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 2002 Business Plan and Budget

 

RECOMMENDATION
THAT Council approve renewal of the annual contract with the Vancouver Economic Development Commission (the "VEDC") for the 2002 fiscal year at a cost of $550,000 plus applicable net GST (a net increase of $300,000 from the 2001 budget). Source of funds: 2002 Operating Budget.

CITY MANAGER'S COMMENTS
Council has identified economic development as a priority for the City of Vancouver. The most critical components in providing proactive and effective economic development is the availability of adequate resources, strong leadership and expertise.

Staff are bringing the 2002 VEDC Business Plan forward at this time for a number of reasons: First, On November 8, 2001, Council directed staff to report back on the VEDC 2002 Business Plan before 2001 year end. Second, approval of the Business Plan now will allow the VEDC to move forward on the renewed mandate received in November of this year. It is important for the VEDC to begin carrying out the proactive economic development activities as detailed in the 2002 Business Plan. Staff will report back to Council in April 2002 on the VEDC 2001 Annual Report.

For the above reasons, the City Manager recommends approval of the foregoingto enable the Vancouver Economic Development Commission to carry out core economic development services on behalf of the City of Vancouver commencing January 2002.

COUNCIL POLICY
Since 1996 Council has contracted with the Vancouver Economic Development Commission for the provision of economic development services, contingent upon approval of its Annual Business Plan.

On November 8, 2001, Council approved the retention of the Vancouver Economic Development Commission ("VEDC") as an arm's length economic development entity for the City of Vancouver. In addition, Council approved the provision of $550,000 for core economic development activities to VEDC in 2002, subject to receipt and approval of a 2001 Annual Report and 2002 Business Plan.

PURPOSE
The purpose of this report is to seek approval for the Vancouver Economic Development Commission 2002 Business Plan and budget (Appendix 1), and to enter into a contract with the VEDC for the provision of economic development services.

BACKGROUND
The Vancouver Economic Development Commission is an arm's length, 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 up to fifteen volunteer members drawn from the Vancouver business community. Collectively, the Commissioners bring an array of knowledge and contacts in such areas as transportation, international finance, high technology, economics, communications, tourism and urban development. Commissioners are appointed by Council, and in general, serve two year terms. In addition, two members of Council serve as ex-officio members.
The VEDC provides economic development services to the City, which are funded through a fee for service contract. In 2001, a review of economic development business models

resulted in Council re-affirming VEDC as the City of Vancouver's vehicle for economic development, and establishing which activities were determined as critical in order to move Council's objective of economic development forward. Renewal of the services provided by the Commission are subject to annual review by Council. Annually, Council also reviews the results of Commission's activities including reporting of the Commission's accomplishments, operating and financial results for the past year. A report up to the month of November 2001 activities to date is contained in the VEDC's 2002 Business Plan. The complete 2001 Annual Report will be reported to Council in April 2002. The Commission must also present the City with the upcoming year's business plan and operating budget for Council consideration and approval.

DISCUSSION
2001 Year In Review
The year 2001 was one of transition for the VEDC. Staffing changes limited the ability of the VEDC to carry out core activities in a proactive manner early in the year. From May onwards, with the approval of the VEDC 2001 Business Plan and Budget and the appointment of a new Executive Director, the VEDC increased its level of economic development activities, with a concentration on the core activities of the commission, the special projects mandated by Council, and the business model review carried out in partnership with the City of Vancouver staff.
Despite the challenges early in the year, there are many positive outcomes from VEDC activities in 2001. In addition to core activities and the business model review, a number of special projects were carried out under the VEDC's supervision. These include Downtown Eastside projects and the Investment Promotion Initiative, a self-funded project which partnered the VEDC with the Federal Government, City of Vancouver, and private industry.
The VEDC 2001 Business Plan set out six objectives, and in addition, two special projects were carried out. Briefly, key accomplishments relating to each objective and project up until December 3, 2001 are:
Objective 1. Provide economic information on Vancouver
· Responded to over 500 information requests on subjects ranging from demographics to site selection assistance to business immigrant requirements. Approximately 15-20% of requests are from site selectors.
· Generated information on demographics, key sectors and real estate for distribution through web and hard copy.

