A Comparative Review of Economic Development Service Delivery Costs. Prepared for:

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1 A Comparative Review of Economic Service Delivery Costs Prepared for: July 2015

2 Introduction Cost Comparisons for Economic Delivery Services Primary economic development services are provided through a variety of methods in Ontario. By far the majority of communities rely on departments within a municipality, while several larger communities have formed economic development corporations operating at arms-length but with some oversight usually from a board appointment from the municipality. Comparing budgets from one community to another is a challenge as there is no standard suite of services delivered by all economic development service providers whether internal or external. For example, some external corporations offer tourism services, while other do not. The biggest challenge in comparing costs is determining what "hidden" costs are covered for internal, and in some cases external, provision of economic development services. The scope of this review represents a summary with information deduced from available public resources and has not been vetted with each individual community for accuracy. The intent of this summary is to provide a reasonable overview of the variety of services provided by both internal economic development departments and external corporations to demonstrate the diversity of service provision and the costs for economic development services as it related to overall community operating budgets. Most economic development service providers secure external funding through upper levels of government and economic development corporations often secure private sector support through direct investment or in-kind contributions. This report uses municipal contributions to economic development services only for comparisons. The key to evaluating investment in economic development services is "return on investment". When assessing economic development performance it is important to weigh the costs against economic impact of successful economic development performance. Overview of Primary Economic Models Municipalities use a variety economic development models to achieve their objectives. There are two standard types of economic development models in practice today, the Non-Profit Economic Corporation and the Municipal model. Another, the "Hybrid" model is more of an advisory committee for the municipal model. All have merits for providing opportunity for successful economic development services delivery dependent on community or region s needs and level of cooperation with partner jurisdictions. The Non-Profit Corporation Model The non-profit (private) economic development corporation model often focuses on the marketing of the municipality or group of municipalities. It is rarely the only economic development body and often works in conjunction with the area municipality it serves. Occasionally this model will assume all economic development functions, especially where more than one co-operating jurisdiction is involved. In Ontario, this model usually operates as a Corporation Without Share Capital. A key component is the successful engagement of the private sector (as board members/advisors and financial contributors) and the primary devotion of resources to business attraction activities specifically national and international business attraction. Funding is usually received from the area 2

3 municipality, potentially upper tiers of governments and contributions from the private sector. A review of this model was completed by the City of Hamilton in 2007 and it was noted that these corporations usually perform optimally when a) they are located in newer, suburban growth type cities with a large land supply and new economy type businesses; and b) They are able to rely on a separate group of dedicated municipal staff mandated to deal with other development issues as their main priority. Economic Corporations (EDC) are typically supported by a base budget from the municipalities they represent, augmented by other sources including private sector and provincial and government support. EDCs are typically responsible for all mandate and operating costs. The Municipal Economic Model Where economic initiatives are primarily development focused, some municipalities have employed a municipal model providing services in house in order to ensure strong connections between the associated planning, public works, engineering and other municipal departments. In fact, often the municipality will locate these associated services together to encourage co-operation and enhanced customer service for economic development clients. This model is typically employed in established municipalities with ageing infrastructure and a historic reliance on traditional industries, they are often looking to make the shift to more a more knowledge based economy. In house economic development portfolios usually include an assortment of other community priorities such as business retention and expansion, brownfield redevelopment, industrial land development, and small business and start-up support. Municipal economic development offices are funded as part of a municipal operating budget and common expenses (facilities, rent, human resources, accounting) are typically absorbed in corporate services or other budget lines and not reflected in reported economic development budgets for the municipality. Economic Services Economic development service providers, whether internal offices or external corporations, provide a diverse range and numerous combinations of different functions or services that may include the following: Site Selection Data Community Profiles and Statistics, Economic Research Information on Incentives Business Advisory Services/Small Business Office(SBO) Property Sales & Management /Redevelopment Services Employment Land Revitalization Downtown Revitalization Marketing & Communications Events and Promotional Activities Liaison and Advocacy with various Government levels Information and Customer Service Convention Services Tourism Strategic Planning Assistance Physician Recruitment Business Retention & Expansion (BR+E) 3

