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Published June 03, 2010, 07:38 AM

Railroad chugging along with rebuilding schedule

The Dakota Southern Railway would welcome federal stimulus funds to speed redevelopment, co-owner Stan Patterson said recently, but grant or no grant, the railroad plans to move ahead with rebuilding plans.
Those plans include rebuilding track from Mitchell to Murdo within three years. The Mitchell-to-White Lake segment will be rehabilitated first, followed by the line from White Lake to Chamberlain. The final leg in the plan is to open the remainder of the track to Murdo.

By: Ross Dolan, The Daily Republic

The Dakota Southern Railway would welcome federal stimulus funds to speed redevelopment, co-owner Stan Patterson said recently, but grant or no grant, the railroad plans to move ahead with rebuilding plans.

Those plans include rebuilding track from Mitchell to Murdo within three years. The Mitchell-to-White Lake segment will be rehabilitated first, followed by the line from White Lake to Chamberlain. The final leg in the plan is to open the remainder of the track to Murdo.

The State Railroad Board learned recently that 2009 federal stimulus money is still available under a $1.5 billion Transportation Investment Generating Economic Recovery — or TIGER — grant program. The grants, which range from $20 million to $300 million, require a 20 percent local match.

Dakota Southern has offered $2 million toward that 80-20 match, and the Mitchell-Rapid City Regional Rail Authority and the state Railroad Board could each contribute $500,000 for a total of $1 million. Those local dollars could leverage another $12 million in federal funds.

Time is short, however, to apply for the money, said Bruce Lindholm, railroad program manager for the state Department of Transportation. Pre-application information must be submitted by July 16, and final applications by Aug. 23, he said.

“The railroad west of Mitchell has more potential than anything I’ve ever been around,” Patterson said, “but it’s in bad shape.

“For the state to really utilize what they have and for it to benefit all the taxpayers and be able to carry some tonnage, somebody has to spend some money on it.”

Just how much cash it will take depends on how much track is tackled.

“We have 265 miles of track. If you want to talk about running to Platte or Kadoka, that could be a gigantic number,” Patterson said,

Patterson figures the cost of developing a reliable railroad from Mitchell to Presho would be $5 million to $6 million on the low end of the cost spectrum. Installing heavier rail to increase the line’s freight capacity would cost considerably more, though no estimate was immediately available.

Patterson believes it’s good that the stimulus grant will require matching local investment. He believes that investment increases commitment.

“This year we’ll be running to Chamberlain if no money becomes available, and if some does, we’ll be looking at doing something down near Wagner,” he said.

In the meantime, an existing shipping agreement with Graphic Packaging in west Mitchell is helping to pay the bills.

In the long-term, however, grain hauling offers the greatest potential for increasing his line’s revenues, Patterson said. He predicts that the majority of his line’s revenues will be from grain hauling in three to four years.

Patterson has no illusions that reviving rail will be a rapid process, and he says he understands that it will take farmers and grain merchants time to make the move back to rail.

Local elevators have been without rail service for so long that it will take time for them to become accustomed to the idea.

“The best marketing tool we can have is trains going by. As people see more trains, they think about trains more often,” Patterson said.

“It will take some time to get customers on board; it’s been a long time since they’ve loaded rail,” he said.

An agreement is currently being finalized for Dakota Southern to shuttle grain between CHS-owned elevators in Chamberlain and Mitchell, he said.

Dakota Southern currently derives much of its income from rail-car storage fees charged to other railroads. It splits that rental income with the Rail Authority.

As the economy improves, Patterson expects rental fees will start falling off as railroads put cars back into service. But he also noted that railroads are running leaner after the recession. That means that some rolling stock will be sold off, occasionally at bargain rates.

That could leave some opportunities for Dakota Southern to pick up some needed grain cars at good prices, he said.

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