Archive for Wednesday, May 19, 2010

State gives tax incentive to BNSF Railway for freight hub

May 19, 2010

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— An often-delayed and controversial freight hub proposed by Burlington Northern Santa Fe Railway got a boost from the state Legislature, which passed a tax incentive provision to speed up construction of the project.

The Kansas City Star reported Tuesday that a tax incentive included in a bill that raised the state’s sales tax and approved a new transportation plan will be worth up to $35 million over several years for BNSF.

In return for the tax provision, the railroad company has agreed to start construction on the $750 million project in southwestern Johnson County this year, state officials said. The railroad announced last year that it was indefinitely delaying the project because of the recession and shrinking freight volumes.

The tax bill authorizes the state to make a grant to BNSF to develop the property. The sales tax generated by the sale of commercial utilities — gas, electricity, water — will be diverted to a special account and used to pay off the grant by 2045.

The railroad is proposing a 1,000-acre development that would include a nearly 500-acre freight yard plus a warehousing complex on land in Edgerton. It would be designed to facilitate movement of goods between trucks and trains.

In January, a coalition of environmental groups and individuals sued to stop a federal permit that would allow construction of the rail hub. The coalition contended that the U.S. Army Corps of Engineers underestimated various environmental impacts from the proposed hub, which would bring large volumes of truck traffic to the area.

Gov. Mark Parkinson said in a statement that the project is “a critical part of Kansas’ new transportation plan, which will invest billions of dollars in the Kansas economy over the next 10 years while putting tens of thousands of our fellow Kansans back to work.”

And state officials pointed out that the freight yard and warehouses will pay taxes that BNSF could have avoided.

“The reality is we’re getting them to agree to pay those (taxes) when they probably would have been granted an exemption,” said Joe Erskine, a deputy state transportation secretary.

BNSF said it needs a new freight center because of increasing demand and space limitations at its yard in the Argentine district of Kansas City, Kan. It contends the project would bring millions of dollars and thousands of jobs into the Kansas City area.

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