The industrially zoned area in southeastern Hermiston, generally referred to as the South Hermiston Industrial Park, has been the main focus of economic development of the City for many years.  The area has developed significantly since 1990. With development of Wal-Mart Distribution Center, Corteva Agriscience, Columbia Basin Bioscience, and many other small light industrial operations, the area now supports well over 1,000 jobs directly.  Planned developments by Meyer Distributing and Amazon Web Services within the area hold the potential for up to 400 additional jobs within the near future.

Despite historical and planned development, the SHIP still contains nearly 300 acres of highly valuable industrial land in large parcels capable of accommodating significant employment growth.  Completing Penney Avenue out to US395 is an important component of facilitating additional future industrial development.

The city's Transportation System Plan (TSP) has long shown Penney Avenue connecting to Highway 395.  Since the development of Ranch & Home, the TSP now calls for a future traffic signal at the intersection of Penney & 395 when traffic conditions warrant it.

As Norpac, Inc. was working through the process of liquidating it's Hermiston Foods processing Plant, city staff worked with Norpac to have the Right of Way for Penney dedicated at no cost to the City.  Shortly thereafter, City Staff held several workshops with businesses and property owners within the SHIP area to consider the most valuable transportation & utility improvements to make within the area.  From those workshops, water, sewer, and street improvements to SE 10th, and SE Campbell drive rose as top priorities to pursue Federal EDA grant funding for by leveraging a Local Improvement District.  In addition, the workshops identified the Kelli to 395 connection via Penney Avenue as a valuable addition to facilitate large truck movements in and out of the area.

In early 2020, City Staff requested Immediate Opportunity Fund (IOF) grant funding from ODOT, through Business Oregon, in response to the pending development of Meyer Distributing.  IOF awards are directly tied to job creation with a transportation nexus, specifically a nexus to ODOT facilities.  In the Spring of 2021, the Oregon Transportation Commission approved our request for funding at the standard 50/50 rate, which requires a 50% local match against the ODOT funding.  The enclosed IOF agreement was finally supplied to City Staff on October 14th.

Although 'Immediate' Opportunity Fund awards don't really live up to their name, their slow pace does help mitigate the City's risk.  You will note that the award of funds requires job creation by Meyer Distributing.  Meyer Distributing is already now well on their way toward completion of their $10M, 180,000 square foot warehouse, and should begin operations before the end of the year.

Approval of this resolution will allow acceptance of the IOF grant agreement in substantially the same term and form, with construction completion anticipated by the end of 2022.  It is important to note the "substantially the same" language, because there are several minor typo's in the agreement, which have been discussed with ODOT, and will be remedied in their final draft, however in the interest of speed, the attached has been brought to you for approval now. 

The City has been awarded $3.8 million in American Recovery Plan Act (ARPA) funding from the Federal government, which must be spent by the end of 2026.  City staff's recommendation in the Spring was to be deliberate in targeting the spending of ARPA funds, with an emphasis on expenses which can leverage additional outside funding.  It is therefore recommended that the local match of $596,600 against the IOF award for Penney Avenue come from ARPA funding.

It is important to keep in mind that the IOF award is a 50% reimbursement.  Therefore, if actual costs come in below expectations, then the IOF award is scaled down on a dollar for dollar basis.  Meanwhile, inflationary pressures have been showing up throughout the construction industry.  However, the attached cost estimate from Anderson Perry was developed in 2019, with an estimated construction year of 2022, with a 4% annual inflationary cushion baked-in on top of a 20% construction contingency.  Therefore, at this point, it is assumed that the final project will have a comfortable cushion to come in under the total project estimate.

1.  Approve Resolution 2200

2.  Reject Resolution 2200

3.  Request amendments