Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on City Services and Budgets

FROM:

General Manager of Corporate Services

SUBJECT:

Vancouver Economic Development Commission - Contract Renewal & Year 2000 Business Plan

 

RECOMMENDATION

A. THAT Council approve renewal of the annual contract with the Vancouver Economic Development Commission for the 2000 fiscal year at a cost of $202,000 (plus applicable net GST) reflecting an increase of 1% that is consistent with the City’s guidelines for year 2000 general inflationary increases; source of funds to be the 2000 Operating Budget.

B. THAT the Director of Legal Services be instructed to amend the contract with the Vancouver Economic Development Commission to reflect provisions of Recommendation A and Consideration item C.

CONSIDERATION

C. THAT Council approve an increase of $18,000 (plus applicable net GST) to the annual contract with the Vancouver Economic Development Commission, bringing the total contract amount to $220,000 (plus applicable net GST), to offset primarily increased rental costs; source of funds to be the 2000 Operating Budget.

COUNCIL POLICY

Council has adopted a policy of contracting with the Vancouver Economic Development Commission for the provision of economic development services, and approval of its Annual Business Plan.

PURPOSE

The purpose of this report is to seek renewal of the City’s contract with the Vancouver Economic Development Commission for the 2000 fiscal year and approval of its Year 2000 Business Plan.

BACKGROUND

The Vancouver Economic Development Commission is an independent, non-profit organization created by Council in 1997 as a focus for economic development in the City. The Commission seeks to unite the private and public sectors in the active and progressive management of Vancouver’s economic growth.

The Commission consists of thirteen volunteer members drawn from the Vancouver business community. Collectively, they bring an array of knowledge and contacts in such areas as urban planning, recreation, transportation, international finance, high technology, economic development, communications, international trade and urban development. In addition, two members of Council serve as ex-officio members.

Council established the Commission as an alternative to the City economic development office in order to take greater advantage of information external to the City. The primary purpose of the Commission is to provide the City with policy advice and commentary on major economic development issues.

Economic development services are provided to the City through a fee for service contract.
Renewal of the services provided by the Commission are subject to annual review by Council, and are contingent upon satisfactory review of the results of Commission’s activities including reporting of the Commission’s accomplishments, operating and financial results for the past year and a review of the audited financial statements. The Commission must also present the City with the upcoming year’s business plan and operating budget for Council consideration and approval, in advance of each new business year.

Council maintains the authority to appoint members to the Commission. Such appointments are made in advance of each business year, for terms of two years. Financing to support the Commission’s ongoing operation is provided primarily by the City through the terms of theaforementioned service contract. The Commission also receives in-kind support, attracts sponsorship funding, and generates revenues through the sales of various economic development materials and partnership agreements.

DISCUSSION

1. 1999 Year End Review.

The Vancouver Economic Development Commission (VEDC) has submitted its 1999 Year End Review and 1999 projected results. Activities were concentrated in several areas as specified in the contract with the Commission, in particular the eight interrelated priority areas noted below. The following summarizes the activities of the Commission in these areas and highlights their achievements during 1999.

· Marketing Vancouver - During 1999 significant progress was made in Marketing Vancouver including the completion of the Commission Brochure, the Economic Vision Brochure, Moving to Vancouver Brochure, Guide to Starting a Business in Vancouver, the 1999 edition of Vancouver Market Facts, as well as the implementation of a new Web Site for the Commission.
· Business Development activities included trade missions, co-sponsoring events and hosting incoming business delegations.
· Economic Partnerships. The Commission has actively pursued a broad range of partnerships in order to achieve its economic objectives. In spring of 1999 the Greater Vancouver Economic Partnership was incorporated, bringing together representatives from the private and public sectors.
· Economic Policy & Research - The provision of economic policy advice is part of the contract between Commission and the City of Vancouver.
· International City Project - Recognizing Vancouver as an emerging player in the global network of international cities, the Commission continues to promote Vancouver in areas such as finance, tourism, research and education and high technology. Funding for this program was augmented in 1999 through the release of $50,000 from the Asia Pacific Legacy Fund.
· Downtown Eastside Economic Revitalization - As part of the Vancouver Coalition for Crime Prevention and Drug Treatment, the Commission was asked to identify projects that would demonstrate positive change in this community. Significant progress has been made and over 40 projects identified through numerous meetings with stakeholder groups.
· Funding Diversification Program - In order to accomplish the Commission’s objectives, substantial increases in revenue sources are required. The Commission is actively working to develop existing sources such as corporate sponsorships, as wellas pursuing alternative revenue opportunities.
· Expansion of the Commission Office - One of the objectives of the 1999 Business Plan was to elevate the visibility of the Commission as the first point of contact for inquiries and information on business in Vancouver. In addition to expanding its offices in the Price Waterhouse Centre, the Commission has increased its staffing resources in order to meet its policy and research demands.

Two initiatives outlined in the 1999 Business Plan have been delayed until 2000 due to funding availability. These were the Small Business Initiative which commenced in 1999 but with the bulk of the project moving to 2000, and the “Common Meet & Greet Function” which was delayed until 2000 pending the receipt of matching funding required to resource the project. Further information about these projects can be found in the 1999 Business Plan.

1999 Financial Results

The Commission’s primary source of income in 1999 flowed from the service contract with the City. In addition to the base contract the City provided $25,000 in special project funding to begin implementation of a Downtown Eastside Economic Revitalization Strategy. Other revenue for the Commission fell well short of expectations, most notably in the area of corporate sponsorships.

