City Council OKs Strategic Investment Zone Application for Columbia Distributing

The city on Wednesday night approved the Strategic Investment Zone application for Columbia Distributing’s new 530,000-square-foot facility in the Canby industrial park, in a protracted and, at times, contentious meeting between councilors and city staff, which happened virtually thanks to the coronavirus pandemic.

The 4-2 decision, with councilors Greg Parker and Sarah Spoon voting against, clears the way for the application to go before the Business Oregon Commission, which has the final say and is expected to review the matter at their next meeting in May.

If approved, Columbia would receive a 15-year abatement on property taxes due over the $25 million mark in assessed value. Estimates from Clackamas County say the program would save the company almost $7 million in property taxes over the next 15 years (though 25 percent of that must be returned to the taxing districts in the form of a “community service fee”).

For something as important as this, the process has been confusing, to say the least.

Columbia Distributing’s chief financial officer failed to file the company’s application before construction began on the new Canby facility — a gaffe that a state incentive coordinator initially said would disqualify it from the program.

And, while the company may have been a few weeks late when they filed the needed paperwork with Business Oregon on July 2, 2019, it was still months before most of Canby’s elected officials heard about it.

When the resolution that the council finally approved last Wednesday was first presented, in January, virtually every councilor claimed to have no knowledge of the program and were frustrated by how the decision was presented — something the then-city administrator later apologized for.

It’s perhaps not surprising, then, that the discussion of the matter on April 1 began with some confusion. City Attorney Joe Lindsay opened things up by explaining that the resolution councilors were being asked to vote on was poorly worded, and can’t actually do what it claimed to do.

“The crux of (it) is that, for better or worse, it’s probably not the best wording in a resolution, to be quite honest,” Lindsay said.

The resolution purported to do two things: authorize the application by Columbia for the SIZ, and give the city administrator the go-ahead to enter into an agreement with all parties for the dispensation of the community service fee.

But last week, Lindsay said that authorization of the application is not really the city’s responsibility. Business Oregon and its legal adviser, the state Department of Justice, are the ones who determine eligibility, Lindsay said, not the city.

The city’s decision was, in the words of Councilor Tryg Berge, a “formality,” which would simply allow it to receive and allocate funds from the community service fee.

Lindsay further added to the confusion by saying councilors could choose to amend the resolution, and remove the language he described as “not legally necessary,” or vote on it as presented. Either way, it would “stand legal muster,” he said.

If that summary makes things sound relatively simple and straightforward, it certainly was not. It took almost an hour to iron things out (though some of that was thanks to the technological challenges of a virtual meeting).

On more than one occasion, Councilor Parker pointedly asked the city’s attorney: “What, exactly, are we voting on tonight?”

“My job as a city councilor is to explain to people what we’re doing. And I can’t even repeat back what you just said,” Parker said, after an attempted explanation by the city attorney. “That was, like, 60 seconds of explanation, and I don’t think I could get it straight. I don’t think I could explain what we’re doing tonight.”

For Parker, another big problem was that the SIZ program calls for recipients to make a good faith effort to use local contractors. That’s the main reason the state requires the application to be approved before construction in the first place.

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In this case, of course, that’s not going to be possible.

The signing of a First Source local contracting agreement was also one of the local prerequisites that were set forth when Canby and Clackamas County first established the county’s Rural Strategic Investment Zone in 2010.

Councilor Spoon asked why Columbia’s failure to sign such an agreement would not make them ineligible on a local level, but Lindsay simply maintained that eligibility is a state decision, according to the law.

Council President Tim Dale said he was troubled by that, as well. He also found it problematic that most of the taxing districts who will be impacted by the abatement, including Canby Fire and Canby schools, have no say in the decision.

Council President Dale said that for him, outside of the discrepancies that are unique to this application, it really comes down to whether the city supports the use of the SIZ as a tool to attract large projects.

Though he did not go into detail, he did confirm there are other “interested parties in the pipeline” who would also like to take advantage of the SIZ, and pulling out of the program could mean the loss of these or other opportunities.

With the national, state and local economies already feeling the impacts of the coronavirus pandemic, now may not be the time to be shedding tools for economic and business development, according to the council president.

Councilor Spoon explained that she was voting “no” because of the precedent it would set. Both the city and county routinely expect businesses and individuals to do their own due diligence in understanding the rules and following them.

The guidelines in this case were perfectly clear (the rule mandating that the application be filed before construction is actually written in bold at the top of the form), and making exceptions for one of the largest companies in the state would be what she called “government at its worst.”

“I think they’re as obligated as everybody else to follow the rules, and accept the consequences if they don’t,” Spoon concluded.

Councilor Parker, the other nay vote, said he would be opposing the application as a matter of “common sense.”

But the arguments did not persuade the majority of the council, who seemed to feel Columbia had kept their side of the bargain — at least in the spirit of the law, if not the letter — and feared a chilling effect on the recruitment of other large companies, with the economy now on the brink of a likely recession.

The possibility of a lawsuit was also alluded to. In a letter submitted to the city before Wednesday’s meeting, the Canby Fire District board had asked the council directly whether Columbia had threatened a lawsuit if they refuse to sign off on the application.

The question was one of several that the city did not address last week, though the city attorney seem to hint that litigation was a definite concern.

“If you have signed up to be a part of something … there is always some exposure if you move the goalposts, or change the rules, or come up with a last-minute reason for why you’re not going to be part of the process,” Lindsay said. “There is liability, I’ll go that far.”

If the state approves the company’s application for the SIZ, it will then be up to the city, Canby Fire and Canby School District to determine how the revenue from the community service fee will be spent during the next 15 years.

Council President Dale expressed several times that he would support the city’s share being allocated to the fire district, which has been an increasingly vocal opponent to the proposed tax abatement.

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