JEFFERSONVILLE — While many people in Jeffersonvile commend the continued economic gains at River Ridge Commerce Center, one entity is not so happy that it’s expanding.
Mid America Rail Storage & Leasing Co. leases more than 50 miles of rail track at the commerce center, and has been storing and switching railcars from around the nation for 17 years.
Now, the River Ridge Development Authority has begun exercising its right to eminent domain over the rails by seeking to remove them for prospective development.
Mid America’s Chief Operating Officer Greg Miller told the River Ridge Development Authority at its August meeting that he feels his company has been “kicked to the curb.”
“After we’ve been here for so long as a support in what you guys have tried to do here, it doesn’t seem like fair and equitable movement,” said Miller, who was one of the three founding owners. “I don’t like the fact that you feel like you need it, you’re going to take it — ‘sorry.’”
THE HISTORY
Mid America entered into an agreement in 1997 with ICI Americas Inc., the company that operated the 6,000-acre Indiana Army Ammunition Plant at the time. The agreement allows Mid America to lease the rail lines for storing and transferring services and lasts until 2017, with a right to extend another 10 years.
Contracts switched hands in 1998 when the Reuse Authority — commercially known as River Ridge Commerce Center — became the operator of the former ammunition plant and inherited the agreement with Mid America.
“It was designed in such a way that it kind of conflicts with our mission, to the extent that now our mission is to develop property and to promote economic development,” River Ridge General Counsel David Lewis told Miller at the meeting.
River Ridge receives a fixed fee of $25,000 a year with a 3.5 percent increase after the first five years, as well as a variable fee that is 20 percent of Mid America’s gross monthly sales. River Ridge also collects “license fees,” or royalties, from Mid America on a monthly basis.
That totals between $400,000 and $500,000 to River Ridge from the rail storage company each year.
The better Mid America does, the better River Ridge does.
IN CONTROL
Indiana state statute allows River Ridge the right to eminent domain over the rail, which it is exercising through a resolution passed in July that allows them to remove 960 feet of rail. The resolution was unanimously approved by both the River Ridge Development Authority and Jeffersonville City Council.
Lewis said the length of track is a “very, very small part” of the total railroad track at the commerce center.
“As a practical point of fact, a sizable part of the 960 feet in question has been fenced off and not used by Mid America,” Lewis said in an email.
River Ridge made an offer for the rail that is 125 percent of the market price. If both parties can’t agree on the price, the matter can be contested in court.
“There is a legal process that is to be followed. It requires that you be justly compensated for the rail that’s taken from you,” Lewis said. “We intend to follow that process and we sure don’t want to jeopardize the mutual benefit that is served by us receiving royalties and revenue as your company does its business.”
Miller said that his business’ goals haven’t changed, even though the purpose of the ammunition plant has.
“ ... At the time when we agreed to us taking over the rail, we were the game in town,” Miller said. “Now, we maintain your rail. It doesn’t cost you a penny. And you’re still gaining royalties from it.”
Mid America lost money when mining company Orica — which paid the rail company fees for switching rail cars — closed operations at River Ridge.
“We lost 30 percent of our business when you didn’t renew Orica’s contract,” Miller said. “I understand the reason for that. But I’ve done a good job of marketing other areas to make up the biggest portion of that. So you’ve not lost.”
Mark Robinson, president of the development authority, said these first negotiations with Mid America can set a possible precedent on how to proceed.
“I do think we’re in for changes and this is a prelude to that future that we’re going to have to address,” Robinson said. “Our mission is quite clear. We’re committed to full implementation of this development park.”
But Miller said he is wary of the effects on his business from River Ridge’s growth in the years to come.
“We’ve got people over here working too,” he said. “We’re not an Amazon, we don’t have thousands of people, but we’ve got people who live in this community and have for years.”
That’s why the board members said they want to make sure they have a resolution in place that involves talks among all parties.
“We like having you here and having you operate and obviously your generation of revenue has been significant over the years,” Acy said. “ ... We do want to have some process going forward that will be mutually acceptable.”