MnDOT: $151.4MM Needed to Renew, Expand Minnesota’s Freight Rail System

Written by Carolina Worrell, Senior Editor, Railway Age
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The Minnesota Department of Transportation (MnDOT) has released its 2023-2028 Forecast, focusing on the $151.4 million in funding required to go toward planned local projects needing state support for rail and bridge upgrades, new industrial parks and job creation.

As part of MnDOT’s forecast, nine short line freight railroads serving more than 40 communities in 34 counties and four proposed or “in development” rail-served industrial parks with the potential to create hundreds of new jobs for Minnesota offer their detailed cost estimates of “shovel ready” projects needed and planned for years 2023-2028, all “highly dependent on significant new state funding support to proceed and succeed.”

Projects in need of state support include:

  • Progressive Railway (PGR) – $15,005,000
  • Otsego: I-94 West Metro Railroad Industrial Park – $4,114,000
  • City of Monticello: Railroad Crossing Upgrades – $1,188,000
  • Twin Cities & Western Railroad – $15,840,000
  • Northern Plains Railroad – $5,500,000
  • Union Pacific Railroad (UP) – $10,000,000
  • City of Big Lake – $10,000,000
  • Minnesota Commercial Railway Rail & Tie Program – $2,750,000
  • Minnesota Northern Railroad (MNN) / St. Croix Valley Railroad (SCXY) – $8,100,000
  • Minnesota Valley Regional Rail Authority (MVRRA) Minnesota Prairie Line – $53,700,000
  • Ellis & Eastern Railroad (Tie Replacement Program, Bridge Program, Economic Development) – $28,433,751
  • Duluth & North Shore Scenic Railroad / North Shore Scenic Railroad – $760,000
  • Norwood-Young America Industrial Park – $5,200,000

According to MnDOT’s forecast, over the years, Minnesota, which ranks fourth in the nation for tons of freight exported by rail, has “provided only limited state support for rail infrastructure and rail-related economic development needs of Class II or III short line rail carriers, while neighboring states Wisconsin, Iowa and South Dakota have each invested tens of millions in keeping their networks safe, reliable and economically viable.” Minnesota’s rail system, according to the Minnesota Regional Railroads Association is the eighth largest in the nation, transporting 228 million tons of freight every year.

This continuing lack of investment in freight rail, MnDOT stated in its forecast, has “made our state far less competitive in the Midwest marketplace for our agricultural, industrial and commercial products, displacing it as the key logistical hub it once was, with long term negative consequences for retaining existing employers and attracting new or relocating businesses and industries.

“Legislation is needed to address these already-identified urgent needs around the state–most of them ‘shovel-ready’ projects requiring only substantial capital to go forward. The projects cited as awaiting financing include those proposed by seven of the state’s short line freight rail companies, and twenty-nine counties, four of which have major new industrial parks either in development or planned, potentially housing dozens of businesses and thousands of new employees, but with no means by which to finance them. Each of these planned projects urgently requires freight rail service for it to be developed and to succeed.

“Currently, proposed legislation would provide state funding assistance for some of these projects, as well as instituting new, more accessible loan and grant processes that would be both “business-friendly” and speedy. The latter is important because new industrial development—and in some cases, rail service improvement and repair projects, especially those with safety implications—need to be processed and approved quickly, given the high degree of competition for new business among neighboring states.

“Minnesota’s short line rail industry is again this year seeking a modest amount of state funding compared with the high level of state spending on highways in support of highly polluting truck traffic, a direct—and more expensive—competitor to rail shipping. Over the years, Minnesota has sold billions in bonds to fund repairs and improvements to trunk highways for truck traffic—in sharp contrast to the relatively small amount of funding needed over the next five years to rehabilitate and expand the state’s efficient and conservation-friendly freight rail system.

Unlike Wisconsin, Iowa and other states, Minnesota has no ongoing grants program for assisting short lines and their industrial or agricultural customers. MNDoT’s local rail services assistance facility, the MRSI program, is primarily a loan program, requiring liens to be placed on properties used as collateral, with repayment within 10 years. Because most short lines operate on trackage owned by larger Class I carriers under leases which prohibit liens on their properties—and because in many cases loans are simply not viable due to the slim operating margins of the railroads needing them—this program is inadequate to address the scale of the need. What is needed is a major state commitment to addressing the rapidly growing infrastructure repair, improvement and new construction cost burdens confronting short line owners.”

Additional details on the projects in need of funding are available in the 2023-2028 Forecast downloadable below.

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