Business & economy

Top ODOT leader signals support to release more state money to get rail center moving

The executive director of the Malheur County Development Corp. said she is confident the project could get back on track with state money, after a private meeting with a top state transportation official. 

Shawna Peterson, who took over the reload project a year ago, indicated to the development board Thursday, May 9, that her meeting last week with Julie Brown, chair of the Oregon Transportation Commission, was encouraging.

Brown was “receptive to supporting the release of funds” for the embattled project, Peterson said in an email to the Enterprise.

Peterson told the board members that she explained to Brown the need for funding from the state Transportation Department to revive the Nyssa project.

A state decision to release more money for the Nyssa project would come at a crucial time for the stalled project.

“I’m maxed out in terms of what we can do without funding,” Peterson told the board.

Brown was in Ontario last week for a regular meeting of the Oregon Transportation Commission, which at times schedules sessions around the state.

Peterson said Brown told her she directly contacted the department director to discuss releasing the funding but there were no assurances that would happen.

Brown’s intervention could reverse a declaration by the Transportation Department just days earlier that no more money would be released until key steps were completed.

“ODOT will not support releasing funds for new work in support of this facility until these two items are completed,” the May 2 letter to Peterson.

Peterson later termed the letter “tone deaf.”

The MCDC board in April tasked Peterson to ask the state agency to release money it has frozen since last August. Peterson advised the board in April that her team needed up to $250,000 to continue work on the reload center.

Peterson said by email Monday that she hadn’t yet sought the money and that her talk with Brown “was my request for the release of funds.”

That direct appeal apparently circumvented what has been the practice since 2018, when funding requests have gone to the state agency executives assigned to oversee the Nyssa project.

Brown didn’t respond to emailed questions and Transportation Department officials provided no comment on changing arrangements for more state funding.

Peterson said in an email she anticipated “incremental” funding from the state.

But even if some money flows, the development company board appeared to concede there was no hope for getting the project done and shipping onions later this year. Board members now say shipments likely won’t start until 2026 at the earliest.

The project, which has consumed $30 million in public money, was once scheduled to open in 2019. The original cost of $26 million has grown to an estimated $40 million.

The MCDC Board was also told that there were no designs for the basic elements of the depot building and that downsizing the project would be the easiest way to avoid an expensive fire sprinkler system required by building codes.

The state is holding about $800,000 allocated to the project earlier and a million provided by the Legislature last year. MCDC has been hoping to tap into that $800,000 for expenses it has no money to cover.

Among the costs are $15,000 to determine the best rail route from Nyssa to move onions back east. Commtrex, a Texas rail logistics company, has proposed assessing several Mid-West cities as a single rail destination for Treasure Valley onions that would then be moved to trucks.

Peterson said she showed Brown the proposal from Commtrex. That contract, Peterson said, is a “prerequisite” to “fine tuning” a decision on hiring a company to operate the rail depot.

The Transportation Department had said that getting an operator on board was a condition for releasing millions more in state funding.

Peterson also said she pressed Brown about the need for about $85,000 to finish linking rail spurs at the depot site to the Union Pacific Railroad mainline.

She told the Enterprise that groundwork needs to be completed at the north approach to the mainline. She said that work was within “the scope” of what contractors were to do and she doesn’t know why it wasn’t completed.

Peterson added that she is establishing the cost to finish a fourth rail spur that is required under MCDC’s agreement with the railroad. Work on the track stopped when project costs exceeded the budget.

Axiom, a Boise consulting firm, estimated that the project team also needs about $250,000 to finish designing and budgeting the depot building.

During its meeting, board members were briefed on problems with the building.

According to a May 8 memo from Axiom, the building permit expired in October. A contractor started work to erect the building, getting as far as preparing foundation work when the project was halted.

The permit only covered the metal building, foundation, slab and utilities under the slab based on designs submitted by Anderson Perry & Associates, the La Grande engineering firm that directed work on the project for more than six years.

The Axiom memo noted that there was “no existing design” for the plumbing, mechanical, electrical and fire protection for the building.

Building the depot at a different spot on the Nyssa land “could remove the need for a fire sprinkler,” the Axiom memo noted.

Adele Schaffeld, Malheur County building official, recounted for the board that the current design of the building meant a fire system had to be put in place.

She said she advised Brad Baird, the lead engineer from Anderson Perry, of the fire sprinkler requirement for the warehouse before the steel building kit was bought.

“I let Mr. Baird know that before he bought the building. He chose to buy it without the collateral load for the sprinkler system,” Schaffeld said. “That’s why it’s very challenging when you have a design professional not familiar with building code requirements. It’s a specialty in itself.”

Baird and Chas Hutchins, president of Anderson Perry, didn’t respond to written questions about the design issues.

Peterson terminated MCDC’s contract with the company last fall. MCDC has paid Anderson Perry $1.9 million for its work on the reload center, according to the company’s records.

The executive director advised the board that a new design and location for the depot might be possible. She said the volume of onions now projected to move through the Nyssa depot is substantially less than when the depot was designed as a 60,000-square-foot complex.

The board could consider a “reorientation and relocation of the building. You’re not so far gone that thoughtfully reevaluating is an exercise in futility and a waste of money,” she said.

Peterson said she spoke to Brown about how past mistakes by others no longer involved in the project are being blamed on the project’s current leaders. She said she was not hired to “look backward” but has talked to “a lot of people in high places” about recent unfair criticism of the project “I was definitely not hired to justify the investment in this project,” she said. “I think there’s an opportunity – hopefully – for some accountability. I think there’s an opportunity for some lessons learned.”

Ralph Poole, a director of Malheur County Development Corp., recently shifted blame for reload center issues away from the company’s board.. (ANGIE SILLONIS/Special to the Enterprise)

Ralph Poole, an MCDC board member and retired Ontario business owner, said criticism has been unfairly heaped on the current group involved in the project.

“The brunt of the criticism should be directed toward ODOT, engineers that were hired and the railroad for all that practical purpose,” Poole said.

He said two miles of rail line were built that the project did not need. Poole said current board members are being blamed for such decisions, “which is not acceptable to me.”

Poole was appointed to the board by the Malheur County Court in December 2022.

Three board members have served since MCDC was formed in 2017. That includes Grant Kitamura, general manager of Baker & Murakami Produce Co. in Ontario, Corey Maag, Vale-area farmer and owner of Y1 Farms and Jamieson Produce, and Kay Riley, a retired onion industry executive who once owned Snake River Produce in Nyssa.

Previous coverage:

State approval of new business plan puts reload center project back on track

Key study that justified Nyssa reload center now doubted by long-time board members

State will not enforce deadlines on rail reload project, waiting for new plan

Permit glitches impede progress on rail reload project

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