The Commission reports alternative funding commitments of approximately $314,000 through access to other government funding sources. However, these funds are subject to the Commission’s ability to secure matching corporate or other funding and will not be available until 2000. While the timing of alternative funding receipts dampens 1999 results, the Commission reports that upon consideration of these commitments, the funding diversification program is in fact ahead of target.

Revenues from sales of materials such as brochures also fell short of the budget of $20,000. On the positive side, the Commission generated $33,000 of additional income from the Greater Vancouver Partnership.

Service and administrative expenses remained on par with budget, however the number of projects undertaken by the Commission was significantly reduced in order to remain within available funding. Overall, the Commission anticipates completing the year with a nominal deficit of $4,774. The table in Appendix I summarizes the financial activities of the Commission projected to the end of December, 1999.

2. Renewal of the VEDC Contract - Year 2000 Business Plan & Budget

The VEDC has submitted its business plan for 2000. The Commission will maintain a range of core services required under the terms of the service contract with the City of Vancouver that include:

· Providing information on business in Vancouver.
· Promoting the City both nationally and internationally.
· Coordinating the efforts of other government departments and agencies with respect to economic development in Vancouver.

Details of these activities are included in the 2000 Business Plan (Appendix III, limited distribution), and will be undertaken as part of the base contract with the City. The Commission has requested an increase of $20,000 in the City contribution to support its basic administrative expenses, which if approved would bring the total City contribution to $220,000. General office costs including rent and related charges will increase significantly in 2000. The majority of the increase in operating costs stems from the requirement to pay commercial rates of rent in previously rent-free office space. This was based on a temporary arrangement with the landlord to occupy untenanted office space. Staff recommend an increase of $2,000 in the Commission’s base contract, reflecting an increase of 1% that is consistent with the City’s guidelines for year 2000 general inflationary increases applied across the remainder of the City’s budget. Staff are not recommending an increase in the contract funding of more than 1% based upon the Commission’s ability to generate revenues from sources other than the City. The balance of the Commission’s request ($18,000) is submitted for Council’s consideration.

The Commission has presented an ambitious Business Plan for 2000 over and above its core contract for service with the City. The overall scale of the program can be viewed as particularly aggressive in light of 1999 results where revenues fell short of target. As a result the Plan may prove difficult to accomplish. Inability to generate sufficient revenues could result in a program that is substantially reduced from the one presented in the Business Plan. However, the Commission is confident that it can achieve the objectives stated therein. In order to accomplish these objectives, the Commission plans to restructure its various committees and intends to establish an independent Advisory Board to provide additional expertise to support the Commission’s undertakings.

Project based activities identified in the Plan include the International City Project, Small Business Initiative, Economic Policy and Research, and the Downtown Eastside Economic Revitalization. These projects continue to building on work started in 1999 are discussed at length in the Business Plan. As indicated in Appendix II (Table 1 of the Business Plan, Source and Application of Funds), many of the projects outlined will be undertaken onlywhen sufficient resources have been received through corporate sponsorships and alternative funding arrangements.

The Commission’s year 2000 business plan budget also identifies $80,000 of project funding to be provided by the City of Vancouver. These funds are identified for Business Planning purposes only and are not part of the service contract or any other commitment by the City. Such projects may or may not materialize and are wholly dependent upon identification an appropriate funding source in addition to individual Council approval at that time.

As part of its economic policy and research goals the Commission plans to undertake a series of research projects that will require their involvement and participation in major policy areas of the City. These includes such areas land use, zoning, taxation and business development. The Commission has also identified a number of areas where it proposes to act as a liaison and facilitate discussion between the City and the business community. Proposed policy reviews as outlined in the Business Plan are extensive. These projects will require ongoing dialogue between various City departments and the Commission in order be effective and make progress in the areas indicated. They will also depend in part upon the City’s ability to respond to all of the policy issues identified and the availability of resources to do so.

The Year 2000 Business Plan Budget totals $1,190,000, to be financed from the sources indicated in the table in Appendix 1. Distribution of the budget across the various projects and activities proposed in the business plan is attached in Appendix II. The ability of the Commission to undertake these initiatives is also dependent upon availability of revenues. One of the objectives of the 1999 Business Plan is the diversification of funding sources. The continuation of this Plan involves substantial revenue increases for 2000, primarily from Corporate Sponsorships with the balance coming from Alternative Funding Sources (other government program funding), as well as other Revenue Generating Activities (web site advertising). Although this is an ambitious target, the Commission remains confident that it can meet its revenue target.

CONCLUSION

The Vancouver Economic Development Commission has submitted its Business Plan for 2000 and has requested that Council renew its contract with the City for the provision of economic development activities. Staff are recommending that Council approve Recommendation A and B, and submit item C for Council’s consideration.

- - - - -

APPENDIX I

1999 Results and Year 2000 Budget

Revenues

Total Revenues $645,000 $319,959 $1,190,000

Expenses

Total Expenses $645,000 $324,733 $1,190,000

Projected surplus / (deficit) - ($4,774) -

Note 1. Year 2000 Project Funding is identified for Business Planning purposes only. It is not part of the service contract and is wholly dependent upon the identification suitable projects along with an appropriate funding source in addition to Council approval at that time.
Note 2. In addition to the 1999 Corporate Sponsorship revenues of $50,000, VEDC reports contributions in-kind totalling $195,950.
Note 3. Commitments of $314,000 were received in 1999 but are still subject to sourcing of matching funds. The 2000 budget has been set conservatively at $275,000 on this basis. The cash will be available in 2000.
Note 4. Revenue generating initiatives including Web based advertising, and sale of VEDC products.
Note 5. Greater Vancouver Partnership - recovery of office space costs from partners.
Note 6. General office expenses includes office rent (1999 actual $31,319, year 2000 budget $44,941).

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