The Oregon Transportation Commission on June 20 declined to approve two multi-million rail projects that lawmakers agreed to fund two years ago.

"If we made the decision today, it would be 'no,'" OTC chairwoman Tammy Baney told disappointed proponents at the OTC's monthly meeting in Salem.

Instead, Baney and her colleagues asked project sponsors to answer additional questions about the underlying demand for the projects, whether the rail service providers are on board and whether the projects actually make sense.

"Commercial viability is the question," OTC Vice-Chairman Bob Van Brocklin told the applicants.

The commission's skepticism, which was based on analysis by the Tioga Group, an independent consulting firm, came as a blow to state Rep. Greg Smith (R-Heppner).

"We have tried our very best," Smith said. But he acknowledged more work needs to be done. "We concur with Tioga Group's issue and concerns," he added. "We think they're legitimate."

Smith took time out from his legislative duties yesterday to testify in front of the OTC as the private consultant leading the planned Treasure Valley Reload Center, a $26 million rail project planned for the Malheur County town of Nyssa and for a separate $25 million rail project near Albany.

(Malheur County is paying Smith's company $15,000 a month to serve as its economic development director and lead the rail project. The Linn Economic Development Group paid Smith's company $10,000 a month for his work on the project near Albany.)

As WW reported in May, Smith is in the unusual position in having served on the legislative committees that conceived of and provided funding for both projects.

Smith then secured assignments in his capacity as a private economic development consultant to lead the development of both projects. Oregon law permits that, provided Smith doesn't use his public office for private benefit.

In 2017, the legislature's Joint Transportation Committee passed House Bill 2017, the largest transportation funding package in Oregon's history. The bill included a specific earmark for a $26 million rail project in and $25 million for a project in the mid-Willamette Valley. That money was appropriated but conditioned on final approval by the OTC—which has been slow in coming.

Both projects were proposed on the premise that they could help farmers get their products to markets more efficiently. In Eastern Oregon, the crop is onions, which get shipped by rail to the Midwest. In the mid-Willamette Valley, the crops are straw and other crops that would be exported shipped north to Portland and Washington.

After the projects were identified, former state Rep. Kevin Mannix (R-Salem) threw a slight curveball. Lawmakers had funded HB 2017 based on the idea that the project in the mid-Willamette Valley would be sited on a defunct paper mill in Millersburg, outside Albany in Linn County. The group championing that location hired Smith. But Mannix put together a competing proposal on a site in Brooks, injecting an element of competition into the process.

The bad news: Tioga doesn't isn't convinced that any of the projects pencils out.

Matt Garrett, ODOT's director spelled that out yesterday to project teams. "I cannot at this time recommend advancing any of the three projects into negotiations for design and construction," Garrett told the commission.

On June 21, ODOT presented the three teams with a series of questions about their projects that the must answer by July 15. The OTC will then make its decisions at its July 18 meeting.