Regional Municipality of Halton: Economic Development Strategy Discussion Paper #3. Business Growth: Investment Attraction and Retention

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1 Regional Municipality of Halton: Economic Development Strategy Discussion Paper #3 Business Growth: Investment Attraction and Retention

2 PREFACE This series of Discussion Papers was produced for the Regional Municipality of Halton (Region) in order to solicit input from key stakeholders, the business community and residents on the strategic directions for economic development within the region over the next decade. This feedback will assist the Region in creating a common vision to further stimulate business growth and development in Halton through coordinated and enhanced economic development servicing and programs. Recognizing that economic development is primarily realized through the growth and intensification of the business community, each Discussion Paper will focus on what has been identified as a key driver of business growth and development within Halton. The Discussion Papers will present the issue, describe the current landscape and offer commentary on challenges, options and available courses of action to address each issue. A series of questions are then asked of the reader to solicit valuable input into the strategic planning process. Discussion Paper # 1 Business Growth: Economic Development and Employment Lands Discussion Paper # 2 Business Growth: Existing and Emerging Economic Sectors Discussion Paper # 3 Business Growth: Investment Attraction and Retention Discussion Paper # 4 Business Growth: Entrepreneurship and Innovation Discussion Paper # 5 Business Growth: Quality of Place and its Influence on Economic Development Discussion Paper feedback will be considered by Halton Region and incorporated into the collective vision and guiding principles of the Region s Economic Development Strategy. These Discussion Papers are designed to generate discussion around future directions in economic development at the Regional level. 2

3 Issue Halton s business areas appeal to different markets and require different investment attraction and retention approaches. For the region to be successful, Halton s business locations must differentiate their value proposition from locations in neighbouring municipalities. Economic development marketing and services may help this process. Definition of Investment Attraction: securing investment that is new to the municipality from a company that previously had no presence. Definition of Investment Retention: ensuring that a company and its jobs stay in the municipality rather than leaving to another jurisdiction and/or securing new investment from a company that is already in the municipality. Investment retention and attraction both work on the notion that Business goes where it is wanted and stays where it is appreciated. Investment Attraction Investment attraction is what is often thought of as the primary economic development activity. It entails strategic identification of best potential investment targets and then trying to get their attention through a number of direct and indirect ways, including: Direct communication means reaching out to decision makers of the target companies through one-on-one conversation or media such as advertising. Indirect communication can be very effective and includes ensuring that key influencers or inediaries know about the product you are selling. In economic development these people can be commercial/industrial real estate professionals, provincial and federal investment representatives, site location consultants, industry association representatives, and business people who are in the community. Once interest in the community is generated, it is the role of the economic development office to provide information on the benefits of locations and help the company chose a site and facilitate construction. Economic development is a service business and investment prospects require a high-degree of attention. To effectively deine the client s needs and identify possible solutions takes strong selling skills and a broad knowledge of the local and regional economy, the business sectors that are being targeted, building/land development and happenings within the local business community. Interaction with the prospect may begin with a single staff person but as the project develops, it is normal for many different municipal departments and outside organizations to be involved. To be consistently successful in 3

4 attracting new business, all municipalities and supporting organizations in Halton must be recognized as one team who are working towards the common goal of doing whatever it can to attract desirable investments. Like most service businesses, technology has had a drastic impact on how this service is delivered. Not only have social media and internet played an important role in marketing strategies and promotional plans but how the economic developer interacts with the prospect has also changed. In the mid-1990s, it was appropriate to respond to that first indication of interest with a couriered information package of pre-printed brochures and data sheets. Now, leading edge communities are engaging the potential investor while on the phone with them during that first contact and walking them through different information on their websites, all the while learning more about the prospect s needs. Currently: International marketing is undertaken to attract companies that are not in Ontario. It requires both marketing value propositions that are sector and Greater Toronto Area (GTA) -specific and direct company contact. This is an expensive and time consuming activity, requiring coordination with senior levels of government and may take significant time to generate results. Local marketing is undertaken with commercial and industrial real estate brokers and developers in the GTA. Again material and contact are needed. However since almost all site selection in the GTA and Halton eventually touches a real estate professional, this provides more exposure to site selection at lower cost. Investment Retention Investment retention is the other economic development cornerstone. It is a method of improving the local business environment by allowing the municipality to learn from its own business community: What barriers to growth need to be removed for the economy, in general, to succeed? What can be done to assist that individual business to expand their scale or ensure they are not lost through consolidation or closure? Business retention works to improve the competitiveness of local businesses by identifying and addressing a business needs and concerns and building on business development opportunities. This is crucial to the sustained viability of communities since businesses that stay competitive are more likely to remain and expand in the community. This function is usually undertaken at the Local Municipal level in regions such as Halton in which there are complementary economic development responsibilities. These initiatives can be informal in nature, where the economic development official makes a point of meeting up with business owners and leaders at community functions and events. It can also take on a more formal tone through a process that involves a survey designed to identify the current business climate. Targets for number of meetings are identified within a workplan and when interviews are completed, data is analyzed and summarized into important action items directed at improving the business environment. 4

