|
CITY OF VANCOUVER Administrative Report |
Report Date: |
February 3, 2005 | |
Author: |
Ernie Westmacott | |
Phone No.: |
604.871.6509 | |
RTS No.: |
RTS 4888 | |
CC File No.: |
3143 | |
Meeting Date: |
February 17, 2005 |
TO: |
Standing Committee on City Services and Budgets |
FROM: |
General Manager of Corporate Services |
SUBJECT: |
Vancouver Economic Development Commission (VEDC) 2005 Business Plan and Budget |
RECOMMENDATION
THAT Council approve renewal of the annual contract with the Vancouver Economic Development Commission (VEDC) for the 2005 fiscal year at a cost of $616,000; source of funds to be the 2005 Operating Budget. Approval of funding to be deferred to the 2005 Interim Operating Budget.
CITY MANAGER'S COMMENTS
Council has identified economic development as a priority for the City of Vancouver. It is important that Council continue to provide funding to enable the Vancouver Economic Development Commission to carry out economic development services on behalf of the City of Vancouver as outlined in VEDC’s 2004-2006 Business Plan.
To provide these core economic development services, the VEDC is asking for a 4.9% increase over the 2004 budget. Part of this increase (2.4%) is due to an increase in employee benefits that is beyond the VEDC’s control.
There are four new initiatives proposed by VEDC for 2005 totaling $121,100; two of which are funded mainly by third party partners ($56,100 out of a total $71,100) and the remaining two and capital expenditures of $14,000 will be funded from the VEDC’s 2004 surplus. The VEDC is showing fiscal prudence by seeking third party funding and utilizing surplus funds to fund additional programs, thereby limiting the additional funding required from the City.
The City Manager RECOMMENDS approval of recommendation A.
COUNCIL POLICY
Since 1997 Council has contracted with the Vancouver Economic Development Commission for the provision of economic development services.
PURPOSE
The purpose of this report is to seek approval for the Vancouver Economic Development Commission 2005 Business Plan and Budget (Appendix A), 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.
VEDC is governed by a 15-member board with three ex-officio members and two designated city council liaisons. Collectively, the Commissioners bring an array of knowledge and contacts in such areas as transportation, international finance, technology, economics, communications, and urban development. Commissioners are appointed by Council, and in general, serve two-year terms.
The five staff members of VEDC provide 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 is subject to annual review by Council. Annually, Council also reviews the results of the Commissions accomplishments and operating and financial results for the past year.
The complete 2004 Annual Report including audited financial statements will be available to Council in April 2005.
DISCUSSION
2004 Year in Review
2004 was a transition year for VEDC with a number of staff positions unfilled for portions of the year. Nevertheless, VEDC accomplished a number of key activities in the five principal goal areas set out in the 2004-2006 Business Plan. VEDC will continue developing a number of these goals in 2005.
A summary of the progress is listed below:
Goal #1
To facilitate development of a long-term economic strategy for the City
Developing a long-term economic strategy for the City was contingent on receiving additional city funding and having staff available to conduct the work. However, due to staff shortages, the project has been deferred.
Goal #2
To implement the Business First Program with active outreach to existing businesses
(Note: staff shortages during the year prevented full implementation of this program.)
Focus on Business First in 2004 was primarily on program development.
Activity |
Purpose |
Result |
Purchased appropriate software platform and company contact database |
To focus on strategic information and longer term actions. Software to guide questioning, tracking, and reporting |
· 15 completed test interviews
|
Initiated conversations with Federal and Provincial governments to co-ordinate interview programs |
· To co-ordinate efforts
|
· Both governments considering the purchase of the same web-based software product
|
Response Network developed |
· Volunteer network developed to provide assistance back to companies |
· Improved access to services |
Goal #3
To foster a supportive and competitive business climate in Vancouver
Activity |
Purpose |
Result |
· Ongoing meetings with all industry associations
|
· To develop key contact networks to understand business issues, barriers and opportunities and to initiate action
|
· Jointly funded Labour Market analysis planned for 2005
|
Regional Economic Leadership Forum |
· To develop a regional approach to economic development to improve strategic efficiency and effectiveness |
· VEDC spent 6 months supporting this initiative through leadership, organization, fund-raising ($200,000), and secretariat support
|
Downtown Eastside Forum |
· To assist in the organization of a forum to help shape future Downtown Eastside economic development activities
|
· Event held with 160 attendees. Report and recommendations issued back to Vancouver Agreement partners |
Goal # 4
To attract new investment and knowledge-based enterprise to Vancouver
VEDC fully implemented a sales strategy in 2004 and raised an additional $75,000 to implement sales and marketing activities. Through trade show attendance, increased contact with the Consular corps, and one on one sales calls with prospect companies, the VEDC increased qualified leads by 128%, from 25 to 57.
