Local government

County court approves plan to pay off more rail reload debt

VALE – The Malheur County Court has decided to step in and pay off yet even more debt accumulated by the developers of the Treasure Valley Reload Center.

The court – Judge Dan Joyce and Commissioners Ron Jacobs and Jim Mendiola – voted unanimously to pay $107,000 owing to the Bank of Eastern Oregon for loans to the Malheur County Development Corporation. The county-backed credit line expired May 31.

The court approved extending authority for MCDC to borrow through the end of the year, but limiting the amount to $250,000.

MCDC was created by the county court in 2017 to oversee the reload center project but operates independently. The reload center is designed so onion producers can truck their produce to Nyssa for loading onto rail cars for shipment to markets in the Midwest or East.

The development company, which has no income, borrows money to pay bills that it then expects will be covered by state funding.

County general fund dollars will be used to pay the debt. The general fund is the main budget to finance county operations.

The court said the extended credit line will be used “to pay invoices when they are received and for expenses that will be reimbursed by ODOT.”

State reimbursements will be used to repay new borrowing.

 “Collateral/security for the line of credit is Malheur County’s full faith and credit, contingency funds, cash-on-hand and state lottery funds held within the Malheur County Economic Development Budget,” the county resolution said.

The meeting was also attended by development corporation board member Mike Walker, who urged the court to approve the credit line extension.

Walker told the court that having the credit line available would produce creditability with contractors when the development corporation seeks bids to finish the project.

He also said a commitment to extend the line would signal commitment to the project from the court.

“If you extend the credit line the message is, yeah, we are interested. If you withdraw the credit line you send the opposite message,” he said.

Jacobs asked Walker if the corporation sought other sources for a credit line.

“No, not a credit line. We don’t have any money,” he said.

Jacobs then asked Walker if the 65 acres owned by the corporation at the Nyssa reload site could be used for collateral to back a new credit line.

Walker said the 65 acres may be used as colleterial for more borrowing in the future.

Mendiola was blunt in his opposition to extending the credit line in particular and the project in general.

“I have seen a whole lot of get-up-and-go (by the corporation). I’m not too enthused about the line of credit extension,” he said.

The June 12 decision by the court is the third time it has stepped in to provide bail-out funds for the rail project, which now sits idle north of Nyssa.

In 2023 the court used county money to pay a $1.3 million owed to the bank by the development company.

Since then, the county has paid $27,672 in interest on new borrowing by MCDC. The current interest rate on the credit line is 4.75%.

Last week before the court meeting, Shawna Peterson, MCDC executive director, said the county should pay off the credit line.

The county opened a $1.5 million credit line through the Bank of Eastern Oregon in 2019 to help cover costs incurred by the development corporation. The line was expanded to $3 million in 2021 and then to $4 million in 2023.

The line was used to pay expenses on the reload project, including, most recently, payments to construction contractors and a payout to the Froerer family for the construction of a new road near the planned facility, said Peterson. The credit line pay outs are reimbursed by the state Transportation Department but the agency last August cut off any more funding.

Recently, the Transportation Department agreed to free $100,000 to revive the beleaguered rail project, which has been in a holding pattern since last summer.

When the Transportation Department suspended more funding last fall, agency officials said they needed MCDC to prove moving ahead on the project was feasible. The state also wanted the corporation to develop a plan to raise $10 million to finish the rail facility and find an operator for the center.

The $100,000 will be used to pay for a study to clarify markets for onions and to finish rail work.

The rail center project began in 2017 but faced cost overruns and missed deadlines for more than six years. The center was originally scheduled to open in 2020. MCDC officials have no projection for when they expect the rail depot to start operating.

News tip? Contact reporter Pat Caldwell at [email protected]

Previous coverage:

Treasure Valley Reload Center gets vital state money as new rail spur issue emerges

Malheur County Court will ponder paying off more rail reload debt

Behind schedule, over budget, state-backed rail projects costing $70 million sit idle

HOW TO SUBSCRIBE – The Malheur Enterprise delivers quality local journalism – fair and accurate. You can read it any hour, any day with a digital subscription. Read it on your phone, your Tablet, your home computer. Click subscribe – $7.50 a month.