The Mitchell-Rapid City Regional Railroad Authority approved a $3 million state loan Thursday to the Dakota Southern Railroad Company.

The seven-year balloon, 20-year amortized loan with 2 percent interest will be administered through the state's railroad trust fund and cosigned by MRC to repair damage to the railroad caused by this year's flooding.

"There's some serious, serious problems out here," said Heath Haden, vice president of operations for Dakota Southern, at MRC's meeting at the Arrowwood Resort and Conference Center in Oacoma. "In order to keep this line up and keep it going and doing what we do, we just need that help."

Haden said the railroad is in the process of requesting funding from FEMA, and representatives will begin inspecting the railroad next Tuesday. Any money received from FEMA would go back toward paying off the loan, and Dakota Southern would be responsible for reimbursing the state for the remainder.

Jack Dokken-air, rail and transit program director for the South Dakota Department of Transportation-said there's no guarantee that the railroad will receive any money from FEMA.

Extensive discussion was held prior to MRC approving the loan due to concern that if Dakota Southern were to fail to repay part of the loan, that responsibility would fall to the railroad authority, which would then likely require invoking a taxing authority in the six counties the railroad passes through.

"I think we need to take this back to our own counties and get their input and also give us some more time to fully understand what all the implications are for something like this," said Zane Reis, of Oacoma, the only board member to ultimately vote against approving the loan.

Haden said that with $2.06 million in damages to the railroad identified west river, the railroad needs the loan approved as quickly as possible to speed up repairs, although the $3 million is an approximation which may not be needed entirely. He also emphasized the loan is a reimbursement loan, meaning rather than receiving a sum of money, Dakota Southern must pay for materials and submit receipts for approval before it is given funding.

"I don't know what the right answer is on this. I just know that we've got some damaged rail out here that's going to take some repair, and a lot of it, and that's a lot to ask of a short-line railroad: to fund basically $3 million off the top, in any type of timeframe," he said. "If the help's not there to help fund this, how's it get fixed?"

Haden said Dakota Southern employees are working seven days a week to get the railroad back to being safe for transport. He's hoping to have enough damage repaired for trains to resume running near Kennebec by the end of next week, and possibly as far west as Presho.

"We are working both directions right now on all the damage, and Kennebec seems to be where we're getting held up with the bridge issue, because we can't cross it," he said. "Once we get that done, things will speed up, and I'll have a better time frame."