D&I plans to buy a S.D.-owned rail line and Watco Companies seeks to buy another

Capitol News Bureau
KELO Railroad Cross

PIERRE, S.D. (KELO) — The South Dakota Railroad Board agreed Wednesday to sell the Sioux Valley line that state government owns in Lincoln and Union Counties.

The buyer would be the current operator, D&I Railroad, a subsidiary of Sioux Falls-based L.G. Everist Inc.

The price is $10 million, spread across 20 years, at a rate of 2% interest.

The Y-shaped route covers 68.6 miles.

“I think we’ve come up to a reasonable agreement,” Rob Everist said.

Governor Kristi Noem has final say on the deal.

No one commented during a public hearing.

“A historic moment, gentlemen,” the board’s chairman, Jerry Cope of Rapid City, said after the unanimous vote. 

The board also listened to a revised offer to buy the state-owned MRC route that runs west of Mitchell and serves several grain elevators. The segment between Kadoka and Rapid City is closed to rail traffic.

Watco Companies proposes to buy the 190.9 miles for $13 million, with $5 million upon closing and the $8 million balance spread across five annual payments.

The Pittsburgh, Kansas-based company also promised to invest $2.1 million annually into the line during the first three years. Watco also plans to cut the $50 surcharge per car to $25 and possibly eliminate it when no longer needed.

The board will hold a public hearing at its September meeting and could make a decision that same day. The governor would have final word on the sale.

Dakota Southern Railway currently operates on the line.

Watco’s executive chairman Rick Webb said that his father was a long-time business associate of the father of Mike Williams, whose company owns Dakota Southern.

“We want to look at this investment as a hundred-year investment,” Webb told the board.

South Dakota took ownership of the Sioux Valley and MRC lines and others during the Janklow administration 40 years ago during the Milwaukee Road bankruptcy.

If Watco gets to own the MRC, the company wants to pay $500,000 annually for three years toward a passing track that is planned.

Webb said the goal is to “lock arms” with the state Department of Transportation and the board on pursuing future federal grants.

“The power that you all have, we want to tap into,” Webb said. He said the company wants the State of South Dakota to feel as though it still owns the MRC. “And we want to operate it in a way that makes you proud.”

A map of South Dakota’s current rail service is here.

Copyright 2020 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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