Oregon taxpayers on the hook for new rail station on Idaho border

NYSSA, Ore. (KGW) — Oregon taxpayers are on the hook for a new rail station in the tiny town of Nyssa along the Idaho border, and the costs have been stacking up amid years of delays.

The project is called the Treasure Valley Reload Center. It’s meant to help farmers ship their products out to other markets — primarily onions. But the cost for the project, which started around $26 million, now stands at roughly $40 million.

An eastern Oregon newspaper, the Malheur Enterprise, has covered the issue extensively. Earlier this month, the paper published a special report titled “Another state bailout for Nyssa rail project in the works,” which is a riveting tale of cost overruns and state lawmakers who keep coming back with hat in hand.

Les Zaitz is the owner of the Malheur Enterprise. Once he ran The Oregonian’s investigative unit, but now he lives on his eastern Oregon ranch and provides hard-hitting news for that part of the state. He’s a consistent thorn in the side of people who try to hide things that should be made public.

That’s one reason why Zaitz has been on the Nyssa story for years now.

“So the Treasure Valley Reload Center is designed to help onion producers in Malheur County and neighboring Idaho producing areas an opportunity to ship their products back east by rail instead of truck,” Zaitz told The Story’s Pat Dooris.

The idea behind the project is that rail would be faster, somewhat more reliable and less costly than trucking, Zaitz said. It solidified as a concept in 2015, and the Oregon legislature set aside almost $26 million in 2017 to fund it.

“That was the entire budget for this. Permitting delays, funding delays, a number of issues held up the project and they broke ground in November of 2021,” he continued. “And now work has come to a stop because the project has run out of money and there’s still a substantial amount of work left to do to get this into operation.”

At last check, costs have grown to about $40 million in state funding. Zaitz’s team has been reporting on it for the last three years, and they’ve been looking into why the price tag has been getting bigger.

“Well, the project managers will tell you the primary blame goes to inflation, and while inflation did have some impact on this, one of the most significant impacts was that they wanted to build rail lines across a wetland,” Zaitz explained. “And they started this project building across wetland without having any idea how deep that wetland was. Push comes to shove, what happens is that they had to spend an extra $5 million to bring in boulders and rock to fill in the wetland and other soft ground on what had been irrigated farmland. So that was a a huge factor in the cost overruns.”

On top of that, Zaitz continued, the project managers estimated that putting up the Treasure Valley warehouse building would cost about $3.5 million. Instead, bids for the project put it closer to $6.5 million.

“The project manager said, ‘Well, we can cut that in half,’ and since then the costs have only increased and the building now is going to cost, if they build it out the way they designed, would be about $6.7 million dollars,” he said. “So it’s been a cascade of financial troubles coupled with the fact that the folks in charge of the project have not really had much in the way of budgets and they haven’t really tracked costs very well.”

Peeling the Treasure Valley onion

One big twist in the story — the project manager for the rail station up to this point, Greg Smith, moonlights as a state lawmaker. He’s a member of three powerful Ways and Means committees in the legislature, committees that decide where money is going to be spent.

On Tuesday, the Malheur Enterprise reported, Smith resigned as project manager for the reload center. So Dooris called Zaitz back up to get the scoop on the whole affair.

“Greg Smith is a Republican state representative from Heppner,” Zaitz said. “He runs a sideline business, a consulting business that contracts with a number of public entities around eastern Oregon. And those entities often benefit from his legislative service by getting state grants for projects; whether it’s Eastern Oregon University or the Port of Morrow, or, in the case of Malheur County, the funding for the Treasure Valley Reload Center in Malheur County.”

Zaitz said that Smith acts as a private contractor through his company, and gets paid $9,000 a month to oversee the reload center project.

“The problem has been that number one, there is no contract with Mr. Smith or his company, so it’s hard to discern what exactly he is supposed to do for his funding,” Zaitz continued, “and because of his other responsibilities, including a full time job in Boardman for the Columbia Development Authority, he is not a constant presence in Malheur County.”

It’s worth noting that the Malheur Enterprise and Smith have a history. In October, Zaitz and his paper sued Smith, along with Malheur County and the Malheur County Development Corporation, alleging that he withheld or destroyed public records related to the Treasure Valley project. That case is still chugging its way through Malheur County Circuit Court.

Despite the fact that Smith serves on committees that dole out state funding for some projects like the reload center that he directly benefits from, Zaitz can’t say whether those relationships alone represent any violation of state law.

“What I could tell you is that under Oregon ethics laws, you know, he declares a conflict of interest on some of these occasions when he votes on budget measures,” Zaitz said. “But there is no law that prohibits him from arranging money to go to entities that employ him, because the money’s going to the entity and not to Greg Smith or his company, so there’s not a direct flow of cash. But I think it’s pretty obvious to anyone who looks at this very closely that these public entities probably would not be getting the funding if Greg Smith was not working for them in his private capacity and working for them in his legislative capacity in Salem.”

The Story emailed Rep. Smith at the legislature, asking for an explanation on why he has chosen to leave the project now that it has hit a financial wall. He had not responded at time of publishing.

In the meantime, it’s unclear what happens next for the reload facility and the tax money that helped to build it. Not so long ago, it was expected to be up and running by the 2023 fall harvest. That now seems increasingly unlikely, which means onion farmers in eastern Oregon will once again pay more to get their products to market.


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