The loss of Americold as operator of the Treasure Valley Reload Center is a jolt. The project is in peril as never before. Only tough, bold leadership will salvage it.
Americold is the big company that was contracted to run the shipping center. Recently, the company stunned project leaders with formal word: We’re out. The company cited the uncertainty whether the reload center would be built. It said the deal in Nyssa no longer penciled out.
Taxpayers should understand what this means.
The task of finding another company won’t be easy. The Malheur County Development Corp., the public company running this project, has a tough sell. What does it have to offer? A project that is half done, without money to finish, years behind schedule, aimed at an onion industry that appears only lukewarm to the $40 million project.
Getting Americold to sign on took two years. And even then, it took a pretty sweet deal to close – the company was going to pay lease rates far below market and then get to buy the whole operation for a buck if it stuck around 20 years. Buried in the contract: an escape clause that lets Americold walk from its commitment with just 60 days’ notice.
Despite all those advantages, Americold still couldn’t see a way to make Nyssa work.
The departure upends the project in several ways.
The price to ship a 50-pound bag of onions through Nyssa is erased. Americold calculated the cost based on a certain volume. And the onion industry promised that volume in part because Americold could move the product to new markets.
The price was everything. The foundation of Treasure Valley Reload Center was saving shippers money, presumably making them more profitable and perhaps more stable. There’s no telling at this point if any other company can provide the cost savings expected from Americold.
Americold’s departure seems to stop the project another way. As the Enterprise has been reporting for months, project leaders need another $5.6 million to complete the project as designed. The talk recently has been to go out and borrow some or all of that money.
But any loan requires some evidence the borrower can repay it. At the moment, Malheur County Development Corp. has no income. It’s already had to turn to its rich uncle, in the form of Malheur County, to pay off past loans.
The community would be right to be angry about all of this. Warning signs have emerged for months that the project was in trouble. Those on the development company board were content to keep spending money, hoping somehow they’d get more. The Malheur County Court keeps forking over public money with Commissioner Jim Mendiola making the most honest remark ever when he said “I’m about to throw up” when told more money was needed. Commissioner, there are many others in the community who are gagging on this mismanaged project.
But what now? We can’t strip out the miles of rail for scrap. We can’t send back the steel building sitting on the ground like an Erector set kit.
The county court and development company have to exhibit guts they have so far not exhibited with this project.
They must order a full stop to all work. The steel building can sit on the ground. The rail spurs to nowhere don’t need extensions now. Suspend all the overhead eating into public money – engineering, accounting and more.
They must put on hold any idea of recruiting another operator. Project leaders have nothing to offer but a record of broken promises and debts.
They must wipe the board clean and start over. For six years, the focus has been serving the onion industry. But that industry is surviving fine without rail cars in Nyssa. And Americold’s departure signals industry interest isn’t that high anyway.
Instead, let’s get experts at work to figure out: What’s the best use of the Nyssa project? What produces new jobs? What benefits the community – and taxpayers? In other words, project leaders shouldn’t continue contorting themselves to keep onions at the center if that’s not the best future.
None of this will be easy. A part-time executive director can’t possibly be expected to shoulder this load. Shawna Peterson, who stepped in to clean up Greg Smith’s mess, should not have to ask for help.
The Malheur County Court recently authorized $50,000 to vet the construction costs, double-checking the questionable work of project engineers. The county commissioners should authorize another $50,000 or what’s needed to for experts to advise a reasonable, achievable path ahead for Treasure Valley Reload Center.
That’s not easy for us to recommend, as we’re mindful of money squandered over the years. But taxpayers need to face a truth – those millions are gone. Now, it’s time for a new team to figure out how to retool this project for success. Otherwise, Malheur County will wear a black eye in economic development that will take long to heal. – LZ