6
Business View Magazine
that we had to generate some cash to start rebuild-
ing the railroad. But there was just no credit available.
So our attorney, Scott Bannister, came up with a very
creative plan to sell the rail of the Iowa Northern un-
der a lease arrangement. We generated around eight
million in cash by selling it and then taking it back on
a ten-year lease. That gave us the money to pay off
the existing mortgage to the state and generate some
cash to start rebuilding the track. So, we pumped ev-
ery penny we could find into ties, and road bed, and
maintenance; we went out and leased some more lo-
comotives and some more covered hoppers. It took
us quite a while, but we did get the company turned
around, and coming into 2000, we were able to qualify
for some low-interest loans and some grant money –
particularly through the state of Iowa – and we got the
thing pretty well straightened around.”
Unfortunately, the better times for the Iowa Northern
came to an abrupt end in 2008. “The first thing that
hit us was the flood in June,” he says. “We lost two
major bridges; neither one of them we owned, but we
operated over them – a UP (Union Pacific) bridge at
Waterloo and a CRANDIC (Cedar Rapids and Iowa City
Railway) bridge at Cedar Rapids. Both of those were
taken out by the floods, so we had to operate on a
bifurcated line for 18 months, until the bridges could
be restored. It was pretty ugly. After the floods, we had
major droughts and then some wet planting seasons.
We went about five years without our basic corn vol-
umes – it was just about 30-40 percent of normal. But
we had diversified with ethanol, chemicals, and a lot of
other new industries along our line, so despite the fact
that we lost our base business for that long, we were
actually profitable through that period.”
