PIERRE, S.D. (KELO) — The South Dakota Transportation Commission approved a nearly $2.7 million loan at one percent interest to Lyman County Thursday.
The terms call for amortizing the loan over 20 years, with a balloon payment in 10 years, and no interest until construction is complete.
The county plans to use the money to rebuild a gravel road and bridge that trucks use to reach the Dakota Mill and Grain terminal at Presho.
No one from the Lyman County government or Dakota Mill and Grain attended the meeting.
Dakota Southern Railway operates the line between Mitchell and Kadoka. The MRC name is an abbreviation of Mitchell and Rapid City that the line once connected.
The vice president of marketing for Dakota Mill and Grain is Jerry Cope of Rapid City. He is chairman of the state Railroad Board that oversees the state-owned rail lines.
State Transportation Secretary Darin Bergquist told the Transportation Commission members Thursday he supported making the loan.
Bergquist told KELOLAND after the meeting he didn’t think Cope was aware the matter was on the agenda. Bergquist said Cope never talked to him about it.
None of the seven members of the Transportation Commission who were present voted against the loan.
Afterward, the commissioners approved a resolution from one of them, Larry Nelson of Canton, that put on the record the reasons why they approved it.
Nelson said the loan would help economic development, wasn’t an emergency, couldn’t be obtained elsewhere and could be repaid by Lyman County.
The Transportation Commission seldom makes loans.
One, for $6 million in 2015 with similar terms and for similar reasons, went to Dakota Plains Ag Center in Yankton County, for business development at Napa Junction. That’s where the state-owned Napa-Platte line connects to a Burlington Northern Santa Fe line.
Toby Morris presented the Lyman County deal to the state commission Thursday. He was from the Pierre office of Dougherty and Company, a Minneapolis-based investment bank and brokerage.
“It’s an elevator on steroids,” Morris said about the Dakota Mill and Grains loader. He said it handled about 50 million bushels of grain last year.
Dakota Mill and Grain is paying approximately $180,000 annually into a tax-increment finance district that Lyman County set up, according to Morris.
He said the company pays that amount to Lyman County, and the county will guarantee repayment of the state loan and pay for rebuilding the road and installing the new bridge.
The Lyman County loan eventually will be re-packaged to another lender, according to Morris. “The county essentially is the (TIF) bondholder,” he said.
Eric Prunty of Brosz Engineering accompanied Morris. Prunty said the road is narrow and the current bridge handles, barely, the weight of the truckloads of grain. “But it’s in pretty tough shape,” Prunty said.
Said Morris, “The county, they have limited resources.” He added that the state loan was a “last resort” for funding the road and bridge.
The job would go to bid in October, according to Prunty, with work starting on the bridge structure this winter, followed by the bridge deck in spring 2020.
Commissioner Ron Rosenboom of Sturgis said people often ask for grants for transportation projects. He said loans at low rates of interest made more sense: “The pros outweigh the cons.”
Commissioner Rodney Fouberg of Aberdeen said the money could be used again, after the $2,278,515 loan is repaid.