First stages of downtown four-story developoment project are pushing forward

After a year that saw Canby citizens pack city hall when the council passed a resolution denouncing state gun control measures, when the council appointed Tyler Smith to Todd Rocha's open seat, and after a float in the Fourth of July parade displayed Confederate flags, almost no one showed up on the night when the first stages of development of a four-story, mixed-use downtown building were approved.

The Canby Urban Renewal Agency, which consists of the same body as the city council, unanimously passed Resolution URR16-006 authorizing the execution of a disposition and development agreement (DDA) with Portland-based developer Mary Hanlon, operating as Canby Civic Blocks LLC, to facilitate the development of the so-called city block properties.

The DDA calls for the Urban Renewal Agency to contribute $1.311 million — $700,000 in cash, plus a waiver of $611,000 in system development charges, which are fees the city imposes on new development.

Additionally, as part of a plan to facilitate the economic vibrancy of downtown Canby by increasing the number of residents who live in its core, the URA will "contribute" the city block properties to Canby Civic Blocks, which consist of the old Canby Area Transit parking lot and five municipal buildings between NW First Avenue, N. Holly Street, NW Second Avenue and N. Ivy Street that formerly housed the finance and planning departments, city hall, the former police department and Canby Utility, city documents show.

(Incidentally, the commercial property that houses Oliver Insurance and Full Bloom Digital, located at the corner of N. Ivy Street and First Avenue, will remain intact.)

The city will recoup that capital contribution in 2028, assuming the urban renewal district's debt has been paid off, through tax collections once the property returns to the tax roll and its assessed value increases. The appraised value of the city property is $2.097 million and the total estimated real market value of the proposed 32,000-square-foot, mixed-use development ranges from $12.5 million to $15 million, city documents show.

After completion of the mixed-use development, which tentatively is called "The Dahlia," the city and the URA together conservatively will receive $136,719 in tax revenue beginning in 2018, and assuming 3 percent annual growth, an aggregate $1.567 million in 2027 and $4.165 million in 2036, the documents show.

If the properties were sold individually and The Dahlia is not constructed, the combined taxes collected are projected to be considerably less at $36,614 in 2018, an aggregate $419,742 by 2027 and $870,431 in 2036, the documents show.

However, the city of Canby opted into a state program that offers developers a vertical housing tax credit — 20 percent per residential floor for a maximum of four floors — so for 10 years after The Dahlia is completed Canby Civic Blocks LLC is eligible for a tax credit equal to 60 percent of the value of the upper three residential floors of the four-story complex, City Administrator Rick Robinson said.

Assuming Canby Civic Blocks takes advantage of the vertical housing tax credit, it will be 2028 before the city receives the full amount of tax revenue generated by the developed property.

Hanlon said she's worked in housing and community development in both the public and private sectors for more than 30 years, and that The Dahlia is a "really visionary project" but also a challenging one.

"There are no comparable projects to this so trying to get investors and economists and appraisers to believe it, you have to make a compelling case for the elements that are present to make it work," she said. "We're going to end up with 20,000 square feet of retail space and that is not what most developers want. We finished our building (in Portland) last year and we still have 2,000 square feet vacant. The risks are tremendous."

Hanlon said anywhere in the region a developer could purchase land without a disposition and development agreement, but that's part of making all the moving pieces works together for The Dahlia.

"I think it's incredibly exciting and I think it will do a lot for your community," she said. "There are a lot of elements that should support and activate downtown, as well as all business (throughout Canby). It will raise the standard for some of the real estate down here. This is really a wonderful culmination of all the work I've done over the years."

City Councilor Greg Parker reminded the public that this is not the first or second time the city has reviewed this proposed development.

"Planning is a lonely job," he said. "I'm thinking of how packed our chambers were when we were talking about who should be in a parade or what our response should be to a gun resolution in the Oregon legislature. The future does not have a built-in constituency. That's our job. We're seven people who have a different role from everyone else in this community, which is to stand on our tippy toes and see as far into the future as we can … As you folks have heard me say for years now — for each person you have living downtown, that's another $9,000 to $10,000 into the pocketbooks of our downtown. I see this being the key to our strategic goal of having a vital downtown."

(This is the latest in a series of ongoing reports about the city block property re-development and sale. More details about the risks involved, details of the terms of agreement and the city requesting that the Bureau of Labor and Industries not subject the project to building wages coming in January.)

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