5 Current State in Halton Both Halton Region and the Local Municipalities currently engage in international and local marketing. However, not all employment areas fit all business types. A sector focus is needed for each employment area and marketing should reflect this. Existing businesses also need to be shown the value of staying and expanding here. Halton Region provides staff and financial support for international marketing through the Greater Toronto Marketing Alliance (GTMA). The GTMA is a non profit public private corporation established in 1997 by municipal councils with support from economic development staffs. The GTMA works in close collaboration with the GTA s local economic development representatives in Durham, Toronto, York, Peel, and Halton, as well as Federal and Provincial economic development Ministries to promote the area under the GTMA umbrella. The marketing concept takes advantage of the reality that the Toronto area is recognized worldwide, more than are individual municipalities. The organization takes the lead in developing and executing investment attraction activities such as investment prospect generation, investment missions and industry trade show participation. The sectors the GTMA is currently concentrating on are outlined in Discussion Paper #2 Business Growth: Existing and Emerging Economic Sectors. Halton Region invests $100,000 annually in the GTMA and is active on its Board of Directors. All GTMA new business leads are shared and local municipalities provide the site selection data for enquiries generated from this activity. However, very little international direct business contact involving travel is currently undertaken by regional or local staff. The GTMA staff travel on Halton s behalf and share leads across all participating municipalities in the GTA. Local marketing is also done by both Halton Region and local municipalities. Once a year, there is a joint Halton Real Estate Forum, hosted by both the region and local economic development staff, to highlight real estate market conditions and available locations. Most site specific descriptive material is created by the local municipalities. Both regional and local staffs keep in contact with brokers and developers and attend and advertise in their professional forums in the GTA. Whether it s a formal or informal initiative, each of the local municipalities conduct some form of business retention contact. However, due to the large number of businesses across Halton, it is impossible to reach all businesses through personal meetings and the type of contact that will facilitate a conversation on retaining and expanding the business. If business retention is a valuable function, more focus on only some sectors may be needed and more resources both local and regional could be allocated. The employment areas in Halton appeal to different business sectors. There is no regional marketing material that pulls all these areas into one marketing approach. Is this needed? 5

6 There is now a broadly described market division between the south along the QEW highway and the north along the 401 highway, with more companies wanting office space in the south and more wanting logistics companies in the north. In the future, market focus will include the 407 highway and portions of the north/south 403 highway, as Regional services become available. For both investment attraction and retention, a clearer understanding of the existing and future sector focus of each employment area may be needed. Not all future sectors will be attracted by the market equally, to every business employment area. The focus in this economic development strategy should also clarify the regional and local municipal roles in company contact. The following table outlines the current characteristics of the employment areas across Halton FIGURE 1: CHARACTERISTICS OF EMPLOYMENT AREAS IN HALTON REGION Employment Area Current Development Characteristics Future Development Objectives Total Lands/ Available Lands (Estimated) Readiness (Servicing) OAKVILLE Winston Park West (bounded by Dundas, 403, QEW, North Service Road) Largely vacant, some small operations exist. Ont Realty Corp is a major land owner Prestige Business Park 100 net Vacant: 75 net Unserviced to be serviced 2-5 years Winston Park (East) (bounded by Dundas, 403, Winston Churchill, Upper Middle/QEW) Large prestige employment uses and industrial condotype developments, large offices, small commercial and retail uses along major corridors Prestige Business Park 170 net Vacant: 10 net Serviced - Short QEW East (QEW, interchanges at Royal Windsor and Ford Drive and Trafalgar) Ford Motor Company Canada and General Employment New office on north side of QEW General Employment and Prestige Office 390 net Vacant: 50 net Serviced - Short QEW West (QEW, interchanges at Bronte, Third Line, Dorval and south to Speers) General employment - some small retail/ hospitality, and integrated wholesale/retail operations Prestige employment and Office along QEW corridor 500 net Vacant: 25 net Serviced - Short Burloak (bounded by QEW, Burloak Drive, and Rebecca Large-format destinationoriented retail developments, general employment Suncor Canada General Employment uses, open space 235 net Vacant: 95 net Serviced short North Oakville (bounded by Dundas on south and 407 on north) Largely vacant Prestige Employment, Hospital/ Institutional 520 net Vacant: 510 net Unserviced longer Some lands awaiting approval 6

