Nyssa project officials hitting up private company for $2.5 million to cover cost overruns

Lynn Findley pushes to avoid seeking new bids on the Treasure Valley Reload Center warehouse during a May 17 meeting of the Malheur County Development Corp. Findley, state senator from Vale, sits on the company board. (The Enterprise/PAT CALDWELL)

NYSSA – Managers of the Treasure Valley Reload Center are counting on two good breaks in the next few days to salvage the Nyssa project from being mothballed.

They need to come up with about $5 million by early June to finish construction and ready the rail shipping center to move out onions later this year.

By early June, project leaders need a multinational company to pump in $2.5 million and they need state legislators to approve an emergency $3 million request.

“With those two, you make it across the finish line,” said Brad Baird last week. Baird is president of Anderson Perry & Associates, which is managing construction of the reload center.

Without that fresh infusion of money, Malheur County Development Corp. will burn through its entire $26 million state grant and still be without its centerpiece building and other elements.

The project is already behind schedule and millions over budget, bedeviled by what project leaders say are twin forces of inflation and poor construction conditions.

The financial Hail Mary the project leaders are trying to pull off in part involves Americold,

a Georgia company expert at storage and transportation.

The company is under contract to run the rail center, arranging with area shippers to move Treasure Valley onions by rail instead of truck to markets in central and eastern U.S.

Baird said project leaders asked company executives during their recent visit to Malheur County to put $2.5 million into the project. The ask came with urgency, Baird said.

“They know they have three weeks,” Baird said at the development company board’s May 17 meeting in Nyssa.

The terms of such an infusion weren’t disclosed. Americold officials didn’t respond to emailed questions and Greg Smith, Malheur County economic development director, has a practice of not responding to questions or interview requests from the Enterprise.

But history indicates that Americold, with operations worldwide, doesn’t move with the speed needed to rescue the Nyssa project. Negotiations to conclude its deal to run the Nyssa center took months longer than scheduled.

Meantime, project officials must wait until early June to learn the fate of their other request – for $3 million from the state Emergency Board. The board is scheduled to meet June 3 in Salem, and legislative leaders have not yet said whether they will advance Malheur County’s request for consideration.

The Emergency Board acts on state funding needs at times the Legislature isn’t in session. Typically, the board acts on emergency needs of state agencies or to allow spending of unexpected federal or other funds.

Project leaders have been shaving features off the Treasure Valley Reload Center to cut the amount of extra funding they need to find. They dropped one rail spur that had been sought by Union Pacific Railroad and eliminated the network of roads planned for the rail project. Now, one unpaved road will go in to serve only the shipping center.

But more money is needed because the price to construct the reload center building came in at $6.9 million – $2.9 million higher than budgeted.

Baird cautioned development company directors of the risks of going back out to bid for the building construction to seek a lower price. He said negotiations have cut $450,000 from the one bid submitted – not enough to stave off budget trouble.

“There is no guarantee you will even get a bid with current bidding conditions,” Baird said in a written report to the board. “The bidding environment is terrible.”

Even if Americold comes in with the money, the delays now mean the building wouldn’t be ready until October or November – peak season for shipping local onions.

One director suggested the development company consider taking more time to finish the project. Kay Riley of Snake River Produce sits on the board and also leads a separate consortium, Treasure Valley Onion Shippers.

“The project needs to be done right. And we don’t need to screw it up and try and meet a deadline. If it’s next year, it’s next year,” Riley said. “We don’t want to make a mess of it.”

Lynn Findley, a board member and state senator, said he didn’t expect construction prices would cool off even if the project was delayed.

“The chance of finding a lower price contractor in three months is probably fairly low,” Findley said.

Much of the meeting at the Waldo Conference Center entailed lessons on contracting and types of rock as Baird addressed previous questions from the board. In an unprecedented action, the development company board had presented Baird with two pages of questions about cost overruns, contractor choices and ground conditions at the Nyssa farmland that is being converted into an industrial complex.

Baird evaluated his own company’s performance as good and stood by the primary contractor, Steve Lindley Contracting of Union.

He explained the agreement with Steve Lindley Contracting had to change from a fixed-price deal to one that was more open and costly. He said conditions at the worksite were significantly different than anticipated, including wet spots in the path of rail lines and roadways that required tons of rock beyond what had been budgeted.

In his written report, Baird explained why his engineering firm wasn’t aware of those problems before construction started.

He said his company dug 12 test pits on the mile-long site.

“It is always a balance when considering how much to invest in explorations prior to completing design of a project,” Baird said in his written responses. “We also completed explorations during a drier time of the year.”

Baird also explained how Anderson Perry evaluated acres of wetland that had to be filled to support rail spurs.

He said any detailed evaluation would have required permits and that process “takes a very long time.”

“Thus, no explorations occurred in the wetlands area,” Baird said.

The meeting turned contentious when Baird explained increasing costs of rock needed to fill in the farmland and where that was coming from.

Two area contractors questioned Baird about his statements, indicating they thought rock costs were higher than justified. Both had put in bids for some of the work – Kelly Johnson of Ironhead Inc. and Kelly Pomeroy of Box of Rocks.

Baird noted that “a lot of insinuations are being made” and that the contractor was free to choose sources of materials.

Without naming the two contractors in the room, Baird noted that Steve Lindley Contracting was unwilling to work with “area sources” because of acrimony.

Baird advised the board that every professional precaution was being taken to ensure the project was built properly and at the least cost. He said decisions by his firm and the development company have been “in the best interest of the project.”

“I don’t think there is a less expensive way to go,” he said.


Oversight of Smith unclear as reload project falters

Engineering firm on rail project exceeds contract by $500,000, hikes its fees twice

Rail board zeroes in on project engineers with tough questions over costs, bidding process

Reload center stripped down but millions still needed to finish, officials report

DA orders Malheur County to release records about reload project cost overruns

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