As if Itasca County isn’t going through enough, last week it was announced that the MSI and Mesaba projects require a rail line and the county will have to decide if they are going to fund it, to the tune of $45 million, and not just pay for it but be their own railroad company, operate it, buy or lease cars, the whole shebang, and they have 30-60 days to come to a decision! Can you believe this?

Charlotte Neigh was at that meeting and took copious notes. From these, she wrote a Letter to the Editor, and it’s in the Grand Rapids Herald Review, though they changed the title from “Should county risk debt for Mesaba Project?” to the one below… sigh…

Is there too much risk?



Last Updated: Friday, May 19th, 2006 04:43:28 PM


On May 16th Itasca CountyĆ¢??s consultant for coordinating infrastructure for the Minnesota Steel and Mesaba Energy projects told the commissioners that they must decide whether the county wants to be in the railroad business. This relates to the shortline railroad comprising 20 miles of track and an interchange yard for train cars, connecting to both the Burlington Northern Santa Fe and the Canadian National lines, and servicing both projects including bringing in coal for Mesaba and taking out steel for MSI.

This railroad infrastructure has been estimated to cost $40,450,455; the question is how to pay for it. The consultant pointed out that the county could borrow at a better interest rate than the projects can and so should consider whether it wants to bond for the needed funds and then seek to recover this debt through long-term (perhaps 20 years) agreements with each project for repayment to the county.

The Department of Energy has stated that “the financial risk associated with this technology demonstration (Mesaba Energy Project) is, in general, too high for the private sector to assume in the absence of strong incentives.” If the risk of this project is so high, should Itasca County and its taxpayers be relying on it to repay tens of millions of dollars expended to provide rail service for it?

The consultant stated that the objectives have been: to provide the lowest cost service to both projects with minimum or no, or acceptable risk to the county, and to get something back for the county’s efforts. He told the commissioners that they need to balance the risk and the benefit and the impact and decide whether it is wise to proceed. The schedule calls for a decision within 30-60 days. Taxpayers concerned about risky debt for Itasca County should let their commissioners know where wisdom lies.

Charlotte Neigh
Trout Lake Township

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