A new wrinkle has surfaced involving plans for the $1.9 billion Southwest light-rail line to run alongside freight trains for a 6-mile portion of the route, including the Kenilworth corridor in Minneapolis.

Before the Metropolitan Council applies for a critical federal grant to pay half of Southwest's construction costs, it needs to reach agreements with some of the railroads that operate along part of the 14.5-mile LRT route between downtown Minneapolis and Eden Prairie.

Freight trains operated by Twin Cities & Western Railroad (TC&W) rumble along the Kenilworth corridor, an isthmus separating Lake of the Isles and Cedar Lake that serves as a popular spot for bicyclists and pedestrians, and a spur of track between St. Louis Park and Minnetonka.

But negotiations between the Met Council and TC&W over how that relationship will be structured have broken down. Now the council is proposing a different plan in order to move the project forward — the latest drama to besiege Southwest, the most expensive public works project in state history.

The regional planning body insists the planning pivot with Glencoe-based TC&W won't affect timing of the project or its ability to secure $929 million in critical federal dollars. Construction of the line is expected to begin later this year, with passenger service starting in 2023.

The proposed rail agreements would mean Hennepin County will assume "common carrier" responsibilities in the Kenilworth corridor, as well as a 7-mile stretch of rail between St. Louis Park and Minnetonka now owned by Canadian Pacific Railway. This means Hennepin County will control which rail carriers could use the tracks, should the arrangement receive council and county approvals.

The council initially negotiated a deal where TC&W would assume those rights, offering the railroad up to $12 million as part of a broader agreement in August. But now council officials say TC&W imposed new conditions they find unacceptable.

Those conditions include language that would have required the council to cover negative changes in TC&W's business due to causes unrelated to light rail, such as an economic downturn, lost revenue, income and profits, according to an e-mail sent to Met Council officials last week from Chairwoman Alene Tchourumoff.

"It would have been irresponsible to commit the people of Minnesota to this type of sweetheart deal with a railroad company and disregard our fiduciary responsibility to the public," Tchourumoff wrote.

Mark Wegner, president of TC&W, is out of the country this week. He said Tuesday that he was presented with the terms of the Met Council's proposal late last week and has not had time to review it thoroughly.

At a meeting of the council's Transportation Committee on Monday, a new settlement with TC&W was proposed that called for paying the railroad up to $11.9 million, plus $230,000 for expenses. The council gave TC&W until April 18 to respond.

The proposed pact continues to permit TC&W to operate its freight trains through the Kenilworth corridor and just west of it.

Should the Met Council and the Hennepin County Regional Railroad Authority approve the new agreements, the council will file a petition with the Surface Transportation Board, a federal regulatory agency that reviews railroad property transfers. That review should take 30 to 60 days.

Other rail agreements call for the council to buy railroad land from Canadian Pacific between St. Louis Park and Minnetonka for $27.5 million. Hennepin County owns the Kenilworth corridor land and is expected to transfer ownership to the council.

Janet Moore • 612-673-7752 Twitter: @MooreStrib