Oregon transportation regulators are postponing key objectives that truck-to-rail reload projects in the Willamette and Treasure valleys must complete to secure further funding.
Both intermodal facilities are intended to improve the efficiency of shipping farm goods, but their economic underpinnings were cast into doubt during a review conducted for the Oregon Transportation Commission.
The mid-Willamette intermodal facility in Millersburg, Ore., is meant to allow farm goods to be shipped by rail to maritime ports along Washington’s Puget Sound, instead of relying on trucks that get bogged down in traffic in Portland, Ore.
The Treasure Valley intermodal facility in Nyssa, Ore., would let local farmers load their onions directly onto rail cars bound for major markets rather than first trucking them to a reload center farther away in Eastern Washington.
An economic analysis conducted by the Tioga Group, a transportation consultant, determined that both projects faced serious hurdles to long-term financial sustainability, such as handling sufficient volumes of product and offering cost-competitive shipping rates.
Though the Oregon Transportation Commission decided to fund both facilities last year, it didn’t authorize project sponsors to spend the full $25 million for the Millersburg site or the $26 million for the Nyssa site that had previously been approved by lawmakers.
Instead, project sponsors would incrementally have to reach certain milestones to unlock further rounds of state funding from the Connect Oregon transportation grant program. In September 2019, the Millersburg facility received an initial $376,000 while the Nyssa site received $525,0000.
Earlier this year, the Millersburg facility was set to receive $7 million while the Nyssa facility was to receive $1.6 million as long as they met certain milestones.
Both projects were to submit fully executed agreements with terminal operators as well as updated financial statements to demonstrate their viability by the end of the year. The updated financial data and operator agreement are now due on Sept. 30 for the Millersburg site. For the Nyssa site, the financial data is due June 1 and the operator agreement is due Oct. 30.
Project sponsors for Millersburg site could not come to terms with Northwest Container Services, an intermodal operator that was intended to run the facility, said Roger Nyquist, chairman of the Linn County Board of Commissioners, which supports the project.
Five applicants have since submitted proposals to operate the facility and a new agreement should be in place by summer, Nyquist said.
“If long term this didn’t pencil, people wouldn’t be interested,” he said. “We feel good about it being a good deal for the taxpayers.”
Aside from the operator agreement, there are also issues that must be resolved regarding how the facility will interface with the railroad, he said. “We would have been asking to change the order of the milestones.”
Kevin Mannix, an attorney and proponent of a competing site in Brooks, Ore., said the plan for Northwest Container Services was a major reason the Millersburg site won out over the project proposed by his Oregon Shipping Group.
“They took advantage of that relationship and made it a critical aspect of their government award,” he said. “It’s like the A-team no longer has the A-team leader.”
However, Northwest Container Services still plans to compete for the chance to operate the facility despite the initial agreement falling through, said Gary Cardwell, the company’s divisional vice president.
In requesting a change to the Treasure Valley project timeline, the Malheur County Development Corp. said the Oregon Department of Transportation’s policy of withholding 5% of the reimbursement for expenses was a “significant barrier to success” and “perhaps a deal breaker.”
The agency withholds 5% of the reimbursements for invoices until all conditions of such transportation grants are completed.
Since then, though, the project sponsor has struck a deal with its contractors under which it also withholds 5% of payment for invoices until completion, said Greg Smith, the project manager.
“As we get paid, they’ll get paid,” Smith said, adding that it was an “issue of concern” that has since been resolved and won’t be an impediment.
The project timelines had to be “re-ordered” because the facility operator needs to work in tandem with the railroad on the project’s design, he said. “We can’t get to that design until we get the railroad on board.”
Under the new schedule, the facility design process will work more smoothly, Smith said. “In our view, the project is moving right ahead.”