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VOL. 124 | NO. 53 | Wednesday, March 18, 2009

Next Stop: Norfolk Southern’s intermodal plans take shape

By Eric Smith

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ON THE TABLE:  Rossville mayor James Gaither looks over the aerial image of where the proposed Norfolk Southern Corp. intermodal terminal will sit, south of Tenn. 57 and north of U.S. 72 on private land owned by insurance mogul William Adair. The yard will carve 465 acres out of Adair’s 3,000 acres, most of which lies within Rossville’s urban growth area. Fayette County leaders are pleased with the site selection, because it keeps traffic away from the residential areas of Rossville and Piperton and keeps truck traffic away from natural areas like the Wolf River. -- PHOTO BY ERIC SMITH

The freight trains that rumble through Memphis are hard to ignore, especially the ones that parallel or bisect main thoroughfares and disrupt traffic. But even people who don’t cross railroad tracks during their commutes are likely to hear the distant blare of horns at some point during the day as locomotives make their way into and out of the city.

For all the commotion a train can generate, however – from the bell at a railway crossing to the click-clack of wheels over tracks to the moan of a diesel engine – the biggest buzz in the rail industry today revolves around a simple question: Where will Norfolk Southern Corp. build its new intermodal yard?

Despite overtures from the city of Memphis, the Norfolk, Va.-based company has formally ruled out Frank C. Pidgeon Industrial Park near Downtown, as The Daily News, The Memphis News’ sister publication, first reported last month.

Instead, railroad executives have decided that Fayette County would be the best spot for a multimillion-dollar, multi-acre yard, a development that will drastically change the county’s landscape with increased train and truck traffic plus a potential host of ancillary businesses.

Community resistance forced Norfolk Southern to reconsider its original preferred site, and now a wealthy Fayette County landowner has proposed a deal that could provide the best scenario for most, if not all, parties involved.

The alternate site might save natural areas and neighborhoods while creating a huge economic impact for Fayette County as well as Memphis. But the yard could also transform the quiet, sleepy community into a noisy, bustling industrial zone, an eyesore riddled with noise and light pollution that drives down property values and drives residents away.

Despite overwhelming evidence that a site selection is around the bend, the railroad – unlike its trains that can be heard from miles away – remains silent when it comes to unveiling specific plans.

Workin’ on the railroad

Speculation about Norfolk Southern’s proposed intermodal terminal began a few years ago. With only 50 landlocked acres at its Forrest Yard near the Mid-South Fairgrounds, the railroad had been expressing the need to find a new site that would allow growth and still be near its main rail line, which runs east out of town.

Click to view large map

This was good news for Memphis – one of just three cities in the U.S with five Class I railroads – because Norfolk Southern’s expansion plans here would bolster its “Crescent Corridor,” a 2,500-mile rail network connecting the southeastern and northeastern parts of the country, from Memphis and New Orleans in the south to Pennsylvania and New Jersey in the north.

“Memphis is a key project in the development of the Crescent Corridor and is an important gateway for all of the nation’s railroads,” said Norfolk Southern spokesperson Susan Terpay.

The $2.5 billion public-private partnership was designed to take a million long-haul trucks off the Interstate system by allowing rail traffic to compete directly with trucks on busy highways such as Interstate 40 and Interstate 81, highways without long distance, parallel rail lines. And since a train can travel many times farther on a gallon of diesel fuel than a truck, the Crescent Corridor has been billed as ecofriendly.

“These improvements will generate big public benefits because they will help both trucks and trains – in partnership – do what they do best,” Terpay said. “For trucks, that means moving freight short distances. For rail, that means moving freight long distances.”

As part of the Crescent Corridor development, the railroad started making significant investments in rail infrastructure along the corridor, from straightening curves to adding side tracks, from building new signals to developing new intermodal facilities.

Darrell Wilson, assistant vice president of government relations for the railroad, spoke in Memphis last month about the Crescent Corridor. He said the ambitious concept was created two years ago as a way to relieve truck congestion along busy highways near or within Norfolk Southern’s eastern U.S. network.

Over the past quarter-century, Wilson pointed out, the trucking industry’s vehicle miles traveled increased 105 percent while highway lane miles increased only 4 percent, according to U.S. Department of Transportation data. That meant highways into and out of places like Memphis were approaching or exceeding capacity.

To meet its goals and to meet increased demand for freight moving along the Crescent Corridor in both directions, Norfolk Southern would need to increase capacity in Memphis, where Forrest Yard records just 123,000 intermodal lifts a year and handles about 20 to 25 trains daily.

