Canby urban renewal agency recommends stopping tax-increment collections and eventual deactivation

The Canby Urban Renewal Agency recommended on Feb. 4 that the city notify the Clackamas County assessor it will stop collecting tax-increment financing for the district effective July 1 and move toward terminating the urban renewal plan, with a later deactivation of the agency once remaining debts and project obligations are resolved.

That recommendation, framed by Randy Ely, the agency’s director and interim city administrator, follows more than 25 years of tax-increment financing and redevelopment projects in Canby. "It's been a 25-plus years, and I think you all can be very proud of the tax increment and the projects," Ely said as staff reviewed projects and the options for winding down the agency.

Why it matters: staff presented revised estimates showing roughly $4.6 million would be returned to affected taxing districts when collections stop, with the city’s share in the current fiscal-year estimate about $1,148,000. Commissioners and staff said stopping new collections would return funding to the "junior" taxing districts while allowing the city to finish existing work.

Legal and practical dispute over sequencing: staff and legal counsel walked the commissioners through three options — deactivating the agency (which would terminate the plan and stop future collections), terminating the plan (preferably by ordinance to match how it was adopted), or instructing the county to stop collecting tax increment while leaving the plan and agency in place so already-collected funds could still be spent on projects.

Legal counsel Miss Stickel told the body the agency cannot be deactivated until its debt is repaid; she and others discussed whether the last debt payment falls on June 1 or later in June. "If the commission's goals are to stop collecting tax increment revenue now and then disperse any remaining funds to the junior taxing districts, the fastest way to do it is by terminating the plan," Miss Stickel said. Staff recommended the practical first step is to notify the county assessor of the intent to stop collections effective July 1, which would align with the county’s scheduling and give staff time to resolve outstanding questions.

Public safety and partner input: representatives of the Canby Fire District urged an expedited approach. "This is kind of a momentous occasion for us," said Steve Thurman, a fire district board member, noting the district had foregone more than $1 million in prior plan negotiations to facilitate closure. Canby Fire Chief Matt Dale said projects that are underway would transfer to the city and continue until finished under the district’s understanding.

Outstanding questions and assurances: commissioners pressed staff on how to complete the remaining North Fir Street/NW 2nd project and whether funds could be transferred to the city general fund. Some commissioners warned against moving URA funds into the general fund for optics reasons; others said stopping collections but keeping the plan would allow completion of projects funded to date. Staff agreed to clarify the county’s technical process and report back.

Next steps and vote: the commission voted to recommend that city council (a) direct staff to notify the Clackamas County assessor of the agency’s intent to stop collecting tax increment effective July 1, (b) recommend termination of the urban renewal plan, and (c) plan for eventual deactivation of the agency after debt obligations are satisfied and outstanding project questions are resolved. The motion passed 6–0.

What comes next: staff will send the letter to the county, will seek clarification from the county assessor's office on timing and on whether leaving the plan in place is required to spend existing funds, and will return to the council/agency with answers before final deactivation. Commissioners said they expect related council action in the next two weeks as city council considers ordinances and the timing of closures.