Spokane County was forced late last month to borrow money from its treasurer's office to make a $2.3 million balloon payment due on more than 200 acres of West Plains land that it bought to facilitate the Geiger Spur rail line relocation project and a big portion of which it now is seeking to sell.

Through a multijurisdictional effort, the rail line was rerouted a year and a half ago to preserve and create jobs in that sparsely industrial area south of U.S. 2 and to get a portion of it off of Fairchild Air Force Base property, where it raised security concerns.

The spur serves a number of manufacturers that collectively employ hundreds of people. Eventually, it's expected to provide rail access to a proposed "transload" facility where freight would be transferred between trucks and rail cars, but which has yet to get rolling due to the sluggish economy.

In recent months, though, the county has deemed as surplus and been seeking to sell through the Spokane-based NAI Black commercial real estate firm all but a relatively small portion of the property, with that piece being preserved for the transload facility.

One of the questions facing the county now is how big a financial hit it might have to take on the sale of that land, given current depressed property values. It bought the land—located just southwest of Airway Heights, between McFarlane and Thorpe roads west of Craig Road—from real estate investor Pete Carstens in early 2008 for $2.9 million, and made an initial $604,000 payment on it.

Carstens says he sold the county a total of 255 acres for around $10,000 an acre, although it had been appraised at about $11,000 an acre. Minus the portion of it that was retained, the county now is seeking to sell 205 acres of the land for $9,300 an acre.

If the county were able to hold firm at that price, the sale of the entire 205 acres would generate roughly $1.9 million, or about the reduced market value that Barrett Associates Real Estate, of Spokane, placed on the land in an appraisal it did for the county last September. NAI Black has made clear to the county, though, that unless the price is discounted more deeply, the land likely will take several years or longer to sell.

"We're going to try to get back as much as we can," says county CEO Marshall Farnell.

"We never said that we'd take a haircut on it," he says, referring to the county's original purchase of the land, but he acknowledges that expecting to recoup such expenditures on real estate "may be unrealistic in today's environment."

The loan from the treasurer's office to make the balloon payment on the property must be paid back in two years and didn't require action by the county commissioners because it was handled internally, Farnell says.

The county had hoped to sell the land or find some appropriate use for it before that payment came due. The commissioners met in the spring of 2009 with representatives from Fairchild and Spokane International Airport to explore ideas on how best to use the two parcels, but nothing substantive apparently came from those discussions. They decided in December to hire NAI Black to help market it.

The commissioners—Todd Mielke, Mark Richard, or Bonnie Mager—didn't return separate phone messages left for them seeking comment for this story.

The two parcels that the county is seeking to sell are roughly rectangular-shaped, front on Craig Road, and are zoned for industrial use.

The 20-acre proposed transload facility would be located on an east-west strip of land that separates the two larger parcels. The northern parcel also fronts on McFarlane Road, and a portion of rail line extends along its rounded northwest corner.

The properties have been used in the past for agricultural purposes, but have been idle for the past few years. The surrounding area has been transitioning slowly from agricultural uses to more industrial uses over the last several decades, but some farming continues nearby.

NAI Black's Mark McLees, one of the listing agents for the county-owned land, says the county would prefer to see the land used for shipping-and-receiving types of activities, but it also would be well-suited for renewable energy, aerospace, and metallurgical-industry uses.

He anticipates that selling all of the land could take three to five years, due partly to the poor economy, and adds, "We're aggressively trying to get it down to two or three." Thus far, though, interest has been "very minimal," he says. "The greatest value to their property is if we sell it down in sections," such as to businesses that envision using the transload facility planned there.

"That's what people inquire about—'When's that going in?' That's definitely going to create some sales" once that facility is operating, McLees says.

Development of that facility, which a Washington state Department of Transportation official said likely would cost about $3 million to build, has yet to get under way, though, due to a lack of funding and industrial inertia.

Chad Coles, assistant county engineer, says some type of private partnership likely will be needed to get the project rolling, but adds, "It just seems like capital isn't out there to start that sort of thing right at the moment." It also hasn't been established who would operate the planned facility.

Despite the obstacles the county now faces in liquidating the property, Carstens says he still believes the county got a good deal when it bought the land from him.

"They got it at a good price. They've got a lot more uses than anyone else. I think it's a great piece of ground," he says. He adds, though, that the county is "sort of caught in this downturn market" like everyone else.

The county still owns land between the parcels it is seeking to sell and the eastern edge of Fairchild Air Force Base. It caught criticism for its purchase of about 150 acres of land there that The Spokesman-Review reported it bought from John Condon Jr., who the newspaper said was a family friend of Mielke and a campaign contributor to both him and Richard.

The commissioners defended the purchase, though, as a way to get additional land for the rail spur and to protect the base from potential closure by eliminating the chances of encroaching development, The Spokesman-Review reported.

Despite the real estate challenges and the controversy related to the relocation of the rail spur, businesses that depend on the line have said they're relieved the connection will be available long term for receiving and shipping freight.

Before the realignment, the spur ran from the BNSF Railway Co. line just north of Fairchild, to the east just inside the northern edge of the base, then turned south and ran along the base's eastern boundary as far as McFarlane Road. From there, the line ran east once again, as it still does, along McFarlane before ending at Hayford Road.

In 2004, BNSF planned to abandon the spur, which opponents said would have meant the loss of several hundred jobs, but instead, it donated the line to Spokane County in October of that year. Meanwhile, military officials wanted the line moved off the base for security reasons, and pulling up that portion of the tracks would have disconnected the spur from the BNSF line to the north.

To solve the dilemma, county and state officials developed a plan to close the part of the spur that ran through Fairchild and connected with the BNSF line to the north and construct a new section that instead would run to the south and connect with the Palouse River-Coulee City (PRCC) rail line near Medical Lake. The PRCC line connects up with a BNSF main line near Cheney.

That $6.8 million project was funded by the state, and the newly realigned spur became operational in January 2009. It roughly parallels Fairchild's eastern boundary from McFarlane about 3.5 miles south to the PRCC line.

The spur now is operated by Eastern Washington Gateway Rail Co., which was formed to run the state-owned rail line branch between Cheney and Coulee City, Wash.