Local government, Special Reports

Governor pushes extra $3 million for Nyssa rail center to cover cost overruns

Gov. Kate Brown is riding to the rescue of the Treasure Valley Reload Center, supporting $3 million in new state funding, with more to come if needed.

The taxpayer bailout is crucial to finish the Nyssa rail shipping center, which is far over budget and behind schedule.

Such funding would pay to erect the last major piece of the project – the shipping center building.

That 60,000-square-foot structure was supposed to be under way by now. But project leaders put the building on hold when the price to put up the structure came in nearly double what was expected.

Work already underway or contracted, including rail spurs off the main Union Pacific Railroad line, will eat up the entire $26 million awarded by the state in 2017. Project leaders have ascribed cost overruns to inflation and discovery of a wetland that required millions of dollars in unexpected costs to bridge.

The kit to raise steel building in Nyssa already has been bought. The parts, like pieces of a giant Erector set, will be stored at the site until $6 million or so is available to put it up.

About half of that would be covered by the extra $3 million backed by Brown but that wouldn’t become available until September at the earliest. The bidding process then would take approximately two months before construction could start. Project leaders have provided no revised schedule for when the reload center could open.

The new money isn’t guaranteed.

Brown’s recommendation will go to the legislative Emergency Board in September. The board, comprised of legislators, has the authority to make emergency spending decisions when the Legislature isn’t in session.

“Governor Brown believes that this project is critical to the regional economy and to the agricultural communities of eastern Oregon,” according to an email on Friday, July 1, from Liz Merah, the governor’s press secretary. “Given the current funding challenges and the importance of this project to the region, this issue cannot wait until the next legislative session” in February 2023.

She said the governor would support even more money “if there’s justification to do so.”

There has been no recent public disclosure of costs.

“I have had multiple versions as we go, and have used different color ink and have used whiteout to make modifications.”

Brad Baird, president of Anderson Perry & Associates

Project leaders haven’t provided recent budgets for Treasure Valley Reload Center despite an order from Malheur County District Attorney Dave Goldthorpe that they do so and a request to them from Malheur County Judge Dan Joyce that such budgets be released.

They did release to the Enterprise a photograph of a spending estimate dated May 17 – the last public disclosure of funding numbers on the project. The pictured document showed broad categories of spending, handwritten figures, and apparent use of whiteout ­– atypical for government budgeting.

An analysis of that document by the Enterprise, though, found that the total listed cost of the project erred, underreporting the total by half a million dollars. That means that, based on the corrected figure, the project was $6.5 million over budget.

The estimate was prepared by Brad Baird, president of Anderson Perry & Associates, the engineering firm overseeing construction in Nyssa.

Baird didn’t respond to written questions regarding the error, but wrote in a subsequent email that expenditure record “isn’t applicable anymore.” He also explained the liquid whiteouts applied to the document.

“I have had multiple versions as we go, and have used different color ink and have used whiteout to make modifications,” Baird wrote. “I had a third row with another scenario going.  When that scenario didn’t pan out, I eliminated it with whiteout so I could present it without that information that wasn’t applicable anymore.”

The $3 million gift that Brown is trying to arrange would come from the state’s general fund, derived largely from income taxpayers in Oregon. In 2017, the Legislature used a mix of lottery money and a new car sales tax to fund the original $26 million for the Treasure Valley Reload Center.

The area’s two legislators, state Sen. Lynn Findley, R-Vale, and state Rep. Mark Owens, R-Crane, tried to get $3 million in June from the Emergency Board, but ran into a legislative policy that only state agencies can request emergency awards. Findley sits on the board of the development company building the rail center.

On June 15, Brown’s office by email directed the Oregon Department of Transportation to advance the request to the Emergency Board.

Lindsey Baker, a Transportation Department assistant director, made clear that the state agency was the messenger to pass on the governor’s request to the Emergency Board in a way that conforms to legislative procedures.

She also said that Owens had requested a meeting with the agency’s top officials to discuss other funding options for Treasure Valley Reload Center, including possibly obtaining more money from the Transportation Department. That meeting has been scheduled for Tuesday, July 14.

Baker told the Enterprise that the Nyssa project wasn’t eligible for additional money from most Transportation Department programs. She said one fund the agency’s director could use to help Nyssa was already committed.

That’s one reason the governor is requesting general fund money, Merah explained.

“Given that the project is not eligible for state highway funds and since ODOT does not have other funds at its discretion, the request will be for general funds,” Merah wrote.

State officials said they were aware the project may be short as much as $6 million, but no request has been made by legislators or county officials for the full amount.

Greg Smith, Malheur County economic development director and project manager, said in a recent meeting that he and Baird were working on modifying the design for the reload center building to “find potential savings” that would “move this project forward much quicker.”

He didn’t provide details, but project leaders have been concerned that their building includes features such as cooling systems that have driven up the cost. They now say such systems aren’t needed for onions.

Brown’s intercession comes months after Smith said he had undertaken the task of finding additional money for the project. Smith subsequently has declined to answer questions in public meetings about that work, but little action is recorded in Malheur County’s documents.

On June 6, the Enterprise requested from Smith and Malheur County “each and every document from April 1, 2022, to present that in any way to relates to efforts to obtain additional funding, whether by grant, gift, loan or any other financial arrangement for TVRC to complete construction of the reload center.”

Three weeks later, Smith produced 27 pages of records. That included 18 pages of emails trying to schedule meetings and nine pages of calendar entries for four meetings. The records otherwise included no memos, letters or notes regarding the shortfall and Smith’s efforts to find the needed money.

There is no record that Smith was in contact with the governor’s office, and there was no document showing he had any role in asking Americold in May to pitch in $2.5 million. Baird, the engineer, had been reporting on that request, which Americold has rejected. 

Contact Editor Les Zaitz by email: les@alexmalheurenterprise-com


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Engineering costs for Nyssa project jump with belated contract change

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

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

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