Construction for Malheur County shipping depot faces budget challenges

The Treasure Valley Reload Center would make shipping onions and other produce easier and cheaper for Malheur County growers. The project was supposed to be completed by the end of August, but officials now say they don’t have enough funds to finish construction. In 2017, Oregon lawmakers invested $26 million for the project. Now, the Malheur County Economic Development office has said this funding will cover the costs of everything but the main building. Les Zaitz is the publisher of the Malheur Enterprise. He joins us to share more on what’s next for the county.

Note: The following transcript was created by a computer and edited by a volunteer.

Dave Miller: Five years ago, Oregon lawmakers earmarked $26 million for a new shipping center for onion growers in Malheur County. Year after year, farmers were promised that the rail project was going forward, but the timeline kept getting pushed back. Now county leaders have been told that the project cannot go forward, that there’s not enough money to construct its main building. This is part of a larger pattern uncovered by years of reporting by the Malheur Enterprise, a lack of results and accountability for the county’s economic development team. Les Zaitz joins us talk about all of this. He is the publisher and editor of the Malheur Enterprise. Les, welcome back.

Les Zaitz: Good to be with you, Dave.

Miller: Let’s start with the basics here. What is the idea behind the Treasure Valley Reload Center?

Zaitz: The basic concept of Malheur County in this area is a deep agricultural community, and it grows acres and acres and acres of onions destined for markets back East and in the Midwest. They rely on a combination of rail shipments and trucking to get their products back East. The idea for the Reload Center was to build an industrial complex and Malheur County, that would number one allow the farmers to get their onions onto train cars for faster and cheaper shipment back East. But more importantly, this was supposed to be an anchor for major industrial development in Malheur County to bring in maybe upwards of 300 jobs. And for the poorest county in Oregon with a strained labor force, the promise of that sort of industrial expansion was too good to pass up.

Miller: So help for both farmers who are a major part of the current economy, but also infrastructure that would be the kind of thing that a new industry would be really keen on seeing if they were going to make an effort to invest in bringing their companies to the area?

Zaitz: Yes. The idea is that this would be built in a small town in Malheur County, which is about 20 miles south of the largest city of Ontario. The idea is that you would get rail spurs off the main Union Pacific Railroad line going through this region, go into a nearly 300-acre parcel of industrial land, put up the Reload Center and then that would attract, they hoped, allied industries like grain shippers and fuel producers. That one development would lead to another. And the key is this unimpeded rail access.

Miller: So that was the plan. This has been five years in the making, as I noted, first earmarked by the legislature in 2017. What were some of the earlier delays?

Zaitz: Well, the legislature signed the money and then the project developers – this is a Malheur County government and the driven project – had to put together some more formal plan for this. They had to scout out properties and they looked at real estate in this and in Ontario. They had to take those plans to the state and convince the state that there was a demand for this service, that it was economically feasible and that it would produce significant public benefits. And one of the most significant benefits that their researchers identified was ‘look, if we put all these onions on rail cars, we’re going to take thousands of trucks off Oregon highways and save consumers not only the road repair work, but air pollution and traffic accidents.’ But as time went on, Dave, the planning fell behind. The work on putting together the economic profile fell behind and a major problem developed when they tried to figure out how to develop an industrial park on top of the wetland and that’s been a huge impediment for this project.

Miller: Can you explain what was announced last week?

Zaitz: So construction on this finally got started last fall, and it suddenly became apparent to the project leaders that the cost of filling in that wetland and of dealing with irrigated farmland to turn into industrial property was going to cost them twice as much as they had budgeted. It would go from roughly $5 million to $10 million. Other costs started escalating and they went ahead with construction. Then they went out for a bid for the central building. This was the warehouse building, the loading dock where trucks would back up and unload the onions, they get put on two trains and away they would go. So they got one bid that came in at nearly $7 million, which is twice what they had budgeted. Now, mind you, by this time, they already had a lot of the construction money committed for laying down the rail traction, for putting in the roadways and it simply turned out that they simply did not have enough money in their budget to make this building go. And, they had hoped to get emergency relief from the legislature. They had hoped that a multinational company that would manage the facility would generously give them $2.5 million. That didn’t happen. So they came to the realization that they had to suspend that plan to build the building until they figured out where they’re going to get about $4 million.

Miller: We’re recording this conversation right now at a little after 11 a.m., Pacific time on Tuesday because it seems that there’s going to be a press conference at noon Pacific time. What options do county leaders have right now with a project that’s already underway, but for which there’s not enough money to actually finish it?

