Treasure Valley Reload Center (TVRC) Project

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TVRC Rendering Phase I.jpg

Phase I Rendering

Phase II Expansion Rendering

Malheur County Development Corporation is proposing the development of the Treasure Valley Reload Center (TVRC) in Nyssa, Oregon. The site is centrally located in the Treasure Valley which includes Malheur County (OR), Payette County (ID), Washington County (ID), Canyon County (ID), and the northern portion of Owyhee County (ID). The site's location along the Union Pacific Railroad (Union Pacific) mainline and near US Highways 20, 26, 201, and 95 makes it ideal to serve as a centralized reload center for the valley's natural resource-based economy. The proposed TVRC would serve the agricultural community in the Treasure Valley by providing infrastructure to transfer agricultural products from trucks to rail. The TVRC has the potential to provide public benefits by reducing the number of trucks using the highways in eastern Oregon, which potentially would lower highway maintenance costs, improve air quality, and decrease carbon emissions. The project would produce positive economic impacts through increased local spending and creating employment opportunities. The goal of this study is to analyze the facility’s potential operations under different scenarios, understand the financial and economic conditions for successful operations, and quantify the potential public benefits that would be realized.

Commodities and Products Likely to be Served

 

The Treasure Valley collectively grows over 40 percent of the onions in the Pacific Northwest, with over 19,000 acres harvested each year. Over the past five years, an average of 490,000 tons of onions has been shipped out of the region each year to customers throughout the United States. About 86 percent of these onions move to their final destinations by truck, with the remainder traveling by refrigerated rail car, either through existing rail access in the Treasure Valley or via the ColdConnect facility in Wallula, Washington. This market is seasonal, with 76 percent of the onions shipped between October and March of each year.

Quarterly Onion Shipments from study are
Typical Market Destinations

 

Agricultural products produced in the region are shipped to a broad set of domestic customers, with southern California and the upper Midwest (Illinois and Wisconsin) serving as the primary destinations for truck shipments. Dallas, Atlanta, and the mid-Atlantic (Maryland, Pennsylvania, and New Jersey/New York) serving as primary destinations for rail shipments. Discussions with onion shippers in the region indicate that the vast majority of their products travel to destinations east of Oregon, both by truck and rail.

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Market Share in the Area That Would Use the Facility

Market analyses of existing commodity flow and agricultural production data combined with stakeholder interviews indicate the expected level of rail service needed. Although the majority of products are still likely to travel by truck, the analysis indicates that there is sufficient demand to support 1.1 – 1.4 million CWT per quarter during the peak season (October through March), and 150 – 303 thousand CWT during the low season (April through September). Approximately 48 percent of these are expected to be new shipments, while the remainder will be substituted from existing rail sidings in the area.

 

Rail cars vary in size, and depending on loading technique, can carry different volumes. Quarterly shipments in CWT, 1,200 CWT capacity rail cars, and 1,600 capacity rail cars are shown below. This amounts to 86-107 thousand CWT per week, and between 54-67 and 72-89 rail cars per week in the high season.

The results of the stakeholder interviews with an opportunistic, self-selected sample are roughly consistent with this estimate. The fourteen interviewees suggested they would ship a total of 119 thousand CWT per week (1.5 million CWT per quarter) during the peak season.

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Anticipated Transportation Cost Savings

Private transportation cost savings may accrue to users of the facility who face lower transportation costs than current alternatives. These benefits only accrue if user fees are lower than alternative shipping modes that provide the same level of service. Since, the current mix of shipping alternatives will continue to exist, allowing growers and shippers to choose the alternative that provides the best level of service, reliability, and timeliness necessary. Calculation of the scale of anticipated private benefits, however, is performed using expected demand, expected trucking costs, and a basic set of assumptions on markets served. Under full utilization, is private transportation cost savings are expected to total $1,831,000 per year. When evaluated over a twenty-year timeframe—from 2020 to 2040—at a 3 percent and 7 percent discount rate, these savings amount to between $18,129,000 and $26,448,000. These transportation cost savings are likely to be captured in the private market by either growers, shippers, the facility operator, or Union Pacific.

