Loaded for Business Sand Springs Railway has a Plan to Boost Local Economy

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By TIM BLACKWELL

Cowcatcher Magazine

 

A few miles west of Tulsa along U.S. Highway 97, the former pride of Oklahoma’s industrial revolution awaits better times. It’s the epicenter of hope for Sand Springs, OK, a longtime friend possessing a new purpose under a short line railroad company known for transforming the tired and weary into high-steppers.

Guided by Denver-based OmniTRAX, the Sand Springs Railway, a fixture since the early 1900s, is attempting to breathe life into a city that once was a giant in manufacturing. The resurgence is happening at a 153-acre mixed-use development on the site of a former steel mill that was the city’s calling card for decades.

Plans for Sheffield Crossing rolled out shortly after the railroad bought the land in September and feature a blend of industrial, commercial and retail that has pumped the chest of city leaders.

“The addition of retail and industry will possibly be the largest economic impact Sand Springs has had in over 30 years,” Sand Springs Vice Mayor John Fothergill said at the time of the announcement.

Retail is hardly within a railroad’s vocabulary, but a proposed strip of “needs-based convenience shopping” at Morrow Road and Wilson Avenue is a natural addition for the Sand Spring Railway’s real estate-savvy affiliate, The Broe Group.

Tony Manos, OmniTRAX senior vice president of industrial development, said the railway is talking with a handful of companies about being a major tenant of a retail center on 26 acres immediately across from a Walmart shopping center. Nearby will be commercial offices, and behind will be a rail makeover of an eyesore, the remains of the old Sheffield Steel plants.

By midyear, the main plant and accompanying buildings will be razed and the land cleared. Construction will then start on what OmniTRAX officials believe will become a destination for residents and business leaders.

“The city of Sand Springs has been very, very forward thinking and really looking at Sheffield as a catalyst,” Manos said in January. “The retail is somewhat unique. But the foundation of our affiliate company is real estate. That combo of our real estate orientation, with actually being short line operators, creates what we call the secret sauce.”

 

UNIQUE OPPORTUNITY

OmniTRAX bought the Sand Springs Railway in 2014 from Gerdau Ameristeel, which acquired the facility and railroad from Sheffield in 2006 for $76 million. As part of the deal, OmniTRAX Logistics Services began leasing a 100,000-square-foot warehouse outfitted with a large crane.

The warehouse is now the hub for the railway’s transload operation, which produces about 75 percent of Sand Springs Railway’s business.

Since the acquisition, OmniTRAX has made improvements to the warehouse and minor enhancements to track and other infrastructure. The railroad’s older prime movers were retired and newer SW1400 locomotives brought in to handle carloads.

The development comes more than a century after Sand Springs founder and wealthy oilman Charles E. Page had a vision for an industrial hub in Northeast Oklahoma. Page in 1908 bought 160 acres west of Tulsa to build an orphanage, among other things. In 1911 he laid track for the Sand Springs Railway, a gasoline-powered streetcar system that a year later was electrified.

The railway expanded to Tulsa, a move that put Sand Springs on the map.

Page lured Kerr (Ball) Glass Manufacturing Co., Sinclair Prairie Refineries, American Zinc and other heavy-hitters. By 1927, a year after his death, Sand Springs was the leading industrial city in Oklahoma. Sheffield Steel arrived in 1929 and soon was among the railroad’s major customers as it transitioned to freight service.

The last passenger trains ran in 1955, and diesels replaced motive power to manage a growing freight business.

In its heyday, the Sand Springs plant was Sheffield’s largest in the U.S. and consisted of a melt shop and rolling mill. The company produced hot-rolled bar products, concrete reinforcing bar and fabricated items like railroad track spikes.

But by the time of the sale to Gerdau, Sheffield Steel was $94 million in debt, although it did own the Sand Springs Railway, which it purchased in 1993.

Gerdau, one of the top mini-mill steel producers in North America, couldn’t overcome a declining market. In October 2009, steel production ceased and 300 workers were laid off. A year and a half later, the remaining 80 or so employees received severance packages and the company announced it would not resume operations.

Since then, the facility has withered. But looking past the faded paint, OmniTRAX saw gold. Part of the Sand Springs Railway deal with Gerdau stipulated that the railway would have first right of refusal for the property. After the company learned that Gerdau was willing to part with it last year, a deal was made.

“What we saw in that marketplace, there really was not a whole lot of land for development remaining,” OmniTRAX CEO Kevin Shuba said. “We saw this as a unique opportunity.”

The development is a commitment to make a difference in the community. Shuba points to the 10 acres that Sand Springs Railway sold at an attractive price so the city could build a state-of-the-art $12 million public safety building for the fire and police departments.

In return, the city is making “substantial off-site improvements that benefit our project and the entire area,” Manos said. Among $1.5 million in improvements are widening Morrow Road to three lanes, with lighting and a left turn lane at the Highway 97 intersection.

Shuba and Manos said newly named Sand Springs Railway General Manager James Tilton has been instrumental in developing a bond with the city.

“We have an incredibly great relationship,” Manos said. “Because of James, the cooperation and relationship with the city, candidly, is the best I’ve ever seen in any development I’ve been a part of in 25-plus years. We’re excited about the investment we’re making there.”

 

NICE LITTLE SHORT LINE

While the railroad stretches 32 miles from Sand Springs to Tulsa and interchanges with BNSF and Union Pacific, the heart of the operation lies within an eight-mile segment. Steel is no longer manufactured in Sand Springs, but a few customers do produce and ship steel pipe and other products. Additionally, lumber and energy commodities are hauled.

The line starts with two spurs near the steel plant and runs the length of Charles Page Boulevard. Along the way, cars are switched at Yaffe Metals, a large scrap recycling plant; Ranger Steel and Webco Industries, one of the city’s largest employers and makers of specialty metal tubes.

Shuba says the future includes expansion of the transload business plus building a car repair and cleaning facility. He says operating in Oklahoma is a plus.

“It’s a great property for us. We like having a presence in Oklahoma – it’s a great business state. That’s how we continue to look at our businesses. We want to set up shop in those states that appreciate having that friendly business flow, and Oklahoma is certainly one of those.”

The energy downturn shortly after OmniTRAX bought the railroad curtailed anticipated business, but Peter Touesnard, OmniTRAX’s chief commercial officer, says the new development is a prime opportunity to grow.

Last year, the Sand Springs Railway hauled about 6,000 carloads, nearly 4,000 of them via transload. Touesnard anticipates that positive economic conditions could generate 10,000 carloads with a mix of energy, building materials and steel.

“Now that energy is coming back, in combination with the land we have to work with, we’ll be able to build business fairly quickly,” he said.

Tilton, who headed the transload area before taking over day-to-day operations, brings just the right expertise, Touesnard said.

“He’s just getting on his feet now, but he’ll do fantastic things for us. He’s an amazing young man, very tight with the community. That’s who we want in those places. That always breeds success when we find that right person.”

That and a good plot of land. Exactly like Charles Page envisioned.

“Now we have some land to bring that business to, and to expand our existing customer base,” Touesnard said. “It will be a nice little short line.”