Zaitz: Well, that’s a good question. We’ve been asking project leaders including Greg Smith, who is a state legislator who runs the County Economic Development Department under a contract. We’ve asked those questions of county commissioners of the president of the development company in charge of putting this project together with Greg Smith and the answers are pretty vague. The options are really not very good. Number one, they can go back to the legislature in September and ask the emergency board for an emergency allocation. They can go to the county government and essentially mortgage the entire industrial property and borrow what they need to finish this. Or they can find some outside government agency that perhaps would make a grant to cover the cost. But short of the Emergency Board, Dave, there’s no immediate solution here and all of them come with complexities and a community that has gotten increasingly restless and frankly unhappy with the prospect of putting more and more tax money into this project.

Miller: Your reporting has actually been a lot bigger than just this one rail center that’s not going forward right now. You spent half a year looking into the economic development work more broadly done by Greg Smith. You just mentioned the state lawmaker, he leads the Malheur County Economic Development Department through a contract with his business called Gregory Smith & Company. How much has he and his company been paid by Malheur County over the last decade?

Zaitz: Well, he started the contract in 2013 for $19,000 a month and then in 2017 got an extra $6,000 a month to manage the Reload Project. Up till today, he has received about $950,000 for his work in Malheur County.

Miller: He told you that his agency, the one that he manages through this contract, has been the subject of an outside audit. What did you find when you looked into that claim?

Zaitz: Well, as with many claims made by county officials, that was a false claim. There was no audit. Greg Smith said that he was interviewed as part of the audit.  He said he was interviewed by a county official. He couldn’t remember who interviewed him or when he was interviewed. And then later on when we started putting that piece of the puzzle together, he acknowledged, well, no, there was no audit, but we had a financial statement audit for another entity.

Miller:  What could he point to to show what he’s done for the nearly million dollars that he has received over the last decade?

Zaitz: Well, as you know, Dave, we investigated that very question. Under his contract, he’s required to perform a number of specific tasks. And mind you, this is only a part-time arrangement for Greg. He has a full-time job in Boardman. He runs other consulting contracts with public agencies. So we simply asked him, ‘okay, so you have these specific tasks, such as devising and marketing plans to promote Malheur County. You’re supposed to have a complete inventory of industrial land available in Malheur County, where is it?’ And we were provided 16 documents that he said sort of chronicled his work under the contract in the period of the year. And it was … it was absurd, in a word. We showed it to each of the three county commissioners who said, ‘this is what your county economic development director puts out as evidence of his performance for $180,000 a year?’ And one of the commissioners looked at that and he looked up at me during the interview and said, ‘this is embarrassing.’

Miller: I want to get to the role that county leaders are playing because it is a crucial question, but just to stick for a little bit longer on the work and the proof of work that you were able to uncover. Can you give us a sense for what other economic development associations in the area do in terms of tracking their own work? Because this is the county effort, but there are others within the county.

Zaitz: That’s right. There are two other economic development organizations in this area. One of them is a Small Business Development Center at Treasure Valley Community College and then there’s a Snake River Economic Development Association. We asked both of those organizations, how do you document what you do? And the Small Business Development Center, for example, produces an annual report that shows here’s the number of jobs that we saved, here’s the number of jobs that we created, here’s the sum total of capital investment made in Malheur County as a result of our efforts. The State River Economic Development Association does a similar thing, and they both have very detailed annual plans for what they intend to do for the year ahead. You will find none of that in the Malheur County Economic Development Department.

Miller: You do note that in October of 2020, Greg Smith’s team put out a press release with quotes from two business owners in Malheur County saying that they had gotten invaluable help from his team. What were you able to find out when you looked into those businesses?

Zaitz: Well, one of the businesses is a coffee stand on the Nevada-Oregon border, which is about three hours or so south of Ontario. The owner lives in Nevada. Her staff lives in Nevada. Her business enterprises based in Nevada. We asked the county judge, Dan Joyce, how many jobs did this create? And he didn’t know. But this was what he considered had been told by Greg Smith was a success. The other company opened up a pizza restaurant in the small town of Jordan Valley, which is about 75-80 miles south of Ontario. It’s a remote community that doesn’t have any cell phone service, but we found records when that particular business sought help from the federal paycheck program it had a single employee.

Miller: I should note that we did reach out to Greg Smith to see if he could join us on today’s show and he declined. You had another deeply-reported article about Greg Smith last month. The gist was that the county could have been getting reimbursed by the state for some of the money it’s been spending to try to get the Reload Center built, but that Smith has not done the paperwork, meaning that the county has missed out on $50,000 so far and counting. How did Smith explain this?

Zaitz: Well, as with many of the questions from the Malheur Enterprise, Smith does not explain it. He doesn’t respond to our written questions. He doesn’t consent to interviews. He’s asked us not to send questions to him. So we can’t provide the community his account of this or his explanations for any such developments. And in that particular case and when we obtained the documents showing that the state would have reimbursed this poor county $5,000 a month for what it was paying to Greg Smith’s company and that he decided that the paperwork was too onerous stood in contrast to what the other contractors working on the Reload Center are required to do. The engineering firm has to list every employee and how many hours they worked. The contractor putting in all the roads has to account for every ton of rock moved in. With Greg Smith, his invoice to nine counties simply says professional services.