Size and Scale Necessary to Support Operation

The TVRC will include a 60,000 square foot warehouse with railroad tracks on one side and loading docks on the other side. Local shippers will back their trucks into the loading docks and unload their product into the warehouse. From the warehouse, operators will load product onto refrigerated rail cars when the train arrives. The warehouse will provide temporary storage capacity for product shipping on the next train. The site is large enough to accommodate additional warehouse development, which could increase future storage capacity and provide additional storage options, such as cold storage.

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The site plan also shows the area north of the proposed reload center where future buildings can be located along the same rail spur. This future reload facility area allows for considerable expansion of the proposed reload center, up to 6 to 7 times the building area and loading dock frontage. This future reload area can utilize the same rail infrastructure initially constructed for the facility with minimal extension of siding spurs, maximizing the future potential and use of the initial rail investment for the facility. Furthermore, the site plan shows potential lot layouts for the remainder of the site. This layout shows several potential site parcels ranging in size from 7 to 16 acres. These sites can be parceled out at whatever size is needed for businesses looking to locate in the vicinity of and adjacent to the reload facility.

The rail component of the TVRC will consist of a support track with 7,000-foot minimum clearance from the Union Pacific mainline. Two additional support tracks will be available to set out inbound cars and pull out with outbound cars. There will be sufficient switching length to shove a full cut of cars onto either loading tracks. There are sufficient track centers planned to allow for additional expansion1 in the future for two support tracks with 7,000-foot clearance each, two more storage tracks, and two more working tracks. These additional support tracks and storage tracks would support any industrial customers that develop in the future industrial park adjacent to this facility on the Malheur County property.

Financial Feasibility of Operations

The financial feasibility of the TVRC is calculated using a financial operating model, which includes fixed and variable operating costs associated with all operations at the facility. Based on estimated demand for the facility and available market data and operating inputs from a comparable facility at the Port of Morrow, Oregon, it is expected that the facility will generate over $720,000 in revenue in each year of operation once build-out is complete. This is sufficient to support the continuous operation of the facility. At full build-out, this facility will require 7 full-time- equivalent staff, one facility manager, plus approximately 13 to 19 seasonal staff during the peak season.

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Anticipated indirect job and economic impacts are calculated using a standard input-output model and include direct, indirect, and induced impacts from construction and operational expenses. The construction of the facility and rail line will support $18.2 million in direct output, $5.5 in direct labor income, and 148 direct construction jobs. Spending circulates through the local economy resulting in indirect and induced effects. Combined with the direct effects, construction generates a total of $23.7 million in output, $7.1 million in labor income, and 199 jobs. The operations of the facility will support $2.1 million in output, $1.2 in labor income, and an average of 16 jobs (full-time equivalents) every year. Summing the direct, indirect, and induced effects result in $2.7 million in total output, $1.4 million in total labor income, and approximately 21 total jobs supported by the facility.

Public Return on Investment Analysis

Public benefits to the residents of Oregon accrue when goods that are non-rival and non- excludable are improved. Although the values can often be inferred from private market transactions, public goods are not regularly bought and sold. This analysis draws information from published economic literature and relevant federal guidance to calculate a range of accruing benefits to Oregon residents from the construction of the TVRC. It is expected that the facility will generate between $1 and $1.8 million in benefits during full operation from removing trucks from roadways in Oregon. Over 20 years of operation, this amounts to between $10 and $26 million in total.

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Bottom Line

The proposed Treasure Valley Reload Center can serve transportation needs in the region by providing direct regional access to the nation’s rail network. The analysis contained in this report estimates that, once fully operational, economic conditions indicate that the reload center will be able to operate in a financially feasible manner, produce significant regional economic impacts, and potentially generate sufficient public benefits to generate a 1-to-1 return on investment for the State of Oregon.