Top state official recommends no state money for Nyssa rail project until risks addressed

The director of the Oregon Transportation Department has concluded Malheur County shouldn’t get state money for a rail shipping center in Nyssa until “significant risks and concerns” about the project are addressed.

The director, Matt Garrett, outlined his concerns in a Feb. 11 letter to the Oregon Transportation Commission. The commission is scheduled to consider the proposal for the Treasure Valley Reload Center at its Feb. 21 meeting.

Garrett’s concerns come as the Malheur County Economic Development Department and a local public corporation, Malheur Economic Development Corp., hope to persuade the state commission to approve construction of the Nyssa project and release $26 million in state money.

Garrett’s letter, however, is the latest that questions elements of the Malheur County project. According to Garrett, the Transportation Department staff, an outside consultant, and a special review committee all have raised concerns with the Treasure Valley Reload Center.

DOCUMENT: Oregon Transportation Department letter

The center is designed to pack local produce, primarily onions, onto special trains for delivery to markets in the Midwest and the East Coast. Greg Smith, the county’s economic development director who is managing the project, said recently he hoped to have construction underway this summer and the first onions shipping out by this fall.

That seems unlikely in the face of Garrett’s concerns. Garrett said he also has concerns with similar rail projects proposed for the Willamette Valley that are relying on state money for completion.

Garrett said the reviews found that Malheur County’s project provided “optimistic” estimates of what share of local onions would go out of the reload center and of the return on investment to the public.

He zeroed in on what has been identified in earlier reviews as a key gap – lack of a deal with Union Pacific Railroad, which would serve the Nyssa project.

“Commitment to service from the rail operator is crucial,” Garrett said. He said another risk for is the “reliance on one primary commodity from the Treasure Valley facility and the fact that Union Pacific Railroad operates a similar cold storage facility in Wallula, Wa.”

Smith has insisted that state officials misunderstand how rail service works and that Union Pacific was preparing a new letter outlining its interest in Nyssa.

Garrett said that for the Nyssa and Willamette Valley projects, there were several “risks and challenges that will need to be addressed….before I can recommend any of the proposals be approved for construction financing.”

Garrett recommended that the Transportation Commission require each project to provide a clear course toward resolving the risks “before public funds are fully allocated.”

This is a developing story and the Malheur Enterprise is actively reporting on this development.