SD RR board extends lease on Napa-Platte line

Talk about it

PIERRE -- At least one member of the South Dakota Railroad Board is tired of the delays in the latest try at selling the state-owned railroad line between Napa Junction and Platte.

Dan Baker, of Rapid City, stood alone Wednesday in voting against granting another three-month extension of the current lease and sublease arrangements.

The proposed buyer, Iron Horse Development Company, which is based in Kimball, was selected in October.

In December, the board granted a three-month extension to the current lease-holder, the Napa-Platte regional railroad authority.

At that time Bruce Lindholm, administrator for the state railroad office, told the board he thought the deal could be ready within 30 days.

Since then, Iron Horse changed the offer from a 10-year series of payments totaling $1.5 million to a single payment.

That switch caused the contract proposal to be re-written, Lindholm said Wednesday. Now the current lease is due to expire March 31 and the contract remains far from finished.

As the board members discussed a second extension Wednesday, Baker urged that the contract be made available to them far enough in advance to see whether the deal meets the five criteria set by Gov. Dennis Daugaard in an Oct. 31 letter to the board.

Lindholm promised to get the contract to the board “well, well in advance” of the meeting. He mentioned several weeks.

“We are talking about a variety of deals,” Lindholm said.

As Baker pressed for a timeline, the board’s chairman, Chet Groseclose Jr., of Sioux Falls, interjected. “I think maybe we’re all a little impatient on that. Unfortunately, that’s the nature of negotiations,” Groseclose said.

Lindholm then added, “I think it’s going to take three months -- or less, hopefully.”

The board waited for years on developers of the proposed Wagner Native Ethanol project to purchase the line under an existing agreement with the board.

In 2006 the state board officially adopted a resolution to sell 54 miles of the line from near Napa Junction to the ethanol project for $1,488,000. That never happened.

Iron Horse eventually came forward with a proposal to buy the line. Iron Horse’s principals are Christine and Eddie Hamilton. of Kimball, along with financier Toby Morris, of Pierre, and Chuck Jepson, of Fort Pierre. Jepson recently built the new grain terminal east of Kimball, Liberty Grain.

At the time Iron Horse was selected, the company had immediate plans to begin rehabilitating five to 10 miles of the eastern-most segment of the line and would keep the current operator, Dakota Southern Railroad, which is storing other railroads’ cars on part of the line.

The Napa-Platte regional railroad authority holds the lease on the eastern 54.5 miles. Dakota Southern holds the sub-lease.

The western 26.6 miles between Ravinia and Platte aren’t leased and likely will be scrapped, with proceeds from the salvage to be used for rehabilitating an easternmost segment.

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