Deadline extended for Wagner Native Ethanol projectPIERRE — Promoters of the Wagner Native Ethanol project received a new deadline Wednesday to complete their proposed purchase of the state-owned stretch of railroad between Napa Junction and Ravinia.
By: Bob Mercer, The Daily Republic
PIERRE — Promoters of the Wagner Native Ethanol project received a new deadline Wednesday to complete their proposed purchase of the state-owned stretch of railroad between Napa Junction and Ravinia.
Told that the proposed ethanol plant’s financing is nearly in place, the South Dakota Railroad Board voted 6-0 to give the project’s backers until the board’s Oct. 19 meeting to finish buying the railroad line.
The state board in May had set an Aug. 26 deadline that passed without Wagner Native Ethanol coming up with the required sum of $1,488,812.
That has been the agreed-upon price since 2006, when the state board agreed to sell the line to the ethanol project.
Investor Don Juffer, a retired bank president from Wagner, told the state board Wednesday that the ethanol project’s key man, Bill Riechers, died unexpectedly about a week after the May meeting.
Juffer said the death disrupted the group’s efforts to finish its financing package in time for the Aug. 26 deadline.
Michael Blumenfeld, president of a Milwaukee-based bonding company known as Safe Harbor, told the state board by telephone Wednesday that a $500 million bond is being offered for the project.
Blumenfeld said two German hedge funds have the offer under consideration, and he expects completion of the bond deal in five to 10 business days after the hedge funds see the full paperwork.
“It does sound like they’ve made some large steps here,” state board member Jack Parliament of Sioux Falls said.
Other parties are interested in purchasing the rail line if Wagner Native Ethanol doesn’t.
The local Napa-Platte Regional Rail Authority, which holds the lease on the line, decided at its Aug. 24 meeting that it favors the line stay in state ownership if the ethanol project can’t complete the purchase.
“Once the state loses control, you’ll never get it back,” Ken Cotton, the lawyer for Wagner Native Ethanol, said.
The state board authorized Department of Transportation staff to negotiate an updated sale agreement that includes protections sought by the local authority and state board members.
The segment of the line sought by Wagner Native Ethanol crosses through Yankton, Bon Homme and Charles Mix counties and connects with a BNSF line at Napa Junction north of Yankton.
The BNSF interchange is crucial to getting ethanol tank cars to and from the proposed plant at Wagner. Local rail authority and state board members want to permanently preserve rights DOT has for using that interchange.
The line continues northwest from Ravinia to Lake Andes, Geddes and Platte, but that segment seems to be economically beyond restoration of service at this time.
Reviving the rail line is seen as a key to economic growth in the extreme south-central region of South Dakota, and local business people and agricultural producers prefer the line stay in local hands, rather than be sold to an operator from outside the state.
“I think we ought to exhaust all of those efforts before we start closing doors, because once those doors are closed, they will be very hard to open again,” state board member Dan Baker of Rapid City said.