· Instituted tracking system for inquiries to allow follow-up;
· Assisted several companies with site selection inquiries.
Objective 2. Promote Vancouver locally, nationally and internationally
· Raised profile via News-releases (Executive Director hire, 2010 Olympic Bid, Convention Centre, Joint Competitive Advantage study with Board of Trade, FIT Study in DTES);
· Targeted advertisements in site selection magazines;
· Received delegations (Approximately one per month)
· Participation in Economic Development Association of BC conference with staffed booth/promotional materials on Vancouver (April), Display, materials and staffed booth at International Development Research Council ("IDRC"): Pacific Northwest World Congress (May).
Objective 3. Provide advice on economic issues of substance to the City
· Partnered with city staff on Economic Development Business Model Task Force to provide feedback to Council on future economic development in Vancouver (required extensive review of business models/other cities, and interviews with key people/organizations impacting economic development in Vancouver);
· Increased communication with Council and city staff regarding activity in the business community through quarterly reports, new releases, email, and meetings.
Objective 4. Forge strategic relationships with public and private entities in order to enhance economic development in the City of Vancouver
· Joint study on Vancouver's competitive advantage with the Vancouver Board of Trade;
· Sought representation from key sectors on commission (communications, transportation, tourism);
· Extensive contact and communications with local organizations interested in economic development in Vancouver. Some organizations with which VEDC is exploring stronger relationships: Board of Trade, Tourism Vancouver, UBC and SFU, Greater Vancouver Gateway Council, BCTIA, BC Biotech Alliance, 2010 Olympic Bid, and BC Hydro;
· Recently appointed as a Founding Partner of the "Spirit of Vancouver" campaign by the Board of Trade. Founding partners contributed $30,000 over three years, although

the VEDC was appointed at no charge.

Objective 5. Identify and communicate key economic indicators to gauge economic progress
· Development of "Quarterly Economic Indicators" published in Third Quarter Report to Council, which demonstrate comparative statistics on employment, real estate, business concerns, and permits;
· Conducted benchmark analysis for Vancouver against five competitor cities.
Objective 6. Provide secretariat duties in support of the Commission and members of

· Completed reorganization of the commission including staffing and reporting;
· Restructured committees to reflect VEDC 2001 priorities.
Investment Promotion ("IP") Initiative
In addition to its core activities, the VEDC carried out the Investment Promotion Initiative in the first six months of 2001. This initiative was entirely funded through corporate sponsorships, revenue generation and seconded staff. The leader of this initiative was seconded from Industry Canada for a six month term. The IP initiative focused on promoting Vancouver as a key location for high-tech investors, site selectors, real estate professionals, and companies from the USA and overseas.
Accomplishments of this initiative include:
· Creation of promotional materials (print and web) which focus on high-tech opportunities;
· Participation in IDRC conference in Seattle, as part of an "Invest BC" initiative;
· Meetings between City of Vancouver and representatives of the real estate and high-tech sectors to provide a high technology perspective on the future of Vancouver, and to present a new initiative to position Vancouver as a prime location.
Downtown Eastside Projects
Since 1999, the VEDC has been an active partner in the DTES Revitalization program. A number of programs were managed by the VEDC in 2001. Partners for Economic and Community Help continues to run under the auspices of the VEDC, but work continues to establish PEACH as a separate legal entity. Revenues for DTES projects are received from a number of organizations. Western Economic Diversification, Human Resources and

Development Canada, City of Vancouver, and the Province of British Columbia have provided support for these projects.
Among the accomplishments of the DTES activities in 2001 are:
· Completion of Phase I of the Economic Capacity Study, and implementation of Phase II;
· Rive Gauche - a festival street market held in Pigeon Park from May to August;
· Coordination of Lease Subsidy/Tenant Improvements Programs in cooperation with PEACH. Two lease subsidies are currently in place: Clothes Encounters and the Call N Post.

2001 Financial Results
The strict financial management controls in place at the VEDC will result in an estimated cash surplus of $20,000-25,000 in 2001. The 2001 Annual Report will include a review of finances in 2001. Any surplus resulting from 2001 will be used for two purposes: for earlier retirement of loan, and to establish a contingency reserve to ensure future financial challenges can be addressed from within the organization.
The project accounting system implemented in 2001 ensured core funding for the VEDC contract was not used for special projects. To date, the Investment Promotion Initiative and the DTES Revitalization Project budgets have been managed in a proactive manner, resulting in balanced budgets for both projects.

