Background

The railroad running west from Mitchell to Chamberlain is not part of the “Core line” that was sold to Burlington Northern Santa Fe (BNSF). It is a state-owned line that is currently leased to the Dakota Southern Railroad.

The State was able to rehabilitate the railroad from Mitchell to Chamberlain because it received a Transportation Investment Generating Economic Recovery (TIGER) grant for $16 million in 2010. The State contributed $7 million and an additional $5 million came from private investment.

The Mitchell to Rapid line is currently leased to Dakota Southern Railroad, however, only the section from Mitchell to Chamberlain is operational. The project has already resulted in tens of millions in economic development including the Liberty Grain elevator near Kimball.

The State purchased the Core line from the Milwaukee Railroad in 1980. The Core line consists of 368 miles of “core” rail. In 1981, the state entered into an agreement with BNSF in which BNSF would provide rail service on behalf of the state on the Core line.

In 2005, BSNF exercised an option to purchase the Core line for $40,337,295- the proceeds of which were deposited into the Rail Road Trust Fund. In 2006, the legislature considered options for how the proceeds from the sale should be used and, ultimately, decided to transfer $38 million into the Property Tax Reduction Fund.