Union Pacific raising rents for property along tracks

Local business looking at 400 percent rise in ratesBy Gus Thomson, Journal Staff WriterUnion Pacific is raising the rent on many properties along its 35,000 miles of railroad track in 23 states, creating consternation for leaseholders in communities like Auburn.While at least one ? the Auburn Area Chamber of Commerce ? has reached a tentative agreement others ? like Highland Properties? Paul Brocker ? are girding for a fight over what they say are inflated rent proposals.Bruce Cosgrove, chamber executive director, said Tuesday that he?s still waiting to have the lease details sent by Union Pacific but believes that they will provide a reasonable solution to the organization?s future needs.Brocker said his family-owned Highland Properties would not have made significant investments in construction on Union Pacific property if it had any inkling of the magnitude of lease proposals now on the table.A Highland attorney has contacted Union Pacific that it wants to go to arbitration over the lease increases, Brocker said.Lease increases are based on what Union Pacific considers fair market value based on new property appraisals. Brocker said they have no basis in fact.?We did our own certified appraisal and he didn?t find what they found,? he said. Brocker said the lease proposal would raise rates 400 percent from the initial amount former owner Southern Pacific charged when Highland Properties built on railroad land 12 years ago on Borland Avenue in Auburn.?It was just a rockpile,? Brocker said. ?We wouldn?t have built if we knew what the railroad was going to do.? Union Pacific is merely doing what any property owner would do under similar circumstances, said corporation spokesman Mike Furtney.?Many of the properties acquired in the 1996 merger with Southern Pacific hadn?t been assessed in many years,? Furtney said. ?For the past several years, many people have been getting a bargain in lease costs and Union Pacific is now on a campaign to reassess and charge a true rate based on values.?While the land the lease agreement would cover is owned by Union Pacific, the chamber owns the restored, 100-year-old rail station, giant concrete ?Chinese Coolie? stature, and three railroad cars on the Lincoln Way property in downtown Auburn. The chamber would be obligated to move the old station, statue and rail cars if a new lease agreement isn?t reached.?We?re looking at a long-term solution consistent with our intent to preserve this building,? Cosgrove said. ?This is more than just a building and the railroad has been willing to sit down, talk and consider other values besides the land and the lease.?Initially, the chamber was looking at payments of about $1,300 a month ? or a 418 percent lease increase. The city of Auburn became involved in the negotiations because it is the leaseholder of record. The chamber is now looking at an increase in rent this year from the $340 a month it has been paying since 1989 to $583 a month. Next year, the tentative agreement calls for an increase to $750 a month. In 2004 the lease would rise to a monthly $916.After 2004, the lease would be based on ?fair market rent? with a 3 percent annual increase.The Journal?s Gus Thomson can be reached at gust@goldcountrymedia.com.