Small rail operators looking for $91 million in Minnesota help over several years

The economic ripple created by a $1.5 million state investment a few years ago in a freight-rail spur line south of White Bear Lake, has empowered several small railroads to ship the Minnesota Legislature a 2020-2025, $91.4 million rail and crossing-improvement program.

"The proposed legislation requires a relatively small amount of funding compared with state spending on highways supporting truck traffic, a direct and more expensive competitor to rail shipping," said a report from the rail-improvement consortium. "Minnesota has no financial resources or programs devoted to rail infrastructure and rail-related economic development needs of [spur-line carriers] while Wisconsin has spent more than $240 million over the past two decades and Iowa more than $60 million."

The $91 million would fund about a dozen projects in seven counties involving eight short-line freight railroads and would retain and create "hundreds" of new jobs, according to the promoters.

The state spent $1.5 million to enable Minnesota Commercial Railway to upgrade deteriorating tracks and other improvements over the 6.5 mile span from White Bear to Hugo's Bald Eagle Industrial Park.

John Gohmann, owner of Minnesota Commercial, which operates 128 miles of short-haul tracks around the Twin Cities, said there was too little volume for him to privately finance the improvements on the Hugo track that was abandoned in 1990 by huge Burlington Northern.

"We weren't being selfish," Gohmann said last week. "We were only doing about 10 cars a month at $400 a car. I couldn't pay for the track rehab or finance it. But the maintenance came due after 25 years."

The consortium said the state investment worked, saving jobs and resulting in more business for the railroad and its customers.

"We did what we said we were going to do," Schwieters said Friday. "We've added 100 people and we will add more. We could add more equipment and people in the building, depending on the market. I rely on that rail. We are the biggest user of the rail line."

The White Bear Area Chamber of Commerce and the town of Hugo were instrumental in getting the bipartisan bill through the legislature.

Gohmann, 72, who hopes to leave his company to a trust that will operate it for the benefit of employees, said in addition to the direct economic development … every full rail car eliminates the need for 4.5 large trucks on local roads.

Now, the short-haul rail lines, including Minnesota Commercial, are back looking for a big boost.

That includes Progressive Railway's replacement of thousands of rail ties in Bloomington and Rosemount, rail replacement of the Northfield to Lakeville line.

The cities of Otsego and Monticello in Wright County want $3.8 million for a proposed, rail-served industrial park and crossing upgrades, Big Lake in Sherburne County wants $10 million for an industrial park; Becker wants $1.6 million for a track serving Northern Metals and Minnesota Northern Railroad and St. Croix Valley Railroad want $8.1 million for various projects.

And the Twin Cities & Western Railroad wants help on 107 miles of deteriorating track that serves several grain terminals, as well as huge Cargill and Cenex in Savage in Scott County.

The rail team at the Minnesota Department of Transportation have recommended $8 million in grants and no-interest loans to start some this year, as part of Gov. Tim Walz's big-ask, $2 billion capital-improvement budget.

That ranges from fixing state roads and bridges to helping Minneapolis upgrade sewers.

The small-line operators formed 25 to 40 years ago as the big national carriers, such as Burlington Northern and Canadian Pacific, abandoned tracks or leased them to small players, as they focused on their more-profitable multistate rail lines.

This multiyear plan is a good starter, as long as each project results in a solid, long-term return to communities and taxpayers.