Business & economy

Request to state for help grows as Smith walks away from Nyssa rail project

NYSSA – The Treasure Valley Reload Center, hobbled by mismanagement, is now without a leader.

Project manager Greg Smith unexpectedly walked away from Malheur County, resigning on Feb. 17 without explanation and in the face of intensifying questions about his work.

He didn’t respond to messages seeking comment, but leaves behind a project that is far from done, millions of dollars short and nowhere near ready to move onions out of the Treasure Valley.

Smith gave officials just 11 days’ notice he was quitting his supervision of what has become a $40 million public works project in Nyssa.

Grant Kitamura, president of Malheur County Development Corp., said he expects a smooth transition.

“The parting of company between Smith & Company and MCDC is totally noncontentious,” he said in an email to the Enterprise.

The public company, established by the county to build the Treasure Valley Reload Center, has no plan on how to replace Smith. Meantime, Kitamura and other board members face other urgent tasks for their beleaguered shipping center.

Construction on the reload center stopped in December and contractors cleared out. To get going again, the development company must finish new financing deals with Malheur County officials and with the Oregon Department of Transportation.

That would allow contractors to return for two key tasks – raising the warehouse building shell and putting in a fourth rail spur required for operations.

“At this time, I am NOT seeking any funding for the Malheur County TVRC project.”

-State Sen. Lynn Findley of Vale

But more money is needed to equip that building, put in streets, power and sewer and to buy an engine to shuttle rail cars on the 65-acre site.

Getting the money to do any of that presents one of the development company’s most daunting tasks: convincing legislators for the third time to bail out the Nyssa project. Smith has failed in most of his efforts to get more money from any source but the Legislature.

The most recent project schedule assumes more money will flow and construction can finish by this summer, with onions shipping in the fall. But past completion dates have gone unfulfilled.

Project officials recently seeded doubt that any onions would ship this fall even if Treasure Valley Reload Center could open. The most recent budget analysis indicated without explanation that Americold, the logistics giant contracted to run the center, might not be ready to serve Nyssa this fall.

The company needs to remodel three of its depots elsewhere in the country to accommodate onion shipments, project officials have said. Americold hasn’t responded to emails seeking comment on those plans.

The board of Malheur County Development Corp. met in Nyssa on Thursday, Feb. 23, to begin charting a post-Greg Smith era. For years, the board has ceded virtually all control over the project to Smith to the point it didn’t even seek customary monthly budgets.

Kitamura said that was going to change. Other developments that emerged from the board meeting:

• Malheur County will join the development company in asking the Legislature for $6.5 million to get the project closer to completion.  The Malheur County Court was scheduled to act on such a request on Wednesday, March 1.

• The development company no longer will seek $1.5 million from a local economic board. The request to the Eastern Oregon Border Economic Development Board had been controversial for the heavy-handed approach used by project managers and their supporters. The rail funding would have consumed one-fourth of funding awarded to the board last year by legislators to help with local economic development.

• Malheur County officials are expected to approve putting in $2 million to buy a fourth rail spur. Project leaders cautioned that was still $450,000 short of the expected cost.

• The engineering firm on the project, Anderson Perry & Associates, is asking for a fee increase and an additional $400,000 for work on the project. That would put the firm’s cost at $2.25 million. A rail engineering firm working under a separate contract has made no similar request.

Smith’s departure caught officials by surprise and came on the heels of a series of investigative reports by the Enterprise. The reports revealed that the state had stopped paying the reload center’s construction bills and that the development company had exhausted its original $25.6 million funding from the state. The newspaper also reported that the development company owed contractors $1 million it couldn’t pay despite Smith’s recent unsupported claim to the board that “We’re not going to allocate dollars we do not have.”

Smith is a Republican state representative who founded his private economic development company about the time he started service in the Legislature in 2001. In 2013, he signed up Gregory Smith & Company to run economic development operations for Malheur County. The contract paid his company $9,000 a month, boosted to $15,000 a month in 2018 when he took on management of the reload center project.

He quit the economic development role last June citing a “toxic” environment. He agreed to continue managing the reload center, reporting to the development company instead of the county. County officials agreed to boost his company’s fee by 50% to assure he stayed in place.

