State legislators aren’t providing as much help as expected to rescue the Treasure Valley Reload Center, putting local officials in the hunt for another $5.5 million to finish the stalled project.
The project has been over budget for months and already has had two previous bailouts from the state and one from Malheur County itself.
Now, where project leaders will get more money to finish is far from certain.
What’s clear is that no onions will ship out of Nyssa this season as pieces of the warehouse building sit on the ground and two rail spurs needed to move train cars are yet to be completed.
Directors of the county-created company managing the project learned the news when they met in Vale on Tuesday, June 20. The Malheur County Development Corp. board made no decisions about its next steps.
The board discussed a limited range of funding options, most keyed to borrowing the needed money. Directors also learned that federal funding might be possible. Board members include Grant Kitamura, managing partner of Baker & Murakami Produce of Ontario, Corey Maag of Jamieson Produce in Vale, Jason Pearson of Eagle Eye Produce in Nyssa, Kay Riley, former owner of Snake River Produce in Nyssa, and Ralph Poole, retired business owner from Ontario.
The new money quandary emerged as Shawna Peterson, executive director of the development company, reported that state legislators would award another $5 million for the Nyssa project. Malheur County had sought $8.5 million in a request backed by state Sen. Lynn Findley and state Rep. Mark Owens.
The county’s request was part of a carefully-orchestrated plan to bring to completion a project pending since 2018. A recent analysis by Peterson showed the development company needed $10.6 million to cover unpaid bills and future construction costs. The company board had approved a plan that counted on $8.5 million from the state and arranging a loan for the rest.
At the board meeting, directors talked about borrowing more money. That would reverse a long-standing promise from county officials that the Nyssa project would be done with no debt.
Poole noted that the development company owns millions in assets – primarily rail lines – that could be used as collateral for a loan.
But the development company would need to find new income to cover loan payments.
The only income the company can expect now is monthly lease payments from the company under contract to run rail center. That is $2,500 a month.
The Enterprise, using online loan calculators, projected the monthly loan payments would be $33,000 a month. That assumes the development company borrowed like a homeowner, financing $5.5 million over 30 years at 6% interest.
Poole suggested the development company could impose an additional fee on shippers using the rail center.
The directors didn’t discuss a suggestion made recently by Malheur County Commissioner Jim Mendiola that the onion industry itself help fund the project.
Meantime, work remains stalled.
A contractor hired to erect the building is at a standstill as project leaders work to get a county building permit it expected to have in early May.
And final work to finish a rail spur is on hold because the development company doesn’t have enough money to cover all the costs.
Meantime, contractors who did preliminary work for the project that they finished last December are pressing for their final payments. The development company hasn’t had the money to make good on those bills.
Brad Baird of the engineering firm Anderson Perry and Associates told the board members that contractors waiting to get paid for several months are getting “pretty antsy.” He urged the board to borrow if needed to pay them.
In a Tuesday email, Peterson said the development company owes contractors $1.5 million.
The Nyssa project launched in 2017 when the Legislature awarded $26 million for its construction – expected then to cover all costs and leave a shipping center ready to ship onions east by 2020.
The development company conducted a groundbreaking ceremony on the site north of downtown Nyssa in October 2021 with plans to ship onions by the autumn of 2022.
As construction and funding problems developed, the start date was pushed back a year, to the fall of 2023. Now, project leaders have no new date for when onions will ship.
PREVIOUS COVERAGE:
More money will be needed to finish rail reload center while construction remains stalled
County inks deal with local engineering firm to conduct review of rail reload project
Permit glitches impede progress on rail reload project
Surprise $2 million cost drives reload center deeper into financial trouble
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