Agenda - Economic Development Authority - 03/15/2015

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ACG The Impact of Rail on the Proposed Site The property under consideration for the new Ramsey Business Park is located adjacent to the Burlington Northern Santa Fe (BNSF) Railroad main line linking the Chicago and Twin City mar- ket to the West Coast. Historically, locating a business park near rail has had some distinct ad- vantages for attracting business and industry. The desirability of freight rail transportation is more often than not linked to the cost of oil. As oil prices increase freight tends to shift from truck to rail. The cost to move a ton of goods by rail is significantly different from truck transportation. With one gallon of diesel fuel it is possible to move one ton of freight 400 miles by rail compared to approximately 100 miles by truck. In addition each rail car holds approximately 4.35 truckloads of commodities creating greater effi- ciencies. Oil production on the Bakken Range in North Dakota has also impacted rail traffic along the rail corridor in Ramsey. The application of hydraulic fracturing and horizontal drilling technologies have caused a boom in Bakken production since 2000. By the end of 2010, oil production rates had reached 458,000 barrels per day, thereby outstripping the pipeline capacity to ship oil out of the Bakken Range. By April, 2014 Bakken oil production in North Dakota and Montana ex- ceeded 1 million barrels per day. Without the construction of additional pipeline capacity, rail has become the preferred method for transporting oil produced from this oil field. Much of this rail traffic moves on the rail line through Ramsey thereby limiting the railroads capacity to ab- sorb additional traffic. The BNSF line through Ramsey is also home to the Northstar Commuter Rail. In 2014 approx- imately 720,000 commuters used the rail for commuting to and from the City of Minneapolis. Currently 6 inbound and 6 outbound Northstar Commuter Trains use the line daily. The use of the line for commuter rail places further restrictions on the use of the line for additional train traffic. Rail traffic on this corridor has now grown to the point where it has become an issue for com- munities located along the line. The problem has risen to the level of garnering attention from the State of Minnesota. Governor Dayton's 2015 budget includes a proposal to change how the state taxes railroads and includes a new fee dedicated to making safety improvements. These new revenue streams would raise $100 million over the next two years to help the state, counties and cities address problems from increased traffic. When all of these factors are taken into consideration, it is clear that locating a business park on rail today does not necessarily translate into rail access and therefore rail oriented business and industry. We believe that the Ramsey Business Park site will not be home to rail oriented industries for the following reasons: Ramsey Business Park Phase I Research Report