Business & economy

County court splits 2-1 over millions more for rail shipping project

VALE – Malheur County Commission Jim Mendiola didn’t pull any punches after listening to the latest briefing on the Treasure Valley Reload Center.

“I am about to throw up,” said Mendiola, Wednesday, May 25, during the regular meeting of the Malheur County Court.

Mendiola was reacting to the figures delivered by Shawna Peterson, executive director of the reload project, to the Malheur County Court. She shared the sobering news that the county will need more than $10 million to finish the Nyssa rail depot and that will have to borrow at least $2 million of that.

That pushes the public investment in still-unfinished onion shipping facility to more than $42 million. The county launched the project in 2017 expecting a $26 million state grant would cover all the costs.

Peterson and her team have been working for weeks to pin down costs to finish the project. She raced to do so, getting state legislators details they said they needed to make the case for more state money.

Initially, Peterson prepared a report showing $9.2 million would be needed. She got a shock after presenting that report to the board of Malheur County Development Corp., the public company managing the rail project.

Other project officials alerted that not in her calculation was $1.2 million in unpaid bills from work already done or under contract. She also had to add in $250,000 for a train engine.

In that moment, the money pit deepened to $10.6 million.

“It would be nice if they put their dog in the fight. Our little chihuahua is tired from running around and pulling the weight the whole damn time.”

–Malheur County Commissioner Jim Mendiola

Peterson explained that an outside engineering review found other costs had not been included in planning by Anderson Perry & Associates, the project engineers.

That included adding $517,000 for fire protection systems not in the original plans but required by county building officials. Brad Baird of Anderson Perry insisted to the development company board that he didn’t think the system was required.

Peterson also said that initial costs for such items as the plumbing and the electrical systems for the warehouse building were too low.

The day after the development company meeting, Peterson shared the new costs with the Malheur County Court.

Mendiola was visibly upset.

Now, the county is banking on getting yet another bail out from the Legislature – this time to the tune of $8.5 million – to finish the project. The state has already allotted bail out funds three times to the rail center.

The county court approved the $8.5 million request Wednesday on a 2-1 vote with Dan Joyce, Malheur County judge and Commissioner Ron Jacobs voting yes while Mendiola voted no. 

State Sen. Lynn Findley, R-Vale, and state Rep. Mark Owens, R-Crane, have championed more funding for the rail center but told county officials not to ask for more than $8.5 million, according to Jacobs.

That means the county and the development company have to come up with another $2 million and that likely will be by borrowing, Peterson said.

The source of such a loan isn’t clear ­– or how it would be repaid.

The only projected income from the rail center will be the $2,500 monthly lease from Americold, the multinational company that will run the operation.

For comparison, that would roughly cover the monthly mortgage on a $425,000 home loan.

The lease payments from Americold will be a fraction of what is standard for industrial property and half of what county officials once expected.

Joyce said the $2 million shortfall would be something Peterson will address “down the road.”

In an interview after the court session, Mendiola said onion producers who plan to use the facility need to contribute to its funding.

“It would be nice if they put their dog in the fight. Our little chihuahua is tired from running around and pulling the weight the whole damn time,” said Mendiola.

He said he believes the onion producers who will use the facility “could come up with $2 million if they want to finish the whole thing out.”

The industry has made no investment in the rail center despite projections the public project will cut their annual shipping costs by $2 million.

For now, Peterson is focused on shepherding a winning pitch through the Legislature. She wrote in a briefing paper for legislators that the rail project “brings together major players in transportation and logistics to bring a competitive edge to the Treasure Valley agriculture industry.”

“This project also creates jobs, improves the county’s property tax base, and is a springboard for the surrounding industrial park to be developed,” she wrote.

Attached to her request were 10 letters of support ranging from Adele Schaffeld, Malheur County building official, to the Malheur County Onion Growers Association and Simplot.

“The city of Nyssa, Oregon whole-heartedly supports the completion of the Treasure Valley Reload Facility which is under construction just north of the City of Nyssa. The facility will help all of Malheur County with respect to economic development,” wrote Nyssa Mayor Betty Holcomb.

Candi Fitch, executive director of the Idaho-Oregon Fruit and Vegetable Association urged legislators to support the reload project and wrote it is “transformational for the local onion, and agriculture industries.”

The $8.5 million funding rescue is not assured. Jacobs said the request is a “heavy lift” and in doubt because a legislative stalemate.

For now, said Peterson, construction will remain stalled at the facility.

“My recommendation to the (development corporation) will be not to take on any additional construction until we know we can pay for it,” said Peterson.

The reload center is designed so onion producers can truck their produce to the site north of Nyssa for loading onto rail cars for shipment to destinations in the Midwest and East.

State financial bailouts are not a new feature of the project. While the majority of the funding for the project was initially provided from a $26 million state outlay approved in 2017, the Legislature approved $3 million special appropriations in 2021 and 2022.

The groundbreaking ceremony for the rail center was scheduled for October, 2021 and officials planned to be shipping onions by the autumn of 2022. As delays piled up – mostly connected to funding – the opening of the center was pushed to September 2023. Now, there is no firm date when the facility will be open.

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


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