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Rail group seeks preliminary study

A private company seeking to build an elevated high-speed rail line from Rochester to the Twin Cities has withdrawn a request for exclusive air rights above state highways and is instead seeking a permit to allow for preliminary study of the rail...

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A private company seeking to build an elevated high-speed rail line from Rochester to the Twin Cities has withdrawn a request for exclusive air rights above state highways and is instead seeking a permit to allow for preliminary study of the rail line.

The North American High Speed Rail Group is seeking a right-of-way permit from the Minnesota Department of Transportation. Company spokeswoman Wendy Meadley said that permit would allow the company to complete a preliminary study to determine whether the rail project is feasible.

"We brainstormed and came up with the fact that there is a very simple permitting process that exists that would allow us to do a quicker study to know if we are interested in moving forward or not," Meadley said.

MnDOT Commissioner Charlie Zelle said he is pleased to see the company moving in this direction instead of continuing to seek exclusive negotiating rights for air space on portions of I-494, Minnesota Highway 55, U.S. 52, U.S. 63 and Interstate-90. He said this preliminary study will help answer key questions about the project's viability.

Zelle added that the fact the company is willing to invest dollars to do a study "is very encouraging."

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A 'no-risk proposal'

The rail group is seeking to build a $4.2 billion rail line from Rochester to the Twin Cities that would be funded through a combination of U.S. and Chinese investors. Train speeds would top 200 miles per hour, enabling passengers to make the trip in as little as 29 minutes.

MnDOT Chief of Staff Eric Davis said the rail group recently applied for a right-of-way permit, but it was denied because the request was too general and was for a two-year time period. Davis said he has been talking with the group about submitting a more detailed permit application that would be for approximately 120 days. He said these types of right-of-way permits are very common and often granted to utility companies, wind developers and other entities seeking to do work in a right-of way.

"They have assured us that there won't be any traffic impact, but they still need a permit if they are going to do surveys," Davis said.

The company has not yet submitted its revised permit request. It is expected to include portions of I-494, Minnesota Highway 55, U.S. 52, U.S. 63 and Interstate-90.

"The good news for the state is it's really kind of a no-risk proposal for us. It's really just our standard operating procedure," Davis said.

Meanwhile, MnDOT officials are considering suspending work on the publicly funded Zip Rail project once an environmental review is done because there is no funding available. Work on a Tier 1 Environmental Impact Statement that analyzes eight potential routes for the proposed high-speed rail line from Rochester to the Twin Cities is expected to be completed early next year. Davis estimates the preliminary engineering work to move ahead with the project would cost $55 million to $65 million. With no federal rail money on the horizon, Davis said it probably makes sense to pause work on the project.

A new strategy for moving ahead

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The company's decision to back away from the air rights request comes as that proposal has stalled at the state. The proposal needed DFL Gov. Mark Dayton's approval and he made clear he wanted legislators to weigh in before moving ahead. The request became public in July after the Post-Bulletin obtained documents from MnDOT as part of a data practices act request. The project has faced fierce opposition from some residents along the corridor concerned it could hurt property values and end up costing taxpayers' money if it fails.

Meadley said that dropping the air rights request will make it easier for the project to move ahead. The company also plans to meet with residents in communities along the corridor while the study is underway to answer their questions.

"It's just a way for this to be a lot cleaner and … explore and understand if we want to move forward. There is no reason that the governor has to get involved at this time," Meadley said.

Rail group scraps EB-5 funding plan

One reason the company had been seeking air rights was to help spur investment in the project. Meadley said the rail group has decided to team up with a group of businesses interested in high-speed rail to fund the $2.5 million preliminary study — instead of relying on private investors. She said Mayo Clinic and Destination Medical Center are not helping fund the study. If the rail group decides to move ahead with the project, Meadley said the company could seek highway air rights in the future.

The rail company has also dropped plans to raise money for the rail project from wealthy investors seeking a path to U.S. citizenship. Meadley said the company has decided not to use the federal EB-5 investor program to help pay for the project. Under that program, immigrants who are willing to invest a minimum of $500,000 are eligible to receive a two-year conditional green card. If the project creates at least 10 jobs after two years, the investor is eligible to receive a regular U.S. green card.

Meadley said the EB-5 funding would have helped pay for a very small part of the project's $4.2 billion price tag, and it's not worth the hassle of pursuing it.

"The reality is it's more cumbersome money than is needed," she said.

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Mazeppa Republican Rep. Steve Drazkowski has been among the project's biggest critics. He said the recent changes in strategy by the company only add to his concerns.

"It appears that this effort is not very organized," Drazkowski said. "If their first request was to have that (air rights) authority and now they need to go back and study the underlying fundamentals, it seems that maybe they were bringing the cart before the horse."

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