4 Kingston Economic Corporation The Kingston Economic Corporation (KEDCO) was established in 1998 as a separately incorporated not-for-profit agency. Kingston was one of the first communities in Ontario to embrace the public-private partnership model of economic development governance. This model can provide advantages in securing funding beyond municipal programs and for attracting people with business expertise in a governance role. KEDCO has evolved to meet a full suite of economic development service needs to the Kingston region and its service mandate is unique in that it includes "traditional" economic development such as business attraction, retention and support and business start-up functions but also provides tourism and workforce development services that are not routinely delivered within most Ontario communities municipal economic development departments. Economic development corporations in Ontario typically secure base funding from their primary client, the local or regional municipality, that is augmented by external funding sources including provincial and federal economic development programs and private sponsorships. When Kingston's budget is compared to other communities the municipal investment ranks within the median for Ontario (less than 1% of total municipal operating budget) at 0.80 and is at the higher end of comparator communities for investment on a Per Capita on a basis ranking between $18-$22 per Annum per person ($21.97), comparable to communities as diverse as Cornwall ($22.35), Brockville ($17.92) and Brantford (20.09). Economic Services Summary Population served: 123,263 Annual budget contribution from municipal sources: $2,707,766 Services Provided Start-up and Small Business Services Business Expansion Services (BR+E) Tourism and Destination Marketing Services Labour Force Downtown Revitalization Physician Recruitment Staffing CEO 3 - Corporate/Administration 7 - Business 1 - Workforce 5 - Tourism Website: kingstoncanada.com 4

5 Ontario Comparator Charts - Economic Costs Y= $ of Operating Budget per Capita, X= Comparator Communities Y= $ Per Population Per Annum, X= Comparator Communities 5

6 Y= % Per Population Per Annum, X= Comparator Communities Y= $ Per Total Operating Budget for Various EcDev Services, X= Comparator Communities 6

7 Selected Example Community Summaries PETERBOROUGH The City of Peterborough and County of Peterborough fund a non-profit economic development corporation officially named the Greater Peterborough Area Economic Corporation (GPAEDC), currently operating as Peterborough Economic (PED). The City of Peterborough does not have internal economic development staff however they do fund airport business development separately ($100,000 per year) with a portion going to PED and outside expert consultants. There are 8 townships in Peterborough County with one operating a separate economic development office. Population served: 135,000 Annual budget contribution from municipal sources: $1,644,000 Services Provided Start-up and Small Business Services Business Expansion Services (BR+E) Tourism and Destination Marketing Services Access to information about the Peterborough Region Staffing CEO 2 - Administration 8 - Business 6 - Tourism Economic contribution as % of operating budget: 0.91 Economic budget per Capita: $7.27 Website: peterboroughed.ca 7

8 BAY OF QUINTE REGION (Quinte Economic Commission) The Quinte Economic Commission (QEDC) is a non-profit corporation funded by and providing services for the City of Belleville, Quinte West and the Municipality of Brighton. The QEDC provides investment attraction and support services only. Each of the partner communities invests in and operates economic development offices within the municipality providing a variety of economic development services not offered by QEDC, small business support is provided separately as well. QEDC operates a Manufacturing Resource Centre providing services to local manufacturers related to business retention; it is funded in part by QEDC with additional funding from government sources. Population served: 103,580 Annual budget contribution from municipal sources: $ 394,000 Services Provided: Access to information about the Bay of Quinte Region Manufacturing Support Staffing CEO 1 - Administration 1 - Business 1 - Manufacturing Resource Officer* Economic contribution as % of operating budget: 0.29 Economic budget per Capita: $3.80 Website: quintedevelopment.com 8

9 LONDON (London Economic Corporation) The London Economic Corporation is a non-profit corporation formed in 1998 funded by the City of London and the private sector, providing economic development services for the City. LEDC provides a variety of business support services with a primary focus on international investment attraction. Population served: $366,150 Annual budget contribution from municipal sources: $2,411,000 Services Provided: Business Expansion Services (BR+E) Workforce International Marketing Staffing CEO 4 - Business 2 - Workforce 4 - Marketing & Communications 3 - Administration Economic contribution as % of operating budget: 0.33 Economic budget per Capita: $7.27 Website: ledc.com 9

10 CORNWALL (Cornwall Economic ) Cornwall economic development is a department within the municipality of Cornwall. It operates publicly as a separate entity under "Choose Cornwall" with a focus on investment attraction. While not a primary focus Cornwall Economic does provide reactive business retention support. Population served: 46,340 Annual budget contribution from municipal sources: $834,286 Services Provided: Business Expansion Services (BR+E) Start-up and Small Business Services Staffing Manager 3 - Business 1 - Marketing & Communications Economic contribution as % of operating budget: 0.66 Economic budget per Capita: $22.35 Website: choosecornwall.ca 10

11 WATERLOO (City of Waterloo Economic ) The City of Waterloo Economic operates within the municipality, until recently Waterloo contributed to Canada's Technology Triangle (CTT) for regional investment attraction services, CTT services are transitioning to a new Waterloo Region Economic Corporation in The economic development office oversees "arts & culture" in Waterloo as well as typical economic development services. Population served: 98,780 Annual budget contribution from municipal sources: $1,416,462 Services Provided: Business Expansion Services (BR+E) Start-up and Small Business Services Arts & Culture Promotion* Staffing Executive Director 1 - Arts & Culture* 3 - Business 1 - Administration Economic contribution as % of operating budget: 0.83 Economic budget per Capita: $14.34 Website: wearewaterloo.ca 11

