VALE – The Malheur County Court is pumping another $1 million into the Treasure Valley Reload Center in a last-minute budget move.
County documents show the court decided recently to use county money to pay off $1.3 million in debts owed by Malheur County Development Corp., taking the money from the county’s emergency fund to do so.
The money shift comes after county commissioners had said there was little chance more county money would be sunk into the beleaguered reload center.
The revelation comes as the project’s new manager urged a short “pause” to evaluate the future of the project.
At this point, the project is a blizzard of numbers as costs shift, sources of money change, and the amount needed to finish the Nyssa rail center remains uncertain. Meanwhile, project leaders and county officials are scrambling to find more money to solve what has become over the past few years into a political and financial quagmire.
Project leaders already are planning how to spend $5 million more they are getting from the state. That’s on top of $3 million the state gave last year and $2 million from the county.
Even with those bailouts, project leaders say they still need another $5 million to finish what started as a $26 million project and now is estimated to cost $40 million.
They are considering borrowing the money, breaking a promise for years that the reload center would be debt free when onions started to move.
A decision to pay off a $1.3 million balance on a credit line used by the development company was reached recently by county officials. The payoff was listed in a document prepared by county officials that accounted for what was described as “total investments” by the county.”
But Shawna Peterson, the development company’s executive director, said that wasn’t accurate.
“This isn’t new or additional and county will be reimbursed,” she wrote in an email to the Enterprise.
She said the payoff was a prudent move to eliminate commercial interest costs. Records show the county so far has paid more than $80,000 in interest in money borrowed from the Bank of Eastern Oregon by the development company.
She said the county would get its money back when the development company eventually recovers project funding being held in reserve by the Oregon Department of Transportation.
Shawna Peterson, the executive director of the Malheur County Development Corp. said a recent payoff of a credit line was a prudent move to eliminate commercial interest costs. (Malheur Enterprise/File Photo)
Peterson didn’t mention the arrangement at the development company’s most recent board meeting, held Thursday, June 29.
And the path through the county budgeting process suggests a hurried decision.
The $1.3 million in county money wasn’t in the proposed budget for the new year that started July 1 and it wasn’t in the budget approved by the Malheur County Budget Committee.
But the budget adopted by the county court included the payoff, cutting into the contingency – or emergency fund – maintained by the county.
Jacobs: No choice
Jacobs said late last week the decision was made to pay off the outstanding balance on the credit line because “we felt like we were going to be responsible for it regardless of what happened.”
Jacobs said he did not recall who initially suggested using county money to pay off the development company’s debt.
In the past, Jacobs expressed doubt the county would invest any more money in the project but said he felt the he “didn’t feel like we had any choice at this point.”
When asked why the credit line payoff was not presented to the county budget committee he said he didn’t know.
“It’s something we’ve discussed a little in the past, recognizing we were going to be responsible to pay that regardless and if we didn’t pay the interest it would continue to go up,” said Jacobs.
County Judge Dan Joyce seemed unaware of the transfer, telling the Enterprise on Friday, June 30, that it was a “good question” why the payoff budgeted.
Joyce said he would have to meet with Lorinda DuBois, the county administrator, to learn the answer.
He said he would be better able to explain to taxpayers why the decision was that talk.
“I don’t have anything concrete for you right now,” he said.
County Commissioner Jim Mendiola said he reluctantly voted to approve the credit line payoff.
He said he was not comfortable with the decision but felt there was little choice.
“MCDC doesn’t have any money. They are not going to get the money from anywhere else and we have to pay the bills,” he said.
“The whole thing sucks. Sucks bad,” he said.
$10.6 million needed
The budget work came as Peterson won the support of the development company for time to dig into the reload center’s finances.
“Finishing this project will require approximately $10.68 million,” she said in a written report to the board. “I recommend taking due time to update the project plan, feasibility, projections and plans to ensure this project can not only be built, but operate successfully.”
She told the board financial projections “are a good five years old at this point.”
In 2018, county officials said the project would be profitable for the development company. One projection showed the reload center would take three years to reach full use by customers and then would have net income each year of about $750,000.
A second scenario showed the reload center would be leased and the development company would collect a fee on produce shipped through. But that showed a lease rate twice what turned out and Malheur County itself has already claimed a per-bag fee.
Determining how much money that reload center could make for the public entities is likely crucial to finishing the reload center.
That because project leaders are for now counting on borrowing to raise the money needed. As with a home loan, the development company would have to show it would have income to repay the loan.
Peterson said those calculations are what she will be working on in the coming weeks.
“I believe this project’s success depends on making well-informed decisions based on current information and I need time to help the board gather information,” said Peterson at the meeting.
Peterson said the county’s best alternative for more money is a loan through Business Oregon, the state’s economic development department. The program, called the Special Public Works Fund, carries a “grant component” tied to job creation, said Peterson.
The county, said Peterson, would borrow the money and guarantee the loan.
She said the county could ask for the entire $5.5 million or less.
In an email Friday, June 29, Peterson said pro forma and operational projections on the facility need to be updated.
“This is necessary to obtain additional funding and is also a wise step for a major project where time has passed since that was last completed,” she said.
She said the phasing of the construction needs to be planned to use the $5 million earmarked by the state for the center. That money isn’t expected until September at the earliest.
Petersons said she is engaging Union Pacific and Americold – the firm brought in by the county to operate the rail depot.
News tip? Contact reporter Pat Caldwell at [email protected]
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