PIERRE, S.D. – The South Dakota State Railroad Board (Board) accepted a proposal Wednesday for possible acquisition of the state-owned Mitchell to Rapid City Railroad (MRC) Line. The proposal was presented by Watco Companies who have ownership in 43 other shortline railroads in North America and Australia.
“The proposal from Watco is very encouraging and shows that the MRC line continues to be a great asset for the private sector to invest in.” says Secretary Darin Bergquist. “The Board’s acceptance of the proposal today will allow the Department to enter into negotiations with Watco for finalizing the terms of the purchase agreement.”
The proposal stems from action the Board took in June 2019 when the Board authorized the Department to prepare packages for receiving proposals for all state-owned railroad assets. The results of that effort lead to rejection of six proposals but approval of a proposal from LG Everist, leading to continued negotiations with them on the acquisition of the Sioux Valley line located near Canton.
The State acquired the railroad lines after the 1980 Milwaukee Road embargo, which resulted in bankruptcy filing and possible abandonment of the lines. Since acquisition of the lines, the State has been successful in restoring service on many of the rail lines, resulting in millions of dollars of development adjacent to the lines. On the MRC line alone, there have been three major agribusinesses who have invested millions of dollars to build facilities adjacent to the line.
The accepted proposal doubles Watco’s original purchase price and includes a commitment to invest capital into the maintenance of the line on an annual basis to improve the track structure. This is important to shippers along the line and will foster additional capital investments into the line by placing it back in private hands.
The results of those negotiations will eventually need Board concurrence, anticipated to be discussed at a future meeting sometime this winter.
