NYSSA – The board overseeing the Treasure Valley Reload Center will seek more public money to rescue the beleaguered project.
The Malheur County Development Corp. on Tuesday, Oct. 25, revealed a deepening financial crisis that without relief means mothballing work until spring.
Company directors learned that Union Pacific Railroad has warned it won’t serve the Nyssa center unless a fourth rail spur is added. Installation of the other three rail spurs is well underway and expected to be finished soon.
To cover that spur and other construction costs, the board decided to seek an immediate grant of $2 million from the county and another $1.5 million from the Eastern Oregon Border Economic Development Board.
The board will also seek $1 million from an undisclosed source to help bridge the financial gap.
Without an infusion of more money, the development company could be short nearly $400,000 to pay bills soon coming due, according to a budget analysis from project managers.
The overall need is so urgent that project leaders expected to approach the Malheur County Court the day after the board meeting. That was news to county officials, who canceled the usual court meeting for other reasons, delaying until next week any consideration of such a request.
But even if $4.5 million is rounded up soon, the project managers say that still wouldn’t finish the shipping center and that another run to get millions more from the Oregon Legislature is likely next year.
In all, the publicly-owned rail shipping center once budgeted at $26 million now is forecast to cost $39 million.
READ: Treasure Valley Reload Center finances
Grant Kitamura, president of the development company, has repeatedly pledged the project would stay within budget and would not spend taxpayer funds.
Project leaders earlier this year predicted a grand opening in October. As construction lagged over the summer, they projected completion by next April. At Tuesday’s meeting, no one mentioned a new target to open.
The reload center is designed for onion producers to truck their produce to the site north of Nyssa for loading onto rail cars for shipment to destinations in the Midwest and East. That would cut shipping costs for the producers but would not expand onion production in the Treasure Valley.
Funding for the project comes from $26 million approved by the Oregon Legislature in 2017, and a $3 million special appropriations in September. The project will also get its $1.7 million water line covered by a separate state grant awarded earlier this year to the city of Nyssa.
During Tuesday’s meeting, directors faced a cascade of troubling developments. Those on the board include Kitamura, who is managing partner of Baker & Murakami Produce, Kay Riley, recently retired from Snake River Produce; Corey Maag of Jamieson Produce, and Jason Pearson of Eagle Eye Produce. Greg Smith, a Heppner contractor, serves on the board but also is the public company’s chief executive.
They agreed to scuttle a plan to award a contract to immediately put in the warehouse foundation. Project leaders said their process to speed up that construction took too long. The arrival of winter-like weather means the work can’t be done until next spring, they said.
Legislators approved an emergency $3 million grant in September based on representations that warehouse work had to be done before winter set in.
In another new and significant twist, board members were told of Union Pacific’s demand for the fourth rail spur, included in plans given the railroad but which was then deferred. No explanation was provided during the board meeting about why the railroad considered the spur to be necessary.
The demand was passed along by RailPros, a rail engineering service under contract with the development company. There was no explanation for the late notice or why Union Pacific apparently didn’t share that requirement directly with the development company.
“That’s quite a gut punch to receive at this point based on the fact that we didn’t really understand that early on,” said Brad Baird, lead engineer on the project from Anderson Perry & Associates. His company has been paid more than $1 million to manage construction.
The pressure is on to get money for that rail spur, and the development company now is scheduled to appear before the county court at 10:30 a.m. Wednesday, Nov. 2. The meeting can be viewed online and local residents can comment.
Baird said there was urgency because a primary contractor needed for the spur work is preparing to leave the work site and a second contractor will soon finish installing the other rail spurs. Baird said it would be more cost effective to get the spur work done without having to bring back the work crews.
Dan Joyce, Malheur County judge, said on Tuesday afternoon that he learned of the potential request from the development corporation “about an hour ago.”
He said he did not know the justification the development corporation is using for the money and that he had not doesn’t know whether he would support the request.
“It’s up in the air,” he said.
Rail project managers apparently want to tap into a $6 million federal grant that county officials only recently learned they will receive. The county, though, doesn’t have the money yet because it hasn’t started the application process.
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News tip? Contact reporter Pat Caldwell at pat@malheurenterprise.com
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