(To October 31, 2001)

Investment Promotion
(Below are actuals as project ended June 30, 2001)

Downtown Eastside
(Projects on-going)

Revenues

$43,480

$358,311

Expenditures

$38,919

$357,165

Surplus (deficit)

$4,561

$1,146

2002 Business Plan
Following Council's decision of November 8, 2001 to retain the Vancouver Economic Development Commission as the City's vehicle for economic development, the VEDC identified the following mandate and goals, which are intended to support Council's objective of economic development:

Mandate
· to promote economic development for the City;
· to serve as a link between City Hall and the business community; and
· to be a vehicle for leadership in the definition and realization of Vancouver's economic potential.
Goals
VEDC has identified three principal goals for 2002:
1. To provide leadership with respect to economic development in Vancouver.
2. To promote Vancouver as a vibrant and diversified destination for business and investment.
3. To assess and report on performance measures for Vancouver and VEDC.

The economic development strategy is underpinned by five guiding principles:
· Innovation
· Diversity
· Entrepreneurship
· Associations
· Sustainability

For each of the goals, the VEDC has identified specific strategies, activities and outcomes which are intended to achieve each goal.
1. To provide leadership with respect to economic development in Vancouver.
· Develop a vision and long-term strategy for economic development in Vancouver
· Foster a positive business climate through partnership initiatives
· Develop an economic development brand for Vancouver and VEDC
· Monitor and report on key factors that will affect the economic development climate in Vancouver
· Provide strategic advice to Council on issues that affect economic development
2. To promote Vancouver as a vibrant and diversified destination for business and investment.
· Retain and expand existing businesses
· Attract new business
· Target key sectors or clusters for business development
· Position Vancouver as a place to do business
· Increase international profile of Vancouver as a place to do business
3. To assess and report on performance indicators for Vancouver and VEDC.
· Provide quarterly reports on key economic indicators for Vancouver
· Implement a monitoring system for tracking business development and the movement of businesses
· Research and monitor peer city policies and activities
· Report quarterly and annually on VEDC's performance (based upon benchmarks established through Business Plan)
Each of these goals and activities will be supported by a comprehensive communications plan.
In relation to earlier reports to Council regarding economic development, the VEDC's business plan addresses all seven of the critical activities determined by the Task Force as important to the City of Vancouver. Appendix 2 illustrates these critical activities in relation to VEDC's 2002 Goals and Strategies.

Performance Measurement and Targets
As indicated in the VEDC 2002 Business Plan, performance measurement is a key goal of the organization. Based on the goals, activities and outcomes in the Business Plan, VEDC will be setting quarterly targets for performance, and will report back on their progress to Council. Examples of measures include: number of information requests received in the year, number of hits to the web site, number of businesses attracted to the City, and number of media articles on the organization. The 2001 Third Quarter Report to Council highlights a number of economic indicators, including: labour force, employment, business licenses, business incorporations, housing starts, permit values, and bankruptcies.

2002 Budget
The VEDC has identified their financial requirement of $550,000 to carry out these core activities. A significant portion of these funds will be utilized for staff. As previously discussed with Council, this level of funding contemplates five staff positions, including two Business Development Officers. The core expenses included in this budget are:

The VEDC also contemplates generating additional revenues in 2002. Revenues will be sought for any special projects initiated by the VEDC, and corporate sponsorship revenues generated through web-site advertisements will enable the VEDC to reduce their loan outstanding.

FINANCIAL IMPLICATIONS
The financial resources required to carry out the core activities in this business plan are $550,000. The VEDC requests Council provide this level of funding for core economic development activities as contemplated in the attached Business Plan. This would be an increase of $300,000 from the VEDC's 2001 core operating contract of $250,000. The increase is due to the additional resources contemplated for promotions and for two Business Development Officers, who will focus on the retention, expansion and attraction of business to Vancouver.
Staff recommend Council approve this level of funding, as it will ensure proactive economic development on behalf of Vancouver. The net increase, if approved by Council, will be funded through the 2002 Operating Budget.

CONCLUSIONS
The VEDC has submitted its 2002 Business Plan and Budget and has requested that Council renew the annual operating contract and provide the funding necessary to fund core activities. Staff recommend approval of funding in the amount of $550,000 for 2002.

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Link to Appendix 1

Link to Appendix 2

cs011213.htm

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