NYSSA – Local officials are now on the hunt to find more cash to save the Treasure Valley Reload Center after state legislators decided not to provide as much help as expected for the beleaguered project.
Officials now must find another $5.5 million to finish the stalled project that has been over budget for months and already received two previous bailouts from the state and one from the county.
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 packaged elements of the warehouse building remain 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 is scheduled to meet again Thursday, June 29.
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.
Kitamura said the development company is “kind of in no man’s land…We have to figure things out.”
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 revenue the company can expect now is monthly lease payments from the company under contract to run the 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.
Peterson said she would expect a lending institution to verify income, assets, debt and property details before approving a loan.
Poole suggested the development company could impose a new fee on shippers to cover loan payments.
In a later interview, Kitamura said “that’s an option. We were talking about fees to begin with years ago. But without knowing the debt service or the volume it is pretty hard to anticipate what the fee would be.”
In fact, such a fee is already in place. The county is requiring the development company to assess a fee on each bag of onions shipped. The money would be used to finish paying off a loan the county took out to buy the Nyssa property.
Peterson said the development company is looking at a combination of loans and grant funding to close the funding gap.
She said one source for a loan would be Business Oregon, the state’s economic development department. Peterson said one “attractive option” would be the agency’s Special Public Works Fund. However, according to a Business Oregon brochure, the maximum grant amount for a project would be $500,000 based on the number of jobs created.
Even then, eligibility is limited to counties, cities and service districts. If the county were to apply, according to the brochure, there would be limits on what the funds could be used for. According to the Business Oregon website, one restriction is that railroads and rail spurs to be built with such funding must be publicly owned.
Peterson said the development company also is exploring federal funding.
There appears to be no appetite for a suggestion from Malheur County Commissioner Jim Mendiola that the onion industry now help fund the project.
Mendiola said local onion producers “should have been in the front line” to help fund the project from the beginning.
“I don’t know what to tell you. It’s a mess,” he said.
Malheur County Judge Dan Joyce and Commissioner Ron Jacobs both said last week they don’t support the county making such a demand on the onion producers.
“I think I know what they would say,” Joyce said.
Kitamura said a contribution from the onion industry isn’t likely. He said there is no incentive to do so.
“They know they need it, but, in the meantime, the past two years of poor yields and lower shipments, they haven’t felt the pressure,” he said.
When onion yields reach normal levels, he said, local producers might be more inclined to consider financial help.
“People are shortsighted to think that it is not needed because of the current situation. We need it more than ever because of the price of fuel and freight is higher,” he said.
Maag, a development company director, is also president of the Treasure Valley Onion Shippers, a consortium formed to provide assurances that onion producers were committed to using the Nyssa center. But no shipper has contracted to use the reload center and only four of the 13 companies in the onion shippers group have signed promises to use the rail depot.
Maag said the onion industry shouldn’t be tapped to finish the project. He noted that the project was always cast as fully publicly funded.
He noted that the reload center was meant to serve all agriculture, not just the onion industry. He said the shipping center would fail if the reload center only ships onions. It needs to be a year-round operation, Maag said.
He also said the reload center is more extensive than needed for produce shipping. The extra rail, he said, was intended to spur development of the county’s proposed industrial park, adjacent to the shipping center.
He said the onion growers and packing sheds are vital to the county’s economy. The onion producers pay property taxes, employ people in the community and buy goods and services from local businesses.
“I wouldn’t want to see the state of the county if the onion industry doesn’t survive,” Maag said.
The onion industry could see lower shipping costs by moving more produce to rail cars from trucks. One estimate done five years ago calculated producers would save $2 million a year if the Nyssa center was operating.
Industry officials backing the county’s request for more state money focused on those shipping costs.
The Malheur County Onion Growers Association wrote legislators in March that onion farmers rely on trucking to ship onions from their packing sheds to customers nationwide. However, truck transportation has become extremely expensive with rising fuel costs.
“Shipping onions by rail will significantly reduce transportation costs,” the association wrote, “allowing our onions to be more cost competitive with competing regions, like Washington and New York.”
The growers association also pointed out that shipping onions by rail would reduce fuel use and emissions.
Kimi Maag of Jamieson Produce wrote legislators that “the completion of this facility is vital to the onion industry in Idaho and eastern Oregon. This region is one of the top producers and shippers of onions in the nation.”
Onion industry officials have said they don’t expect an increase in onion acreage or in shipments as a result of having more access to rail shipments. The industry has been quiet about whether the public investment in the rail project would lead to new jobs among its producers.
Nyssa Mayor Betty Holcomb said Wednesday, June 21, that while she could not speak for the onion farmers, she said the project delays had been a hindrance for some growers.
“That’s more time that farmers have lost,” Holcomb said. “We absolutely need this.”
Construction crews idle
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.
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 an email last week, Peterson said the development company owes contractors $1.5 million. She said her understanding is that the development board could pay the contractors out of the $5 million the board would be getting from the state.
So far, Peterson she is still determining the logistics of how the money would need to be spent, but she expects the funding would come from the Oregon Department of Transportation.
The Nyssa project launched in 2017 when the Legislature awarded $26 million for its construction – expected then to cover all costs and leave a rail 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.
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