Newly formed rail authority gives sign off to sponsor $18 million loan for High Plains soybean facility (2024)

MITCHELL — The newly formed Davison Regional Railroad Authority voted Thursday to sponsor an application on behalf of High Plains Processing to pursue up to $18 million in state low-interest loans for the soybean processing plant’s rail facilities.

Toby Morris, a senior vice president at Colliers Securities who is advising High Plains through the funding process, said he has already been in discussion with the South Dakota Department of Transportation over the bid amounts for completing the rail work.

The funding for the low-interest loan will come from the state’s revolving loan fund. The interest rate is expected to be 2% and the loan application will likely go before the South Dakota State Rail Board in October.

“It’s going to be one of the largest requests they’ve ever had but then again they’ve never had a half-billion project come through either,” Morris said.

The costs will go to grading the land, building the track and rail loops on the property, land acquisition costs, a receiving and loadout building and connections for water, electric and natural gas facilities for the railroad. About $1 million will go toward BNSF Railway work at the property as well, as BNSF owns the line.

The DRRA, which was only meeting for the second time, was formed earlier this year by the city of Mitchell and Davison County. The authorities serve as a pass-through organization for the government funds to be handed down to businesses. The five-member board of the DRRA includes Mitchell City Council members Mike Bathke and Jeff Smith, Davison County Commissioners Mike Blaalid and Randy Reider and Mitchell Area Development Corporation CEO Mike Lauritsen.

The board discussed what the application fee should be to the DRRA for the project and ultimately approved $15,000. That dollar figure was at the suggestion of Morris.

Lauritsen pointed out that it's less than 0.001% of the $18 million loan they’re seeking but agreed that they didn’t want to deter future businesses over the application fee.

“I’d like to see it be higher,” Blaalid said of the fee. All five members eventually voted in favor of the $15,000 fee.

The board members discussed the risk involved for the authority to be the government sponsor to High Plains, which is on the hook for repaying the loan but could fall back on Davison County and city of Mitchell taxpayers if the funding ever fell through. Reider said it’s clear there’s “excellent financing for the project and you would expect the risk to be pretty low.”

“The last thing I want to do is come back to our public entities and say they will owe some money,” Smith said. “That’s all that I really care about at this point. I have all of the confidence that this is going to go. But in the future, what will be our expenses (as an authority)?

The $500 million High Plains Processing facility broke ground in September 2023 and will be located along the BNSF line about 2 miles south of Mitchell. It’s expected to open in fall 2025.

The processing plant will have a loop for rail cars and will connect to the adjacent BNSF line and the rail line was a major draw for the initial developers South Dakota Soybean Processors. Tom Kersting, the CEO of South Dakota Soybean Processors, which is the majority owner of the High Plains Processing, said the track on High Plains property will be able to hold 340 cars at once and will have a rail loop 3 1/2 times larger than the typical large-scale grain-handling facility in the state.

“We’re going to be kicking out 21 cars a day,” he said. “You can see the emphasis on rail with this project. We’re much more reliant on this here than we are with our plant in Volga.”

Morris, a former economic development staffer for Govs. Bill Janklow and Mike Rounds, has been involved in infrastructure and public financing during his career. He is bullish on the potential of the DRRA for fostering more business growth.

“My development hat is always on,” Morris said. “I think there’s a good chance for more development. I see this authority being one of the more-used ones in the state.”

Kersting said it’s possible more potential businesses could come forward in connection to the railroad upgrades and the development of the soybean facility.

“We’re not stopping here. We’re looking at a lot of things,” Kersting said.

Marcus Traxler is the assistant editor and sports editor for the Mitchell Republic. A past winner of the state's Outstanding Young Journalist award and the 2023 South Dakota Sportswriter of the Year, he's worked for the newspaper since 2014 and covers a wide variety of topics. A Minnesota native, Traxler can be reached at mtraxler@mitchellrepublic.com.