Watco subsidiary Ringneck & Western Railroad LLC is purchasing the 285-mile Mitchell to Rapid City rail line in South Dakota.
The South Dakota State Railroad Board authorized the South Dakota Department of Transportation (S.D. DOT) to sell the line for $13 million. Only 190 miles of the line are active between Mitchell and Kadoka, and have been operated by Dakota Southern Railway under a lease with the Mitchell-Rapid City Regional Railroad Authority.
Once the sale closes and Ringneck & Western assumes operations, shippers will receive a $25 reduction in the current $50 surcharge per loaded railcar, according to S.D. DOT. Additionally, the short line has committed to spending at least $2 million per year for ten years on track maintenance. Over the past 11 years, upgrades have been made along 41 miles of track between Chamberlain and Presho (valued at nearly $30 million) and along 61 miles of track west of Mitchell ($29 million).
Ringneck & Western will also work with S.D. DOT to finish construction of a rail siding near Kimball. The purchase agreement requires the short line to pay the department $1.5 million upon completion.
The agreement also includes a provision that the department may repurchase the line if the owner plans to abandon it or discontinue service.
“Thank you to the state DOT, the Board and the citizens of South Dakota for being such good stewards of these rail assets,” Watco Executive Chairman Rick Webb said. “We are honored to continue building from this tremendous foundation and excited to be coming to South Dakota.”