Apache Railway Sale Bodes Well For Area’s Future

The three-year effort to save the Apache began after the 2012 closure of the Catalyst Paper Mill, which led to the mill and the railway being purchased out of bankruptcy by a California investment group. Fearing that the railway would be scrapped, Navajo County leaders formed the Snowflake Community Foundation (SCF) to purchase the Apache from the investment group using short-term financing. Under SCF’s ownership over the past three years, the railway continued operations and became profitable again.

“This project is vital to many rural communities, businesses and families in Navajo County and surrounding areas,” said Douglas Bystry, president and CEO of Clearinghouse CDFI. “We are happy to partner with the Arizona Commerce Authority to provide financing for the continued operation of the Apache Railway, operating since 1917.”

“The Apache is such a tremendous asset to our community,” said District III Navajo County Supervisor Jason Whiting. “It provides Navajo County and the Town of Snowflake a connection to other markets, increasing our ability to better do business throughout the Southwest. For economic development purposes, the more assets a community has, the better chance it will attract meaningful investment and the jobs that go with it.”

In May 2015, SCF filed for U.S. Bankruptcy Court protection as it continued to seek permanent financing for the railway, and thereby ensure it would continue to be one of the region’s lifelines for jobs and economic development. The court had recently established a Nov. 30, 2015, deadline for SCF’s debt to be repaid. Last week, the court approved the sale of the Apache stock to the new ownership group. The deal, which closed Nov. 30, extinguishes SCF’s debt and related liens on Apache assets, and allows the railway to continue operations.

The railway’s management will remain in place. Its workforce, which three years ago consisted of eight employees, has increased to 21. The workforce will continue to expand to meet demand for the rail services.

Through a collaborative local and state effort, equity investors were found to contribute significant capital to the acquisition of the railroad. The effort was complemented with a $2.5 million joint loan from the Arizona Commerce Authority’s Arizona Innovation Accelerator Fund program ($1.75 million) and Arizona MultiBank ($750,000).

“In saving the Apache, both gave full measure so that our community might live well and prosper. A fully-functioning Apache Railway will attract new businesses, and gives Navajo County the necessary underpinnings for job growth and the resulting economic benefit for the entire community, now and into the future,” said Brophy.

“Strengthening Arizona’s rural communities is an important part of enhancing our statewide economy,” said Governor Doug Ducey. “The historic Apache Railway is a key piece of infrastructure that is vital for supporting economic development in Navajo County and its continued operation will attract industry and opportunity to the region.”

In addition to the assistance of the Arizona Commerce Authority, other federal, state and local leaders have assisted the railway during its long journey. U.S. Senators John McCain and Jeff Flake, Congresswoman Ann Kirkpatrick, and Gov. Ducey and his staff all played important roles during the last three years. Locally, the Apache was aided by the Snowflake Town Council, former Snowflake Town Manager Paul Watson (now with Navajo County), Snowflake Mayor Tom Poscharsky and former Vice Mayor Whiting (now county supervisor). Apache customers Hormel Foods and Preferred Sands also lent key support to the effort.

“The ACA remains committed to supporting local communities throughout Arizona and is proud of our work to ensure the Apache Railway’s continued success,” said Sandra Watson, Arizona Commerce Authority president & CEO. “The Apache provides a foundation for bringing jobs and economic opportunity to Navajo County. The successful effort to secure new financing for the railway is an excellent example of collaboration between public and private sector entities to ensure the longevity of an important piece of infrastructure.”

In a phone interview Dec. 2 with Naomi Hatch of the Silver Creek Herald, Brophy said that no one person can take the credit, noting, “a lot marched shoulder to shoulder, particularly the people at the railroad. They killed themselves. Their productivity humbled me, day in and day out. That’s a wonderful bunch of people.”

Brophy recalled that they thought they had the loan, but it fell through. The second time he had to tell the railroad workers, who all had families. He got them together and told them the Apache couldn’t exist without them, but he couldn’t promise that they were going to pull this off. He said he would understand if they found other jobs. “They all said they were going to see it through,” he said.

“If we keep operating, at some point sooner or later it will bring business and jobs,” predicted Brophy. “It’s open to all comers and you will see that jobs, industry, employment will come because the railroad is here.”

He explained that he says that because “there are people that were raised here that would come back if they had a job; there are highways, power supply, availability of land, and the infrastructure of I-40, and the BSNF transcontinental railway and the shortline railroad. When you add that to the land prices, water supply and the friendly governments you have in relation to Snowflake, Holbrook and the county government…you simply have a future that can’t escape itself. There will be jobs here and it will grow.”

Brophy offered thanks to the whole community, beginning with the railroad personnel, the people who wrote to the Assistant Secretary of Agriculture, the newspaper coverage. “All that adds up, it’s not any single element, it’s all of that,” he said.