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With rail-loan fund empty, Kimball request is on hold

Dakota Mill and Grain was placed on a waiting line Thursday by the State Railroad Board, so that state Department of Transportation officials can research the advisability of tapping other state funds to provide the company a $4 million loan for ...

Dakota Mill and Grain was placed on a waiting line Thursday by the State Railroad Board, so that state Department of Transportation officials can research the advisability of tapping other state funds to provide the company a $4 million loan for building its proposed grain-loading facility at the old Kimball airport.

The state board's loan fund will be tapped out by other projects that have already received commitments.

The Kimball loan would actually be made to the Brule County Regional Railroad Authority, which has taxing authority to repay the loan if Dakota Mill and Grain didn't.

One of the board members is Ron Mitzel, of Rapid City, a Dakota Mill and Grain executive. He excused himself from acting as a board member during the discussions Thursday about the Kimball loan and about providing access to the state-owned rail line to which the Kimball facility would connect.

The board approved the access request, just as it did last month for Kimball Terminal, a privately financed project that involves construction of a grain loading terminal five miles east of Kimball near the S.D. 45 exchange with Interstate 90.

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The Dakota Mill and Grain project would cost $22 million, according to the application for the state loan.

"We're ready to go," Mitzel said. Another board member asked what it would mean for the project if there isn't a state loan. "We just go to commercial lenders and ask for more," he replied.

State Transportation Secretary Darin Bergquist said he was "a little bit concerned" that the board was willing to consider taking the loan fund further into the red without a discussion of the interest charges.

On state-owned lines the board's policy has been to charge zero interest, while its interest rate on other rail project loans has been two percent. The board might have to pay more than 2 percent interest on money it borrows from state government to make the Dakota Mill loan.

Board member Chet Groseclose, of Sioux Falls, said the board should charge a rate on the Dakota Mill loan that would cover the state interest charge. Bergquist said he needs to find out what's allowed.

The board also informally decided that, if it's going to borrow for the Dakota Grain loan, other projects also should be considered for the same treatment.

Mitzel said he was "blind-sided" by a DOT official's recommendation Thursday that the loan be turned down because of the lack of funds.

Other board members said they want Bergquist to use the three weeks until their next meeting to see what is possible. "We don't even know if we can do this," said board chairman Todd Yeaton, of Highmore.

Related Topics: KIMBALLTRANSPORTATION
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