DUNDEE, Ore. — Dundee officials are weighing how to use urban renewal funding to support major development and infrastructure projects as the city prepares for future growth.
During the Sept. 1 Dundee city council meeting, city leaders reviewed future urban renewal spending and debt, including up to $700,000 to reimburse the Terrain Hotel project for construction of SW 8th Street. The City Council also accepted a $250,000 state grant for Third Street improvements, approved a wastewater study, referred a set of development questions to the Planning Commission, and applied for a state infrastructure grant ahead of a Sept. 16 deadline.
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Council Refers Drive-Through And Building Height Questions To Planning Commission
The council discussed referring several development and planning questions to the Planning Commission.
The referral follows Ordinance 593-2026, which the council passed unanimously in May, banning drive-through businesses in the community commercial zone. The deadline for anyone to appeal the ordinance to the state Land Use Board of Appeals has since passed.
Councilor David Hinson has since asked staff to refer additional drive-through-related questions to the Planning Commission, including which locations, if any, should allow drive-through uses, and whether the city code needs clearer language on what qualifies as a drive-through.
The referral may also include questions about downtown building height restrictions and the types of businesses the city wants to encourage.
The height question is tied to a proposal from SkanlanKemperBard (SKB), a developer that owns the La Sierra property along Highway 99W. The developer has asked the city to raise the downtown building height limit from three stories to four and to adopt a vertical housing tax credit zone, saying the changes would help finance a proposed mixed-use project combining a grocery market with middle-income multi-family housing above it.
City staff said Dundee is considered an untested market for developers seeking financing and that the additional height and tax credit would improve the project’s financial feasibility.
Completing a development code change would cost an estimated $20,000 to $30,000 for contracted planning services, according to a staff report, an expense not included in the current fiscal year’s budget.
Patterson recommended the council weigh any unbudgeted spending carefully against rebuilding the city’s General Fund reserves, which stood at $231,242 as of the report, below the roughly two months of expenditures the Government Finance Officers Association recommends cities keep in reserve.
The council expressed interest in holding a joint City Council and Planning Commission session in October, potentially combined with an open house. The meeting could allow councilors, planning commissioners, and members of the public to discuss Dundee’s long-term development goals before the city commits significant funding to specific code changes.
City officials said the tax credit discussion and potential building height changes are separate issues but could both affect the financial feasibility of future mixed-use housing projects.
The council plans to continue the discussion and return with a more specific proposal for the joint meeting.
Urban Renewal Takes Center Stage
The Dundee Urban Renewal Agency discussed its current finances, future debt, and potential investments in downtown development.
The agency is facing several major financial commitments during the 2026-27 fiscal year, including loan repayments, operational expenses, infrastructure work, and up to $700,000 connected to the Terrain Hotel development.
Under the city’s agreement with the Terrain Hotel project, the hotel developers will construct SW 8th Street, with Dundee reimbursing construction costs up to $700,000 through urban renewal funding. Once completed, the street will become a city-owned public street.
Because SW 8th Street will connect to Highway 99W, the project must meet Oregon Department of Transportation (ODOT) standards before construction can move forward. City Administrator Courtney Patterson said the city, Terrain, and ODOT are working through a remaining issue before ODOT issues a permit for the construction of the street.
The hotel itself has received the necessary city approvals, Patterson said, and a Type B permit has been issued that could allow certain preliminary work, including grading, to begin.
Urban renewal consultant John Southgate discussed several potential programs Dundee could consider as it plans for future development, including a storefront grant program to help property owners improve building facades, a tenant improvement program to help businesses renovate commercial spaces, and programs that could support infrastructure improvements or land acquisition.
Southgate pointed to Hillsboro and Beaverton as examples of Oregon cities where similar programs have helped attract businesses and revitalize downtown areas.
City officials also discussed the possibility of expanding the urban renewal district to include the former Dundee Elementary School property and 3rd Street, as the road improvement project moves forward, Patterson said.
The council said it wants to find a balance between attracting new development and maintaining a community where residents can walk between businesses and public spaces.
Before making significant changes to the urban renewal plan, officials said they would likely seek public feedback through an open house in the future.
3rd Street Project Receives $250,000 State Grant
The council unanimously approved accepting a $250,000 Small Cities Allotment Grant from ODOT for improvements to Third Street and authorized Patterson to sign the grant agreement.
Dundee’s proposed project includes paving the gravel portion of SE 3rd Street and extending improvements along SW 3rd Street.
The grant is available to Oregon cities with populations under 5,000 and can provide up to $250,000 for local road improvements.
The project has an estimated total cost of approximately $507,910, with the city expected to cover the remaining costs through urban renewal funding and other available sources.
Under the grant program, Dundee will be required to complete the project within two years of the grant agreement’s execution.
Patterson recommended accepting the grant, saying that if Dundee declined the funding, the money would not necessarily be redistributed to another small city.
Council Approves Wastewater Study
Dundee City Council approved a task order with Kennedy Jenks to complete a mixing zone study as part of the city’s National Pollutant Discharge Elimination System permit renewal.
The Oregon Department of Environmental Quality contacted city staff in June about renewing the permit and initially required Dundee to complete a Level 2 mixing zone study. City staff later negotiated the requirement down to a Level 1 study, with a deadline of July 31, 2027.
A mixing zone study examines how wastewater discharged from a permitted facility disperses into a water body and whether water quality standards are met at the edge of that dispersal area.
The Kennedy Jenks task order is expected to cost $76,993. The study was not included in Dundee’s approved budget, although the city has additional funds available in its sewer accounts.
Patterson said the city has approximately $77,441 more available in its sewer operations budget than originally estimated.
The city is also anticipating significant sewer system development charge (SDC) revenue from the proposed Terrain Hotel development. Staff estimated the project could generate approximately $448,869 in sewer SDC revenue, including roughly $320,000 associated with Building A.
Patterson said the city could move forward with the project and monitor the timing of future SDC payments. If the expected revenue does not begin coming in as anticipated, the city could pause work.
The council unanimously approved authorizing Patterson to execute the task order with Kennedy Jenks and make minor changes necessary to finalize the contract.
Dundee Applies For Wastewater Infrastructure Grant
The council also approved a resolution supporting the city’s application for a state-funded Regional Infrastructure Fund grant administered by Business Oregon for improvements to the city’s wastewater system.
Gov. Tina Kotek announced the grant program Aug. 3, and applications are due Sept. 16. The program makes $10 million available statewide to cities and counties with populations under 25,000, with $500,000 reserved for the mid-Willamette Valley region, which includes Marion, Polk, and Yamhill counties. Construction projects are eligible for awards between $100,000 and $1,000,000, while planning projects can receive between $25,000 and $250,000.
The proposed Dundee project would focus on wastewater treatment plant renovations and infrastructure improvements, including relining manholes and pipes, rebuilding filter cartridges and ultraviolet disinfection systems, and identifying and repairing leaks.
In a staff report from Patterson, the city considered applying instead with a project to connect Dundee’s water system with McMinnville Water and Light, but staff received conflicting guidance on whether that project would meet the grant’s population-eligibility rules, since it would tie into Yamhill County, which has a population of more than 110,000. A written answer to the eligibility question was not expected until Sept. 9, one week before the application deadline, so Patterson recommended the city move forward with the wastewater project instead.
The council unanimously approved the resolution, which also authorizes Patterson to sign the grant application on the city’s behalf.
City staff will also seek letters of support for the project from community members, elected officials, and other eligible supporters once the grant’s requirements are clarified.
