Grant Kitamura, left, and Corey Maag listen to a briefing on the Treasure Valley Reload Center on April 12. Kitamura is president of Malheur County Development Corp. and Maag is a director. (ANGIE SILLONIS/Special to the Enterprise)
The board of Malheur County Development Corp. in a recent statement compared its costs to a family budget and said it was taking steps to balance its budget, comparing construction features to “wants” such as new shoes and movie tickets.
The statement acknowledged that the Treasure Valley Reload Center “is facing an overall project cost struggle” amounting to $9.8 million over its original $26 million budget and explained circumstances leading to the costs.
Directors said their project had long included elements not really needed to make the rail shipping center functional.
In design for years, the project is behind schedule and won’t begin shipping onions out of Malheur County until September or later. Project leaders have warned that if more money isn’t brought in, construction of the centerpiece building would have to be postponed.
The statement made no mention of seeking additional public funding beyond the $26 million grant from the state and $3 million given to the city of Nyssa to establish water service to the reload center.
Greg Smith, Malheur County economic development director, told the board at its April 12 meeting that his team was exploring several sources of state and county money that could be tapped.
The directors seemed to indicate that wouldn’t happen, saying that “the budget is being balanced the same way as a typical household budget would be” by cutting spending.
They described family necessities such as food and rent and then described “wants, such as going out to eat, new shoes, tickets to a movie, all of which are not necessary for survival.”
The statement identified the project “needs” as rail, a building and road access.
The directors listed items “not necessary” for the reload center to include a sewer line from Nyssa, paved streets, and a truck scale.
“The MCDC board is examining those items that are ‘wants’ vs ‘needs’ for project success,” the statement said. The statement didn’t explain why that work was just now beginning since the project’s lead engineer in January 2021 forecast that the project would be millions short.
The board met April 12, when it convened in-person in Nyssa. It scheduled another board meeting for Tuesday, April 26, but planned to do its business by telephone instead of in-person. Results were too late for press time.
The scope of possible cuts isn’t clear from the statement.
Smith, who also is the project manager, has a practice of not responding to telephone messages or written questions from the Enterprise.
None of the directors responded to written questions about their statement seeking more information and clarification.
The board includes Grant Kitamura of Baker & Murakami Produce in Ontario, Kay Riley of Snake River Produce in Nyssa, Corey Maag of Jamieson Produce of Vale, Jason Pearson of Eagle Eye Produce in Nyssa, and Lynn Findley, state senator from Vale.
The statement didn’t name the board members.
Maag responded to an earlier email that “everyone is working to look for cost savings in order to complete this facility. I believe this facility is necessary for the future of Malheur County agriculture.”
One element cited as unnecessary is extending sewer service from Nyssa. But it’s unclear if that is part of the current $38.8 million cost estimate or whether directors were citing as a possible savings something long ago taken out.
In September 2018, the development company said in its plan for how to spend the $26 million state grant that “some desired items were excluded from the revised cost estimates to help bring the project within budget” and noted “sewer service from the City of Nyssa was excluded.”
The directors’ statement reference to truck scales doesn’t say whether that cost is also still in its cost estimates. The most recent cost figures provided by Smith’s team only provide broad categories of spending.
Earlier budgets showed the truck scale costing $450,000.
Kitamura, the president of the development company, has said before that the feature wasn’t needed, but whether that $450,000 element is included in the latest cost estimate couldn’t be determined.
The board statement explained two factors driving up costs for the project, but didn’t elaborate on when the factors became known to the directors and their contractors.
“One major reason for the drastic cost changes comes from the amount of earthwork needed,” the statement said. “With several soft spots and a slough that was roughly twice as deep as engineered, more materials are necessary.”
The statement also noted that a bid to erect the shipping center building was significantly higher than engineers had budgeted. Only one company, from Idaho, bid for the work.
“Never before seen material and labor shortages have resulted in nearly every aspect of the building cost more,” the statement said. “Anderson Perry is working with the bidder, going line by line attempting to find any savings for the project. If a suitable price point cannot be reached, the contract may be put out to bid” again.
The project schedule anticipated the bid would be awarded April 14 and that construction would start in May. The directors didn’t explain what would happen to the schedule if the bidding process had to be done over.
Project leaders have yet to put road and utility work out for bid. Smith recently told state officials that all bids would be out by March 15. More recently, project leaders said the work would be advertised for bid by late April. As of Monday, that apparently had not happened.
The board, however, ended its statement on an upbeat note.
“Thank you for all of the support as this project has developed over the years and we look forward to a grand opening later in 2022!” it concluded.
Contact Editor Les Zaitz by email: [email protected].
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