EVERETT – A 12-year effort to relocate miles of railroad track near the Snohomish River steamed closer to reality Wednesday.

The Everett City Council signed off on an agreement with the state that could provide $1.8 million to move tracks that slice in half a riverfront area the city wants redevelopment.

“We need to have every square inch of developable land down there available,” Councilman Mark Olsen said.

The Wednesday agreement still needs final approval from Mayor Ray Stephanson.

San Diego-based developer Oliver McMillan has proposed an upscale residential and retail development on a 100-acre swath of city land between I-5 and the Snohomish River.

The development company is negotiating to buy the land. After missing a May deadline with the city, the council last week extended talks with the developer to Jan. 31.

Removing 3.5 miles of railroad tracks between a former landfill and the old Simpson-Lee pulp and paper mill is vital to the property’s development, officials say.

It eliminates the need for a costly railroad overpass between the two parcels.

It also will help with a planned trail system, offering access to wetlands and fishing spots along the river.

“It really is an essential part of the riverfront redevelopment,” Dave Davis, a city engineer who has been negotiating the move with Burlington Northern Santa Fe Railway for a dozen years. “Without relocating the tracks you just wouldn’t be able to complete the vision the city has for the property.”

Davis said moving the tracks to the western edge of the site should start in 2007, with a 2008 completion date.

BNSF spokesman Gus Melonas wouldn’t say whether a final agreement had been signed Wednesday afternoon.

An agreement deal with the railroad company is expected before Friday.

The $1.8 million that could come from the state Department of Transportation was bundled in the Legislature’s April 2005 transportation bill.

That bill included nearly $500 million for highway, railroad and bridge projects in Snohomish and Island counties.

The city estimates it will cost about $8 million to move the tracks by the end of 2008.

Other funding includes $4.2 million in federal money and more than $1 million in local funds.

Reporter David Chircop: 425-339-3429 or dchircop@heraldnet.com.