Colorado will continue to lease a crucial piece of state-owned infrastructure to the Union Pacific railroad for the next 25 years in exchange for help with its plans to expand passenger rail service to several mountain communities, under an agreement signed Monday.

The deal, signed by Governor Jared Polis and Union Pacific president Beth Whited at the governor’s residence in Denver, extends the railroad giant’s lease of the 6.2-mile Moffat Tunnel, which crosses under the Continental Divide between Winter Park and Rollinsville. The state owns the tunnel, which was completed in 1926 and leased to Union Pacific for a term of 99 years. A short-term agreement had previously extended the lease for four months following its expiration in December 2024 while the new terms were finalized.

“Moffat Tunnel represents an important part of Colorado’s history, as well as a bright part of our future,” Polis said in a press release. “With this work, we are showing the country a new model for pursuing passenger rail through collaboration with the railroad.”

Image

Following the 1997 decommissioning of the Tennessee Pass line near Leadville, the Moffat Tunnel route is the only way for trains to travel between Colorado’s Western Slope and the Front Range. In addition to regular freight traffic, the tunnel is used by Amtrak’s long-haul California Zephyr passenger line, which makes several stops in Colorado on its route between Chicago and San Francisco, and the seasonal Winter Park Express, which offers service to the Winter Park ski resort from December to March.

The core of the new lease agreement is a state license for three daily round trips, or up to 506,000 train miles annually, for a new passenger rail service between Denver and mountain communities to the northwest. The mountain route, plans for which have been floated by Colorado transportation officials for the last several years, would complement the state’s separate efforts to reestablish north-south passenger service along the Front Range, still a decade or more away.

The state promised Monday that passenger rail to the mountains will be operational much sooner than that, with daily, year-round service between Denver and Granby beginning by 2026, and “flexibility for the state to expand service in future phases” as far as Steamboat Springs, Craig and Hayden. That expansion will depend on “needed capital improvements completed that are identified in the access agreement,” the state says.

“Today’s agreement will offer residents and visitors throughout Colorado new opportunities and choices to get where they’re going,” said Sally Chafee, chief of staff for the Colorado Department of Transportation. “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 new lease agreement also includes provisions finalizing Union Pacific’s sale to CDOT of the Burnham Lead Line, railroad track easement near the disused Burnham Yard in central Denver. The acquisition will help facilitate the planned redevelopment of the 60-acre former rail yard site.

“Union Pacific is proud of the hard work and spirit of collaboration that went into this agreement with the State of Colorado,” Withed said. “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.”