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Project Profile: Lyman County Shuttle Train Access Road

Lyman County Shuttle Train Access Road

photo credit: South Dakota Department of Transportation

Location

Presho, South Dakota

Project Sponsor / Borrower

Lyman County, South Dakota

Program Areas

Value Capture

Value Capture Techniques Tax Increment Financing
Mode

Local Road

Description

In August 2019, the South Dakota Transportation Commission approved a state loan to Lyman County for $2.3 million to build a 2.25-mile access road from Interstate 90 and SD 248 to Lyman County Road 14 and on to the new Dakota Mill and Grain (DMG) grain-loading rail terminal and agronomy center, in Presho, South Dakota. The road includes a bridge on 306th Avenue, 0.3 mile east of Presho. The Commission also approved a $600,000 Agri-Business Grant, used as a means for local governments to address road needs associated with new agri-businesses.

The rebuilt gravel road, including one bridge, will allow better access for trucks to reach the DMG rail terminal in Presho. The current road is narrow, and the bridge does not adequately accommodate the weight of grain trucks.

The loan is to be repaid to the South Dakota DOT by Lyman County using a tax increment financing (TIF) district of approximately $3 million, the first in the county. The tax increment that will repay the loan derives from the increased property value of the new grain-loading facility and other properties within the district.

The need for the access road was stimulated by two TIGER Grants of $16 million and $12.7 million, respectively to the State of South Dakota to rehabilitate the state-owned Mitchell to Rapid City (MRC) branch rail line. The MRC line, rehabilitated in 2014 with another segment added in 2016, allows farmers to easily export their grain across the country. Rehabilitation of the line removed trucks from state highways and put the grain on rail, and a Dakota Southern / BNSF Shuttle Load partnership allows the railroad and shippers to load larger rail shuttle trains, which dramatically improves efficiency. Since the MRC Line was rehabilitated, over $115 million in new grain handling facilities, fertilizer storage, and agronomy centers have been built between Mitchell and Presho. These investments have significantly enhanced opportunities for farmers to reduce the transportation costs of bringing their products to market in central South Dakota. Improvements to roads accessing the rail terminals have been required. The road and bridge improvements are within a designated opportunity zone.

Cost

$2,878,515 (construction cost, design and construction management services, 10% contingency, and 6% administrative/legal)

  • Road improvements - $1.236 million
  • Bridge - $1.643 million
Funding Sources

South Dakota DOT Agri Business Grant - $600,000

South Dakota DOT State Highway Fund Loan for Local Governments - $2,278,515

Project Delivery / Contract Method

Design-bid-build

Private Partner

None

Project Advisors / Consultants

Dougherty & Company LLC - Financial Consultant

Brosz Engineering - Road and Bridge

Lenders

South Dakota Transportation Commission

Duration / Status

The Dakota Mill and Grain improved the Presho grain elevator in 2018. Road and bridge improvements expected to start November 2019 and be substantially complete in September 2020.

Financial Status

The state highway loan has been made, and the TIF district in Lyman County has been created to payback the loan. Dakota Mill and Grain is responsible for any shortfall that may occur if the TIF revenue is not sufficient to cover the debt service. The terms of the loan call for amortizing the loan over 20 years, with a balloon payment in 10 years, and no interest until construction is complete. The estimated increment resulting from the improvements is approximately $11 million.

Innovations
  • This is the first TIF district in Lyman County, stimulated by the TIGER Grants to the State of South Dakota for the Mitchell to Rapid City (MRC) branch rail line. This development has spurred economic growth, increasing local property values and making a TIF district feasible.
Related Links / Articles

State Highway Fund Loan Application from Lyman County

Keloland News Article

Dakota Mill and Grain

Contacts

Tammy Williams
SDDOT Program Manager - Administration
Tel: (605) 773-2995

Toby Morris
Dougherty & Company
Tel: (612) 376-4000

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