The city of Beech Grove will finally reconstruct its flood-prone Main Street, thanks to a $750,000 settlement with Amtrak.

"It's a critical issue for the future of the city," said Joey Fox, chief of staff for Mayor Terry Dilk, who announced the settlement Friday morning.

Flooding is such a problem on Main Street that business owners have to set out sandbags after an inch of rain, Fox said. That's made attracting new businesses nearly impossible.

"We've got committed small-business owners on Main Street that deserve more than what we have," he said.

The city received a $4.2 million federal transportation grant in 2008 to reconstruct the 13-block corridor, but the project never started because Beech Grove couldn't come up with its 20-percent share of the $5 million cost, Fox said.

Meanwhile, the city in early 2009 discovered that Amtrak had for decades sent its stormwater runoff into the sewer system through an unmetered connection. A court battle ensued, and in September 2010 a Marion County Superior Court judge sided with the city in ordering Amtrak to discontinue the practice. The $750,000 settlement with Amtrak that was reached Thursday is the result of a court-ordered mediation.

The Main Street project will include design elements similar to the city's Emerson Avenue streetscape improvements, built in 2006, Fox said. The Indiana Department of Transportation is expected to let bids in spring, so work may start this summer, he said.

A city of 14,000 in southeast Marion County, Beech Grove was founded in 1906 to serve people working in the 350-acre railyard that today houses CSX and Amtrak.

Reaching a settlement with Amtrak was a top priority for Dilk, who will leave office Dec. 31, Fox said. He lost his re-election bid to Democrat Dennis Buckley after serving for less than a year.

Dilk came to the Beech Grove mayor's office in January to fill out the term of Republican Joe Wright, who left to focus on his business.