Five companies have applied to the board for a total of $15 million in low-interest loans to build train-loading facilities for shipping grain and wood pellets from those communities.
But there’s not enough money in the board’s account to go around, at least not any time soon.
The board expects to have only about $6.9 million become available in the next 16 to 17 months and possibly another $3.3 million at some point in 2014.
The board will consider the loan applications Wednesday afternoon during a meeting in Pierre.
An additional complication is that the loans typically are made to regional railroad authorities, which under state law have authority to levy property taxes in the event that a loan goes bad. There isn’t a regional authority in place for one of the applicants, Deadwood BioFuels.
The company has a new production plant at Rapid City where wood pellets are made. Rail service for shipping the pellets in bulk at 100 tons per rail car calls for construction of a new siding that will cost an estimated $3.76 million. The company is seeking a $964,000 state loan.
Current and potential outlets include companies in Wisconsin and Massachusetts, and utilities in Europe, as well as national hardware and discount store chains, according to the loan application documents.
One source of wood for the pellets is waste from trees removed because of pine-beetle infestation in the Black Hills.
The four other applications are for conventional rail loops where unit trains can be loaded with grain.
Prairie Ag Partners at Lake Preston is seeking a $4.5 million state loan to build an 8,000-feet loop that can handle 120-unit trains.
Liberty Grain has asked for a $3.6 million state loan as part of its $33.6 million project east of Kimball at the intersection of Interstate 90 and state Highway 45 south, where Chuck Jepson has grain elevators, a fertilizer distribution plant and a 1.5-mile train loop under construction.
Dakota Mill and Grain, meanwhile, wants to build a $22.8 million loading facility at Kimball that would feature 15 million bushels of grain storage and 9,000 feet of loop track. The company seeks a $3.5 million state loan.
The fourth new grain project is proposed at Aberdeen by Ochsner Real Estate Limited Partnerships. It calls for providing 1.5 million bushels of grain storage and 10,620 feet of loop track west of Aberdeen along U.S. Highway 12 and the Burlington Northern Santa Fe line. The loan request is for $2.4 million.
Helping stir interest is the Legislature’s decision to grant Gov. Dennis Daugaard’s recommendation that $4 million be shifted into the railroad loan fund as part of state government’s 2013 budget.
Analysis by the state Department of Transportation rail staff shows a $2.9 million balance is expected in the loan fund by the end of the 2013 fiscal year and the additional $4 million would make up to $6.9 million available.