By Shannon Lukens. Courtesy photos.
A new 25-year lease has been signed with Union Pacific by Governor Polis for the State of Colorado. It is a new lease agreement for Colorado’s Moffat Tunnel, which replaces the original 1926 lease. It will allow continued freight operations through the Moffat Tunnel and possibly establish passenger rail access from Denver, to Winter Park, and on to Steamboat Springs and Craig.
The first phase would be re-establish passenger rail from Denver to Granby, and then future phases would connect eventually through to Craig.
Press Release from Governor Polis; May 5, 2025.
Governor Polis, Union Pacific Railroad Officials Celebrate Signing of Historic Partnership on Moffat Tunnel Lease Agreement and Mountain Passenger Rail Agreement
DENVER – Today, Governor Polis and Union Pacific Railroad President Beth Whited, celebrated the signing of a historic lease agreement for Colorado’s Moffat Tunnel, replacing the original 1926 lease. This new agreement follows the Memorandum of Understanding signed on November 1, 2024, and includes a 25-year lease, a 25 year access agreement for Mountain Passenger Rail, and finalizing the purchase and sale of the Burnham lead line which will unlock transit-oriented development potential for the Burnham Yard property. This public-private partnership assures continued freight operations through the Moffat Tunnel for 25 years with established passenger rail access from Denver through the Moffat Tunnel to Winter Park, Granby, Steamboat Springs and Craig for soon-to-be Mountain Passenger Rail Service, bringing new transportation options and economic opportunities to Colorado communities. These three agreements demonstrate a new model of collaboration that can support the state’s needs for moving goods and commerce and giving Coloradans more transportation options.
“This agreement begins a new era of partnership between the State of Colorado and Union Pacific that will expand passenger rail into our beautiful Rocky Mountains, assure continued freight movement through the Continental Divide, and unlock access to the Burnham Yard, a very special state property with unparalleled transit-oriented development potential. Moffat Tunnel represents an important part of Colorado’s history, as well as a bright part of our future. With this work, we are showing the country a new model for pursuing passenger rail through collaboration with the railroad. I am thrilled with the three new agreements and look forward to seeing the positive benefits to our state,” said Governor Jared Polis.
“Mountain rail Service will soon run year-round from Denver Union Station to Winter Park, to Fraser, to Granby, Steamboat Springs, Craig and Hayden, a corridor renowned for its scenery and beauty,” continued Governor Polis.
“Union Pacific is proud of the hard work and spirit of collaboration that went into this agreement with the State of Colorado. We came together as true partners and the result is an agreement that benefits the citizens of Colorado and the businesses and people who rely upon Union Pacific to deliver the goods and material vital to today’s economy,” said Union Pacific President Beth Whited.
“It was an honor to help lead the Colorado negotiation team on this unique partnership that will benefit the state of Colorado for the next 25 years. When this daily train service begins connecting Denver to Winter Park, Granby, Steamboat Springs, and on to Craig it will undoubtedly be one of the most beautiful train rides in the country if not the world and provide a safe, affordable alternative to being stuck in traffic. I am thrilled we were able to purchase the Burnham Lead line, a short freight line easement. This purchase unlocks safe passage into the Burnham Yard property, the original rail yard of Colorado that predates statehood and one of the last undeveloped parcels in Denver. The new lease, the new access agreement, and the purchase of the Burnham lead line are a win, wi,n and win for the state of Colorado. I want to thank the Union Pacific team for their efforts and creative problem solving that made these agreements possible,” said Lisa Kaufmann, Senior Strategic Advisor for Governor Polis.
“Today’s agreement will offer residents and visitors throughout Colorado new opportunities and choices to get where they’re going. More passenger rail trips between the Front Range and mountain communities in Winter Park, Granby, and beyond will offer an option in addition to the drive over Berthoud Pass. The purchase of the Burnham lead line will also improve local mobility surrounding Lincoln Park in Denver, ensuring this historic neighborhood can continue to offer residents safe access to all the surrounding amenities,” said CDOT Chief of Staff Sally Chafee.
The 25-year access agreement establishes Colorado’s license for three daily roundtrips or up to 506,000 train miles annually for Mountain Passenger Rail, as the payment from Union Pacific for their use of the Moffat Tunnel for 25 years. The state plans to start a daily roundtrip year-round to Granby by 2026 and flexibility for the state to expand service in future phases to connect Denver to Winter Park Resorts, Granby, Steamboat Springs on to Craig and Hayden. Future phases will commence after a procurement process for a designated contract operator and upon needed capital improvements completed that are identified in the access agreement. highlighted by traveling under the continental divide through the 6.2 mile long Moffat Tunnel, the highest operating railroad tunnel in the United States.
The Moffat Tunnel has been one of the first and most successful public private partnerships in Colorado’s history, where 6 counties and private investors came together over a 100 years ago to build the Moffat Tunnel to ensure Denver as the commerce hub of the Rocky Mountain West, after Union Pacific the first transcontinental railroad bypassed Colorado and routed through Wyoming instead. For 99 years Union Pacific or their predecessors have held a lease that expired on May 1, 2025.
The 100-year-old, 6.2-mile-long Moffat Tunnel cuts through the Continental Divide at 9,239 feet above sea level. Created to provide an important east-to-west connection from Denver to the West coast for commerce, the Moffat Tunnel helped Denver become a center of commerce and growth in the Rockies.
Demand for rail transportation in Colorado is significant. In partnership with Amtrak and Winter Park Resorts, the state made investments to lower the cost and increase the frequency of the Winter Park Ski train. During the 2024-25 ski season, Coloradans and visitors booked more than 44,000 trips on the Ski train compared to 17,500 last season – a 153% increase.