Now, he has left that role too.

Gregory Smith & Company had no contract with the development company so there is no record that any legal requirement governed Smith’s departure. His 11-day notice was short of the 60-day notice he was required to provide when under contract with the county.

“I wanted to let you all know that Gregory Smith & Company will officially be resigning from all Malheur County Development Corporation related duties on February 28th,” Smith wrote in an email to company directors on Friday, Feb. 17.

Smith didn’t explain why he was quitting.

“We will do everything in our power to ensure a smooth transition during this time,” Smith wrote. “I look forward to seeing the grand opening of the reload center.”

But Smith didn’t appear at the Feb. 23 meeting of the development company board. His chief aide in Malheur County, Ryan Bailey, also was uncharacteristically absent.

Smith couldn’t be reached for comment. His only response to emails to his company and state email addresses was to call it “incredibly inappropriate” to contact him at his state email.

Malheur County Commissioner Ron Jacobs was one of the first to learn of Smith’s intentions. He said Smith called him on Thursday, Feb. 16, but gave no reason for his resignation.  Jacobs has been the county commissioners’ liaison to the project.

Malheur County Judge Dan Joyce said he didn’t learn of Smith’s intentions until four days after the development company board was notified.

“I think the project is up in the air,” he said.

Commissioner Jim Mendiola learned about the resignation when an Enterprise reporter called for comment.

Officials at the Oregon Department of Transportation, which is overseeing most of the funding for the project, hadn’t been alerted by Smith to his departure. They learned of it from an Enterprise reporter calling for comment.

Kitamura said “I don’t recall” when Smith started talking about leaving but that he got Smith’s official notice when others did – by email.

The development company board hasn’t discussed how to replace Smith, but Kitamura said in an interview the directors would seek “a good business person and someone who can oversee the project manager and work with the board.”

Smith’s departure leaves a second vacancy on the board, but Kitamura said he intends to fill just one seat. The appointments to the board are made by the Malheur County Court. Others on the board now include Corey Maag of Jamieson Produce in Vale, Kay Riley, a consultant for Fort Boise Produce in Parma, Jason Pearson of Eagle Eye Produce in Nyssa and Ralph Poole, a retired business executive from Ontario.

While Smith was not at the board meeting, Kitamura took a moment to thank him for his efforts.

“It’s been a long haul,” he said.

Much of the board meeting was focused on money – or the lack of it.

The most significant development was a major shift in approaching the Legislature.

Smith and Brad Baird, president of Anderson Perry & Associates, presented a plan in early February to seek $5 million from the Legislature.

Baird told the board on Feb. 9 that state Sen. Lynn Findley, R-Vale, and state Rep. Mark Owens were working on that funding.

“My understanding is there’s a lot of movement afoot with Findley and Owens to secure five million from the state legislature,” Baird said.

Owens hasn’t responded to questions about the matter and Findley also was silent – until Friday.

“Until and or if Malheur County submits a request to me, I am not seeking additional funding for the project,” Findley said in an email to the Enterprise. “At this time, I am NOT seeking any funding for the Malheur County TVRC project.”

Baird didn’t respond to emailed questions about the basis for his earlier statement about the legislators.

Instead, at the board meeting, he said the plan now is for Malheur County government to request $6.5 million from the Legislature.

Kitamura said he understood that Gov. Tina Kotek wanted to see the project finished. He said she suggested asking legislators for all of the $6.5 million needed instead of tapping the local economic board for some of it.

Kotek’s office didn’t respond by Monday to questions about whether she was backing the extra allocation.

Legislators usually don’t approve such project funding until late in the session, which means the money wouldn’t flow until this summer. Project officials have mapped out a schedule to go ahead with construction before then, but haven’t explained how they would pay bills until the new state money shows up.

The money, though, is needed for tasks as specific as finishing the fourth rail spur.

Baird explained the plan is to get rail construction going again soon, but the development company is short $450,000 to finish it.

He said the initial work would be covered by county funding. The spur then would be finished when more money is found – or work would stop.

Reporters Pat Caldwell and Steven Mitchell contributed reporting.

Contact Editor Les Zaitz: [email protected].


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