampton stopped transporting propane several years ago there were tens of millions of gallons cut out of the regional supply chain, he said.
“Nothing to offset that amount has ever been done in northeast Iowa,” Rippentrop said. “When you study the maps and start putting logistics into it, suddenly you realize that we have a major void in northeast Iowa. Not just in LP pipelines, but in other things also.”
Rippentrop is also part of CH Wilson Transport Inc., but said that company is not involved in this project.
“They may get benefit down the road, but initially CH Wilson is not involved. This is a venture that I’m involved with on my own,” he said.
During an LP shortage in 2019, a picture of trucks waiting for hours at the LP terminal in Clear Lake was broadcast by national media.
Guiseppe “Joe” Natalie, who then worked for a company that had 30 million gallons of LP available on the East Coast, called Rippentrop because he saw the CH Wilson sign on a truck and wondered how they could arrange to get the LP to Iowa.
At that time that plan didn’t work out financially, but it got Natale and Rippentrop thinking about what a long-term solution could be.
“He’s very good in logistics and he came back to me and said, ‘Dennis, it’s right there in Charles City.’ After several months of looking over different spots, he said, ‘It’s right there. You’ve got two Class 1 rail lines and that’s what it’s all about,” Rippentrop said, referring to the White-Oliver property that is served by both the Canadian Pacific and Canadian National railroads.
Natale has almost 20 years experience in the energy and energy transportation industries, and is listed as the president of Charles City Rail Terminal LLC on the state application.
According to the application for funding through the Iowa Rail Revolving Loan and Grant Fund, “This project will be a major transportation facility improvement for Iowa and will assist in moving liquefied petroleum into the region. The project will also help Iowa biofuels producers and farmers expand secondary markets for the renewables recovered from biofuels refining.”
The proposed facility would work with rail traffic on the Canadian Pacific and the Canadian National railroads, which both have tracks bordering the former White-Oliver site. The existing rails on the property would be replaced with heavier-duty rails capable of supporting railcars with loaded weights of 286,000 pounds. Rail switches that were previously removed would be restored, the state application says.
Rippentrop said he plans to have the facility ready by next fall, hopefully by August 2022, with probably two loading spots for trucks to load LP, but eventually there could be four or more truck loadouts.
“The potential we can go up to is really unlimited,” Rippentrop said. “It’s going to be set up in the fashion that we progressively grow as people support it. We’ll go up to whatever size we have to, because we do have the land availability.”
The project will include loading facilities with “piping, pumps, walkways, metering and safety equipment,” and could install two 90,000-gallon propane storage “bullets” — the name for the round-ended pressurized cylinder tanks used to store LP, according to the state application.
Or, Rippentrop said, rail tanker cars could be used for short-term LP storage.
“I think in a year or two or three, the transfer of the renewable bioproducts could be a pretty major deal because of how we’re set up. That means like your corn oil potentially; your soybean oil potentially; your used fats and greases, fats maybe from meatpacking plants; those are things that could all be transferred from this location directly down to the refineries by the Gulf, which are looking very hard for that product,” Rippentrop said.
“CN and CP will hook on direct. Usually there’s a short line. They will connect direct. That has the potential to save millions and millions of dollars going down south,” he said.
“I think it’s going to be very good for the area. That’s the intent. And I think the agriculture side should be very, very pleased with it, should be very, very supporting of it,” Rippentrop said, both because it will provide a reliable source of LP for farms, but also because it will make it easier to market some of their products.
The White-Oliver site is the former home of the White/Oliver Farm Equipment and Tractor Factory and predecessor companies. At its height, the factory employed more than 2,000 people and built 100 tractors a day, according to an Iowa Department of Economic Development guide to state brownfield sites.
The factory closed in 1994 during a farm recession, the buildings were demolished and acres of concrete were left behind. The Charles City Area Development Corp. (CCADC), was granted the rights to the property in an agreement that forgave delinquent property taxes.
The property, now called the Oliver Development Park by the CCADC, is listed as a “brownfield” site because there is still some contamination in the soil from when the factory operated there. Tim Fox, the CCADC executive director, has said in the past that cadmium, lead, antimony, petroleum products and solvents have potentially been identified at the site.
An item on the regular monthly meeting agenda for the CCADC next Wednesday morning lists an offer to buy about 62.4 acres of the Oliver Development Park from the CCADC, by Iron Mountain Land Co., LLC, as the buyer.
Rippentrop said the newly created Iron Mountain Land Co. will probably purchase the property, then lease some or all of it to the Charles City Rail Terminal.
The site will be entered into the state’s Land Recycling Program through the Iowa Department of Natural Resources, which helps facilitate moving contaminated property sites into productive use.
“The total project will create over 20 new jobs after it is fully operational,” the application for the state grant and loan said, adding that the average wage will be $20 per hour or higher.
“These jobs will be well paid when compared to the Floyd County average, and they will consist of jobs in trucking, transloading, maintenance, rail shuttle operations and truck/trailer repairs. The project will also create secondary markets for Iowa bio-renewables which will support the agricultural sector and renewable products industries.”
In addition to the jobs directly with Charles City Rail Terminal, the project will create an additional 50 to 60 truck-driving jobs in the area, with an average wage per driver of $70,000 annually, as well as additional other jobs in related industries, the application predicted.
“This project will also lower or stabilize LP (propane) prices and will provide secondary markets for renewable by-products for Iowa’s biofuels industry,” the application says.
Included with the state application was a letter from the manager of business development with the Canadian National Railway, stating that CN would be capable of serving the terminal and transload operations being proposed, and is interested in working with the new company.
A letter of support from the Dakota Minnesota & Eastern Railroad, doing business as Canadian Pacific, says that company would service the Charles City terminal and transload operations as well, and confirmed “an expression of interest in working with this customer to develop additional rail business at Charles City.”
The application lists project financing sources as $1.34 million from the Iowa Rail Revolving Loan and Grant, $1.34 million in developer equity (cash to the project), and $6.915 million from bank lenders or investors, although Rippentrop said that is still pretty fluid.
The state application was for $240,000 in a grant and $1.1 million in the no-interest loan.
The amount approved by the Transportation Commission was for $240,000 in the grant and $900,000 in the loan, or $200,000 less than the amount requested.
Tamara Nicholson, director of the Modal Transportation Bureau of the Iowa Department of Transportation, told the Press that her staff goes through the applications and evaluates the projects, based on scoring criteria.
“We take a look at the way they’re going to affect the targeted jobs — creating jobs and economic development is the most critical one that we look at. The rail improvement loans are very important as well, to keep a strong rail network,” Nicholson said.
“We make a recommendation to our commission about how those should be funded … to get the best benefits for the rail system and businesses and customers served by rail,” she said.
Usually the recommendations are for less than the requested amount, “and that’s not because they’re not good projects, they are, but because we have limited funding,” she said.
“We were fortunate this year. We were able to fund many of them at pretty good amounts. This project applied for a loan of $1.1 million and we were able to grant a loan of $900,000, and then a grant of $240,000, which we fully funded,” Nicholson said.
She said the program is funded by an annual appropriation by the Legislature, then also as the revolving loans are paid back that money becomes available again for other projects.
“It does a lot of good for customers and businesses that are served by rail, and it’s a very successful program,” Nicholson said. “It’s a really good investment in the rail transportation system for Iowa.”