Local government, Special Reports

SPECIAL REPORT: Another state bailout for Nyssa rail project in the works

UPDATE: 4 p.m. Wednesday, Feb. 8: Malheur County Development Corp. revealed Wednesday afternoon that it will need to get $5 million from the Oregon Legislature to finish the project, $2 million more than project leaders had said a month ago.

Project managers trying to get the Treasure Valley Reload Center finished will ask state legislators for a fourth helping of public money, according to documents obtained by the Enterprise.

Greg Smith, the contractor managing the Nyssa project, alerted state officials in January that he expects to seek another $3 million from the Oregon Legislature. He didn’t detail what shipping center costs the money would cover.

He also said he was abandoning his pursuit of $1 million that he had described earlier as a near-certainty to cover cost overruns.

The board of Malheur County Development Corp., the public company building the Nyssa industrial complex, hasn’t approved any new request to the Legislature. None of the five board members responded last week to questions from the Enterprise about more state funding.

The revelations come as project leaders and county officials operate with budget figures that haven’t been updated since October, according to recently-obtained public records.

Those records, however, show that a project once budgeted at $26 million now will cost closer to $40 million if finished as originally planned. They were obtained through a series of public records requests from the Enterprise.

Smith outlined his plan for more state help in a Jan. 6 email to Oregon Department of Transportation officials, referring to Malheur County Development Corp. as MCDC.

State officials had been seeking clear information from Smith and the development company on how they intended to finance and finish a project that was supposed to have been done last June.

“Because of the current budget situation and the desire to maximize the capability of the facility, MCDC is going to pivot and pursue an additional $3 million (in place of ‘other funding’) from the Oregon Legislature during the 2023 session,” Smith wrote.

His team had listed $1 million in “other funding” in the budget review last October as one source of money for the development company. He told the development company board he was certain he could land the $1 million, but wasn’t publicly disclosing the source. He later told the Malheur County Court that the money would come as a loan instead of direct funding.

In his email to the state, Smith didn’t explain why he was giving up on the $1 million and he didn’t respond to written questions from the Enterprise about the matter.

When the project seems to run out of options, Smith and his team have previously sought more public money through the Legislature.

He has influence there because he is a state representative from Heppner and holds a key leadership position on the Legislature’s budget committee. Smith arranged a special award in 2021, getting $1.8 million to run a water line to the reload center. He worked with local legislators last year in a successful bid to convince legislators to award another $3 million in emergency funding.

State Sen. Lynn Findley carried the duty of selling the need for the money to legislators on the state Emergency Board. In his presentation last September, Findley falsely told legislators that $3 million would get the reload center finished. He has never explained the lie.

He also serves on the legislative budget committee, but he didn’t respond last week to written questions or a message seeking an interview about Smith’s latest plan.

State Rep. Mark Owens, R-Crane, who represents Malheur County in the House, worked on that $3 million request last year as well. He didn’t respond last week to written questions or a request for an interview about whether he would support yet another state bailout for the Nyssa project.

Smith warned state officials that even if legislators agreed to $3 million, the money wouldn’t come immediately.

Such special project funding is typically not approved by the Legislature until late in the session, scheduled to run this year through June.

Smith said the development company “will likely turn to interim financing for the sake of project completion.”

He provided no details on how the development company would borrow $3 million. Such a loan could be a challenge to arrange if legislative approval isn’t established until this summer. A lender would have no guarantee that money was coming.

An excerpt of a Jan. 6 email from Greg Smith, Malheur County Development Corp. project manager, to state officials lays out the plan to seek more state relief for his project.

Smith also told state officials in January that the development company was still pursuing $1.5 million from the Eastern Oregon Border Economic Development Board, based in Malheur County. Officials asked the board last fall for the money.

The board deferred because the request didn’t fit any of its funding programs. The board was scheduled to consider a new process at its meeting on Monday, Feb. 6, that would open applications for money in March.

But Smith told state officials getting that $1.5 million “may be more challenging.”

State officials also sought more details about the role of Americold, the Atlanta company under contract to run the shipping center. Smith and his team had asked the multinational company to contribute $2.5 million to cover cost overruns.

He was silent about the matter in his update to state officials earlier this year but he told the development company board in January that no such funding would be coming. The development company would have to find other money to pay for special ventilation and other building systems.

“So right now, we’re working through how to best accomplish that,” he told the board at its Jan. 12 meeting. “That’s going to be one of those items that is going to take additional thought. There’s no doubt about it as we deal with inflation and our budgetary challenges.”


SPECIAL REPORT: Smith pledges scrutiny of rail project budget, can’t produce one

SPECIAL REPORT: State suspends payments for Nyssa rail project

State’s fund for rail center nearly exhausted but millions in costs remain, records show

Rail meeting canceled after officials meet with attorneys regarding newspaper lawsuit

Rail reload center manager says cash woes may slow progress on project

Findley uncertain of seeking more state money for rail project while Owens stays silent

Contact Editor Les Zaitz: [email protected].

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