Councilors Air Frustrations over Proposed Tax Incentives for Columbia Distributing

The massive beverage warehouse and distribution facility that will become the new Portland metro area headquarters of Columbia Distributing has been discussed ad nauseum in the community of Canby, and has been covered extensively by the media (or at least, by this media outlet, cough, cough).

But one aspect of the project was not widely known before this week’s city council meeting: Columbia’s investment in Canby would qualify it for a huge property tax break over the first 15 years of their occupancy.

How huge? It’s difficult to determine because the savings is based on the property’s assessed value, and we don’t know what that will be. The approximately 530,000-square-foot facility is not occupied yet, or even finished.

But the threshold for receiving the tax abatement through the county’s Strategic Investment Zone is $25 million, and it’s safe to say Columbia will be well over that. The company estimates they have invested or will invest more than $65 million in land, building and equipment at their new location in the Canby Pioneer Industrial Park.

Under the SIZ, taxes on any assessed valuation in excess of $25 million are abated for 15 years. In return, the company must pay 25 percent of the savings — up to a maximum of $500,000 — toward a community service fee, whose disbursement must be determined through an agreement between the city, county and other taxing districts (in this case, Canby School District and Canby Fire).

There is also the potential that some of the loss could be offset through a state income tax program, though this is subject to legislative approval and may not be a permanent program.

Generally speaking, the SIZ will probably translate to a savings for Columbia of at least several hundred thousand dollars per year, with the community service fee included. Wednesday night, Canby Fire Chief Jim Davis estimated that the impact to the fire district at between $60,000 and $85,000, and their tax rate is roughly half that of the city’s.

Virtually every councilor expressed some measure of frustration about the process, both that they hadn’t known about it before this week, and that their “hands are tied” with regard to the decision. Their decision was essentially made when the city agreed to be part of the county’s SIZ program back in 2010, and they can’t now deny a project that meets the criteria for the incentive.

“Don’t write a check with our face if we’re going to have to cash it,” Councilor Greg Parker said, in comments directed toward city staff as well as Mayor Brian Hodson, who was involved in some of the early recruitment efforts for Columbia. “If we have tools out there that are going to require council approval, I think we need a heads up. … When we’re being given it after the building’s already built, that seems like we’re an afterthought.”

Columbia’s application for the SIZ came in around the time that the project broke ground early this summer, and city staff admitted the program had been part of their initial discussions with the company at least as early as April 2018.

“It was a very early conversation, the incentive of the strategic investment zone,” Canby Economic Development Director Jamie Stickel said.

The costs to the city are not insignificant, as pointed out by Councilor Sarah Spoon and others. A traffic study indicated the fully operation Columbia facility would generate close to 1,600 new vehicle trips per day, a large percentage of that being truck traffic for deliveries.

The project is a large contributor to the need for the planned traffic signal at Sequoia and Hazel Dell, and a new north access road for the industrial park. The city, through a combination of system development fees and urban renewal fund, is expected to foot most of the bill for both projects.

“They’re getting a 15-year abatement, but we don’t get to abate our expenses associated with the development coming into town,” Spoon said. “Even though we get the full taxes in 15 years, we’re still buying property, putting in roads… Those expenses come to us right now.”

As City Administrator Scott McClure explained, Columbia will still be paying a lot in taxes, to the city and the other districts. Columbia will be expected to cover the full amount due for the first $25 million of their investment each year, which alone translates to roughly $350,000 for the city of Canby.

Compare that to what the undeveloped property was generating, which City Attorney Joe Lindsay said was most likely nothing due to agricultural exemptions.

“So it went from zero to $25 million worth of value that’s being taxed,” Lindsay said. “And then there’s the income tax piece, which wouldn’t be there if it were just sitting there as grass and rocks like it was before.”

In Chief Davis’ remarks Wednesday, and in a letter to the city from their attorney, Robert Blackmore, the district expressed similar sentiments, along with concern that they had not been informed of this tax break before this week.

Click to access SKM_C45820011709080.pdf

Chief Davis said Canby fire personnel have already spent numerous hours at the site, performing inspections and providing other services.

Once the building is occupied later this year, it will house upwards of 300 employees and operate around the clock. Canby Fire will be expected to provide full service to the property even if a sizable portion of its property tax bill is being abated.

“[I]f this project goes forward as currently presented, the impact of the loss of financial resources coupled with increased need for services will significantly erode the quality of the district’s services,” Blackmore’s letter read.

Councilor Traci Hensley said that while she wants to support business interests and help them succeed, she’s sympathetic to CFD and the other affected districts who also didn’t know this was coming down the pike.

Councilors and the fire district also questioned whether the application had followed the proper process required by law, which seemed to imply the need for the SIZ application to be submitted and approved prior to construction.

However, Stickel said city staff and the company have been working closely with Business Oregon throughout this process and have been assured the project remains eligible for the SIZ.

In the end, the council voted to table the resolution until the next meeting on Feb. 5, to give more time for city staff to research the proposal and its current status, and also for the fire and school districts to discuss the matter and provide feedback.

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