Developer loses rail bid
Group marketing old RG Steel site tried to buy line that runs along mill
WARREN — A key component in the revitalization of the old RG Steel site hit a speed bump when the site developer’s bid to buy a rail line near the old mill was denied.
The application of BDM Warren Steel Holdings, LLC — the group marketing the mill site to potential investors — to purchase a 14-mile portion of a CSX rail line running along the mill was rejected Aug. 30 by the federal Surface Transportation Board.
In May, CSX filed a petition to abandon the rail line that travels in a semi-circle between Newton Falls and Niles, passing through Weathersfield, Howland, Warren and Warren Township. In July, the board cleared the way for the abandonment despite objections from a property owner, the Youngstown Warren Regional Chamber, the Mahoning Valley Economic Development Corporation and BDM.
In its decision, the board held although BDM provided a bank statement showing it could meet the preliminary financial responsibility of $741,911 to buy the rail line, it did not demonstrate it had placed 10 percent of that amount in escrow.
The company also filed its offer to purchase the line more than 10 days after the deadline.
Michael Bechtold, executive vice president of Brayman Construction Corporation, the company involved in the cleanup of the mill site, said BDM attempted to reach out to CSX’s attorneys concerning the offer to purchase the line, but were unable to connect before the June 29 deadline.
Additionally, the board found BDM failed to show a continued need for rail service on the line, which has not been used for more than two years. The company contended the rail was a “critical component of the redevelopment of the property and restoration of employment to the Warren area,” but did not provide evidence of any shipper or receiver that requires the use of rail.
The board also noted letters of support from the chamber and MVEDC that the rail service is “economically valuable,” but did not provide evidence of the need for such service. The board also stated BDM did not provide basic contact information, like a mailing address or phone number, leading CSX to refer to the company as a “mystery entity.”
Bechtold said it is unknown how the board’s decision could affect the search for an investor.
“It depends on the individual investor and their business model,” said Bechtold, who added the company did not expect the board to rule against them. “We followed what we viewed were correct procedures.”
Sarah Boyarko, chief operating officer for the chamber, agreed with Bechtold’s assessment.
“Each individual company looking to make an investment will have specific requirements,” said Boyarko.
Boyarko said the mill site is still served by a Norfolk Southern rail line, but she is concerned that some prospective investors will leave the market.
“There’s still a lot of opportunity (for the property),” said Boyarko. “We’re reaching out and waiting to hear back on companies’ timelines and notifying them that the STB has ruled this way.”
CSX and Trumbull County have until Jan. 2 to negotiate an agreement to turn the rail lines into a bike trail, which could help finish the last four-mile Trumbull County leg of the 79-mile Western Reserve Greenway.
Bechtold said BDM is currently in discussions with Trumbull County and exploring what options the company may have. BDM may also approach CSX directly or simply move forward without the rail line, Bechtold said.