“We can’t serve the market,” Wilson said. “We’re tapped out and we want to be able to grow.”

Not in our backyard

With Memphis poised to become a major gateway for the Crescent Corridor and therefore an enhanced origination and destination point for shippers and freight forwarders worldwide, it quickly became clear that Norfolk Southern would need adequate space to make the expanded yard a reality.

As much as city officials hoped the railroad would consider Pidgeon Park, it didn’t make sense logistically for the company to invest there (see sidebar), and the company stated publicly it would instead look to Fayette County.

Last year, word began trickling out that the railroad had secured a purchase option with a group that owns about 1,000 acres of farmland between Rossville and Moscow, north of Tenn. 57 and south of the Norfolk Southern rail line. The property originally was slated for a golf course and country club development by the owners of Windyke Country Club in Memphis.

Resistance to that site was fast and furious. Residents, landowners and businesspeople cried foul, quickly forming a grass-roots organization called the South Fayette Alliance, which vehemently opposed the site and launched a campaign warning of widespread harm the roughly 500-acre yard might cause.

Specifically, opponents were concerned about rampant truck traffic on the two-lane Tenn. 57 – the chief route through south Fayette County – noise and light pollution created by a 24/7 intermodal operation and the damage an industrial site could have on the community’s environmental assets such as the Wolf River and nature preserves.

Buck Clark, whose father, William Clark, was the developer of the Clark Tower in East Memphis and is the namesake of the William B. Clark Conservation Area in Fayette County, serves as president of the SFA and lives in Rossville. He didn’t mince words when discussing the possibility of an intermodal yard in his backyard, which he fears could resemble the Lamar Avenue and Shelby Drive corridor with unsightly warehouses on every block and ruts from heavy trucks on every road.

“It brings nothing to the county but a depreciation of values. We’d like to see it locate elsewhere,” Clark said. “No one is lacking in support for Norfolk Southern and their business plan and what they do. We think they serve a good purpose and do good work. We just don’t want them to destroy our community in the process of advancing that.”

Clark wasn’t alone in his distaste for the railroad’s chosen site. Another outspoken voice came from the Wolf River Conservancy, a Memphis-based nonprofit organization that fights to protect the Wolf River and its ecosystem. That includes the Memphis Sands aquifer, a source of public drinking water, plus surrounding wetlands and floodplains.

Conservancy CEO Steve Fleegal said the organization didn’t oppose Norfolk Southern’s expansion plan, per se, but it found serious fault with the Windyke site’s proximity to the Wolf River.

“We recognize that Norfolk Southern needs a multimodal yard. We have no problem with that,” Fleegal said. “What we do have an issue with is the location of the yard. That is because there are a number of other places which are far better suited to this type of facility in the metro area. In a nutshell, that’s our position.”

Another location did emerge, perhaps easing the fears of residents and environmentalists alike.

Intervention for community

In 2007, insurance mogul William Adair paid $28 million for 3,200 acres of farmland called Twin Hills Ranch. Most of the property was in Fayette County with a few hundred acres across the state line in Marshall County, Miss.

Adair, who was born and raised in Fayette County and attended Collierville High School, made a fortune when he sold the company he founded, Direct General Insurance Co., for more than $600 million. Adair had big plans for his newly acquired land, from funding a waste treatment plant on site for the city of Piperton to developing a massive multiuse development called Piperton Hills.

Then Adair caught wind of the Norfolk Southern plan to develop and build an intermodal yard nearby. Like others in the community, he didn’t want to see his Fayette County home industrialized beyond recognition.

“We got a lot of roots out here, and the last thing we wanted was to see the 57 corridor destroyed and become another Lamar Avenue,” Adair said. “That’s what it would turn out to be.”

So Adair and others put together a proposal that would save properties along Tenn. 57, the Wolf River and communities such as Piperton, Rossville and Moscow by selling a portion of his land to the railroad.

Under this alternate plan, the railroad would carve 465 acres from the middle of Adair’s property for its intermodal yard. Norfolk Southern would bring a rail spur south from its main line across Tenn. 57 and into the rectangular site. The yard would have one southern access road for trucks, onto U.S. 72 just across the state line, limiting all intermodal traffic to 72, which has four lanes in Fayette County and connects with Tenn. 385 (soon to be Interstate 269) near the Fayette-Shelby border.

