Local government, Special Reports

Nyssa rail center stopped in its tracks – no money for building

Greg Smith, Malheur County economic development director, speaks on April 12 to the board of the Malheur County Development Corp. (ANGIE SILLONIS/Special to the Enterprise)

NYSSA ­– Construction of the centerpiece building for the long-planned Treasure Valley Reload Center was scuttled this week because there isn’t money to pay for it.

Project leaders on Tuesday said it would take nearly all the $26 million budgeted for the project to finish everything but the building. That will leave Malheur County with rail spurs to nowhere and no firm plan on how to finish a project in the works for more than five years.

“We don’t have the cash to build the building,” said Greg Smith, Malheur County economic development director and project leader. “Until we do, the building will have to be put on hold.”

Smith made the announcement at a meeting Tuesday, June 7, of the Malheur County Development Corp., the public company set up by county officials to manage the Nyssa project.

The stunning development came just a week after Smith’s team told state officials to expect the reload center to be done by the end of August.

The publicly-funded project is designed to move area produce by train car to markets in the East. About a dozen onion companies in the region plan to be the first customers for the Treasure Valley Reload Center, getting less-costly shipping for their products through the government project.

Smith provided no plan to the development company board on how to salvage the project. He didn’t respond to a later request for comment. He has a practice of not providing interviews or answering questions from the Enterprise.

He and his team had been vowing for two months to cut expenses on the project and find millions to cover cost overruns. Smith since then has failed to add so much as a dollar, given or borrowed, to plug the budget hole.

That meant on Monday, Smith gave up on the one bid he had to erect the 60,000-square-foot building at the reload center.

Optimism earlier this year that contractors would be line up for a chance at that million-dollar construction job turned into sour reality when in April only one company from Idaho bid for the work. The price was a jaw-dropping $6.9 million – nearly $3 million higher than engineers estimated and far beyond the financial reach of Smith’s team.

Smith and Brad Baird, president of Anderson Perry & Associates, the engineering firm overseeing the project, blamed the high price on inflation, a hyperactive construction environment and nearly $1 million in features that the reload center operator insisted on.

They nonetheless had banked on getting millions to cover the overrun and keep the project alive. But an effort to get an emergency $3 million from the Legislature failed earlier this month.

Additionally, project leaders had asked Americold to put in $2.5 million to cover the gap. The Atlanta conglomerate is under contract to manage the Nyssa center.

Grant Kitamura, an onion industry leader and president of the development company, said Monday that he had “no response” from Americold to that request.

Smith responded “no comment” when asked about the matter during the board meeting.

Smith and Baird had warned that letting the lone bid expire might mean even higher bids in the next round – or no bids at all. Directors of the development company had signaled in May that they might be willing to wait until more favorable conditions develop.

Smith told the directors Monday he made the decision to drop the building plan.

“I allowed the building bid to expire without accepting it,” Smith said.

He said Baird has been tasked to prepare a new round of bidding, but there was little detail about how or when that would happen.

The fate of that building hinges on finding money, although Smith and his team gave no indication of how much is still needed.  Until recently, Baird had calculated about $5 million more was needed to finish even a slimmed-down version of the economic development project.

Grant Kitamura of Baker and Murakami Produce Co. of Ontario and president of the Malheur County Development Corp., which is developing a publicly-funded rail shipping center in Nyssa. (AUSTIN JOHNSON/The Enterprise)

Kitamura said “we’ll continue to search for funding” but responded “I don’t know” when asked what would be the next steps to do that and Smith responded with a terse “no comment.”

Kitamura said he wasn’t sure if the development company would again seek bids on the rail building before the funding is in place. He said he didn’t know whether the building design would change again.

Baird told the development company board that finishing ground work, getting rail spurs installed, and creating a single gravel entry road and parking pad would use up nearly all the $26 million awarded by the Oregon Legislature in 2017 for the project. He estimated that the work would leave $500,000 to $1 million that could be used for the building.

But Baird said a new, unexpected expense had cropped up.

The development company earlier this year bought the pieces for the reload center building. Baird said the Idaho company supplying the building pieces needed to deliver them to the Nyssa site by August.

He estimated it would cost $10,000 just to unload the material.

Then, he said, a storage container would be needed to safeguard parts until the building could be raised. One of the development company directors advised that his company bought such a container last year for $8,500.

Meantime, Malheur County taxpayers will have to continue providing about $50,000 a year to pay interest on a state loan used to buy the Nyssa industrial property. The Malheur County Court also was scheduled to discuss on Wednesday, June 8, continuing Smith’s contract to manage the reload center. That has cost the county $6,000 a month since 2017.


Despite officials’ claims, lottery bonds aren’t sole money source for Nyssa reload project

Project leaders report to state that Nyssa rail center will be done by August

State board won’t consider emergency $3 million for Nyssa rail center

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

Smith erupts during question-and-answer session at rail center meeting

Oversight of Smith unclear as reload project falters

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

EXCELLENCE IN JOURNALISM – Available for $5 a month. Subscribe to the digital service of the Enterprise and get the very best in local journalism. We report with care, attention to accuracy, and an unwavering devotion to fairness.