Miller: And just to be clear, his company still gets the money. The question is, will the county be reimbursed for some of the money it is paying to him, right?

Zaitz: That’s correct.

Miller: So the overall picture that you present in months and months of reporting and a variety of related issues is that there’s somebody who can provide very little, in some cases no evidence, that he’s been doing the job that the county has been giving him a lot of money to do so. But what I keep coming back to is that it’s county leaders who year after year are renewing his contract. That is where the buck is supposed to stop in this system. But year after year they have been saying ‘yes, keep going, we’re going to give you more money’. In the last couple years, it means we’re going to keep giving you $180,000 a year. How do they justify that?

Zaitz: Well, the County Judge Dan Joyce, who has been in office since I think 2004 versus the county commissioner now is the lead and by county judge, essentially, what that means is he is the chair of the County Commission. Judge Joyce’s explanation was, ‘I don’t get any complaints about Greg and that’s his way of evaluating what taxpayers are getting for $180,000 a year,’ as if he does or does not get a complaint about what Greg Smith is doing. The other commissioners say that they are satisfied with his performance, but then you start asking them, ‘well, did the county get its marketing plan? Well, that’s a good question. Have you ever seen a work plan that’s required of Greg Smith? Well, that’s a good question.’ It is a question for the community and for the Enterprise, frankly. To your point, David, how can county commissioners who are responsible for overseeing this contract? They sign it, they negotiate it, but they’re not seeing that the taxpayers of Malheur County are getting good value for the money received.

Miller: You sort of retired before when you quit your job at the Oregonian, but you kept running and obviously a really active role in the Malheur Enterprise, not to mention starting up the Salem Reporter and becoming the editor more recently of the Oregon Capitol Chronicle. Now, once again, you are talking about winding down, I think that those were the exact words on Twitter, about your journalism career. Why?

Zaitz: Well, two things. When I retired that was just in 2015, it was the following year that obviously Donald Trump became president and the aggressive assault on the free press in the United States commenced. And, as I watched that unfold and the implications, not only across the country, but frankly, here in Oregon, I grew very concerned about the future of journalism and the ability of journalism to be a force for delivering information that people can trust. And, I simply decided though I had retired from the Oregonian, that I had the energy, the ability and the training to – in a very small way – do something about that. And by that, what I mean is take steps to try and regain the trust of the American people in the press so they trust the information that they should rely on to make their decisions. So that is what sort of led me into this inability to say no. But now it’s reached a point where I feel satisfied that our profession in Oregon and across the country is engaged in this battle for democracy and for truth and fairness and accuracy and next year marks 50 years that I’ve been in this profession, Dave, and I think people probably will be happy to see me shuffle off, finally, into the shadows.

Miller: Do you feel though constitutionally like you are capable of not filing public records requests, of not trying to hold public officials accountable?

Zaitz: Do you mean, can I walk away from doing that?

Miller: Yeah. Your answer, which I take at face value, that the world changed in 2016, and so you saw a need societally and in Oregon. But that’s different to me, related to, but different from your own personal drive to do this work that clearly means something deeply to you as an individual.

Zaitz: Yes. And I get your point, Dave, and on that point, what motivates me is my lifelong ambition to hold public officials truly accountable, not just question them at news conferences, but to probe and dig and get at the truth.

Miller: And I’m wondering if you can … if you’ll be satisfied just writing letters to the editor as opposed to filing FOIA requests?

Zaitz: Well, yes, I will. Look, I’ve finally reached a point in my career where I feel I have done my duty. I’ve done all that I can do. It is time for another generation to take on these responsibilities. And frankly, look, life is short. I have a wonderful family. I have so many friends that it’s time for the work-life balance to tip heavily towards life and that’s exactly what I intend to do. Nobody believes me, not even my own father, who is going to be 92 next week, believes that I will ever retire. And I keep trying to convince him so. If I convince him, I guess I can’t convince you.

Miller: All right, well maybe we’ll talk again. Maybe he’ll ride off to the sunset.

Zaitz: Thanks very much.

Miller: We spoke about two hours ago. Meanwhile, I mentioned the press conference about the Treasure Valley Reload Center. Officials said this hour that they are still short $5 to 6 million but that construction for everything besides the main building will be completed by the end of this summer. Here’s something else to note about that press conference: Greg Smith, the county’s Economic Development Director, kicked Les Zaitz and another Malheur Enterprise Journalist off of the press conference’s telephone line saying they had monopolized enough of their time.

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