“We got maps out and started looking at all the sites that’s possible, and probably the only property that’s possible to put something like this on, that was within a reasonable distance, was our property,” Adair said. “We just felt like we needed to bite the bullet. It will cost us money down the road, but if you take the greed out of it and the money out of it, it becomes an issue of what is best for the community.”

TRUCK ALLEY: The intersection at Lamar Avenue and Shelby Drive in Southeast Memphis is riddled with trucks, many of them approaching or leaving the nearby BNSF Railway Co. intermodal yard. Some fear this will be what Fayette County will resemble if Norfolk Southern Corp. moves forward with its plans to build an intermodal terminal there. County leaders and residents are relieved, however, that the railroad is considering a site that will restrict truck traffic to the four-lane U.S. 72 instead of the two-lane Tenn. 57. -- PHOTOS BY ERIC SMITH

The plan would keep traffic out of Piperton and away from Collierville, something that had concerned residents of both towns. Also, should the company agree to his site, Adair is asking the railroad to minimize the yard’s impact by building berms that will keep the yard partially sunken in a valley, allowing “dirt absorption of all the sound” to prevent noise pollution.

Adair said he is asking Norfolk Southern to install shorter light poles – 35 feet high rather than 70 or 80 feet, as is common at intermodal facilities – with hoods on them to reduce light pollution. Last, Adair said he requested the yard be set as far away as possible from homes, with only one access road for trucks to keep traffic away from Tenn. 57 and back roads.

“They’re working with us as much as they can,” said Adair, declining to discuss financial negotiations until a deal is struck. “They’re willing to change and do some things for the community, so that’s a big plus.”

‘Expense of the few’

Though Norfolk Southern officials won’t comment on talks with Adair or anyone else regarding possible site selections for the company’s yard, the railroad has admitted to considering alternative locales.

Despite the company’s reticence, news of the potential deal between the railroad and Adair has spread quickly. The Memphis News obtained an aerial image that details how the massive yard would sit on Adair’s property, replete with track coming from the rail line and a road coming in from U.S. 72 (see overview).

The Wolf River Conservancy eagerly accepted the alternate site. With the new property much farther away from the river, its entire ecosystem seems to be out of harm’s way, noted Fleegal.

“We’re incredibly grateful to William Adair for offering his land, for removing this threat to the river system and the character of Highway 57 and the Wolf River corridor, which is a significant natural asset to the entire Mid-South community,” Fleegal said. “Ruining that asset by putting (the intermodal yard) there would have been catastrophic.”

For the most part, the plan also has been met with approval by Fayette County leaders, who were dead-set against Norfolk Southern’s original choice of the Windyke property, a site they couldn’t have stopped from being developed because of the railroad industry’s eminent domain capabilities.

For locations, click here.

“We don’t want it up there where they were talking about building it, between (Tenn. 57) and the railroad. We didn’t like it up there at all,” said Rossville mayor James Gaither. “I probably would have moved if they had put it up there – I live right on (Tenn.) 57 highway.”

Adair’s land is part of Rossville’s urban growth zone, but it might have a greater impact on Piperton, which has an industrial park sitting south of U.S. 72, in the extreme southwest corner of the county, not far from the proposed yard’s entrance. The town could see a host of ancillary businesses, namely warehouses and distribution centers, that tend to sprout around intermodal terminals.

“We are totally for it,” Piperton mayor Buck Chambers said of the terminal. “It’s just going to be a good situation for everybody, for the whole southwest quadrant (of Fayette County).”

McCall Wilson, president of the Bank of Fayette County and SFA treasurer, said for the situation to be good for everybody, Norfolk Southern will need to minimize the yard’s profile. He said while the new site affects fewer homes than the Windyke site, a few residents are near the terminal and could face diminishing property values.

“I hope (Norfolk Southern officials) will listen to the concerns of the neighbors as well and say, ‘How can we mitigate this (impact)? Can we do something so that the cranes aren’t close to somebody’s house? Can we do something so that the lights aren’t shining in their bedroom window?’” Wilson said. “You try to please the many at the expense of the few. You try to do what’s right for the county as a whole.”

But questions linger about the property. First, Norfolk Southern has to agree to build there, forgoing the Windyke property, which is closer to its track. Choosing the Adair land means added infrastructure costs and added time – albeit minimal – to its dropoff or pickup area, something that might be a deterrent.

Second, in light of a recent event in Memphis, during which a truck spilled fuel and required hazardous materials response, the intermodal terminal will bring added concern over emergency services for the county, noted Rossville county commissioner Ron Gant.

“This would put an additional burden on us, and we’re hoping the railroad will provide some additional funding for the county to do that as well,” he said.

