Community Improvement Venture Initiative Preliminary Review and Business Case Presentation to Council, June 22, 2015

Transcription

1 Community Improvement Venture Initiative Preliminary Review and Business Case Presentation to Council, June 22, 2015

2 Study Background Community Improvement Venture Initiative (CIVI) is one of six key recommendations in Downtown Master Plan The CIVI will lead downtown redevelopment through provision of gap financing, mortgages, loan guarantees for small/medium-size projects Determine the viability of a CIVI for Cobourg

3 Study Components Preliminary Review Business Case Business Plan (to follow)

4 Preliminary Review - Methodology The operation of community venture development organizations in North America Only a handful of venture organizations in Canada Centre Venture, Winnipeg; Renaissance Brandon (MB); Downtown Village Development Corporation, Sudbury; Brampton Downtown Development Corporation (hybrid BIA/development corporation disbanded Feb 2015) Alternative downtown revitalization delivery models - Business Improvement Area (BIA) led initiatives: Barrie, Windsor, St. Catherine s; Oshawa: in-house initiative

5 Preliminary Review - Summary Observations Downtown is part of the bigger picture: belongs to everyone in community Driven by core group of committed individuals who deeply care about downtown Public-private sector collaboration is foundation for success Long-term vision (10-20 years) not bound by political cycles Perseverance: reaching next level is a protracted process Political timelines and mandates can be an impediment Barrie: best practice DBIA operates in political context Key success factor for Centre Venture: private sector board composition and absence of politicians Skills inventory identifies requirements: recruitment of board members with requisite skills, experience and contacts

6 Study Components - Summary Observations 2 Start small with measurable steps Anchor tenants/show case projects important drivers in initial stages e.g. King Street property: heritage building improvements working model; home to an entrepreneur incubator Federal/Provincial programs provided significant cash injections Volunteer community had critical role in operations/delivery of advisory services Key venture development organizational attribute is ability to build up funds and reserves Ability of downtown to contribute to the bottom line of the municipality is important ROI on incentives is a long-term consideration: a cost of doing business

7 Business Case - Opportunity and Needs Assessment Population projections: 36.2% increase forecasted - 19,160 (current) to estimated 26,105 by 2034; 2011 Census: grew by 309 between Durham Region: predicted growth, ripple effect Cobourg s natural assets: quality of place important in attraction and retention of citizens and businesses Retail: experiential potential, demand for new/additional retail categories, undesirable categories, rising vacancy rates Commercial: good inquiry flow, sales conversion issues, depressed asset values, high taxes Sector Opportunities: education, digital manufacturing, living workshop Funding resources: low take-up of heritage program, funding programs, onerous requirements of mainstream institutions. Funding gaps, awareness issues Advisory resources: business support network in place through a variety of delivery agents; possible awareness issues

8 Business Case The investment required to achieve the objective Potential ROI for the Town The most appropriate delivery model to accomplish the objective

9 Business Case Financial Analysis Investment Required to Achieve the Objective Heritage building renovation cost per square foot: $ Representative building: 9,000 sq.ft. $1,408,500 Four financial scenarios developed Probabilistic investment of $10,422,900 Equates to 7.4 buildings Initial investments over the first two years should cover at least 4 buildings to have the required impact ($5,634,000) Disproportionate share at the beginning Loan portfolio will earn interest Initiate shift to private sector funding and sufficiency in later years

10 Business Case Return on Investment Components Return on Investment over 10 years in enhanced area 9.05 x combined effect of assessed value and taxes payable $1,914,269 increase in assessed property value $262,357 increase in taxes payable Interest on loans payable $297,053 over 10 years based on probabilistic investments of $10,422,900 at 2.85% Private sector funds leveraged over 10 years $31.3 million based on assumed conservative leverage of 3:1 on probabilistic investments of $10.4m

11 Business Case Cost Benefit Analysis Return on Investment over 10 years in enhanced area Increase in taxes payable: $262,357 Interest on loans: $297,053 Private sector funds leveraged: $31,268,700 Total ROI: $31,828,110 Total invested: $10,422,900 Increase in tax receipts and interest alone will not cover investment Dependant on private sector leverage and fund management Over 10 years: $3.05 return for every dollar invested

12 Business Case Indirect Tangible ROI CIVI Investments and Interest Commercial projects: Increase in business counts, employment, business retention Residential projects: increase in population Retail expenditure retention Increase in number of visitors Taxes Payable Increase in: assessed property values, rental values Decline in vacancy rates

13 Business Case Indirect Intangible ROI Preservation of heritage buildings Build a sense of place and community pride Provide a crucial draw for the tourism sector Increase morale of business owners Enhance the liveability of the surrounding areas Provide environmental benefits by reducing demolition waste Spearhead business retention/expansion and investment attraction initiatives Combined assets form part of a unique identity for Cobourg

14 Downtown Vitalization Delivery Models 1a. In-house employee: Downtown Development Officer works with planning & development and the private sector to deliver projects 1b. Retained external consultant: External consultant specialist: same arrangements as in-house employee 2. DBIA led Organization Existing Cobourg DBIA mandate extended to development. Projects delivered in partnership with Town. Political board representation 3. Hybrid: current DBIA amalgamated with CIVI. DBIA and development mandate. Separate organization. Political board representation 4. A CIVI: an arms length organization with downtown development mandate. Private sector driven with political/town board representation in ex-officio capacity Option 4 is recommended as the most appropriate delivery model for Cobourg to accomplish downtown vitalization objectives

15 Downtown Vitalization Delivery Models CIVI best fit for Cobourg No political interference Clear downtown development focus Potential to manage and invest funds Generate ROI & revenue Deliver projects at the speed of the private sector

16 Downtown Vitalization Delivery Models Today s macroeconomic climate is vastly different than what we have traditionally seen. The country is seeing slower growth, higher unemployment, less liquidity in the small business loan market, and generally a more difficult business climate overall. Businesses and their support systems - such as the Town of Cobourg - must be more creative.

17 Critical Success Factors Aggressive outreach campaign Person appointed must have the right connections with the developer community Cobourg s overall strategy must align with downtown development initiatives Mobilization of existing resources and energies Appetite for risk Long term vision and perseverance

18 Final Thoughts The establishment and operation of a CIVI in Cobourg is no small endeavour There are limited precedents in Canada Those that do exist are in communities that are much larger than Cobourg Cobourg would be a pioneer Opportunity to deploy a pilot CIVI and to provide a blueprint for other small communities in Ontario