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C7 • VBMR0K1A-r1DN the city that works for you REQUEST FOR COUNCIL CONSIDERATION Report Number: Agenda Section: V1 1-1 Report Date: October 5, 2007 Council Meeting Date: October 9, 2007 ITEM DESCRIPTION: Consideration of a Letter of Understanding by and between the City of New Brighton; MT Properties, Inc.; and Minnesota Commercial Railway Company Regarding Railroad Related Proiects. DEPARTMENT HEAD'S APPROVAL: Grant Fernelius, Community Development Director CITY MANAGER'S APPROVAL: No comments to supplement this report [)//' Comments attached Recommendation: Staff recommends that the City Council approve the attached Letter of Understanding by and between the City of New Brighton; MT Properties, Inc.; and Minnesota Commercial Railway Company Regarding Railroad Related Projects. Legislative History: July 24, 2007 City Council approves the purchase of a 2.0 acre tract of land from Estes Express Lines for the southeast wye and team track projects. Financial Impact: Analysis is provided below. Explanation: Since early 2004 staff has been working with MT Properties, Inc. (MT Properties) and Minnesota Commercial Railway Company (Minnesota Commercial) on several railroad projects. These projects have included the abandonment of Butcher's Spur line in the Northwest Quadrant, construction of a functional replacement (also referred to as a "team track"), and the development of a new "southeast wye" connection near lit Street SW. As the Council is aware, this project has taken a tremendous amount of time due to the complex negotiations with the railroad and the landowner. We are pleased to report that we have finally reached an agreement with the railroad on the various elements of the project. Attached is copy of the Letter of Understanding (LOU) which has been drafted by the City and accepted by both MT Properties and Minnesota Commercial. As background information, MT Properties owns the underlying right-of-way and has an agreement with Minnesota Commercial to operate the line. Over the course of the last three years it became apparent that each party had different rights and responsibilities, which influenced the course of the discussions. Because railroads have a tremendous amount of power under federal law, the City was in a difficult negotiating position.