Sponsor: Public Works
Title
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Use of Fund Balance - Union Depot Insurance Premiums
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Recommendation
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Approve the transfer of $800,000 from Ramsey County Regional Railroad Authority tax levy fund balance to the 2025 Multimodal Planning operating budget to be used for the cost of insurance premiums related to increased rail liability coverage.
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Background and Rationale
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On March 19, 2024, the Ramsey County Regional Railroad Authority (RCRRA) approved the First Amendment to the Operating Agreement with National Railroad Passenger Corporation (Amtrak) for passenger rail service at Union Depot. One of the changes provided by the amendment was the removal of Amtrak’s exclusive use of the track and platform for passenger rail service. This removal coincided with an increase in risk associated with third party liability for Union Depot.
On November 19, 2024, the RCRRA accepted a grant award and approved a grant agreement with the Minnesota Department of Transportation for the Union Depot Rail Insurance grant to provide up to $1,000,000 in state funds for the purchase of increased rail liability insurance coverage. These funds allowed RCRRA to procure an additional $125 million of liability coverage, increasing total liability coverage to $175 million. This was a one-time grant that was expended in 2024. The 2025 state legislature did not provide additional state funds nor are additional funds expected in future years.
In consultation with Enterprise Risk Management, it was determined that $175 million in coverage is the appropriate level of insurance for Union Depot based upon changes to the lease and operating agreements in 2024. The increased costs associated with the new level of coverage was not budgeted in the 2024-2025 approved budget or the 2025 supplemental budget. This request for use of fund balance will allow RCRRA to maintain liability coverage of $175 million. The cost to maintain this level of coverage will be included in future proposed budgets.
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County Goals (Check those advanced by Action)
☐ Well-being ☐ Prosperity ☐ Opportunity ☒ Accountability
Racial Equity Impact
Ramsey County Regional Railroad Authority strives to build a robust, multimodal, public transportation system that is connected to long-distance transportation services such as intercity bus and passenger train. Union Depot is the Twin Cities premier transportation hub and is the only intercity passenger train station in the Twin Cities. Maintaining multimodal transit and transportation services at Union Depot provides access to those resources in one location for all to use. Additional intercity passenger train service provides more affordable and accessible travel options that are better connected to urban centers and other destinations.
Community Participation Level and Impact
Ramsey County Regional Railroad Authority facilitates community participation in the development of additional intercity passenger train services and investments through the Great River Rail Commission (Commission). RCRRA is a member and fiscal agent to the Commission, where Minnesota Department of Transportation staff provide updates and respond to questions at all Commission meetings.
☒ Inform ☐ Consult ☐ Involve ☐ Collaborate ☐ Empower
Fiscal Impact
The funding for this request is coming from the Ramsey County Regional Railroad Authority tax levy fund balance. Adequate fund balance is available to accommodate this request.
Total Union Depot insurance premiums for 2025 are estimated at $2,300,000. With a budget of only $850,000, this results in an estimated unfavorable variance of $1,450,000. The requested use of fund balance does not represent the full cost of the insurance premium but will be combined with other estimated favorable budget variances that will help offset the unfavorable variance for Union Depot insurance premiums. The increased costs to maintain the current level of liability coverage will be included in future proposed budgets.
Last Previous Action
On November 19, 2024, the Ramsey County Regional Railroad Authority accepted a $1 million grant from the Minnesota Department of Transportation to allow for the purchase of an additional $125 million of liability coverage, increasing total liability coverage to $175 million (Resolution R2024-020).
Attachments
None.