Stimulating Economic Growth: Toronto s Approach to Financial Incentives. Presentation to Toronto City Council December, 2007

Transcription

1 Stimulating Economic Growth: Toronto s Approach to Financial Incentives Presentation to Toronto City Council December, 2007

2 Introduction 2007 Saw Significant Progress in the Economic Portfolio Film Sector Strategy Employment Lands Strategy Imagine Toronto - Creative Industries Report Nuit Blanche Business Climate Report Competitiveness Issues Underlie all of these Activities The Use of Incentives to Stimulate Growth is a New Tool EDCT, Finance and Planning Divisions are Jointly Proposing a Citywide Incentive Strategy focused on Key Economic Sectors Presentation: Kyle Benham, Director Business Development and Retention Questions: Finance, Planning and EDCT staff 2

3 Toronto Is Improving its Position in the Face of Growing Competition 4.5 City of Toronto Municipal Tax Ratios Municipal Tax Rate as Percent of Residential Rate Industrial 2.5 Commercial Toronto s 15 year plan will significantly reduce business tax ratios Need to compete: 120 million square feet industrial space built in 905 since 2002 Increasing Globalization 3

4 Toronto s Job Growth is not Keeping Pace Toronto has yet to return to 1989 employment levels Cumulative Job Change (thousands) City of Toronto Rest of Toronto CMA ,600 Toronto Jobs Lost: Over 60,000 Housing Units Built:

5 Incentives are a Common Economic Development Tool Existing Toronto companies are directly solicited to set up operations in other jurisdictions Direct competitors such as Chicago, New York, Boston and Detroit all offer significant incentives Eight U.S. States maintain economic development offices in Toronto Incentives are required to make a site selector s short list 5

6 South Etobicoke was in Trouble 80 acres of vacant industrial land Considerable pressure for residential conversion Brownfield issues Decreasing employment and assessment base 6

7 South Etobicoke Program Shows Incentives Make a Difference Today over 1.1 million square feet of constructed or proposed industrial space Estimated over $1.36 million in new taxes will be generated. Over 10 years City gets: - $1.7 million base taxes - $6.2 million new taxes 1,100 new jobs in the area 7

8 Toronto Needs a Clear Approach to Financial Incentives Staff have received numerous requests for financial incentives MaRS / Discovery District Toronto Waterfront Leaside Business Association Project Sunrise (Rexdale) Sterling Road / Junction Area Proposed MaRS Phase II 8

9 Investing in Sector Development Will Drive Future Prosperity Sectors are the building blocks of the City s Economy Provide knowledge based/value-added jobs Trade regionally and internationally: creating new wealth Establish the City s global reputation Impact of a large value chain 9

10 Toronto s Proposed Approach City-wide v. Geographic Focus on sector priorities/need Proposed Tools Tax Incremental Equivalent Grants, (TIEG) Brownfield Remediation Specific Purpose Grants (Environmental) $140,000 Annual Property Taxes (Municipal) $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Year 1 Tax Increment = $100,000 Pre-rehabilitation taxes 50% Post-rehabilitation taxes 10% Grant amounts paid 30% 20% 60% 40% 70% 90% 80% 80% 90% 70% 100% 60% 50% Incremental City tax revenue 40% 30% 20% 10% Base Level Taxes $0 Year Year 10 Illustration of a Typical TIEG Program 10

11 Initial Sectors Being Considered for Incentives Screen based industries Food and Beverage manufacturing Environmental product production and research Information Technology/New Media industries Tourism Bio-Medical industries and research Aerospace, pharmaceutical, electronic equipment manufacturing 11

12 Proposed Approach Creates New Benefits with Low Risk The existing tax base is not touched Tied to private investment: occurs when the investment has taken place Stimulates future tax revenue streams Immediate economic impact related to new construction On-going GDP impact related to production and jobs 12

13 Economic Development Committee Issues to be Addressed Sector selection - What s in / What s out Level of Support to be provided - 60% TIEG Development Criteria - size, investment, etc. Evaluation of other tools Linkage to Green Building Initiatives Inclusion of Business Incubators, Convergence Centres, Head Offices, Transformative Projects Linkage to Priority Neighbourhoods 13

14 Action is Needed Now Council Approval of Directions Report: Dec 2007 Prepare Consultation Paper: Dec 2007 Business Community Consultation: Jan -Feb 2008 Community/Interest Group/Labour Consultation: Jan -Feb 2008 Draft Community Improvement Plan: March 2008 Progress Report to Economic Development Committee: Feb 2008 Statutory Meeting at Planning and Growth Management Committee: April 2008 Council Approval: April