Massive industrial rail park plan back on track
An agreement has been struck between the province and CentrePort Canada that has cleared the way for the inland port to finally get started on the development of a unique industrial rail park.
On Thursday, CentrePort released a request for proposal seeking private-sector partnership for what is likely to become a $100 million-plus development designed to attract rail-intensive industrial tenants that will be able to access Canadian Pacific Railway Ltd.’s main line.
The expectation is that the facility will be built in phases — it could take as long as 15 years to complete — on a 665-acre parcel of land just west of Sturgeon Road on the north side of CentrePort Canada Way. The province has agreed to sell the land to CentrePort.
The development will include switching and spur lines connecting to the CP main line that runs through the north part of CentrePort’s 20,000-acre footprint. With new federal inter-switching rules, it also means tenants will have access to Canadian National Railway and BNSF Railway. It is a rare opportunity in Canada to have access to three tier l railways.
The rail park concept has been in the works for years. An anchor tenant was announced more than two years ago but, because of delays in getting to this point, the company, BroadGrain Commodities, has since gone on to do a development in Saskatchewan.
In the course of its review of provincial business commitments, the province has recently signed off on CentrePort’s business plan, including guaranteeing an additional $1.5 million to CentrePort’s line of credit.
CentrePort CEO Diane Gray said she's confident about the potential for this development. She said in pre-marketing discussions with potential development partners from Canada and the U.S., there has already been keen interest.
"This is the transformational piece of the inland port," she said.
The provincial government decision to give the go-ahead sets the stage for CentrePort’s future self-sufficiency. Negotiations with potential partners will include ongoing revenue for CentrePort Canada Inc. and a share in the profits of the operation of the rail park.
"What this does is confirm the government support for what is the key priority of our business that then sustains the vision of CentrePort going forward," Gray said.
"The government has put all major economic projects under review. They were entitled to do so. If I was a new government, I would have done the same thing."
Gray said plenty of negotiations with the prospective developer — who will need to be willing to finance the construction — will be required before it is determined what the ultimate partnership arrangement will be. But the fact that CentrePort will own the land will allow it to leverage that asset to fund other operations.
Since it was formed in 2008, a lot of heavy lifting has been done at CentrePort to get to this point. The development of the $200 million CentrePort Canada Way that connects the Perimeter Highway to Inkster Boulevard, creates an important thoroughfare that allows a large volume of truck traffic to by-pass formerly congested routes. Gray and her team at CentrePort have led the way in getting many agreements with the city and regional municipalities for water and sewage servicing work, as well as zoning and subdivision work. The development of several industrial parks in the inland port has meant the addition of 54 new companies that have either built or are building new operations at CentrePort.
Martin McGarry, president and CEO of Cushman & Wakefield Winnipeg, has been active in marketing industrial land at CentrePort and is currently selling fully serviced properties at the 89-acre Brookside Industrial Park Phase III.
"We have finally arrived," he said. "For the first time in many years we have shovel-ready inventory that’s fully serviced which is great. Now to augment that with access to an intermodal yard in your backyard, that’s another fantastic step."
It was almost not to be. Don Leitch, the CEO of the Business Council of Manitoba, has been a long-time advocate for the strategic importance of CentrePort. He said there was a real concern that CentrePort would not be allowed to get to this point.
"The provincial government has been debating their position and view on CentrePort," said Leitch. "We've always said it's OK if there is an issue around the business plan... but when government hesitates too long... timely decisions are critical when there is private capital at play. We don't want to lose the gem that is there."
More than two years ago, when a large press conference was held announcing that BroadGrain Commodities would be the anchor tenant of a new rail park, there were several pieces not yet in place. Gray said that its initial arrangement with BroadGrain was during a phase when the rail park was being marketed on a client-by-client basis. She said now that there is committed support from the province to proceed, there is renewed confidence in the market demand for the project.
"We went back to the drawing board to develop a new business model for the rail park," Gray said. "This is the model we are advancing through the RFP today. It required provincial government review and due diligence. We are pleased to be moving forward with this project with the government's full support."
Blaine Pedersen, provincial minister of Growth, Enterprise and Trade, said, "We commend CentrePort and its board of directors for seeking private sector input in this initiative to further develop these lands. Manitoba is an excellent place for business to invest, build and grow. We will continue to work together with CentrePort and industry leaders to increase private sector investment in our province."
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.