Potential benefits

While Fayette County appears to be a sure thing for the railroad – even if a specific site hasn’t been selected – what does that mean for the area’s logistics and distribution industries?

Martin Lipinski, director of the Intermodal Freight Transportation Institute at the University of Memphis and a civil engineering professor, said it was a “disappointment” for Memphis that Norfolk Southern said no to Pidgeon Park, but he also understands the company’s decision.

He counts the development of a new yard, even one the next county over, as a positive step for the city despite not reaping all the direct economic benefits of the facility.

“The fact that Norfolk Southern sees Memphis as a key role in this Crescent Corridor development and sees the great potential for developing more domestic business should be viewed as something very positive for the community,” Lipinski said. “It will definitely have a regional benefit. If they develop an increased business, we’ll continue to add to our intermodal capabilities.”

With this new terminal, Norfolk Southern plans to quadruple its local lift capacity from 123,000 lifts to 535,000 by 2022. The new facility also would double the number of local employees, from 99 to 218, while an estimated 454 drayage drivers (explanation below) would be needed to accommodate transportation to other yards or warehouses, up from 110.

The terminal development could have a significant economic impact over the next 15 years, according to a study conducted by the University of Tennessee’s Center for Business and Economic Research. Specifically, the yard could create 900 average annual construction jobs, $37 million in average annual construction-related income, $373 million in permanent annual income, $5 billion in private sector investment, $9 million in property tax revenue and $4.8 million in local sales tax revenue – important considerations in a recession.

Dan Pallme, director of business development at Comtrak Logistics, noted that the drayage – the movement of cargo from one railroad’s intermodal yard to another, or to an altogether different destination – will increase greatly with Norfolk Southern in Fayette County. But, he added, the opportunities for more business in the area are staggering. That includes the heart of Memphis, just a short drive away along U.S. 72 and Tenn. 385.

“It gets more competitive and the pricing comes down and the goods flow and more DCs (distribution centers) will open up here because it’s easier to get freight flows in the city,” Pallme said. “So I think it’s a good thing for the city.”

The best thing about the expansion, Lipinski and Pallme both noted, is having a key eastern railroad such as Norfolk Southern beef up its presence here.

That advantage was echoed by Joseph Waldo, senior consultant for Lexington, Mass.-based IHS Global Insight, who said this investment makes the city even more of a rail crossroads than it is now.

“I think it’s going have a beneficial impact for Memphis for a couple of reasons. First, most of the intermodal activity that has occurred in Memphis so far has been the western railroads,” Waldo said. “The Norfolk Southern serves an entirely different part of the country, which is the southeast and the northeast. So that gives Memphis better access by rail to a larger part of the country that heretofore has not been served that much.”

A close call

Norfolk Southern developing a large intermodal facility enhances the area’s role as a rail nexus, following BNSF Railway Co. finishing its new yard in Southeast Memphis, the joint Canadian National Railway Co.-CSX Intermodal yard at Pidgeon and Union Pacific in Marion, Ark. (see sidebar).

Terpay said the new intermodal terminal will be “dedicated to intermodal operations – using a combination of truck and rail transportation to move cargo – whereas Norfolk Southern’s Forrest Yard (which will remain operational) handles both intermodal freight, as well as other bulk commodities that the railroad hauls, such as coal, metals, machinery, paper products, agricultural products, vehicles and vehicle parts and chemicals.”

Toss in Memphis International Airport as the world’s busiest cargo airport, the International Port of Memphis as the fourth-busiest inland waterway port in the U.S. and two Interstates (with another pair on the way), and it’s easy to see that a large Norfolk Southern yard within the metropolitan area adds to the city’s abundance of distribution riches.

“As the volumes grow and freight transportation grows, we probably have it better than any other market in the whole United States because you’ve got the growth capabilities on different railroads to keep on growing and keep up with the freight demands,” Pallme said.

As for when the railroad makes its final decision, Terpay has reiterated during numerous phone and e-mail correspondences that no timeline has been set for a site selection. But Norfolk Southern’s next stop appears to be the land owned by Adair, who expects an agreement to be hammered out soon.

“It looks like we’re going to get the issues worked out without any problem,” he said. “We’re getting close.”

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 91 91 21,363
MORTGAGES 63 63 16,257
FORECLOSURE NOTICES 4 7 1,494
BUILDING PERMITS 166 167 42,087
BANKRUPTCIES 34 40 6,619
BUSINESS LICENSES 13 13 3,110
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0