Decision on Columbia Distributing Tax Abatements Looms for Canby City Council

In a time of booming economic growth and expansion (though the financial forecast certainly looks less rosy now than it did a few weeks ago), should the city and county grant a significant tax break to the West Coast’s largest beverage distributor, a company that five years ago reported almost $800 million from the sale of beer and cider alone? (They also distribute wine and non-alcoholic beverages.)

Should they still give it to them, even if the company failed to follow all the rules? And what would happen if they say no?

These are the questions facing the Canby City Council as they consider a Strategic Investment Zone application from Columbia Distributing, the planned owner/operator of the not-yet-complete, 530,000-square-foot beverage warehouse and distribution facility on the corner of SE First and Walnut in the Pioneer Industrial Park.

If granted, Columbia would receive a 15-year abatement on property taxes due over the $25 million mark. It’s not yet known what the ultimate assessed value of their property will be, but it’s being estimated in the range of $50 to $60 million.

In return, they would have to 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 total $6.89 million over the next 15 years, but it will return $1.72 million of that in the community service fee, for a total savings of around $5 mil.

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).

According to the company’s CFO, this tax abatement 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 of the program.

Initially, it appeared that would disqualify Columbia. 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.

Before the city’s last regular business meeting on March 4, Mayor Brian Hodson and the Canby City Council hosted Clackamas County Economic Development Coordinator Cindy Moore and Appraisal Manager Lynn Longfellow at a public work session to discuss the company’s application and the proposed compromise.

Rather than our usual 30-second sound bytes, we’re going to share a couple of longer clips from this meeting, to give you a better idea of the different issues that were raised.

In this first clip, Councilor Greg Parker asks Economic Development Coordinator Moore about one of the main benefits of the SIZ program, namely, the requirement that companies use local contractors.

The mandate doesn’t kick in until the application is approved, and in this case, the company has already hired its contractors. Its building is done. Councilor Parker asked, “So, how does this help Canby?”

Near the end of the work session, Councilor Sarah Spoon asked about what the consequences would be if the city denies the company’s application, a question that appeared to stump county officials until Longfellow gave the obvious answer: a lawsuit, probably.

That sparked this exchange between Councilors Parker and Tryg Berge, which we think really encapsulates the issues at play.

Councilor Traci Hensley seemed to sum up the feelings of more than one councilor saying, “Both arguments are accurate,” and that she feels “stuck” on the issue. She also said she would be interested in the city withdrawing from the SIZ, if possible, saying she didn’t like the program initially, and the more she heard about it, the less she liked it.

That may be an option for the city in the future, but not now. They’ll have to make a decision on the application by Columbia, and live with the consequences.

Initially set for March 18, a decision on the matter is now expected at the council’s next regularly scheduled meeting on April 1. Interim City Administrator Amanda Zeiber said it will be a “virtual meeting,” and they plan to have it televised. More info to come once all the details are sorted out.

The city of Canby and Clackamas County must both sign off on Columbia Distributing’s SIZ application for it to go before the Oregon Business Development Commission, which will have the final say. The Clackamas County Board of Commissioners unanimously approved the compromise during their business meeting last Thursday, as part of the consent agenda.

The state commission is expecting to see Columbia’s application at their regularly scheduled meeting on April 10. The commission meets quarterly and is not scheduled to reconvene following the April meeting until July 17.

In order to take effect, Columbia’s application must be approved by the commission before July 1.

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