Canby Urban Renewal Agency discusses winding down district, identifies $1.8M for local street projects

The Canby Urban Renewal Agency spent the April 2 meeting discussing legal options and project choices as the agency moves toward winding down its urban renewal plan.

City legal counsel explained the two primary options under state law: terminate the urban renewal plan (which ends project authority within the district) or terminate the agency itself (which also removes the administrative entity). Counsel told the board the agency can also instruct the county to stop collecting tax increment as soon as the agency has enough funds in its special fund to pay its maximum indebtedness; in that case the county will not begin distributing money to junior taxing districts until the agency tells the county it has sufficient funds to pay principal and interest in full.

Finance and agency staff told the board they expect a final debt payment on June 1, 2026; once that payment is made Clackamas County would begin the process to release tax-increment receipts back to junior taxing districts with distribution expected in the October–November 2026 cycle. Staff estimated roughly $1.8 million would be available for projects after normal obligations and noted that the number is subject to final accounting and year-end adjustments.

Commissioners and staff reviewed a set of candidate capital projects identified earlier by the agency: improvements to North First Street (curbs, sidewalks, ADA ramps between First and Second avenues, including safety work near the American Legion), continuation of Second Avenue paving/curb work (including related medallion repairs at Elm, Fir and Ivy), and related public-right-of-way improvements. Staff said these items had previously been discussed and that project engineering would be required before construction bids are issued.

Board members discussed alternatives: spend the available funds to complete remaining street projects now, or allow the funds to return to the junior taxing districts once the agency’s indebtedness is satisfied. Several commissioners said they favored using the surplus to finish local street projects and to repair medallions while prices are relatively low; others urged caution so that the agency can meet its legal obligations and avoid prepayment penalties on outstanding loans. The group also debated the appropriate treatment of urban renewal–funded staff salaries and whether those positions should be transitioned into the city’s operating budget this coming year; staff said the $1.8 million figure excludes salaries and covers capital projects only.

While no formal vote was taken to adopt a final project list, commissioners expressed consensus around allocating available capital funding toward the prioritized street projects, with direction to staff to return with designs, engineering cost estimates and a recommended budget breakdown. Staff said they would notify Clackamas County in February 2026 of the agency’s intent regarding tax-increment collection and execute the final debt payment on June 1, 2026 as described.

Next steps: staff will refine project scopes, return with engineering estimates for North First Street and Second Avenue segments, clarify how medallion repairs fit the scope, and provide a menu of options for transitioning salaries into the city operating budget ahead of the next fiscal-year budget process.