Senate Bill 2245 passed with only one negative vote in the North Dakota Senate but has faced headwind in the House Appropriations Committee, which is expected to consider amendments when it takes up the bill again.

SB 2245, introduced by Sen. Karen Krebsbach, R-Minot, seeks a $10 million grant to allow the Chamber EDC to acquire assets held by banks following foreclosure and to build additional track.

“There’s past history; there’s concerns,” Rep. Jay Fisher, R-Minot, said at a legislative forum in Minot Saturday. “Frankly, our Magic City is divided, so we have a contentious issue we have to fix, and we’re looking for solutions.”

Rep. Jeff Hoverson, R-Minot, said at the forum that he likes the intermodal concept but he’s not sure whether he can support SB 2245.

Jill Schramm/MDN Reps. Bob Paulson and Jay Fisher boot up their computers to report on bills to constituents at a legislative forum Saturday.

“I’m still trying to figure out why it can’t be run by a private business. I’m a little concerned that we might be going into more of a crony capitalism, and we’ve got to be careful of that,” he said.

Dan Mostad, general manager at Berthold Farmers Elevator, testified before the House Appropriations Committee on March 16 that the $8.2 million to the banks “looks like a bailout to me.”

Travis Zablotney, a Minot agricultural producer who also testified against SB 2245 before the House committee, said the bill is a bank bailout that ignores other creditors who are owed money. First Western Bank, the Bank of North Dakota and State Bank and Trust of Kenmare would share in the $8.2 million from a sale. The remaining money from the $10 million would go to build rail line that is mostly on BNSF’s property, he said.

“It’s a business that hasn’t been able to sustain itself so why are we throwing more taxpayer dollars at it?” Mostad said of the intermodal facility Monday.

Mostad added he is concerned that the facility is actively procuring grain from individual farmers, competing with privately financed, tax-paying businesses such as his elevator, which is a farmer-owned cooperative. He said his elevator has been able to ship identity-preserved grain to Seattle, where the commodities are containerized before going overseas.

John MacMartin, president of the Minot Area Chamber EDC, confirmed Rail Modal Group is buying from farmers, but also from grain elevators. The grain is combined into identity-preserved, containerized loads for shipping to smaller countries that can’t handle large amounts of bulk grain, he said.

“We have asked them for a compromise,” MacMartin said of area elevator managers, noting that they have not been willing.

Elevator manager Brad Haugeberg of Minot said he is unaware of any attempt by the Chamber EDC to reach out. As someone who works in the industry, he said, he concurs with Mostad and other elevator managers who oppose tax-funded competition.

“If private enterprise wants to compete with us up there, I welcome that. We have always had competition, but I don’t think tax money is the right answer,” he said.

Greg Johnson, former owner of the intermodal Port of North Dakota, said the facility can be successfully operated privately and SB 2245 isn’t necessary.

“I know from my own experience that it will stand alone and I know that it will pay debt,” he said. He said the foreclosure would not have happened had a couple of circumstances outside his control been different. Due to changeover in city leadership that was occurring several years ago, issues weren’t addressed the way they should have been, he said. Even now as the Chamber EDC proceeds with another operator, no one has talked to him about what went wrong the first time, he said.

Johnson said more than $10 million in infrastructure is in place at the site.

However, MacMartin said the assets that his organization looks to purchase from the banks have been over-valued. The banks are offering the assets for less than the $9.2 million paid to acquire the property in the foreclosure, he said.

The property remains over-valued, MacMartin said, but by the Chamber EDC acquiring the assets with the state’s help, the current operator would be able to compete in the market.

The City of Minot has invested about $12 million over the past 15 years to establish the port. The city owns the land, but improvements that include a building and a track were financed by Johnson, with whom the city ended its lease in 2018.