Small scale: Rural port districts turn to niche business

For the Basin Business Journal | March 27, 2024 1:00 AM

EASTERN WASHINGTON — Washington has 75 port districts scattered around the state, 21 of them in the eastern part of the state. Some of those, like the ports of Kennewick, Pasco or Moses Lake, have fairly extensive facilities and serve a wide variety of functions, including operating airports, shipping terminals and other facilities as well as working to bring trade and economic development to their area. 

But other, smaller port districts occupy small economic niches that don’t get as much publicity.

The Port of Pend Oreille, which includes all of Pend Oreille County in the northeast corner of Washington, is one of the newest port districts, having formed in 1979 for the sole purpose of keeping a local rail line from being shut down.

“There were two large businesses that were dependent on rail,” said Kelly Driver, who has been executive director for the Port of Pend Oreille since 1985. “So the citizens of the county got together and had it put on the ballot to save the rails for what was then Lehigh Portland Cement and Louisiana Pacific Corp. Those were both on the very north end of our lines.”

The Milwaukee Road had operated the rail line until 1979 when it decided it was no longer economically feasible. To keep the employees of those businesses from being thrown out of work, the port district first leased the line to Kyle Railways and then took over the line itself, according to the port’s website, running five days a week from Metaline Falls to Newport.

The cement plant, located in Metaline Falls, closed in 1990 and the sawmill in Ione formerly owned by Louisiana Pacific was shuttered in 1995, but the port maintained the railroad, now called the Pend Oreille Valley Railroad, in the hope of attracting new businesses to the area. In 2016, faced with untenable federal regulations, the port took the stretch between Ione and Metaline Falls out of service but still maintains the tracks.

With no freight coming out of Metaline Falls and Ione, the port’s shipping focus turned east. The Port of Pend Oreille leases lines between Newport and Dover, Idaho, and acquired trackage rights from Dover to Sandpoint, where it interchanges with the Burlington Northern Santa Fe. 

Besides actually running trains, the port also fixes them. At the port’s headquarters in the hamlet of Usk, there’s a complete repair shop.

“We can rebuild a locomotive from the ground up,” Driver said. “We work with a broker, and we’re actually partnering with Cummins Diesel. We’re putting in what they call Tier 3 and Tier 4 conversions. They’re engines that go in the locomotives that are cleaner air, clean energy. We have a blast booth and a locomotive paint booth. So once we do the repairs, we can put it in the shop and get it all looking like a brand new locomotive.”

The Port of Pend Oreille is unusual among port districts in that it was voted in with no taxing authority, but with restrictions that dictated that it focus solely on rail. Last year, however, that changed, Driver said.

“Our debt is paid off,” she said. “So we don’t have the bond covenants, telling us what we could and couldn’t do with our revenues, and now we’ve started going further with economic development. We were just recently appointed to be the (associate development organization) for the county by the county commissioners.”

An ADO works with the state Department of Commerce, Driver explained, to do economic development for business retention and expansion. The port hired an economic development director March 1, she added, to put out feelers toward bringing in businesses that might thrive in the area. Given the lack of infrastructure in Pend Oreille County, however – it’s large stretches of forest dotted with a few tiny towns – it’s not exactly a hot property on the wider business market.

“The city of Newport, which is our county seat, has water, sewer, power, all of that. But then you have a large, empty, rural lifestyle until you get to the little tiny town of Cusick, which has limited water and sewer capabilities. And then you go another 35 miles north before you hit Ione where it’s got water and sewer and everything. So we’ve got a lot of voids that need addressed.”

Up in the northeastern corner of Franklin County is the little Port of Kahlotus. Unlike Pend Oreille, it has no office, no staff and no website; its phone number goes to its lawyer’s office, Kuffel Hultgrenn Klashke, Shea & Ellerd, in Pasco. The port’s revenue comes entirely from two grain terminals on the Snake River next to Lower Monumental Dam, where it essentially acts as a landlord. 

“The port actually leases some land from the U.S. Army Corps of Engineers, then it turns around and subleases that land and additional land out,” said Candy Hales, the legal assistant who handles the port’s business. That 9.8-acre parcel is leased to Rw Windust Kahlotus LLC, which is registered to the same address as Ritzville Warehouse Company, according to state records.

In addition, the port owns a 68-acre tract upstream from the dam that it leases to Cograin, which in turn leases it to CHS Inc., and 25 acres of the bluff overlooking the Snake called Devil’s Bench, which isn’t being used for anything.

The Port of Kahlotus was created in 1961, to raise revenues for the local community in anticipation of the Ice Harbor and Lower Monumental dams. One of the first things it did was work with the Corps of Engineers to build a highway, SR 263, through Devil’s Canyon between the town of Kahlotus and Lower Monumental Dam, and then on to the Windust facility. The port’s total revenues in 2021, the most recent year for which information is available, came to about $14,500.

The Port of Wilson Creek, formally known as Grant County Port District No. 6, does almost nothing these days. In the early 1960s, port districts in sprang up in small communities across northern Grant County to avoid being swallowed up by the nascent Port of Quincy, which wanted to serve – and collect taxes from – the entire county. One of those was in Wilson Creek, a town of about 200 on SR 28 between Odessa and Ephrata. Only a few businesses are operating in the town, but it does have a small airport built in 1950 with a 3,074-foot paved runway and a small storage facility. The Town of Wilson Creek has owned the land the airport is on since 1949, according to county records, but the port ran it until a few years ago, according to Port Commissioner Pat Hochstatter.

“The airport is not necessarily a money-making venture in itself,” Hochstatter said. “There was a building and some infrastructure put in up there, a hangar and an office … there’s a lot of costs associated with trying to keep the maintenance up in the airport, and we were renting it for $1 a year from the city. Well, then the city thought the port district maybe had some money, we could not come across in agreement, and there you go.”

The town maintains the airport now, according to Town Clerk and Treasurer Kaci Anderson. It was leased for a couple of years to a charter service based in Idaho, but that ended recently and the town is looking for another tenant.

Meanwhile, the Port of Wilson Creek is looking around for other potential projects, but they’re not materializing, Hochstatter said. It had taxing authority when it was first formed, but it relinquished that authority a few years ago, he said. The port owns some land in and around the town, but it hasn’t found a business that wants to move in and use it.

“One of the hardest things to deal with is Wilson Creek is too close to Moses Lake and too far away, all at the same time,” he said. “We had some potential renters for the (airport) hangars, some other businesses, non-airplane related, but their employees didn’t want to drive that far.”

Joel Martin may be reached by email at

    Crews unload railroad ties on the Pend Oreille Valley Railroad. The Port of Pend Oreille maintains a rail line that extends from Newport to Metaline Falls, but most of its freight capacity is on leased lines into Idaho.
 Courtesy photo/Port of Pend Oreille 
    The Port of Pend Oreille offers locomotive repair and reconstruction services, a very specialized field.
 Courtesy photo/..Port of Pend Oreille