The Metropolitan Council and Hennepin County were maneuvering in March to take ownership of and responsibility for key portions of the future Southwest Light Rail Transit corridor.
Met Council plans to purchase the 6.8-mile Bass Lake Spur, located just west of Minneapolis, from Canadian Pacific Railway and at the same time take over ownership of the 2.5-mile Kenilworth Corridor from the Hennepin County Regional Railroad Authority. The rail authority, already acting as the common carrier for the Kenilworth Corridor, would also assume that role for the Bass Lake Spur, meaning it will be responsible for maintaining freight rail service for shippers that operate along both stretches of track.
Votes are scheduled early next week on the real estate transactions and a joint powers agreement related to the railroad authority serving as common carrier.
The moves were prompted by a breakdown in negotiations between Met Council and Twin Cities & Western Railroad Company, a regional railway that moves agricultural products between southwestern Minnesota and the Twin Cities. TC&W will continue hauling freight in both Bass Lake and Kenilworth during light rail construction and after the start of commuter service along the 14.5-mile SWLRT route.
Late last summer, Met Council approved the terms of an agreement that would’ve had TC&W take on common carrier obligations for both the Bass Lake Spur and Kenilworth Corridor. The $16.1 million offer from Met Council included $11.8 million to replace freight rail tracks in the Bass Lake Spur and up to $4.2 million to compensate TC&W for service interruptions and maintenance during light rail construction.
But TC&W’s demands “grew in scope” during negotiations, said Jim Alexander, director of the nearly $1.9 billion SWLRT project.
“We felt like we had the terms set,” Alexander told the Met Council Transportation Committee at its March 12 meeting. “Well, it just didn’t turn out that way, and TC&W is looking for a little bit more.”
Met Council Communications Director Kate Brickman said TC&W was pushing to add liability and indemnification language to the agreement that was so broad Met Council potentially would’ve been required to compensate the railway for any loss in business — not just delays related to light rail construction, but possibly even a downturn in the economy affecting freight shippers.
“Those were, simply put, unacceptable to the council in terms of our responsibility to the public as stewards of public resources,” Brickman said.
Met Council is now offering to pay TC&W up to $11.9 million, plus $230,000 for expenses incurred by the shipper during talks over the previous agreement.
The deal would ensure TC&W’s cooperation with light rail construction. The railway would vacate existing freight tracks that are scheduled to be removed during construction and quit any claims against the project.
In exchange, TC&W would get the protection of railroad liability insurance coverage paid for by Met Council. The policy would shield the carrier in the case of a derailment or other type of accident during construction or after the start of light rail service.
TC&W has until April 18 to respond to the offer from Met Council.
As for the real estate beneath the tracks, Met Council plans to offer Canadian Pacific up to $27.45 million for the Bass Lake Spur. An agency spokesperson placed a $66 million value on the Kenilworth Corridor property that will be transferred from the county to Met Council.
The deals will require approval from the Surface Transportation Board, a federal board that has jurisdiction over railway transactions and service issues. It is expected to offer a ruling within 30–60 days of being petitioned by the Met Council.
The complicated “jurisdictional gymnastics” called for in the joint powers agreement that will have Hennepin County acting as common carrier in the Bass Lake Spur and Kenilworth Corridor raised the eyebrows of Hennepin County Commissioner Mike Opat, who voiced concerns at a March 13 railroad authority meeting about the “steady drip, drip, drip of accommodations” the county was making to keep the SWLRT project on track.
“The more you think about it, the more questions one can have,” Opat said. “This is a far cry from the discussions many months ago where TC&W would’ve become the common carrier for both Kenilworth and the Bass Lake Spur.”
Brickman said Met Council attorneys do not believe the agency is allowed to serve as common carrier under state law. She noted that the proposed arrangement keeps the corridor in public ownership — one of the guarantees sought by Minneapolis elected officials when they reluctantly agreed to plans that add light rail service to the Kenilworth Corridor without first rerouting TC&W’s freight service.
Hennepin County Commissioner Peter McLaughlin, who chairs the railroad authority, noted that the county already acts as common carrier in the Kenilworth Corridor and has done so since the county purchased the land with the intention of developing transit service in the 1980s. McLaughlin said fees paid by the railroads are expected to cover track maintenance and other costs bourn by the common carrier.
“It’s a modest responsibility in these corridors,” he said.