ONTARIO — As the new year begins, a major step toward construction of the Treasure Valley Reload Center took place Friday with the purchase of the property north of Nyssa, where the rail facility is projected to be located.
The purchase of the property owned by Jim and Peggy Farmer and Warren Farmer was finalized Friday afternoon by Malheur County on behalf of the Malheur County Development Corporation. The corporation is the reload center project sponsor.
Documents were signed at the title company’s office by representatives of the Farmer family along with Judge Dan Joyce on behalf of the county. This step officially enabled the transfer of money to the title company from Business Oregon.
The total land purchase price is $3,019,900, for which the state agency is financing $2,050,000 through its Infrastructure Finance Authority’s Special Public Works Fund. The county kicked in $969,000 from its Contingency Fund to complete the package.
It is important to note that the $26 million in funding allocated for the reload facility by the 2017 Legislature in passing House Bill 2017 is to be used for transportation infrastructure, rather than property.
Paying back the $2.05 million
The county will ultimately have to pay back the money from the Special Public Works Fund used for the land acquisition.
The property size is about 290 acres; however, the county can only be reimbursed for up to 65 acres from Oregon Department of Transportation to pay back the state fund. Wilson said it is estimated this will end up being “close to the $500,000 to $650,000 range.”
With five more acres being purchased by the farmers, that leaves 220 acres. Of that, 143 acres will be zoned industrial, and the remainder will eventually be brought into industrial, according to officials.
Though there will be a time lapse before revenue is made, officials say they aim to do that with an assortment of funding resources. These include expected revenue from leasing the facility to an operator, leasing additional acreage adjacent to the facility, or selling parcels located in the industrial area or adjacent property.
‘An investment in the county’
Greg Smith, officer to the Development Corporation board and reload project manager, says assuming the worst-case scenario — the entire project going upside down — the county would still at the end up with property it could sell with a higher value than when it was purchased.
Smith and Malheur County Commissioner Larry Wilson both say while the purchase price of the property — $10,000 per acre — was higher than typical for farm land it is an investment. In addition to the property not being on the market, the value was expected to go up to $20,000 to $25,000 per acre once it was converted to industrial land.
“It’s not hard to justify the equity,” said Wilson.
Grant Kitamura, president of the Malheur County Development Corporation board, furthered that sentiment by saying said “it’s not really spending because once the facility is going you have an asset.”
Wilson said he sees this purchase as an investment in the county, adding that the loan will pay itself off.
With a 2.81% fixed interest rate, and no principal payments due for “three to four years,” Wilson said, it was “by far the best rate we could get.”
Interest payments on the loan did begin in December and are expected to last through 2023, and if there is any extra money available to pay the principal before then, there are no pre-payment penalties, he explained.
There are provisions in the sale documents allowing existing farming operations to continue until development begins and crops are harvested.
Spend money to get money
In order to get work done on the project, local officials must pay for the work then be reimbursed by the state. This is because ODOT does not providing funding up front for infrastructure projects.
As such, officials recently went out for a $1.5 million line of credit from the Bank of Eastern Oregon.
Furthermore, to ensure reimbursement is actually met, officials say all project work will be discussed with ODOT officials.
Invoices for work performed will be reviewed by an independent accountant, and payments will be authorized by multiple individuals.