INFORMATION #3 05-15-2006
MEMORANDUM
TO: Mayor and City Council
FROM: Scott Clark, Community Development Director
DATE: May IS, 2006
SUBJECT: Northstar Corridor Development Authority Memorandum of
Understanding
Attached for your information is a coy of the Memorandum of Understanding with BNSF
Railway Company for the Northstar Corridor project.
S:\Community Development\Scott CIark\NCDA \Mem of Understanding BNSF.doc
NCDA
Resolution 2006-
Memorandum of Understanding with BNSF Railway Company
WHEREAS, the Northstar Corridor Development Authority (NCDA) was formed
in May of 1997 by joint powers agreement among the counties, county regional railroad
authorities, cities and towns along the Northstar Corridor; and
WHEREAS, the sole purpose of the NCDA is to address the transportation needs
of the TH1 O/Northstar Corridor, one of the fastest growing corridors in the State of
Minnesota; and
WHEREAS, in December, 1999, the NCDA selected commuter rail as the
centerpiece of its locally preferred transportation investment strategy; and
WHEREAS, the proposed commuter rail service between Big Lake and
Minneapolis, Minnesota will operate on the existing freight railroad owned by BNSF
Railway Company (BNSF); and
WHEREAS, the Minnesota Statutes Section 174.82 provides that the
Commissioner of the Minnesota Department of Transportation is responsible for all
aspects of commuter rail in Minnesota, including negotiations with the railroad and
further provides that the Commissioner may delegate such responsibilities to a joint
power board; and
WHEREAS, in November, 2003, the Commissioner of Mn/DOT entered into a
memorandum of understanding with the NCDA, delegating to the NCDA the
responsibility to conduct negotiations with BNSF and to seek approval from Mn/DOT of
any agreements with BNSF relating to commuter rail; and
WHEREAS, the NCDA and Mn/DOT have worked in partnership over the last.
several years to negotiate an agreement with BNSF to provide the necessary capacity
for commuter rail and the right to operate on BNSF tracks; and
WHEREAS, with the leadership and support of Governor Tim Pawlenty, the
NCDA and the State have negotiated a Memorandum of Understanding with BNSF; and
WHEREAS, the NCDA further recognizes the important contributiOns of the
Minnesota Congressional Delegation including Senator Coleman and Congressmen
Oberstar, Kennedy, Sabo and Ramstad, in securing the partnership with BNSF and
ensuring the continued support of FT A; and
WHEREAS, the NCDA further recognizes the hard work and extraordinary efforts
the NCDA Executive Committee, the Project Management Team, and the Northstar
Negotiating Team; and
WHEREAS, the Memorandum of Understanding is a necessary step in the
process to secure approval from the Federal Transit Administration to advance the
Northstar Commuter Rail Project into the final design phase of project development; and
WHEREAS, the Memorandum of Understanding provides the framework for the
negotiation and development of definitive implementing agreements; and
WHEREAS, the Memorandum of Understanding establishes a partnership with
BNSF that will work towards making commuter rail a reality in Minnesota without
jeopardizing the important freight transportation service operating in the Northstar
Corridor.
NOW, THEREFORE BE IT Resolved that the Northstar Corridor Development
Authority:
1) approves the Memorandum of Understanding between the State of Minnesota
and BNSF Railway Company as attached;
2) strongly urges Commissioner Molnau to execute the Memorandum of
Understanding; and
3) extends its sincere appreciation to Governor Tim Pawlenty, Senator Coleman
and Congressmen Oberstar, Kennedy, Sabo and Ramstad for their strong leadership
and support for the Northstar Commuter Rail Project.
Duane Grandy, Chairperson
Certification
I hereby certify that the foregoing resolution is a true and correct copy of the resolution
presented to and adopted by the Northstar Corridor Development Authority at a duly
authorized meeting thereof held on the 9th day of May, 2006 as shown by the minutes of
said meeting in my possession.
.>
(Name)
(Title)
Term Sheet
Memorandum of Understanding
This Term Sheet and Memorandum of Understanding ("MOU") is entered into this _
day of May, 2006 between the Commissioner of Transportation (the "Commissioner") acting on
behalf of the State of Minnesota (the "State"), and BNSF Railway Company ("BNSF").
