COOS BAY — The Oregon International Port of Coos Bay has grudgingly accepted a federal ruling that will allow it to purchase the Coos Bay rail line, but is considering an appeal.

The port commission agreed Wednesday to pay as much as $16 million for the 111-mile line, based on a formula established by the U.S. Surface Transportation Board.

But port officials said the formula was flawed, justifying an appeal.

The commission, however, isn’t rushing to take that step.

Commissioner Caddy McKeown asked if the STB would reduce the price upon appeal and Executive Director Jeffrey Bishop said it was unlikely. He suggested there are other reasons for the appeal, but he didn’t want to discuss it in open session.

The commission voted to postpone making a decision on the matter until hearing more from Bishop.

Bishop also presented a business plan for operating the rail line. He noted that the line needs significant repairs, amounting to almost $60 million over the next 10 years. It also likely would lose about $7.6 million during that time, since rail traffic is expected to be about half of a “normal” short-line.

“You will have to get new customers on the line,” Bishop said.

The port wants to upgrade the line so traffic can safely travel up to 25 miles per hour along the route. That would allow one crew to make the trip from Coos Bay to Eugene instead of two, effectively cutting operating costs in half.

The commission also agreed to apply for a $82.7 million Railroad Rehabilitation and Improvement Financing loan. Bishop took pains to emphasize that the loan would work more as a line of credit. It would only be used in extraordinary circumstances, such as to repair a tunnel collapse.

“You only draw on it as you absolutely need it,” he said.

Bishop said money from such a loan could also be used to build a port slip or rail spur if a prospective business needed one to move into the area.

The loan application costs $35,000, Bishop said, which will be paid out of the special projects fund.

Bishop said the application normally takes about four months to complete, though the port is lobbying Oregon’s state and federal officials to exert their influence to expedite the process.

The time frame for the STB is slightly faster. Once the port formally accepts the STB’s ruling, there will be a three-month closing period, so the port could take ownership in January or February. Bishop said he doesn’t know when the appeal deadline is.

The STB approved the port’s feeder-line application Friday, setting the sale price based on scrap metal prices as of that day. It also is requiring the port to pay $6.7 million for the land under the tracks, and denied the port’s suggestion for a deduction for tunnels and bridges on the line.

Bishop said the port still believes it should get a discount because the Central Oregon & Pacific Railroad would have to remove several bridges as part of its abandonment application.

“We felt the board erred when it said that there is no cost with removing the bridges and that the real estate price was inflated and inaccurate,” he said. “And taxpayers shouldn’t be required to provide another windfall to a hedge fund.”

Commission president David Kronsteiner said he thought the price tag was a little high, but not enough to justify turning down the offer.

“After we get over feeling that, I think we’ll be all right,” he said.

The task now is getting together the $16 million.

The port has $7 million in cash reserves, as well as a $4 million grant from the Oregon Department of Transportation. There also is a $12.5 million loan commitment from Umpqua Bank, and $8 million from Congress that is supposed to go to repairs to the swing bridge that may be diverted to the rail line acquisition and refurbishment.

Bishop said the port is speaking with local shippers to negotiate a surcharge they would pay to cover projected operating losses.

The port also is working with state and federal officials to see about securing other sources of revenue. Bishop noted that Congress is considering a new stimulus package that might include transportation funding, with an emphasis on rail.