The state legislative board that was counted on to rescue the Treasure Valley Reload Center won’t even consider a $3 million taxpayer bailout of the project, interviews and documents show.
That’s trouble for the Nyssa project, which is behind schedule and facing millions in cost overruns. Without the money to finish the work, the plan to move onions by rail out of Nyssa this fall now appears doomed.
Project leaders had hoped to forestall that outcome by getting money from the state Emergency Board, a group of legislators with authority to make spending decisions when the Legislature is not in session. The board is scheduled to meet Friday, June 3, but Malheur County’s request for $3 million won’t be considered.
The reason has more to do with legislative practices than the merits of the project.
Legislative leaders signaled more than a month ago that the Emergency Board would return to its customary practice of dealing only with emergencies raised by state agencies. That meant the direct appeal for the $3 million from state Sen. Lynn Findley, R-Vale, and state Rep. Mark Owens, R-Crane, wouldn’t be allowed.
Findley said in an interview Friday that he tried to change tactics, approaching the Oregon Department of Transportation to indirectly advance the request for $3 million. The agency didn’t do so.
“Unfortunately, we’re stuck in a bad position with this project,” Findley said.
Project leaders have made no public announcement about the matter, and Findley initially said in an email he hadn’t been advised by legislative leaders the request wasn’t proceeding.
Grant Kitamura, president of Malheur County Development Corp., the public company set up to build the rail center, confirmed that he was told of the development last week by Greg Smith, the Malheur County economic development director who is the rail project manager.
“We’ll have to delay until we have funding,” Kitamura said. “We’re not going to spend money we don’t have.”
Corey Maag, a director of the development company and owner of Jamieson Produce, said, “If it takes more time, that’s what we’re prepared to do.”
Malheur County Judge Dan Joyce said Friday that he wasn’t aware the bailout effort had failed until contacted by the Enterprise.
“I thought it was done a month ago,” said Joyce. “You’re taking me by surprise.”
The money issue arose as crews converting the farmland for the industrial project encountered unexpectedly poor ground conditions, requiring several million dollars in extra construction work. Inflation also has taken a toll as the project lagged more than two years behind schedule. In April, project leaders calculated they needed $10 million on top of the $26 million they already have to spend.
The excess has been trimmed by downsizing what was to be an economic development jewel for Malheur County. By the latest estimate, though, project leaders still need $5 million to finish the reload center.
What’s next isn’t clear.
Kitamura and other project leaders face one immediate deadline – on or about Monday, June 6.
That’s when the development company must decide whether to accept the one bid it got to erect the reload center warehouse. The price came in at $6.9 million – about 70% higher than engineers had estimated.
The bid is only good for 60 days. If the development company doesn’t take the bid, which has been whittled to about $6.5 million through negotiations, it would have to seek a new one. Board members have been advised that they aren’t likely to get a lower price and run a risk of getting no contractor to bid.
Keeping the project on track now hinges on quickly finding extra money.
“We’re looking for additional funding from multiple sources,” Kitamura said. “Greg’s in charge of that.”
Smith has so far failed in this mission.
In March, he said legislators finishing up their regular session had given the project an extra $3 million. That turned out to be not true.
In April, he outlined for board members other sources of funding he could tap, including:
• Seeking a state loan through Business Oregon. The rail project wasn’t eligible, and Smith hasn’t explained why he listed that as an option.
• Approaching the Eastern Oregon Border Economic Development Board for money. He hasn’t done so.
• Asking the Oregon Department of Transportation to simply add more money to the original $26 million grant. There is no record he did so.
That’s when Findley and state Rep. Mark Owens wrote to legislative leaders asking for the emergency $3 million. Findley also sits on the board of the development company.
As their request encountered political headwinds, rail project leaders turned to one other source for money – multinational Americold, which operates shipping and storage facilities worldwide. The company is under contract to operate the Nyssa depot.
The company recently was asked to put $2.5 million of its money into project construction. But no details of the terms of such a deal have been released, and there has been no disclosure whether the company has agreed to do so.
But even if Americold wrote a check soon for the $2.5 million, that would leave the reload center short by another $3 million or so.
Maag said the development company would “continue to pursue additional funding from the state” and “consider pursuing outside financing.”
Smith didn’t respond to emails and voice and text messages about the development. Smith has a practice of not responding to questions or interview requests from the Enterprise.
Two other development company directors, Kay Riley of Snake River Produce of Nyssa and Jason Pearson of Eagle Eye Produce of Nyssa, didn’t respond to emails seeking comment.
The person responsible for cost estimates and construction scheduling is Brad Baird, president of Anderson Perry & Associates, the La Grande engineering firm overseeing construction. Baird didn’t respond to email and phone messages last week seeking comment on how the loss of the $3 million would affect the work.
County Commissioners Don Hodge and Ron Jacobs also didn’t respond to emailed questions.
PREVIOUS COVERAGE:
Nyssa project officials hitting up private company for $2.5 million to cover cost overruns
Oversight of Smith unclear as reload project falters
Engineering firm on rail project exceeds contract by $500,000, hikes its fees twice
Rail board zeroes in on project engineers with tough questions over costs, bidding process
Reload center stripped down but millions still needed to finish, officials report
DA orders Malheur County to release records about reload project cost overruns
SUPPORT THIS LOCAL JOURNALISM – Available for $5 a month. Subscribe to the digital service of the Enterprise and get the very best in local journalism.