12 Guelph (City of Guelph Economic ) The Guelph Economic operates as a department within the City of Guelph. The economic development office does not deliver tourism and contribute to an external small business support office. In addition to business attraction and expansion services the department also oversees a unique Community Energy Initiative and Downtown Renewal that while included in the overall economic development budget are not calculated in the primary economic development services budget. All costs such as financial, human resources and other administrative costs are accommodated in the municipal budget and not attributed to economic development. Population served: 121, 688 Annual budget contribution from municipal sources: $941,700 Services Provided: Business Expansion Services (BR+E) Community Energy* Downtown Renewal* Staffing General Manager 1 - Administrative Coordinator 1 - Economic Specialist - FDI 1 - Economic Specialist - BR+E 1 - Manager, Community Energy* 1- Manager, Downtown Renewal* * Cost not included in annual budget contribution noted above Economic contribution as % of operating budget: 0.95 Economic budget per Capita: $15.11 Website: http: guelph.ca/business/economic-development-office/ 12

13 Municipality Population (2011) Type of EDO Tourism Y/N Mun. Op. Budget KEDCO 123,263 Peterborough 135,000 EcDev Amount ($) Municipality Tourism $ % of Total Budget EcDev Amount ($) Per Capita - Total EcDev Amount ($) Per Capita - Tourism EcDev Only ($) Per Capita - No Tourism Commisssion Y $ 338,000, $ 2,707, $ 1,268, % $ $ $ Commission Y $ 289,000, $ 1,644, $ 644, % $ $ 4.78 $ 7.41 St. Catharines 131,400 City Department Y $ 105,533, $ 955, $ 306, % $ 7.27 $ 2.33 $ 4.94 Brantford 93,650 City Department Y $ 128,471, $ 1,881, $ 751, % $ $ 8.02 $ Niagara Region 431,346 Commission N $ 597,774, $ 2,796, $ % $ 6.48 Quinte EDC 103,580 Commission N $ 136,062, $ 394, % $ 3.80 Oshawa 149,607 City Department N $ 130,649, $ 607, % $ 4.06 London 366,150 Windsor Essex 395,614 Commission N $ 804,147, $ 2,662, % $ 7.27 Commission N $ 465,655, $ 2,167, % $ 5.48 Barrie 136,063 City Department N $ 200,683, $ 1,120, % $ 8.24 Burlington 175,779 Thunder Bay 121,596 Commission N $ 140,000, $ 1,814, % $ Commission $ 229,107, $ 1,204, % $ 9.91 Brockville 24,000 City Department N $ 33,000, $ 430, % $ Guelph 121,688 City Department N $ 192,865, $ 1,828, % $ Kitchener 219,153 Commission N $ 126,353, $ 3,310, % $ Cornwall 46,340 City Department N $ 156,618, $ 1,035, % $ Waterloo 98,780 City Department N $ 171,500, $ 1,416, % $ Municipality Population (2011) Type of EDO Tourism Y/N Mun. Op. Budget EcDev Amount ($) Municipality % of Total Budget EcDev Amount ($) Per Capita EcDev Amount ($) Per Capita

14 Jay Amer, Ec.D. President & CEO Jay Amer is a Certified Economic professional who established Amer & Associates in January Prior to forming his own consultancy he was responsible for delivery of a wide variety of economic development services for a regional economic development corporation in Ontario, Canada. Amer & Associates has established itself as a well-respected boutique economic development consultancy providing investment and trade services to a variety of clients in North America delivering successful results on various initiatives in sectors that include rural development, tourism, advanced manufacturing, aerospace, automotive, agri-food, energy and green technologies, among others. Recent and current clients include provincial and federal ministries, a US state, private sector corporations, municipalities and regional economic development commissions. Currently Amer & Associates supports FDI and Trade activities for the State of New York through an affiliation with Washington-based PSD Global. Services include identifying investment opportunities in Canada and supporting market entry decisions by providing research reports and introductions to industry executives and influencers. Through his almost 20 years in the economic development field Jay's professional activity has nurtured access to a wide spectrum of professional contacts and resources throughout Canada in both government and business that benefit all Amer & Associates clients. Involved in several non-profit organizations as an executive board member, Jay has an interest in effective board governance and has contributed to the development of regional delivery models for economic development. He has provided facilitation for strategic planning for various organizations. Prior to joining the economic development profession Jay had a successful career in engineering, public affairs and communications with Ontario's provincial electrical energy utility. He is a Past- President of the Economic Developers Association of Canada (EDAC) and a recipient of Bell Canada Ontario East Economic Developer of the Year award presented for contributions to his community and the economic development profession. For more information please visit: Jay Amer, Ec.D. President, Amer & Associates Inc. T: (705) E: jay@amerandassociates.com Airport Road, Peterborough ON K9J 0E7 13