County Gives Nod to Tax Exemption for Columbia Distributing, Estimated to Save $5M over 15 Years

Three members of the Clackamas County Board of Commissioners gave a preliminary nod this week to 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.

Chair Jim Bernard, along with commissioners Martha Schrader and Ken Humberston, reviewed the agreement at a policy session Tuesday afternoon and, after hearing from Canby Fire Chief Jim Davis, gave it their unanimous approval to be moved to a future business meeting for final consideration.

The Canby 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, one of the most impacted districts will be Canby Fire, which is projected to lose out on an estimated $800,000 in revenue over the 15-year period. The biggest losers, according to the county’s numbers, would be Canby schools (at $2.21 million, assuming the current bond rates are continued), the city (at $1.41 million), the Canby Urban Renewal Agency (at $903,656) and the county itself (at $836,699).

Chief Davis told commissioners that his district is not necessarily against the program, it’s just that they didn’t know about it. Their financial outlook for the future had been based on Columbia being taxed at the full rate.

(“It’s not that we’re opposed to the 2010 law. It’s just that, No. 1, we didn’t know about it. We didn’t know about the law. The Fire District had performed some financial planning, anticipating the $68 million in assessed valuation moving forward, and were very, very surprised when this was put in front of City Council for consideration.”)

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 the company’s CFO, this incentive was an important factor in the decision by the nation’s fourth largest beverage distributor 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.

Any work that took place after that date — which was the vast majority of the actual construction — would still be eligible for the abatement under the Strategic Investment Program. This agreement is subject to the approval of the state, which has sole authority over which projects receive the exemption.

But Chief Davis, speaking before commissioners this week, didn’t necessarily seem clear on how this “compromise” fits into the existing laws that govern the program.

(“The big issue here is process. The law is very clear that the application has to be submitted and approved prior to building construction. And the building was well on its way before the submission. And that’s our point: We can’t get anyone to give us a firm answer on that question as to when it was submitted and approved. Columbia Distributing’s walls have been up for quite some time. We’ve spent a great amount of time out at Columbia on code enforcement issues.”)

Davis also wondered whether such a program should even still exist. It was created during the depths of the economic downtown, when economic growth was the exception, not the rule, and major incentives were necessary to attract any type of significant investment.

As the recent boom in development at the Canby Pioneer Industrial Park suggests, that may no longer be the case. For his part, Chief Davis believes the companies who have moved to Canby would have done so with or without the SIZ.

(“Keep in mind, too, when this law was passed back in 2010, step back and think about where we were then. There was no growth going on at the time in Canby or in the county. And so, everybody was doing what they could to try to promote growth. But that’s not the way it is in Canby right now, or in the industrial area. It’s growing substantially, and I feel that these business would move into Canby at this point, with or without this, because they’re receiving substantial savings in electrical rates. And moving from Multnomah County to Clackamas County, they’re already receiving a reduction [in taxes]. It’s quite a bit different than it was in 2010.”)

While the losses to Canby schools, the fire district, city and the other taxing entities are substantial, it’s important to view these numbers in light of what they’re gaining. Revenue on the company’s taxable portion of its property amounts to more than $6.9 million over the next 15 years, according to the county.

Add to that the estimated community service fee totaling $1.72 million, and you get a grand total of $8,629,234. Which is, you know, nothing to sneeze at. In fact, it’s easily one of the largest tax bills the city of Canby will see over the next decade and a half.

The council’s work session to discuss Columbia’s strategic investment zone application has been scheduled for 6 p.m. March 4 in the Willow Creek Conference Room of the Canby Civic Building.

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