Business & economy

Legislators want financial accounting of rail center before they throw their support behind project

VALE – Two state legislators who represent Malheur County want an outside audit to be completed on the Treasure Valley Reload Center before they throw their support behind more state money to finish the project.
In a joint letter from state Rep. Mark Owens, R-Crane, and state Sen. Lynn Findley, R-Vale, sent to the county March 22, the legislators wrote that it was “widely believed a third-party analysis is necessary.”
They want to know if funds on the $40 million project have so far been appropriately spent and whether adequate controls are in place over public money going into the reload center.
The two legislators say Malheur County also has to provide renewed assurances that the reload center is economically viable. They asked for evidence that onion shippers, Union Pacific Railroad and the center’s operator, Americold, are in place.
They also want to be sure there is plan for run the Nyssa rail depot, asking for an assessment of the “degree of confidence” in that plan, the timeline and the “total cost plus financial plan, including contingencies.”
The questions emerged just one month after Greg Smith, a state representative from Heppner, quit his role as project manager for the Treasure Valley Reload Center. His tenure was marked by controversy over spending decisions, public accountability, and budget gaps. He was effectively the CEO.
Findley has taken the lead on the request that, but he didn’t respond to written questions or an interview request. Owens also didn’t respond to interview requests.
The request comes as Malheur County is seeking a fourth dose of state money to finish a project far behind schedule and millions over budget. The $8.5 milion sought from legislators is crucial to completing the Nyssa project and getting it operating.

But Findley and Owens made clear the money is far from a certainty.
They said the review of a project approved by the Legislature in 2017 is needed “because of history of the project and the taint surrounding it.”
The timing of the review is unclear but the request represents a substantial departure from past support of the project by the two legislators.
The Malheur County Court so far has addressed only the financial questions.
The court on Wednesday March 29, moved fast to hire Zwygart John and Associates of Nampa to complete the new audit of the Malheur County Development Corp., the public company handling the reload center project. The county will pay the Nampa firm $2,000 to $3,500 for the work. Based on its rates, the audit would take no more than 20 hours.
According to the contract, the work is to be done in about 30 days – by April 28. That is when legislators are scheduled to be in Ontario to hold a public hearing on the state budget. The Joint Ways and Means Committee is expected to hear testimony supporting the extra $8.5 million for the project.
But the Zwygart work is narrowly focused. The company is not being hired to consider whether expenditures were prudent or necessary or to evaluate project features such as contracts.
Under its agreement, the firm will only review invoices to “confirm that funds were spent on the project.” It will assess whether “appropriate financial controls” exited by “confirming that invoices were approved.”
The accounting firm has previously audited the development company’s financial statements, a type of audit that verifies numbers such as revenue and expenses are accurate. Such audits don’t independently examine the performance of the company or its contractors.
Last week, county officials were unsure what would be different about the newest audit from ones prepared by the firm in the past.
“As far as I know an audit is an audit. It is just an audit to make sure there was nothing inappropriate was done and everything is on the up and up,” said Ron Jacobs, Malheur County commissioner.
Jacobs said the $8.5 million request to the state could be jeopardized if auditors identify problems.
Whether Zwygart John and Associates can be considered an outside accounting firm even after it conducted previous audits of the project was a question Dan Joyce, Malheur County judge, couldn’t answer.
“I don’t know. That’s a good question,” said Joyce.
Jacobs said as far as he knew the accounting firm has “no connection to anybody who is working on the project.”
The two legislators listed six accounting firms they thought could handle the work. Those firms stretched from Portland to Corvallis to Fruitland and Bend and Lake Oswego., but did not include the firm eventually chosen by the county.
Joyce said the county chose Zwygart because the firm previously did “the books” on the project.
Jacobs said he wasn’t sure why Zwygart was picked.
“They’ve been on the board as auditors since I got here,” said Jacobs.
Jacobs said officials did not consider asking the Oregon Secretary of State to do an audit and “I don’t know if that is necessary.”
Jacobs and Joyce they believed the state Transportation Department also wanted an audit.
Erik Havig, the agency’s planning manager, reported via email last week that the agency hasn’t requested such an audit.
The two legislators indicated in their letter that concerns about the project emerged as they gauged support. They didn’t detail who they talked with.
“For the most part everyone wants the project to be completed but there are issues that must be completed before any additional funding commitments and support is received,” they wrote.
The reload center north of Nyssa is designed so onion producers can truck their produce to the site and load it onto rail cars for shipment to destinations in the Midwest and East.
The majority of the funding for the project comes from a $26 million outlay approved by the Oregon Legislature in 2017, and two $3 million special appropriations, one in 2021 and a second one September.
Yet the project has faced budget overruns and delays for years. Construction on the project ceased in December for lack of money.
The center was scheduled to open in 2020 and then a grand opening was slated for October 2022. Now, project leaders hope to be open by the fall of 2023 but that date is in limbo because of a lack of funds and the approval of the pending, $8.5 request from the county to the state.
Even if state legislators approve the $8.5 million outlay, there is no guarantee the money will arrive any time soon. Legislators probably will not make a final decision on the request until June.

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

Previous coverage:

Any legislative rescue of reload center wouldn’t deliver cash for months, officials say

Rail board picks Smith replacement as county pursues millions for shipping center

Smith says under oath he had contract for reload project – but ‘no records exist’

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