Local government, Special Reports

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

The remarks to the board seemed to come from a project manager both frugal and attentive to costs.

In somber tones, Greg Smith told the board of the Malheur County Development Corp. that he and the project engineer “are closely watching the budget.”

Smith has been in charge of the Treasure Valley Reload Center since 2017, paid by Malheur County to oversee budgets and keep costs in line. He alerted the board at its Jan. 12 meeting that budgetary challenges persisted.

“We’re having to look at it with a microscope,” he said.

“Would you be able to provide us an updated breakout of total project funds spent?”

–Greg Smith email to state officials about his Malheur County project

Such a claim was misleading, based on newly-disclosed documents obtained by the Enterprise through public records requests.

Hours after Smith made the remarks, the Enterprise asked the development corporation for “any document that is the budget Greg Smith told the MCDC Board about on Jan. 12.”

Last week, Smith answered.

“No records exist,” he said in a Feb. 1 email.

The Enterprise also asked for “the most recent budget review” since a review was presented to the board in October.

Last week, Smith answered.
“No records exist,” he said in his Feb. 1 email.

By then, he had turned to the Oregon Department of Transportation to learn what his project has spent so far. The agency oversees a $25.6 million grant to build the Nyssa shipping center.

“Would you be able to provide us an updated breakout of total project funds spent?” he asked in his Jan. 6 email. “We want to ensure that as we’re closing in on the $26 million budget that we’re not going a penny over.”

State officials obliged, sending him a spreadsheet that summarized spending records that already were in the hands of the development company.

Smith didn’t respond to questions about why, as project manager, he didn’t already have the information he sought from the state.

The lack of a budget is no small matter.

A budget tracks income and expenses. For projects like the shipping center, a budget details expected costs and where money will come. Without a budget, those responsible for public spending are left blind to the financial condition of their organization.

For the Malheur County Development Corp. board and county officials on the Malheur County Court, the lack of a current budget means they are dealing with figures that are months old.

The last “budget analysis” – not an actual budget – was presented publicly last October.

When Smith made his reassuring comments to the board in January, none of the five directors asked to the see a budget. Directors have a legal duty to safeguard the company they serve. In this instance, directors Grant Kitamura, Corey Maag, Kay Riley, Jason Pearson and Ralph Poole sat unquestioning.

They listened as Smith vowed that “We’re not going to allocate dollars we do not have.”

But records released to the Enterprise last week indicate that had already happened.

The documents show the development company is facing $1 million in claims it doesn’t have the state money to cover. Smith did not dispute that figure when it was provided to him in writing by the Enterprise.

He otherwise didn’t respond to detailed written questions. The five other board members also didn’t respond to written questions about Smith’s claims and their roles.

The silence is in keeping with their recent practice. The board members didn’t respond to questions sent Jan. 19 that questioned the finances of the development company.

They also didn’t respond to questions sent Jan. 5 regarding Smith and his services to the development company at a cost to the public of $9,000 a month.

In a Dec. 19 sworn statement under penalty of perjury, Smith said that his company “was and is under contract to provide management services to MCDC.”

The next day, the Enterprise requested “any executed contract between Gregory Smith & Company LLC and MCDC.”

On Jan. 2, Smith responded.

“No records for your public records request dated December 20, 2022 (‘Smith company contract’) exist,” he wrote in an email.

The other board members were asked for their understanding of why Smith would swear there was a contract if there wasn’t one.

No one replied.


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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