City council postpones spur line sale

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This article was published 13/12/2018 (1952 days ago), so information in it may no longer be current.

The sale of a City of Winnipeg-owned rail spur line was postponed by council on Thursday, after the operator of Prairie Dog Central Railway questioned why the deal wasn’t put out for tender.

The city’s real estate division had recommended the sale of the spur line in the Murray Industrial Park to Cando Rail Services for $1, without putting it out to tender, on the grounds it didn’t think another firm would be interested.

An administrative report to council said the sale would save the city tens of thousands of dollars in future maintenance costs and would ensure a large employer could continue to receive rail service (implying the employer could leave the city if the spur line was shut down).

The $1 sale had been flagged by the city’s independent fairness commissioner, which filed a report to council saying the real estate division did not get an independent appraisal on the land’s worth, and hadn’t circulated the property to other rail line maintenance firms — which is required by city policy.

The real estate division countered in its report that even if it had put the line out for tender, it still would recommend selling to Cando.

This week, another dissenting party weighed in.

“We would have liked to have known the rail line was up for sale,” Paul Newsome, general manager of the Vintage Locomotive Society, told the Free Press on Friday.

Newsome went to council on Thursday, asking for the sale to be put on hold until the society could get a look at the books and decide if it should make a bid for the spur line.

According to an administrative report, city hall had an agreement with CP Rail dating to 1975, when the industrial park was opened, whereby CP would operate the spur line but the city would own the land and maintain the tracks.

The city has spent $160,000 in track maintenance since 2016, the report said, and CP no longer wants the line.

The non-profit Vintage Locomotive Society operates the Prairie Dog Central, a heritage railway on the city’s western edge. Since 2012, the society has also operated a for-profit business subsidiary, Prairie Rail Solutions (PRS), which provides track, locomotive and signal maintenance to the railway industry, as well as railcar storage facilities and services.

Newsome said the society operates the commercial subsidiary as a way to offset costs of operating the Prairie Dog Central — and buying the Murray Industrial Park spur line could be of interest to it.

“Clearly, the (real estate division) failed to identify that PRS is a qualified rail service company capable of undertaking the ownership and servicing of the Murray Industrial Park spur line,” Newsome told council.

Newsome said he doesn’t know if buying the spur line would make economic sense for the society, adding it would need to determine what revenue it could expect by servicing businesses in the industrial park, the city’s current maintenance costs and the property taxes the city will be levying on the property once it’s been sold.

“I understand why the city wants to sell the spur line, but we need all this information and the time to do our due diligence,” Newsome said.

Councillors Scott Gillingham (chairman of the finance committee) and Brian Mayes (chairman of property and development) urged other councillors to defer a vote on the sale for 60 days, to give the locomotive society time to consider a bid.

Only Coun. John Orlikow (River Heights-Fort Garry) voted against the 60-day postponement.

aldo.santin@freepress.mb.ca