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Railroad Wye Update July 23, 2010 Page 2 2005 Grant In 2005, the City approached the State Legislature about a funding solution. The City's argument for funding was that excessive train traffic caused inconveniences and safety issues for the public. As part of the 2005 bonding bill, the City received an allocation of $1.0 million toward construction of the wye track. It should be noted that this grant can only be used for construction purposes; none of the funding can be used for real estate acquisition. Real estate costs have been paid by the City out of its Municipal Development Fund 460. Since 2005, staff and the city attorney have been working with the railroads, MnDOT, the Department of Finance and the Attorney General's office on crafting the necessary agreements to carryout the project. Overview of Project One of the City's primary concerns is to avoid getting into the "railroad business". In other words, the City will construct the track, but it should not take responsibility for any operational or maintenance issues. As such, the plan is for the City to execute lease and operating agreements with the appropriate railroads. The following is a list of the parties that will be involved in the project: State of Minnesota Provides the grant funding to City for this project. MnDOT will enter into grant agreement with the City, once it is satisfied that all other agreements are in place. MT Properties, Inc. Owns portion of right-of-way. Will provide easement to City for construction of track. MT will also be a signatory to the lease and operating agreement with the City and Minnesota Commercial. Minnesota Commercial Operates portion of wye track. MC will also be a signatory to the lease and operating agreement with the City and MT Properties. City will enter into an agreement with MC to coordinate construction and connections to their mainline. Canadian Pacific: Owns portion of right-of-way for wye track. CP will provide an easement to the City for the track and enter into a separate construction agreement for the track work. Any operational and maintenance obligations will be assigned to MC.