PIERRE, SD – The South Dakota State Railroad Board has signed off on the sale of the Mitchell to Rapid City (MRC) line to Ringneck and Western Railroad for $13 million. The purchase price will be paid to the department, with $5 million paid at closing and the remaining balance paid in equal installments of $1.6 million over the next five years.
Interim State Transportation Department Secretary Joel Jundt says it was important to get the line back into private business. “The biggest aspect of the sale is to get it into private hands where Ringneck can do some things that the state is really not able to do from a developmental opportunity.” He continued, “They are poised to do that. They are looking at investing some additional funds into the maintenance of the line. So I think that’s a key for shippers out there.”
Jundt says the line has seen considerable growth over the past few years. “There have been three major ag facilities that have been built on those things and the number of cars just continue to increase on a yearly basis. That’s funding they can put back into the line and maintain it to the degree it needs to be.”
Shippers will see an immediate discount with the new operators, according to Jundt. “When we did the improvement on the line, we took a loan and converted that it into a per-car surcharge. That per-car surcharge will go down from $50 to $25 per car so I think that is going to benefit those shippers out there.”
The line runs from Mitchell to Rapid City, with active service now as far west as Presho.
Ringneck & Western is owned by Watco Transportation Services, the largest short line railroad company in the country.
The railroad has committed to spend at least $2 million on track maintenance per year over the next 10 years, South Dakota Department Of Transportation (SDDOT) officials said.
Ringneck and Western has also agreed to work with the SDDOT to complete construction of a rail siding near Kimball. The project will improve shipping efficiency and is partially funded by a federal grant. Once the siding is completed, the agreement requires Ringneck and Western to pay the department $1.5 million in three yearly installments of $500,000.
The sale agreement also includes provisions aimed at protecting the quality of future rail service. If the owner plans to abandon the line or discontinue service, the department may repurchase the line.
