PIERRE, S.D. — South Dakota’s Railroad Board has terminated its lease agreement with the Dakota Southern Railway on a section of state-owned track for failure to make an annual payment.
KELO-TV reports the railroad board terminated the lease on the state-owned Napa-Platte line in the southeastern portion of the state, where Dakota Southern stored railcars. But the railroad missed a $179,134 payment due May 1, and the board voted 5-0 at a meeting on Wednesday (July 16) to terminate the agreement 17 months ahead of its scheduled expiration. The board also directed Dakota Southern to file the appropriate papers with the Surface Transportation Board within 30 days; if it fails to do so, the state Department of Transportation was directed to address the paperwork.
The board, which received a series of photos of the condition of the 21-mile llne between Napa and Tyndall, S.D., also directed the state DOT to undertake maintenance and repairs and pursue damages from Dakota Southern for the work, and to move forward with a lawsuit to pursue the unpaid funds. With interest, that amount was $182,850.40 as of Wednesday.
KELO reports the railroad’s co-owner, Mike Williams, told the board by telephone that he was working on refinancing property to make the payment, and said that car-storage revenue had fallen from $6.8 million a year to $1.2 million.
Dakota Southern was formed in 1985 to operate a line between Mitchell and Chamberlain, S.D.; but the original operators sold the company to Midwest Pacific RailNet and Logistics, which sold the Mitchell line to Watco in 2021; it now operates as the Ringneck & Western Railroad. The stored-car trackage is the last remnant of the Dakota Southern name.
The rentor’s last income is $1.2 million but he had been getting $8 million a year yet he can not pay the $179,000 rent ???. Who believes that bunch of bull. Yes, I would file suit on him.
It’s supposed to be a win-win for the operator and the state when retaining a rail line like this.
The state gets a rent payment for its use while the operator attempts to build business along the line which includes car storage.
Is car storage really operating a state owned rail line or is it just a way to make money on a line that is already abandoned to business?
The lessee noted it was just for car storage and they were seeing declining revenues. Expect that the lesee will declare bankruptcy of the railroad/enterprise to avoid anymore payments…