Canby City Council to Discuss Property Tax Breaks for Columbia Distributing’s New Facility

The Canby City Council will have their chance this week to weigh in on a tweaked version of the Strategic Investment Program that will still save Columbia Distributing’s new Canby facility an estimated $5.1 million in property taxes over the next 15 years.

Approved in 2010, the county’s Rural Strategic Investment Zone program gives qualifying projects a 15-year abatement on property taxes due over the $25 million mark. Business must pay full taxes on the first $25 million and follow other criteria, such as hiring locally and using local contractors where possible.

The company must also give back a quarter of the abated taxes in the form of a “community service fee,” the disbursement of which must be agreed upon by all the impacted taxing districts. In this case, Columbia’s full abated amount is anticipated to be $6.89 million, but it will return $1.72 million of that in the community service fee, for a total savings of around $5 mil.

According to a memo from the city of Canby included with the packet for Wednesday night’s meeting, the community service fee is intended to mitigate the development’s impacts on the community, and to address other “high-priority projects or programs.”

The Clackamas County Board of Commissioners previously gave an initial nod of approval to the compromise hammered out by state, county and Columbia officials. They plan to consider a final vote on the agreement during their business meeting on Thursday, March 4.

The City Council must also sign off on the document, and if both bodies agree, it will head to the Oregon Business Development Commission, which has the final say. The commission expects to see Columbia’s Strategic Investment Zone application on April 10.

If approved, as many as a dozen local taxing districts would be impacted, the biggest losers being Canby schools (with an estimated loss of $2.21 million over the 15-year period, assuming the current bond rates are continued), the city (at $1.41 million), the Canby Urban Renewal Agency (at $903,656), the county itself (at $836,699) and Canby Fire ($801,622, with the local option levy and current bond rates included).

While the losses are substantial, the districts will also be receiving a lot more from this particular property than they were before Columbia came to town.

According to estimates from Clackamas County, revenue on the company’s taxable assessed value amounts to more than $6.9 million over the next 15 years. Add to that the estimated community service fee totaling $1.72 million, and you get a grand total of $8,629,234 — significantly more than the $5.1 million that would be abated.

In fact, according to the city’s finance office — even with the $25 million cap in place — Columbia will immediately become one of the city’s largest property taxpayers.

Fred Meyer, assessed at $24,863,054 in 2019, will probably be over $25 million this year. Under the SIZ, the $25 million cap would increase by 3 percent each year, so it is possible that Columbia could still overtake Freddie’s even while the program is in effect.

Depending on how you classify Columbia’s community service fee, which the Canby Finance Department technically considers a “fee” and not tax revenue, you may already count Columbia as the city’s No. 1 taxpayer. But there will be no contest once the abatement expires.

With an estimated assessed value in the $50 or $60 million range (and with firm plans for as many as two future expansions that would add an additional 224,000 in square footage to their 530,000-square-foot facility), Columbia would be the city’s No. 1 taxpayer in 15 years, and it doesn’t look like it will be particularly close.

TaxpayerTaxable Assessed Value (2019)
Columbia Distributing$25,000,000 (actual: est. $65,0000)
Fred Meyer$24,863,054
Hope Village$23,778,964
Sequoia Grove Apartments$18,972,161
American Steel Corp.$18,904,440
Canby Telephone Assn.$16,908,900
Johnson Controls$16,025,833
Shimadzu USA Manufacturing$15,723,941
Argo Canby LLC$13,318,038
Kogap Enterprises$11,317,157
Jorken Oregon LLC$9,011,821

While elected officials debate the merits of granting the proposed tax incentives to the largest and most significant industrial project the city of Canby has ever seen, the case is beginning to gain larger notice.

Over the weekend, former Oregon State Representative and Clackamas County Commissioner Tootie Smith, who is running against County Chair Jim Bernard in November, hammered commissioners over the proposed tax breaks, saying they “continue to act like the Super Majority at the Oregon Legislature.”

“Columbia seeks local city and county jurisdictions to back fill their profits with Urban Renewal money that will be taken from K-12 schools, Canby Fire Department and Clackamas County General Fund,” she alleged. “Meanwhile, Clackamas County can ill afford to give away tax money when they have failed to balance their own budget.”

According to the company’s CFO, the Strategic Investment Program was an important factor in Columbia’s decision to relocate their Portland metro area operations to Canby. However, due to an apparent miscommunication between Columbia and Business Oregon, the company failed to file its application before beginning construction — which is a prerequisite to being considered.

Initially, it appeared that would disqualify Columbia from participating in the program. But staff working with the county and the state soon hammered out a compromise that would render ineligible only the work that took place prior to when the state received the company’s application on July 2.

According to the company, work done prior to July 2 includes the purchase of the land, design and permitting work, and the beginning of the site development, including concrete pouring for the foundation. These costs (the amount of which were not provided) would be excluded from consideration under the SIZ.

Work that happened after July 2 includes “walls, roof, refrigeration, HVAC, electrical, racking and other material handling equipment, landscaping, cabling, security and other building improvements,” according to the company.

Columbia expects to begin moving into the facility in late spring of 2020 and be fully operational by fall. The facility will serve the entire Portland metro area along with Salem, a substantial portion of the Columbia Gorge and the Northern Oregon Coast. The facility will also serve as a hub for Columbia branches in Medford, Springfield, Bend and Pendleton.

Once fully operational, Columbia expects to employ roughly 300 full-time employees out of the facility, which will operate around the clock. These employees will receive, pick and deliver an estimated 16 million cases of product per year.

The facility itself will be owned by Canby East Associates LLC, a corporation whose ownership overlaps “substantially” with that of Columbia Distributing. Columbia will enter into a 15-year lease for the facility with Canby East.

According to a project timeline provided by Columbia, the lease is expected to take effect on June 1. The facility is projected to begin receiving product Aug. 3, with inventory from existing facilities also being transferred that month.

The initial four to six delivery routes out of Canby will begin service in September, with full operations expected to be underway by the following month.

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