Business & economy

Nyssa project can’t tap state program cited as one source for emergency $9.8 million

The troubled Treasure Valley Reload Center doesn’t qualify for state funding that project officials said could provide up to $9.8 million needed to finish the Nyssa project.

And other options also have obstacles that make it doubtful the money could be in hand soon enough to keep contractors going.

Failure to come up with more public money imperils the project. Project managers already are considering dropping a key rail line, stopping some road construction and even postponing erecting the project’s centerpiece – the rail shipping complex.

Greg Smith, Malheur County economic development director and rail project manager, listed the money options in a meeting Tuesday, April 12, of the board of the Malheur County Development Corp. That’s the public company set up by Malheur County to manage the Nyssa project.

He downplayed the projected overruns.

“This is very natural in industrial development,” he said.

And Malheur County Judge Dan Joyce said “I’m not surprised” by the $9.8 million shortfall, but “where they’re going to get it, I don’t have a clue.”

Smith said one place to get the cash would be the state’s special public works fund.

“There’s no reason we could not access the special public works fund and utilize some of those resources to fill the gap,” said Smith as he reminded the board that financing “is my background.”

But the development corporation isn’t eligible for such funding, which is available only for local governments such as cities and counties.

The fund is managed by Business Oregon, the state’s economic development agency. Agency officials confirmed website information available to the public that an entity such as Malheur County Development, which is a public corporation and not a government agency, isn’t eligible to apply.

Why Smith represented it was couldn’t be established. He has a practice of not responding to telephone messages or written questions from the Enterprise.

At the meeting, he confirmed when questioned that such state financing would entail borrowing.

He said that state financing would be a combination of a grant and a loan. But the qualifications for the funding listed by Business Oregon indicate that no more than $500,000 could be considered a grant – and then only paid at a rate of $3,000 per job created by an economic development project. The full amount would require 167 full-time jobs but no more than seven full-time jobs have been forecast at the reload center.

Pressed at the meeting about how the loan would be repaid, Smith said selling off some of the reload center’s 65 acres was one possibility.

“And as those portions of the property are utilized and sold then we would take those proceeds to pay down the debt,” Smith told the board.

The property was recently valued at about $800,000, so it’s unclear how sales of pieces would cover millions in debt.

And project managers have never mentioned plans to sell off pieces of the reload project, other than a deal struck last year that gives the reload complex itself to Americold for $1. The company is under contract to run the shipping facility.

When the development company applied in 2020 to subdivide the property, it told the county that its 65-acre lot – Lot 2 – “will not be redivided…..The entire area of Lot 2 is needed for infrastructure, development, construction and rail for the TVRC.”

And nine acres of the reload center site is “unusable wetlands,” according to an appraisal produced in September 2020.

The reload center is part of a larger property owned by Malheur County. County officials already mortgaged that ground, borrowing $2 million from the state to buy the land in the first place. County taxpayers are covering debt payments on that loan.

Smith also indicated that the Legislature could be a source of money.

He’s failed once this year on that route. He told the development company board a month ago that he had secured $3 million from legislators before they adjourned in March. But there was no such allocation, and Smith has not responded to questions about the matter.

He alluded to the issue on Tuesday, suggesting there had been “miscommunications” without elaborating. He said there is a new effort to get an emergency infusion of $3 million.

State Sen. Lynn Findley, R-Vale, and state Rep. Mark Owens, R-Crane, on April 1 wrote to Senate President Peter Courtney and House Speaker Dan Rayfield, asking for $2.8 million.

“The Treasure Valley Reload Center project construction is well underway and progressing well and on schedule,” they wrote. “The $2.8 million is critical to completing this project safely and on time in order to enhance desperately needed economic development in Malheur County.”

Findley said in an interview Wednesday that he hadn’t been told project officials had already sought an extension from state officials to complete the project.

He also said he wasn’t sure the basis for the $2.8 million figure.

“I can’t tell you for that number exactly where it came from,” Findley said. “That’s what we settled on.”

Owens said the figure was provided by Brad Baird, president of Anderson Perry & Associates. The company is the lead engineer on the rail project.

Four days after the legislators sent in their request, Baird produced a revised estimate showing the project was up to $5.3 million short. That increased to a “worst case scenario” $9.8 million by the time of Tuesday’s meeting, a figure that Findley said is “shocking.”

Findley sits on the board of the development company but didn’t attend Tuesday’s meeting. He didn’t disclose in his letter to legislative leaders that he sits on that board of the company that would get the extra state money.

The senator grew angry during an interview when questioned about the matter.

“There’s no personal interest,” he said of his development company role. “I have no economic interest. There is no reimbursement. I get nothing out of it.”

The special legislative allocation would have to be made by the state Emergency Board, which decides on such requests when legislators aren’t in session. Findley and Smith, also a state representative from Heppner, serve on the Emergency Board.

Findley and Owens said they didn’t expect the board to meet until June.

Baird warned project officials Tuesday that any extra money had to be in hand within 60 days – which would be early June.

Findley said he isn’t amending his request to legislative leaders to reflect the deeper financial hole.

“I’m not changing anything until I have a better understanding,” Findley said.

Owens also said he doesn’t plan to ask legislators for a larger sum.

Smith indicated that project leaders also could ask the state Transportation Department to increase the grant for the Treasure Valley Reload Center.

“We ask them to make an amendment to our budget,” Smith said.

But the $26 million grant was directed by the Oregon Legislature in 2017, not awarded by the Transportation Department. The state agency is charged with managing the grant to ensure the money is properly used and to reimburse Malheur County as expenses come in for the project.

Agency officials have said previously that the Transportation Department has never added money to such a project. The agency director does have a special fund on which to draw, but officials have said it’s never been used to give more money to a project already underway.

Erik Havig, a planning executive at the agency, said Smith and his team briefed transportation officials on Monday, April 11. Havig said they were told of a shortfall, but were provided no numbers. He also said Smith and Baird, who was on the call, didn’t share that they may have to postpone some construction or that extra money was needed within 60 days.

He said Smith advised that he was “exploring” options for more funding.

“I don’t remember us talking about” the agency providing more funding, Havig said. “We didn’t suggest any specific grant or loan programs.”

Smith advised the development company board that it could also tap a local agency for money.

The Eastern Oregon Border Economic Development Board, a state agency focused on economic development in Malheur County, was granted $6 million by the Legislature to continue its own loan and grant programs.

“I think there’s a conversation to be had with the border board in terms of what resources would be available for this project,” Smith said.

The board is next scheduled to meet on May 2.

Tiffany Cruickshank, board chair and who works for Onions 52, said in an email Friday that she has not been contacted by Smith or anyone else connected with the project and there has been no written request to the organization. She said the matter was not on the May 2 agenda.

Contact Editor Les Zaitz: [email protected]


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Smith touts new, $3 million infusion of cash from Legislature for rail center, but it’s not there

Cost for rail for Treasure Valley Reload Center comes in high; one key track line remains optional

‘NEED $3.6 MILLION’ – Records raise questions about Malheur County rail center finances

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