Canby transit building plan stalled after federal NEPA requirement blocks grant eligibility

Canby Area Transit staff told the advisory committee on Jan. 23 that the planned transit operations building is effectively on hold after a federal review requirement was not completed before the property purchase. The agency purchased the property under a prior manager; because the required pre-purchase environmental review was not performed, Federal Transit Administration (FTA) grants are unavailable for the project.

The agency’s interim discussion centered on why federal funds are now off the table and what short-term steps are possible. "The FTA has a requirement when you purchase property ... if you want to apply for any grants to help fund the building project," said Tanya, transit director, explaining that the property purchase did not follow the pre-purchase process FTA requires. As a result, she said, federal grant money cannot be used to build the $10 million facility now estimated to be needed.

Why it matters: the building project was expected to provide permanent office and vehicle storage space; without grants, the transit agency reported roughly $3 million on hand versus about $10 million estimated cost. That funding gap leaves the project infeasible without major changes to scope, sale-and-repurchase strategies or new financing.

Details and next steps - Tanya, transit director, told the committee the agency applied for state grants but those applications were denied because demand exceeded available funds. She said city council has directed staff to explore alternatives, including selling the property and buying a different parcel or shrinking the project scope. - Staff described one possible interim solution: build a parking apron at the site, place modular office units on the parcel and continue using off-site parking for buses while planning longer-term options. The agency’s lease for current office space expires in December; the landlord has previously indicated interest in leasing the space to another tenant. - The committee was told legal review is pending on questions such as whether a sale-and-buyback could avoid the FTA rule or otherwise permit later grant eligibility. Staff said they are awaiting the city attorney’s guidance before making recommendations to council.

Constraints and context The committee heard that COVID-era cost increases inflated the project estimate: a project once estimated below $5 million is now about $10 million, according to staff. Staff also reported other Oregon transit agencies have encountered the same FTA/NEPA barrier, and that the federal government is increasingly enforcing NEPA procedures for property and vehicle purchases.

The committee did not take formal action on the building at the Jan. 23 meeting; staff will return with legal guidance and recommended options for council consideration.