Private railway wins federal grant

JOHNSTOWN – As hundreds of Colorado businesses raced to get loans to help rebuild their flood-battered companies late last year, one of Colorado’s wealthiest businessmen received a federal grant to repair his privately held rail network.

Great Western was the only railroad in Colorado to receive federal grant money, which doesn’t have to be repaid, after last September’s devastating floods, according to the Colorado Department of Transportation.

The grant to rail and real estate magnate Pat Broe came after Colorado’s Democratic U.S. Sens. Mark Udall and Michael Bennet wrote letters to the Federal Railroad Administration supporting the grant request. The funds were delivered through CDOT. Broe is a modest, although longtime contributor to Udall, among other politicians.

A spokesman for the Federal Railroad Administration and a representative of OmniTRAX did not respond to requests for comment.

Udall spokesman Mike Saccone said the transportation department received the grant to partner with Great Western Railway to complete repairs.

“It wasn’t an earmark, it was a competitive grant,” he said. “There were no politics involved.”

Bennet supported the grant as he has supported other funding that CDOT has requested, Bennet spokesman Adam Bozzi said in an email.

“Had any other railroad applied for assistance with the support of the state, we of course would have advocated for them as well,” he said.

The nearly $1.7 million federal grant will address a sizable chunk of the $3 million in damage suffered by the railroad company after floodwaters destroyed a portion of Front Range railroad infrastructure in September. Great Western Railway will contribute $434,000 in matching funds.

The taxpayer dollars from the Federal Railroad Administration will cover removal of flood debris, construction of railroad track and bridges and reconstruction of salvageable railroad track in Weld, Larimer and Boulder counties.

The deluge impaired nearly 150 miles of railroad tracks and damaged bridges, leading to millions of dollars in damage. The disaster stymied crude-oil rail shipments for Noble Energy Inc. (NYSE: NBL), among the largest oil and natural-gas companies in Northern Colorado. It also delayed rail shipments of Vestas Wind Systems’ (OMX: VWS) wind turbine components.

Broe founded real estate and asset management firm The Broe Group in Denver in 1972. In 1986, The Broe Group’s involvement in rail began when it bought a portfolio of real estate assets from the bankrupt estate of a large industrial company, including a railroad in Northern Colorado that became Great Western Railway near Windsor. The Broe Group now owns OmniTRAX Inc., a network of railroads including Great Western that it operates throughout North America.

Rail has become an important part of Broe’s business, attracting companies such as Halliburton Co. (NYSE: HAL), which built a sand terminal in the Great Western Industrial Park, also owned by The Broe Group. Halliburton uses the Great Western Railway to deliver its sand to various customers.

The Broe Group’s asset portfolio includes more than 10 million square feet of commercial property nationwide. Among Colorado’s wealthiest businessmen, Broe ranked 25th nationwide in land ownership in the 2011 Land Report 100, with hundreds of thousands of acres of land in Colorado, Wyoming and New Mexico.

The grant to the railroad comes as cities and towns in Northern Colorado and the Boulder Valley attempt to cope with limited funding to repair public infrastructure. Meanwhile, businesses in 10 Colorado counties, including Boulder, Larimer and Weld counties, have received $26.8 million in Small Business Administration low-interest loans that they eventually must repay. The federal agency does not have a disaster grant program.

“The Colorado Department of Transportation’s larger strategy is designed to maintain and upgrade this transportation infrastructure that is an important component of commerce and industry in this region of Colorado,” Udall said in his letter to Federal Railroad Administrator Joseph Szabo.

Broe has made $4,250 in campaign contributions to Udall since 1998, according to Federal Election Commission records, although he has not contributed to Bennet.

The senators’ offices noted that both lawmakers have led efforts to secure recovery aid for Colorado cities and towns, including raising the cap on the amount of federal transportation recovery dollars the state could receive from $100 million to $450 million.

Amy Ford, spokeswoman for CDOT, confirmed that only Great Western Railway received the disaster-relief grant. Great Western qualified for the grant because of its designation as a short-haul railroad, Ford said. Other railroads such as BNSF and Union Pacific were ineligible because they are considered long-haul railroads.

Transportation department officials saw that they could apply for the federal grant and asked Bennet and Udall to write letters of support, Ford said.

“One of the things that we were looking at is how do we benefit Colorado as a whole, and we saw the opportunity to apply for these grants,” Ford said. “It wasn’t about who owns this railroad. It was an opportunity to rebuild Colorado in an area that had been devastated by these floods.”

Great Western Railway spent 3,300 man hours repairing its lines and finished emergency repairs by Nov. 11, according to the grant application submitted by CDOT. About 720 feet of track remained out of service and unrepaired as of December when the application was completed.

Union Pacific did not receive such a grant, nor did it apply for one, UP spokesman Mark Davis said. UP saw damage on its Denver-to-Grand Junction and Denver-to-Cheyenne lines.

The company considers natural disasters a cost of doing business, said Davis, who has worked for UP more than 30 years. He could not recall a time when the railroad company ever has applied for a grant to rebuild after a natural disaster.

BNSF, which saw more than a mile of track damaged in Boulder, Loveland and Longmont, also did not receive a grant, BNSF spokesman Andy Williams said.

Molly Armbrister contributed to this report. Steve Lynn can be reached at slynn@bizwestmedia.com and 970-232-3147. Follow Lynn on Twitter at @SteveLynnBW.


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