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Bourbon scandal sparks new doubts about Oregon Liquor and Cannabis Commission warehouse project

Oregon State Capitol building, May 18, 2021. Oregon's unique tax law sends money back to taxpayers whenever personal income tax revenues come in at least 2% above initial projections during a two-year budget cycle.
Kristyna Wentz-Graff
Oregon State Capitol building, May 18, 2021. Oregon's unique tax law sends money back to taxpayers whenever personal income tax revenues come in at least 2% above initial projections during a two-year budget cycle.

Some of the state's top budget writers want a closer look at the project, which has gone up in price by more than 133%.

As Oregon’s liquor control agency weathers a scandal over rare bourbon, Oregon lawmakers are showing a renewed appetite to look more closely at an agency construction project some watchdogs have called a boondoggle.

For years, the Oregon Liquor and Cannabis Commission has been working to build a new warehouse and headquarters. The agency argues that its current warehouse lacks capacity for all the liquor it could distribute, limiting both the variety of products it can ship to retailers and tax revenues for state coffers.

But the agency’s estimated cost for the project has ballooned by an eye-popping amount. The price tag rose by 133% between 2019 and 2022 — from an estimated $62.5 million to $145.7 million. It has risen higher since.

Part of that increase was due to a land deal that has earned withering criticism from members of the Oregon Public Lands Advisory Commission, which weighs in on state land acquisitions.

In April 2021, the OLCC agreed to pay $40.7 million for a 33-acre parcel in Canby, where it plans to construct a warehouse and headquarters. That land had been appraised for $22 million – and had sold for roughly $6 million not long before.

The deal was so objectionable to public lands advisory Chair John Brown that it became one of just two land deals he can remember the commission rejecting in more than a decade on the body. But that rejection was purely advisory, and the state’s Department of Administrative Services moved forward with the deal anyway.

“It’s over and it’s done, but hopefully we can learn from it and not ever let it happen again,” Brown said.

OLCC today argues that there were few suitable plots of land and that the larger warehouse will generate tax revenues that easily paid for the parcel. Oregon is one of 17 “control” states in the U.S., controlling the distribution of – and reaping revenue from – every bottle of liquor sold.

The OLCC has pegged the remainder of the ballooning project cost on the increased cost of construction and labor. The project is currently in its early stages and crews are not likely to break ground until 2025.

That is unless something major changes.

At a hearing of the Legislature’s powerful budget-writing committee on Friday morning, a routine matter involving the warehouse project came up on the agenda.

Lawmakers were only being asked to acknowledge they’d received a report from the OLCC. But while the committee hadfunded the escalating costs in a past vote, many could not resist airing doubts that appear to have grown stronger since revelations OLCC managers were reserving bottles of rare liquor for their own purchase.

“I have significant concerns with OLCC and the procurement and the cost of this warehouse,” state Sen. Lynn Findley, R-Vale said. “Given recent events and prior events that got us where it is, I think it would be imperative if we could have a more in-depth better understanding of what exactly is going on.”

Senate Minority Leader Tim Knopp, R-Bend, agreed: “There’s definitely some concern both in the public sphere and in this building about the cost,” Knopp said. “I just think based on what has transpired that the more eyes and more transparency that exists the better.”

State Rep. Greg Smith, R-Heppner, suggested the agency commission a “forensic financial audit” of the project “because of the nature of what has gone on.”

It wasn’t only Republicans signaling they wanted to delve into the project. State Sen. Elizabeth Steiner, a Portland Democrat and the budget committee co-chair, said she expected a subcommittee to ask hard questions of the OLCC moving forward.

“We are taking this quite seriously,” she said.

It is unclear whether those concerns will result in any changes to a project that is already underway. It’s also not clear when the lawmakers might be able to pose questions to the OLCC. An agency appearance before budget writers was scrapped this week, amid a scandal that has now seen two top officials step down.

The OLCC’s warehouse project “is unlikely to be stopped at this point, but we need to have as much transparency as possible,” Knopp said after the meeting. “If something comes to light that needs to be addressed, the Legislature will address it.”

Copyright 2023 Oregon Public Broadcasting. To see more, visit Oregon Public Broadcasting.

Dirk VanderHart is JPR's Salem correspondent reporting from the Oregon State Capitol. His reporting is funded through a collaboration among public radio stations in Oregon and Washington that includes JPR.