WHEREAS, the State desires to use its resources and authority to provide commuter rail
service between Big Lake and Minneapolis, Minnesota (the "Northstar Corridor") on the existing
BNSF rail lines and facilities, as improved; and
WHEREAS, provision of Northstar Commuter Rail Service will support the Northstar
Corridor's economic growth by increasing mobility and reducing reliance on the existing highway
system and will improve environmental quality; and
WHEREAS, BNSF plays an important role in maintaining the competitive position of
Minnesota by providing freight transportation between Chicago, Illinois and the American West and
Pacific Northwest through the Northstar Corridor (the "BNSF Freight Service") and Amtrak
intercity passenger service; and
WHEREAS, BNSF and State wish to protect freight mobility and capacity provided in the
Northstar Corridor so that Northstar Commuter Rail Service does not jeopardize freight mobility on
this corridor; and
WHEREAS, the parties hereto wish to negotiate a mutually acceptable agreement in lieu of
the threatened condemnation or similar proceeding in furtherance of the above:
NOW, THEREFORE the parties agree as follows:
1. Subject to the negotiation of mutually acceptable definitive service, easement
purchase and sale, joint use, and/or other implementing agreements (collectively, the "Definitive
Agreements"), BNSF will permit the operation of the following (the "Northstar Commuter Rail
Service"): (a) 5 morning peak direction one-way train trips per work weekday and 1 morning
reverse peak direction train trip per work weekday; (b) 5 evening peak direction one-way train trips
per work weekday and 1 evening reverse peak direction one-way train trip per work weekday; (c)
subject to agreed upon schedules, parameters and terms, up to 3 round trip trains each weekend day;
and (d) subject to agreement on acceptable procedures and availability, special event train trips as
may be requested by State and approved by BNSF in its discretion from time to time. The
Definitive Agreements will provide for passenger stations in the communities of Big Lake, Elk
River, Anoka, Coon Rapids, Fridley, and downtown Minneapolis. .'-
2. BNSF and State contemplate that the Definitive Agreements would provide for the
following: (a) BNSF will provide the State with perpetual easements, interests and/or rights for use
of the Northstar Corridor for use in providing Northstar Commuter Rail Service as described in
paragraph 1, with BNSF retaining all rights and obligations to provide freight service and intercity
passenger service along the Northstar Corridor; (b) BNSF will implement certain improvements in
the Northstar Corridor, with BNSF responsible for the ordinary and customary design, engineering
and construction of rail and track structure and signal improvements within the right of way corridor
in compliance with all federal, state and local laws and regulations and BNSF standards; (c) the
State will be responsible for securing, on BNSF's behalf, all environmental and governmental
permits (including, but not limited to, proprietary permits such as wetland permits) that are
necessary for projects (the "Permits") and BNSF will cooperate in efforts to obtain such permits;
(d) BNSF, with notice to the State, will determine the specific improvement projects that are
necessary to construct and implement Northstar Commuter Rail Service; (e) BNSF will provide the
necessary capacity to operate the Northstar Corridor Rail Service within negotiated schedules and
service parameters; (f) BNSF will provide the necessary rights within its existing right of way to
construct and operate by State at its expense at agreed upon station locations and consistent with
BNSF standards, all station related facilities; and (g) State will be responsible for design,
construction, maintenance and repair of improvements used exclusively in the provision of
Northstar Commuter Rail Service such as stations, parking facilities and passenger rolling stock
layover and maintenance facilities, and for completion of existing agreements consistent with the
current scope provided in (d) above. A schedule of improvements for which the State must obtain
Permits will be included in the Definitive Agreements.
3. Prior to commencement of operation of Northstar Commuter Rail Service and
conveyance of any such easement, interest or rights for use of the Northstar Corridor, the parties
will also complete, as part of the Definitive Agreements, a mutually acceptable service agreement
for provision of dispatching and/or train crew services and related services for the specified
commuter trains. The Definitive Agreements will include mutually acceptable compensation terms
including, but not limited to, contribution by State for maintenance, repair and replacement along
the Northstar Corridor; and enforceable comprehensive provisions protecting BNSF from liability,
including insurance and indemnification. The Definitive Agreements will also define the services
to be provided by BNSF, including maintaining the railroad infrastructure and dispatching, and also
the terms for operation and scheduling of commuter rail trains.
4. In order to qualify for federal funding, BNSF will cooperate with the State's efforts
to meet the Federal Transit Administration ("FT A") requirements consistent with the terms of this
MOV.
