Earlier this year in a farsighted move, Edgerton hired its first city administrator so the community could take advantage of opportunities from a planned Burlington Northern Santa Fe rail hub in Gardner.

“We were positioning ourselves to get the crumbs off the plate,” said Donald Roberts, mayor of Edgerton, a Johnson County community about 10 east of Baldwin City. “Now we have the whole plate.”

The plate is the railroad’s intermodal — to be built between Gardner and Edgerton — and an associated warehouse complex next to the new yard. The intermodal will transfer containers, many filled with cargo from Asia, from railroad cars to truck trailers.

The two projects are to be built by the Allen Group Inc., immediately southwest of Gardner. The tract includes 1,300 acres bounded by U.S. Highway 56 on the north, within sight of Interstate 35 to the south and astride BNSF’s main transcontinental rail line.

The $750 million project came Edgerton’s way last month, after the Gardner City Council voted 3-2 to rescind agreements with the developers. The council has three new members.

The vote came after BNSF officials first informed Gardner officials in February it was putting the project on a “variable” schedule because of a recession-related dip in freight and revenue.

Then in May, it was learned the Kansas Department of Transportation would apply for $50 million from the next round of federal transportation stimulus grants in an attempt to get the project back on track.

With that and the change in the Gardner City Council, the BNSF and the Allen Group sought reconfirmation of three agreements with the city.

“I don’t think the three unsigned agreements would benefit the residents of Gardner,” said Gardner City Council member Mary Peters, who returned to the council in April after two years away the body. “Everything seemed meant to benefit the railroad and the Allen Group.”

Since the vote, a recall petition was started to remove the three council members who voted to rescind the agreements. In November 2006, more than 72 percent of voters rejected a ballot measure that would have prevented annexation.

Peters is undeterred, saying she made her opposition to the agreements clear during her campaign.

Still, the Gardner City Council has announced a willingness to renegotiate the contracts. But neither Peters nor Gardner Mayor David Drovetta, a supporter of the project, expect much to come from that decision because negotiations have started with Edgerton.

“I personally don’t think the majority of the council will go back to the type of agreements that are going to work for the developers,” he said. “I think the developers will find Edgerton to be more amenable.

“With the Johnson County New Century AirCenter to the northwest, Gardner is going to be bracketed by two industrial parks over which it has no control and gets no revenue.”

Steve Forsberg, BNSF public affairs director, said the railroad and the Allen Group were in talks with Edgerton on the same three agreements the Gardner City Council rescinded.

Although no start date is set, the railroad is committed to the project, Forsberg said.

“We’ve already invested $60 million in the project for land, overhead cranes and engineering,” he said. “We’re going to proceed with the project regardless of what taxing jurisdiction it ends up in. The only question is when construction begins.”

Grant to determine timeline

The start date will depend on KDOT’s attempt to secure $50 million for the project from the next stimulus transportation package offered by the U.S. Department of Transportation.

Joe Erskine, KDOT deputy secretary of finance and administration, said the intermodal would be among the five to 10 projects for which the agency would make application for a so-call TIGER Grant.

“There’s $1.5 billion to be awarded nationwide,” Erskine said. “It’s a pot of money everybody will compete for. … In Kansas, we’ll be happy if we get one or two projects funded.”

The application deadline is Sept. 15, with the winning projects to be announced in February.

Selection criteria for the grant give Forsberg confidence. Projects will be chosen based on their long-term benefits to a metropolitan area, region or the country. They will also be judged on their job creation, economic benefit, innovation, safety enhancement, integration with other transportation systems and participation of other public and private partners.

The intermodal/warehouse project gets a check mark in all those categories, Forsberg said.

As for job creation, a Southwest Johnson County Economic Development Corporation study conducted more than three years ago found when fully built out, the complex would create 3,396 jobs in Gardner in the next 20 years and provide the economic stimulus to add another 3,800 jobs in Johnson County.

The project also has the advantage of being shovel ready, Forsberg said. Should the project receive the grant, work will start in 2010, he said.

Gardner council members were aware the project would go forward on the city’s doorstep regardless of the city’s participation, Drovetta said. He said he suspected some on the council didn’t think Edgerton, a city of about 1,800 residents, was prepared to pull together such a complex deal.

Drovetta said he didn’t share that view because Edgerton officials would benefit from the interest Johnson County and the state have in making the project work. The Kansas Legislature passed a statute in 2008 that allows the state, rather than cities, to back bonds issued for intermodal infrastructure, he said.

Complex agreement

The intermodal project is much more complex than anything his city has ever considered, Roberts conceded. It is a big responsibility because it would not only greatly benefit Edgerton but all of Johnson County — and communities in neighboring counties.

Since negotiations with the railroad and the Allen Group began early this month, the city has hired attorneys and financial experts to help with negotiations and is looking to add an engineering firm, Roberts said.

Agreements with the developers would cover property annexation, public financing of infrastructure improvements and an overall definition of the intermodal and logistics park.

In the previous financial agreement:

• Nearly $50 million in roads, bridges, sewers and other public improvements for the intermodal and logistics park would be completed in three stages.

• Johnson County would be responsible for roads amounting to $14 million of that total, while Gardner would have been responsible for about $20 million.

• Gardner would have contributed 100 percent of franchise fees and utility sales taxes and excise taxes collected at the intermodal site to a fund dedicated to paying off public improvements.

• Individually owned warehouse projects in the logistics park would be eligible for a 50 percent property tax abatement for a term of 20 years. And 15 percent of the property tax collected on warehouse projects in their first 10 years would be used to pay for their needed public infrastructure improvements.

Edgerton City Administrator David Dillner said there was little or no risk to Edgerton. He was confident revenue produced by the development would cover the bonds, which would be backed by the state.

Another public infrastructure component is a KDOT commitment to build an Interstate 35 interchange for the intermodal within four to five years of its opening, Erskine said. Unless there is an unexpected revenue shortfall, the agency should be able to pay for the $15 million to $25 million interchange from program revenues, he said.