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Fact Sheet from Colorado Governor Jared Polis and Colorado Department of Transportation
On November 1, 2024, the State of Colorado and Union Pacific Railroad (UP) signed a landmark Memorandum of Understanding (MOU) to renew the lease for the Moffat Tunnel, laying the groundwork for the return of passenger rail through Colorado’s Rocky Mountains. On May 1, 2025, the State of Colorado and UP signed a new 25 year lease agreement for the Moffat Tunnel, a new landmark 25 year Access Agreement for the commencement of Mountain Rail through Colorado’s Rocky Mountains and the purchase and sale of the easement for the Burnham Lead Line in Denver. This unprecedented partnership between the State of Colorado and Union Pacific Railroad will ensure continued freight operations through the Mofatt Tunnel, and bring new transportation options and economic opportunities to Colorado communities.
Access agreements for new passenger rail service can often take years of negotiations, on average 3 years, between provider and host railroads and are dense legal agreements that establish the economics of the service, the infrastructure needs for service, dispatch prioritization insurance and identification requirements, requirements for operations and maintenance, operator and rollingstock criteria, performance metrics and dispute resolutions. Union Pacific Railroad and the State of Colorado have executed a new passenger rail access agreement in just 4 months, and established a new public-private partnership model based on mutually beneficial terms.
In the Spring of 2025, the Colorado Department of Transportation will complete the Service Development Plan for the Mountain Rail Project and begin to solicit bids for an operator and rolling stock necessary to commence service in the Fall of 2026.
Below are the parameters of the deal between the State of Colorado and Union Pacific:
New 25-Year Lease between Union Pacific and the State of Colorado
● 25-Year Lease Renewal: The State will lease the Moffat Tunnel to Union Pacific with exclusive use for freight and intercity rail, preserving the longstanding agreement while modernizing terms.
● The previous 99 year lease had Union Pacific paying the State of Colorado $12,000 annually and the railroad was responsible for the costs of operations and maintenance of the tunnel.
● This new lease will have Union Pacific paying the State of Colorado in the form of 506,000 annual train miles to be used on the route from Denver to Winter Park, to Granby, to Bond, to Steamboat Springs and Craig. These train miles could be up to 3 daily roundtrips from Denver through the tunnel, or used more flexible terms for shorter routes west of the tunnel. Union Pacific will continue to be responsible for costs of operations and maintenance of the tunnel, will update emergency response capacity and more modernized terms for insurance and dispute resolutions.
New 25 Year Passenger Rail Access Agreement
● The Access Agreement outlines plans for Mountain Passenger Rail, with phased service between Denver and Craig.
● Up to 506,000 train miles annually are permitted under the Use Agreement. The State will pay a proportional share of operating, maintenance, and all capital costs associated with construction projects needed for passenger rail service.
● This access agreement between the state and Union Pacific is in addition to existing passenger rail service on this line and the agreement is designed to not supplant or impact those existing passenger rail services.
● The State will fund capital improvements such as track improvements, signal upgrades, tunnel clearance, and rockfall mitigation, as outlined in the construction exhibit in this agreement.
● This access agreement establishes the Mountain Passenger Rail service will have reasonable dispatching priority over freight traffic for its service, establish key performance indicators (KPIs), an agreement to strive for the lowest cost option on needed infrastructure improvements for future phases, and an agreement on the infrastructure projects for the first phase.
● This agreement establishes that the State of Colorado may enter into new public-private partnerships or partnerships with local governments to deliver passenger rail service within the designated 506,000 train miles. These train miles may also be used for the regional commuter service from Oak Creek to Craig for any future Regional Transit Authority partnership.
● Phase 1A is aiming to commence service in November 2026 after successful completion of infrastructure improvements, successful procurement of rolling stock and a designated contractor for operations.
● Phase 1A will begin service with existing stops at Denver, Winter Park, Fraser and Granby, departing in the morning from Denver and return service departing from Granby in the afternoon. Final schedule to be agreed upon after selection of the operator and rolling stock and test runs are completed.
● Phase 1B will look to infill stations in the West Metro Area and Rollinsville, after station development work is completed. Union Pacific and the State are committed to work together on future station development work that may require additional land acquisition and other improvements.
● The State is scheduled to begin the procurement process next month for rolling stock and designated contractor for operations in alignment with the terms outlined in the access agreement; the state is expecting the selection of an operator by Q1 2026.
● After rolling stock and operator is selected the State and UP will perform test train runs on the line to finalize run times for KPIs and finalize the schedule.
● Travel times, particularly between Denver and Winter Park and Fraser, are expected to be better via train than driving. On days of winter storms or ski traffic, it is expected to be faster on the train than driving and far more enjoyable.
Purchase of Burnham Lead Line and Easement:
● The Colorado Transportation Commission appropriated $19.4M in December for the purchase of the Burnham Lead Line and easement.
● The Burnham Lead Line is a rail line within the Burnham Yard property that is a redundant rail line that had been owned by Union Pacific Railroad. This important transportation right-of-way unlocks transit oriented development on the Burnham Yard Property and ensures public ownership shall there be a need to increase capacity on the light rail system that runs ascend to the heavy rail line.
● The state plans to remove the Burnham Lead Line, eliminating at-grade crossings at 13th Ave, Rio Court and Shoshone Street. This will greatly improve rail safety in the Denver urban corridor.
● Use of the Burnham Yard railyard, operated as one of the most significant railyards for more than 150 years, predates statehood.
● Union Pacific closed operations at Burnham Yard in 2016 and the State of Colorado bought the land of over 58 acres in 2021.
● Purchase of the Burnham Lead Line was a critical first step to redevelopment of Burnham Yard property, a special property that will tie our storied railroad history and development with the vibrant future of our state and city.