5. The parties contemplate that revenue operations of the Northstar Commuter Rail
Service will commence in 2009. The Definitive Agreements will contain a time period after all
Permits are obtained by the State during which BNSF may construct improvements as contemplated
above and provide that the Northstar Commuter Rail Service would not commence until such time
periods have run.
6. The State will pay BNSF $107,500,000.00 for the commuter rail easements, as to be
further defined in the Definitive Agreements, subject to concurrence by the FT A. If the State of
Minnesota enacts legislation exempting certain Northstar-related expenditures from Minnesota state
sales tax, any net cost savings that accrue directly to BNSF from the exemption will be credited by
BNSF to the State.
7. The parties' interests and obligations in continued service and payments during the
terms granted to it under the agreements contemplated in this MOU will be established so as to
survive bankruptcy and sale.
2
8. This MOD will be effective on the date first above entered and the parties agree to
negotiate in good faith during the next ninety (90) days to agree upon an appropriate structure and
to complete the Definitive Agreements and modification" of prior agreements necessary (if any) to
implement the same. This MOD is only an expression of the parties' mutual intent regarding the
proposed transaction and does not constitute a complete statement of the intended structure of the
transactions, of all essential terms for providing such service or of a legal binding and enforceable
agreement of the State and BNSF. In the absence of execution of the Definitive Agreements
mutually acceptable to both parties, this MOD will be of no further force and effect.
9. It is contemplated that the Northstar Commuter Rail Service may be expanded to St.
Cloud area or by constructing additional stations or providing additional service. In such event the
parties recognize and agree that additional agreements will be necessary between the State and
BNSF to implement such expanded service, and recognize and agree that any increase in the scope
of service, number of trains, number of stations or service territory will require additional
improvements and compensation to BNSF.
10. Notwithstanding the above provisions, nothing in this memorandum will be deemed
to limit or affect any party's exercise of powers or performance of such responsibilities or
obligations as may be authorized or required by applicable laws and regulations.
11. The State may assign this MOD to the Metropolitan Councilor the Northstar
Corridor Development Authority with prior written notification to BNSF.
12. This MOD may be executed in more than one counterpart, including facsimile
transmissions, each of which will be deemed an original.
IN WITNESS WHEREOF, the Parties hereto have set their hands.
STATE OF MINNESOTA
By:
Name: Carol Molnau
Title: Commissioner of Transportation
BNSF RAIL WAY COMPANY
By:
Name:
Title:
3
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NEWS RELEASE
For Immediate Release
May 8,2006
Contact:
Tim Yantos
763-323-5692
Northstar Corridor Development Authority Thanks Governor, Members of
Congress for Their Work on Successful Northstar-BNSF Agreement
Anoka, Minn. - The chair of the Northstar Corridor Development Authority (NCDA) today praised
Governor Tim Pawlenty and members of Minnesota's Congressional delegation for their valuable
assistance in reaching an agreement in principal with BNSF Railway. The agreement in principal allows
the Northstar Commuter Rail project to move ahead with the next steps in securing passenger rail
service for commuters along a 40-mile segment of the BNSF rail line from Big Lake to downtown
Minneapolis.
'We congratulate Governor Pawlenty for his leadership and personal involvement in helping secure this
agreement. In addition, this milestone would not have been possible without the assistance of key
members of Minnesota's Congressional delegation: Senator Norm Coleman, Congressman Jim
Oberstar, Congressman Mark Kennedy, Congressman Martin Sabo and Congressman Jim Ramstad,"
said NCDA Chair Duane Grandy.
"The BNSF agreement in principal is great news for Northstar and is a major breakthrough in the
successful advancement of this project," Grandy said. "BNSF committed a hard-working team to
negotiate with the state and NCDA to develop an agreement in principal that balances their business
interests with the public interest, and we thank BNSF for that. This was a critical milestone toward
establishing definitive implementing agreements with BNSF."
The NCDA has called a special meeting for 4:30 p.m. Tuesday at the Anoka County Courthouse, during
which members of the authority will consider a resolution supporting the agreement in principal and
urging legislators to complete the state's portion of Northstar construction funding.
About the Northstar Commuter Rail Project
The Northstar proposal is for commuter rail service on the 40-mile segment of existing track along
Highways 10 and 47 from Big Lake to Minneapolis. Stations are proposed for Big Lake, Elk River,
Anoka, Coon Rapids, Fridley and Minneapolis. It will offer a convenient connection to the Hiawatha LRT
line in downtown Minneapolis.
