Business & economy

Rail project may have to ‘slow up’ until more money found, project manager says

NYSSA – The Treasure Valley Reload Center is no closer to having the money needed to finish construction as project leaders warn progress on the Nyssa center may slow as a result.

The board of the Malheur County Development Corp. also learned at its meeting Jan. 12 that Americold Logistics, the company contracted to run the shipping depot, won’t help pay for building features. Project leaders had hoped the multinational company would contribute $2.5 million for the building.

That means the development company charged with opening the rail center still doesn’t have money to put in anything beyond the shell of a building.

And that has work is on hold until the state releases an emergency appropriation of $3 million approved by legislators in September. The Oregon Department of Transportation is seeking from project managers a firm date to finish the project. The development company is more than two years behind schedule and it now aims to be done by June and open this fall.

In other updates, the board learned:

•Project leaders need to convene a meeting with local onion shippers to determine which producers will actually use the facility despite their commitments offered earlier.

•Work on the main building can’t start until a roadway to the site is beefed up with more rock, which could cut into the budget for the building.

•The development company still needs to buy its own train engine, a feature that has come and gone from recent budget estimates.

Even with the state’s extra $3 million and a recent grant of $2 million from Malheur County, project officials are millions short of having funds to complete the reload center.

The lack of money “may mean we have to slow up a little bit,” said Greg Smith, the Heppner contractor managing the Nyssa work. He didn’t elaborate.

As budget woes continue to hamper the project, Smith told the development company spending will have to be “looked at under the microscope,” adding that “in the coming weeks we will be sharing with you what under the microscope means.”

 Smith said that the $3 million outlay from the Emergency Board, a group of legislators with authority to make spending decisions when the Legislature is not in session, was approved last fall but the money – critical to finish the main terminal building – won’t be released until the development company sets an end date for the project. Officials also needs to amend its funding agreement with the state Transportation Department to get the $3 million.

Smith also advised that a meeting with onion shippers is crucial to “really start determining who will be utilizing the facility and in what amount.”

Onion shippers have been asked repeatedly in recent years to detail for project leaders how many tons of onions would move through Nyssa. That is a key to making the project pay off for the shippers, Americold and Malheur County government.

Smith told the board that the contract between the development company and a consortium of onion shippers is “significantly to the benefit to the onion shippers to where language effectively says if Americold can’t provide service at a competitive rate then an onion shipper is not obligated to use the service.”

“It is time for us to sit down to finalize what utilization will look like so we can determine final cash flow,” said Smith.

Grant Kitamura, general manager and part owner of the onion packing firm Baker & Murakami Produce Co.  and president of the development company, said during the meeting that Americold “has begun to put numbers together for the estimate of the freight.”
“I think the figures show where 25 to 30 percent rate savings over trucks,” he said.

Those figures, he said, “will be key to show them (onion shippers) what the savings will be so there will be quite a big of savings.”

Smith said that in a recent meeting with Americold, officials sought clarification regarding “what we should expect of their site contribution.”

“They will provide anything related to the operation of the facility which will mean forklifts, desks, automation, those things,” said Smith.

The company, though, will not pay for refrigeration or ventilation for the main terminal building. The special equipment alone is estimated to cost $1 million, and the project engineer and some board members last year had suggested taking the features out to save money. Americold, however, has been promised a “temperature-controlled” building to manage.

That means the development company needs to find more cash to provide those amenities.

“We are working through how best to accomplish that. That is one of the items that will have to take additional thought,” said Smith.

The ventilation cost has been an issue for Smith and his team for the past year.

Ron Jacobs, Malheur County commissioner, asked the board if there needed to be more work done on a road to the main terminal building.

Brad Baird, president of Anderson Perry & Associates said there “will need to be a little bit more on the end (of the road) so equipment can get into there.”

“So, we will have to spend some funds,” said Baird, whose company is under a $1.85 million contract to oversee construction.

Jacobs asked Baird if the project had money for that road work, recently estimated at about $100,000.

Baird replied that it was a good question.

“It may be very tight and we may need to use a little bit of E-Board funds to put a little bit of rock to make sure the equipment can access the building without sinking,” said Baird.

Baird didn’t explain how building funds could be diverted. The state funding of $3 million was to fund the building foundation and erection of the steel shell.

That won’t be enough to cover the low bid of $3.1 million turned in by the Washington state firm of Nelson Construction.

Board member Ralph Poole asked Smith if Americold would provide a switch engine to move rail cars around at the facility.

“We just had that conversation and the answer is no,” said Smith.

He said such an engine would cost up to $60,000 and “we will be able to absorb that in our budget.”

Smith did not explain how a budget already short could absorb that expenses.

 In December the Malheur County Court gave the development corporation $2 million to cover the costs of a rail spur, dubbed Track C. Smith and his team last April suspended the spur, apparently without telling Union Pacific Railroad. Project leaders had to hurry a change in plans to build the extra rail spur to satisfy the railroad. The spur had been part of plans presented to the railroad before it agreed to serve the Nyssa depot.

Smith made vague references to the board about efforts to find more cash for the beleaguered project, which is still more than $6 million short.

He told the board he was still working with the Eastern Oregon Border Economic Development Board to acquire between $1 million and $1.5 million infusion of cash. Development company officials sought the cash in December but the border board said it didn’t have a method to consider such a request and would first consider such a process.

News tip? Contact reporter Pat Caldwell at [email protected]

Previous coverage:

Rail reload corporation burns through county budget for operating expenses

Editorial: Malheur County’s $2 million gift to reload center ignores greater needs

More contract troubles dog Smith in public work as business awarded without bidding

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