Rail reload supporters make their case to transportation commission

Greg Smith, the economic development director for Malheur County, answered questions from state transportation officials Feb. 21 on a rail reload center planned north of Nyssa. (The Enterprise/File).

SALEM – Malheur County went to Salem late last week and pitched a case to state transportation officials to support a rail reload center north of Nyssa.

Greg Smith, the economic development director for Malheur County, briefed and answered questions from the Oregon Transportation Commission on the local project during the Feb. 21 session.

The reload center is seen by local officials as a major economic development project to boost the region’s agriculture industry.

The rail shipping center would be built with state money on land north of Nyssa and would provide shippers a way to move produce from the county to major markets.

Smith and other supporters presented little new information about the project during the meeting.

The state commission will probably decide in March whether to release the $26 million state funds for the Nyssa rail center.

“The March OTC meeting is set now as a tentative date for decision. However, ODOT staff are working on the next steps and we will likely know more closer to the OTC meeting,” said Eric Havig, planning manager for the Transportation Department via email Monday.

Grant Kitamura, CEO of Baker & Murakami Produce Co., state Rep. Lynn Findley, R-Vale, and Jim Maret, Nyssa city manager, also testified before the commission.

“The city of Nyssa, city council and planning commission and its residents are completely committed to the Treasure Valley reload facility,” Maret told the commission.

Maret said Nyssa is “committed that all necessary local permits will be handled in an expedient manner.”

“The urban growth boundary has already been done as well as the zoning. We have been committed partner to this project from the start. The level of cooperation among all the partners on this project is high,” said Maret.

Maret told the commission that the reload facility will be “a hand up, not a hand out to our community.”

 “If a problem arises, we make a phone call among ourselves and work it out quickly. That’s the Malheur County way,” said Maret.

Findley echoed Maret’s support.

“I am committed to this project,” said Findley.

Smith addressed some concerns raised by the state and its consultants about the project. Those issues included a commitment from Union Pacific for rail service, ownership of the land at the project site, an operator for the facility and the overall economic viability of the project.

“We have to be able to demonstrate service from a Class I railroad and provide evidence of site ownership and who will operate it, and do we have an over-reliance on onions,” said Smith.

Smith didn’t return a call for comment Friday, but during the session said

the Malheur County Development Corp., a public business created by the Malheur County Court, has been working closely with Union Pacific. Kitamura is president and Findley is vice president of the company.

Smith also told the commission that the development corporation has two escrow agreements in place on property selected for the reload center.

Smith said one of the advantages of the rail proposal is “there is no debt associated with our project and we can stage our growth incrementally.”

Smith told the commission that several firms, including a “major food processing company,” expressed interest in the local rail reload center.

The key question of commitment from Union Pacific, though, remained unanswered.

Smith released a letter from the railroad company that outlined its role in the project. Union Pacific said in the letter that it is “pleased to notify you that we are looking forward to working with you on developing rail service to the Treasure Valley Reload Center.”

The letter, however, stopped short of a firm commitment.

Melissa Meyer, of Union Pacific’s network economic development team, told the commission that the Nyssa facility was about midway in the firm’s 10-step track planning construction program.

Cindy Robert, who represents Union Pacific in Oregon, said one of the challenges of the reload facility was “your chicken and egg problem.”

“Shippers want rates. We are interested in commodity and volume before we determine those rates,” said Robert.

Robert said Union Pacific would continue to work with the sponsors of the Nyssa project to “figure that out.”

Robert also told the commission that Union Pacific would not provide refrigerated cars for the facility. Instead, she said, customers of the rail reload center must furnish the specialty rail cars.

Frank Harder of the Tioga Group, the consulting firm hired to review the rail project, voiced concern to the commission that reload facility planners were a “little too optimistic on the size of the market they can access and volume.”

“There is some ambiguity on who, exactly, would fulfill what role,” said Harder.

Harder, though, said many of the questions now hovering over the facility “can be ironed out in the succeeding planning phases.”

“The greater concern is the relationship with Union Pacific,” said Harder.

Harder said if reload planners can get a “good workable relationship in place with Union Pacific to offer the shippers the service they require there is no reason why this shouldn’t succeed.”

Matthew Garrett, director of the state Transportation Department, told the commission that the Nyssa project along with two other rail reload proposals in the Willamette Valley should address a “common set of deficiencies” before any state money was released.

Those deficiencies, he said, include “operational liquidity and the ability of each of the projects to operate successfully without public money.”

Garrett recommended that the state move ahead with negotiations on an agreement with the Malheur County Development Corp. but cautioned there is a long way to go.

“The project sponsors still have several crucial areas that need to be addressed,” said Garrett.

Garrett said the path forward should occur in “an incremental manner.”

“I believe it is prudent, prior to our next meeting, the project sponsors for Treasure Valley and Mid-Willamette Valley identify a clear path, clear timeline to resolve unanswered questions of Union Pacific’s commitment to these projects,” said Garrett.

Garrett also said he believed it was crucial that there are “clear milestones with go and no-go off-ramps in case the (project) sponsors do not achieve the approvals necessary to ensure operational viability.”

Smith said he agreed with Garrett’s recommendation for an incremental approach. He said the Malheur County Development Corp. was ready to move forward and develop the business analysis – a key requirement for Union Pacific. Smith said the corporation was ready to “ask those questions of industry of who will use this service and what opportunities do we have.”

Smith said the county showed it was committed to the project by setting aside $200,000 to cover a credit line for the development corporation.

Smith promised once the reload center is built it will attract more investment.

“We full anticipate companies will want to locate next to this infrastructure,” said Smith.

News tip? Contact reporter Pat Caldwell: [email protected] or 541-473-3377.

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