The NCDA is a joint powers board of 30 counties, cities, townships and regional railroad authorities
along the Northstar Corridor, which covers an area from downtown Minneapolis to Rice, north of St.
Cloud. For more information about the Northstar Commuter Rail project, please visit www.mn-
GetOnBoard.com.
-- 30 -
OFFICE OF GOVERNOR TIM PAWLENTY
130 State Capitol + Saint Paul, MN 55155 + (651) 296-0001
FOR IMMEDIATE RELEASE:
May 8, 2006
Contact: Brian McClung
. (651) 296-0001
GOVERNOR P A WLENTY ANNOUNCES AGREEMENT WITH
RAIL WAY FOR NORTHST AR COMMUTER RAIL PROJECT
- Agreement ensures the operation of commuter rail service for generations -
St. Paul- Calling it a major milestone in the development of the Northstar project, Governor
Pawlenty today announced an agreement in principle with the BNSF Railway Company
(BNSF) on financial terms for construction and general operation ofthe commuter rail line
from Big Lake to Minneapolis.
"The Northstar project is on track and on time. With this agreement, much needed commuter
rail in Minnesota is now closer to reality than ever," Governor Pawlenty said. "Northstar
means more transportation capacity and less congestion for commuters in one of the fastest
growing areas of the state."
The agreement between BNSF, the state of Minnesota, and the Northstar Corridor
Development Authority (NCDA), will allow the state to secure approval from the Federal
Transit Administration (FT A) for the "final design" phase of the project. When final federal
approval is received later this year, construction could start in 2007 with service scheduled to
begin in 2009.
"This is a major milestone toward bringing commuter rail service to the citizens of the Twin
Cities area," said Matthew K. Rose, Chairman, President and Chief Executive Officer ofBNSF
Railway Company, "and we look forward to working together to make this a reality."
The agreement outlines the framework for construction, maintenance and operation in the
Northstar corridor:
. BNSF will make all necessary capital improvements to their tracks and facilities to
accommodate and ensure the safe, efficient and on-schedule operation of commuter rail in
the corridor.
. The state will acquire property rights for commuter rail service on tracks within the BNSF
right-of-way. A one-time state payment of $1 07.5 million will secure these valuable
"easement" rights, ensuring the operation of commuter rail service for generations.
--more--
www.governor.state.mn.us +(651) 296-0001 + (651) 296-0056 fax
The easement agreement also means guaranteed service levels for Northstar Commuter Rail
passengers:
. Five weekday morning trips from Big Lake to Mirmeapolis, plus one morning reverse
commute from Mirmeapolis to Big Lake.
. Five weekday afternoon trips from Mirmeapolis to Big Lake, plus one afternoon reverse
commute from Big Lake to Mirmeapolis.
. Up to three roundtrips on weekends. Special event service subject to negotiation.
. Six commuter rail stations - Big Lake, Elk River, Anoka, Coon Rapids/Riverdale, Fridley
and downtown Mirmeapolis. The timing of construction of the Fridley station will be
determined during final design.
. Potential future expansion of service within the corridor, or expansion of the corridor itself,
will be negotiated separately with BNSF as opportunities arise.
Governor Pawlenty acknowledged the important efforts of Mirmesota's congressional
delegation. Senator Norm Coleman, Congressman Mark Kermedy, Congressman Jim Oberstar,
Congressman Martin Sabo and Congressman Jim Ramstad were all helpful in securing the
partnership with BNSF and ensuring the continued support of the Federal Transit
Administration.
"Now the state Legislature must do its part to move Northstar forward. In these final weeks of
the legislative session, I urge approval of my proposal for $60 million in state bonding to
complete the state's financial contribution to the construction of the Northstar line," said
Governor Pawlenty in a letter to legislators.
Governor Pawlenty reminded lawmakers that the entire $60 million request is necessary to
secure FT A approval to enter final design phase. With FT A approval, the state is able to
proceed with certain development and design activities that are eligible for partial cost
reimbursement from the federal government.
The Northstar commuter rail line will cormect downtown Mirmeapolis to communities along a
40 mile stretch to Big Lake, including Fridley, Anoka and Elk River. It is estimated that
approximately 5,600 commuters will use Northstar each day in one of the fastest growing
regions in the country. Northstar is projected to save 892,000 commuter hours per year through
improved travel times over the next best transit option.
- 30 -
www.governor.state.mn.us + (651) 296-0001 + (651) 296-0056 fax