Greg Smith, Malheur County economic development director, talks during a meeting last year regarding a rail reload facility planned north of Nyssa. (The Enterprise/File).
VALE – Malheur County intends to take $1 million out of the county treasury to help acquire Nyssa land that is part of a larger industrial project, according to state records obtained by the Malheur Enterprise.
The records also show that a state-mandated appraisal concluded that the property the county wants to buy for a rail reload center is valued at $1 million less than county officials have already agreed to pay the buyer.
The disclosures come as Biz Oregon, the state’s economic development agency, notified the county Tuesday that it was approving its request for a $2.4 million loan to help buy about 290 acres of land near the rail reload site north of Nyssa.
The records show that county officials intend to tap county property taxes to pay loan interest of $62,200 in 2021 and $55,800 for 2022 and 2023.
County officials have long said that state funding would be used for the reload center and allied projects.
The financing involves 290 acres owned by the Farmer family, which operates an onion producing company. The county also intends to buy 79 acres from Nyssa Industries. The total land cost, according to state records, is $3,424,550
The county previously placed purchase options on both property’s but those agreements are set to expire Dec. 31.
The BizORegon loan won’t cover the total cost of the land so the county plans to dip into its own coffers to make the deal happen. The county will create a special fund – dubbed the Reload Land Repayment Fund – to finance the loan repayment.
“The Reload Land Repayment Fund will, initially, be supported with operational transfers in from the County’s General Fund,” according to BizOregon memo on the venture.
The county will spend $969,900 for the property.
The remainder of the loan will be serviced from revenue generated from two sources, according to the BizOregon memo.
“Once the reload facility is functional, operating, and generating cash flow as a business enterprise, net operating revenue from reload operations and related revenue are forecast to provide sufficient funds to provide the 1.20x service debt service. Repayment is additionally bolstered by two land lease revenue streams: (a) from leasing of property on 65 acres of reload property and (b) from the leasing of associated industrial lands,” said the memo.
The memo also outlines a possible plan to sell land to service the loan.
“Although liquidation (sale) of the property is not the primary source of repayment as proposed by the recipient, it is prudent to look at the coverage the collateral provides as that could be viewed as the primary source of repayment before the development project is complete and financially viable,” said the memo.
Why the county is dropping nearly a million in taxpayer funds for the property is a “good and legitimate question” said County Judge Dan Joyce.
“It is leverage in my mind for the $26 million” the state is putting up to build the reload center, said Joyce.
Joyce said the county court would address all “of those issues that are supposedly out there” at either the county’s Dec. 11 or Dec. 18 regular meeting.
CORRECTION: The county’s proposed interest payments out of the county general fund would total $173,800 over three years. An earlier version incorrectly stated the county would pay $150,000 per year. The Enterprise apologizes for the error.
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