Greg Smith, Malheur County economic development director, shows members of the Oregon Transportation Commission a document regarding a proposed rail reload center north of Nyssa last week. (Mark Ylen, Mid-Valley Media).
During last week’s meeting of the Oregon Transportation Commission, Malheur County officials faced questions about the unexpected cost of leasing rail cars to serve the onion industry. Here is the transcript of an exchange between the vice chair of the commission and Greg Smith, Malheur County’s economic development director. The reference to return-on-investment turns on the state’s expectation that each dollar of state money invested in a rail project will return $1 dollar in benefit to the public.
Robert Van Brocklin: One is around return on investment. So I think what I read was that the project plan was an ROI of 1 to 1. But I didn’t note right in there anything about rail car costs.
So I wonder since we are obviously focused on a question not just with respect to your proposal but with all proposals about what is, do we have a positive return on investment over time and over what period of time…I think I’m correct that the ROI of 1 to 1was predicated on not including rail car costs and those obviously would change that presumably. Could you talk me through the ROI of this project?
Greg Smith: First of all I want to refer to Commissioner (Larry) Wilson’s comments and recognize that the reload development that we are discussing is in an area of high poverty and limited economic opportunity. So I want to be very clear for those who are thinking return on investment as it relates to real estate growth, etc.
What I would share with you is that we retained ECONorthwest. We asked them to take a look at this project and to run that scenario for us.
They, when it was all said and done, really came back with a couple thoughts, one was this was going to provide an opportunity for Malheur County growers and shippers to not be crossing over the Blue Mountains to get to Walla Wal– the Wallulas, Pasco area, thereby creating less depreciation on the railroad, less carbon in the air and greater efficiency for folks at home.
That was number one.
Number two, again our goal on this facility is to not have debt. And so that return on investment, if we can maintain that relationship to where we have someone else carry that liability, while that return on investment may be a long-term increase, we think we’re going to be able to keep it from declining.
The goal on this is to have no debt. And so, uh, really the return to the state of Oregon is one, is reduced truck traffic between Nyssa and Washington and parts of Idaho and Utah.
And I would share with you, I would have your region 5 manager up and ask relieving truck traffic between Ontario and Baker City is that important. I think you’d find the answer on that is yes, and again reduced carbon and reduced tear on those highways.
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