7 Employment Area Current Development Characteristics Future Development Objectives Total Lands/ Available Lands (Estimated) Readiness (Servicing) Midtown Core (bounded by Eighth Line and Cornwall Road, QEW, existing interchange at Trafalgar to Cross Avenue) Substantially developed, mixed use core area. Urban Growth Centre designation in ROPA 38 Office/ Commercial, Mixed use, residential, institutional medium to high density around Oakville GO 55 net Vacant 5 net Serviced Short BURLINGTON North and South Aldershot ( from Waterdown Rd to King Road, both sides of QEW ) Largely vacant and rural Portions in Greenbelt and Niagara Escarpment Vacant 80 net Some small serviced areas but mostly Unserviced longer Burloak (south of Upper Middle Road, North of QEW Corridor at Mainway west of Bronte Creek Pk) Vacant, part of a mixed existing employment use area to the south and further west along Mainway General Employment uses, Vacant 36 net Serviced - Short QEW Corridor (south and north side of QEW from about Guelph Line to Burloak) Substantially developed older employment areas, a number of different uses including general and prestige industrial, commercial office, and retail. Includes the Burlington (just west) and Appleby GO Stations, and DeGroote School of Business. Significant office uses at Burloak Mixed office and prestige industrial development Largely absorbed, some vacant parcels smaller than 5 net, Serviced Short Downtown Burlington (south of QEW to Lakeshore Road) Substantially developed, mixed-use core area, highdensity residential emerging in many areas Urban Growth Centre designation in ROPA 38 Office/ commercial, residential, institutional Largely absorbed Serviced Short Term Alton north of Dundas to 407around Appleby to Tremaine Largely vacant, rural, some developer proposals for office Prestige Business Park Vacant 50 net Unserviced Shorter MILTON Business park Phase 1 (north side of 401 both sides of Highway 25 and east to James Snow Parkway) Largely absorbed Prestige Industrial and office facilities available for lease. Some additional area added to this employment area in ROPA 38. Integrated industrial/office facilities Total: 668 net Vacant: ~200 net Serviced shorter 7

8 Employment Area Current Development Characteristics Future Development Objectives Total Lands/ Available Lands (Estimated) Readiness (Servicing) Business Park Phase 2 (south of 401, east of James Snow Parkway) Largely vacant Integrated office/industrial uses, prestige industrial Vacant 420 net Unserviced to be serviced 2-5 years Downtown Milton West of Highway 25 Mixed use area, downtown core, older industrial uses Urban Growth Centre designation in ROPA 38 Mixed use commercial, office, residential uses Vacant 15 net ha Serviced shorter where opportunities exist Trafalgar and Derry North to 401 designated future employment area and future GO station location, added to employment area in ROPA 38 Mixed office and employment uses Vacant Est 100 net Unserviced longer Southwest Education Village and CN lands (south of Derry, west of Tremaine, and south of Britannia) Largely vacant added to employment area in ROPA 38 Proposed future home of a Wilfrid Laurier University campus, with major office uses, high technology incubator and some general employment uses on lands south of Britannia Vacant ~160 net Unserviced longer HALTON HILLS Georgetown Largely occupied General Employment uses, small parcels remain Serviced shorter Acton Largely occupied, small parcels remain General Employment uses, 25 net ha vacant employment lands constrained by lack of sufficient well water and upstream water treatment Serviced, but limited servicing capacity for vacant lands medium 401 North side to Trafalgar (north side of 401 to Steeles from James Snow Parkway to Trafalgar and 5th line above Steeles Mixed industrial and logistics/warehousing uses, retail zoning at James Snow. More North side of Steeles added to employment area in ROPA 38 Prestige employment uses both industrial and office Total: 263 net Approximately 117 net available Serviced shorter 401 North side Trafalgar to Winston Churchill (north side of 401 to Steeles from Trafalgar to Winston Churchill) Mainly industrial and logistics/warehousing uses, retail zoning at Trafalgar. More North side of Steeles added to employment area in ROPA 38 Prestige employment uses both industrial and office Available: Approximately 108 net Unserviced to have south side of Steeles serviced 2-5 years 8

9 Challenges to Business Growth The private sector real estate development market may not be delivering enough industrial and commercial buildings and job creating companies to match planned expectations. It must be realized that the cost competitiveness of Halton s employment areas are more attractive for some business sectors than others. In addition, retention may be impossible in some cases as sectors decline and local businesses become uncompetitive there may be nothing a municipality can (or should) do to resist this situation. The private sector controls all employment land ownership in Halton, which to some degree removes the ability for a municipality to direct development. However, the municipalities can play a significant role in removing any uncertainties about developing. This can be done by ensuring land is serviced and shovel-ready and that approvals can be quickly secured. Once a company makes a commitment to invest, speed-to-market is critical every additional day that it takes to get up and running is a lost day of revenue. In the rental market, companies usually can find buildings to suit the business sectors they are in quickly. Many new businesses find the locations they need in Halton in the rental market and are assisted by the cooperation between real estate professionals and economic development staff, both local and regional. There is currently no critical shortage of building space to rent. However, it has been observed that design-build developers who construct new buildings in the rental sector are not building in Halton or repurposing existing buildings for the rental market as often as they used to. The reasons for this situation need to be understood and addressed. In the buy-land-and-build market, a developer or end user company faces a lot of uncertainty. The site approval process is complex and economic development staff are often told the time to obtain a building permit can be longer in Halton than in other municipalities. Land owners may not be willing to sell at reasonable prices. Regional servicing, although available at the lot line for some sites, may not be in areas that are owned in land blocks that meet the investor s need. Multiple owners of smaller sites may not coordinate property to be sold at the same time. How the costs of land, Development Charges, preservation of natural heritage areas, provision of storm ponds, services and road connections are allocated between the many private and public sector parties can affect decisions to build. These cost issues are receiving further research in an Investment Readiness and Competitiveness Study, currently being undertaken by Watson & Associates, which will provide input into the economic development strategy. 9

10 Business retention also often comes into conflict with municipal regulation. Many long standing businesses were built under permissive zoning and before stringent site plan requirements. When encouraged by economic development staff to stay and expand, the increased complexity and cost of the new regulations comes as a surprise. Planning land use policies in ROPA 38 favour higher density development and encourage water and sewer capacity to be provided in these higher density areas. The private sector ultimately pays for services through Development Charges (DCs). Will there be enough new companies wanting to locate in higher density locations in the next 10 years to pay the DCs needed for servicing? Anticipating this issue and dealing with it before it causes a financial strain on the municipal tax base may be an important economic development issue. Opportunities and Actions for Economic Development Agreement is needed between the Regional and Local Municipal level of economic development on an overall vision of the sectors and process most appropriate for the various employment areas in Halton. The opportunity discussed here is to concentrate economic development resources on the sectors where employment areas in Halton have the most competitive advantage. Finding those companies internationally and domestically is then important. International marketing is currently taking place through the GTMA and with Regional support. At a minimum, the sectors on which the GTMA is focusing should be more aligned with particular employment areas in the local municipalities in Halton. Halton has received few new businesses from GTMA efforts over the last few years. More effort towards sector alignment and travel to meet new companies may improve the results but support will be needed. Also, the GTMA connection does solidify federal and provincial economic development staff connections that would need to be resourced more robustly at the local or regional level without the GTMA. Whether international and local marketing is adequately resourced at the Regional or Local Municipal level, is an issue for discussion. The matter comes down to what process will offer the best client-focused mechanism and deliver the highest results. The prospect must receive an optimal level of service. New techniques, using internet based technologies for company contact and economic development collaboration may be needed. Having economic development staff involved in the building construction approval process may also be a way of improving both existing and new business growth. For both companies looking to build and developers of employment land, some municipalities have teams of staff that are assigned to both provide the information a business needs to find a location and secure a building permit and to help move the municipal process along to approval. To be effective, this service must begin prior to the actual municipal application, when the business is still comparing locations across Ontario and this assistance would continue as the business finalizes its decisions. Creating a joint Regional and Local Municipal team led by 10

11 economic development that is front and centre with both new business and existing business expansions may be beneficial. There is also a possibility that these Investment Teams could assist in the provision of services for existing businesses and company retention efforts. Existing companies often have strong connections to local locations. They have local employees and have paid taxes, often for decades. As noted in other Discussion papers, their municipal taxes have contributed a net positive surplus over costs to fund municipal services. There may be a case for developing special polices that apply only to some existing major companies to encourage them to stay and expand, in recognition of their long- contribution to the community. To deine if the private land market is delivering the higher density development anticipated in ROPA 38 performance measures would be helpful. How this could be organized and what is reported on may be part of this economic development strategy. Discussion Questions 1. Do you feel the issue presented here is important to a Halton Region Economic Development Strategy? (rank from 1 to 10, with 10 being highest)? Explain. 2. Do you feel the Current State is correctly described? (rank from 1 to 10, with 10 being highest)? Explain. 3. Do you feel the Challenges to Business Growth are correctly described? (rank from 1 to 10, with 10 being highest)? Explain. 4. Is the local and regional building approval process supportive enough of business construction? 5. What are the primary strengths of Halton Region s employment areas with respect to business attraction and retention? 6. In the employment areas described, what sectors do you see the market wanting to build in the next 5 years? In the next 5 to 10 years? 7. Are you in favour of more international marketing to attract new business? 8. If municipal staff were organized to provide support for companies wishing to build in locations here, would you agree with provisions that might fast track business construction more quickly compared to residential construction? 11

12 For more information, contact Halton Region Dial 311 or Toll free HALTON ( ) TTY