Activity |
Purpose |
Result |
Developed and implemented a sales strategy for 2004 |
· To plan 2004 sales approach |
· Fully implemented – resulted in 128% increase in qualified prospects, from 25 in 2003 to 57 in 2004 |
Funnel tracking system put in place |
· To effectively manage new and qualified prospects through a staged sales process. |
· Improved tracking and management of sales leads and prospects |
Developed and distributed new collateral materials |
· Develop VEDC brand in targeted markets |
· Improved consistency in visual identify and messaging across mediums |
Attended 7 trade shows |
· To develop key contacts and network
|
· Establish base of key contacts in target markets
|
6 sales calls to qualified leads in the Pacific Northwest |
· To develop Consular Corp relationship
|
· Confirmed strategic focus on consular partnerships
|
12 hosted site visits |
· To introduce prospects to Vancouver and to sell our competitive advantages |
· Provide specific information, tour strategic facilities, make introductions to key contacts and organizations |
Consular Event |
· To develop relationships with the Consular staff
|
· 46 Consulates in Vancouver attended the event
|
Goal#5
To benchmark economic progress in Vancouver, and to measure and benchmark Vancouver’s competitive advantages in a global context and best practices for economic development.
(Note: This position was only filled for six months in 2004, which has delayed progress of this project.)
Activity |
Purpose |
Result |
Hired a research assistant |
· To develop our information base and analysis capabilities
|
· Information and statistical library developed
|
Sector profile development |
· Plan developed and priority sectors targeted
|
· First sector (Tourism) drafted
|
Benchmarking economic process and best practices |
· To mark progress, influence strategies and policies in Vancouver to obtain desired economic results |
· Met with BC Progress Board to review their work and methodology |
2004 Financial Performance
VEDC Core Activities Income Statement
Year Ended December 31, 2004
(Unaudited)
|
|
|
Variance favourable (unfavorable) |
Revenues |
|
|
|
Service contract (City) |
587,000 |
587,621 |
621 |
Other revenues |
0 |
44,446 |
44,446 |
TOTAL REVENUES |
587,000 |
632,067 |
45,067 |
|
|
|
|
Expenses |
|
|
|
Salaries and Benefits |
407,000 |
325,741 |
81,259 |
Rent |
53,500 |
47,641 |
5,859 |
Office Expenses |
42,600 |
60,288 |
(17,688) |
Core Activities: Retention, attraction, promotion, research and information services |
83,900 |
109,820 |
(25,920) |
Total Expenses |
587,000 |
543,490 |
43,510 |
|
|
| |
Net Income |
0 |
88,577 |
88,577 |
Notes:
1. Other revenues included a PEMDI grant of $37,146 to develop and implement the 2004 marketing plan and develop collateral materials.
2. Salaries and benefits are lower than budget due to unfilled positions during the year.
3. Rent was slightly lower than forecast due to a lower than expected increase in rent and utilities
4. Office expenses were higher than budgeted due to relocation costs, increased telecommunications costs and legal fees, and the recognition of amortization not budgeted for.
5. The increased expenses for core activities were a result of expending the additional funds secured from the federal government through the PEMDI Grant discussed in note 1.
Commentary:
Several positions were vacant for periods during the year, contributing to the year end surplus.
VEDC obtained additional project funding in the amount of $285,085 for both core activities and for two major conferences identified as Council priorities; Downtown Eastside Forum and Economic Leadership Forum (regional forum)
As in previous years, VEDC benefited from over 1250 volunteer hours and in-kind support provided by Commissioners and the business and academic communities.
2005 Business Plan
The VEDC's vision, mission, values and mandate have been slightly amended from 2004, based on Council input and the VEDC Board’s planning retreat in December 2004.
The goals for 2005 build on the 2004-2006 business plan and are as follows;
1) To plan for the Long Term
· Plan 2010
· Economic Development Strategy for the City
· Support Regional Economic Development
· Film Competitiveness
2) To drive core activities
· Business First – focus on existing businesses and provide support
· Business Friendly environment – policy development
· Business services and research
· Business Attraction and recruitment
3) To develop the organization and strategic relationships
· Build capacity
· Build profile and credibility
· Build strategic relationships
· Benchmark progress and develop comprehensive indicators
· Monitor best practices
VEDC staff and its board of commissioners have developed the 2005 business plan. Staff, Mayor and Council also provided their comments.
The 2005 Business Plan is provided with this report, and includes a detailed budget. A summary version is provided below to indicate the proposed changes.
|
|
Actual |
Budget
|
Percentage Change (Budget to Budget) |
Salaries and Benefits |
407,000 |
325,741 |
417,000 |
2.5% |
Benefit Adjustment |
0 |
15,000 |
||
Rent |
53,500 |
47,641 |
50,000 |
(6.5%) |
Office Expenses |
42,600 |
60,288 |
40,500 |
(4.9%) |
Core Activities: Retention, attraction, promotion, research and information services |
83,900 |
109,820 |
93,500 |
11.4% |
TOTAL EXPENSES |
587,000 |
543,490 |
616,000 |
4.9% |
Capital Expenditures |
14,000 |
|||
Expense increases have been limited to inflation (2.5% for salaries and 2% for other expenses for a combined rate of 2.4%). The additional 2.5% increase relates to an adjustment in the calculation of benefits for the employees as the result of a legal opinion received.
VEDC has shifted funds from rent (relocated to less expensive premises) and office expenses to focus on increased servicing of the existing business base, researching and developing statistical and economic information, policy development related to Business Friendliness, and more targeted business attraction and recruitment activities.
The provincial government has increased its marketing and sales budget through Leading Edge BC, the 2010 Secretariat and through its economic development ministry. VEDC can piggy back on these campaigns and focus on one on one sales calls in the Pacific Northwest. VEDC will work closely with consulate staff to qualify and organize these meetings. This strategy increases the travel, meetings and hospitality budgets related to the Core Activities.
Anticipated capital expenditures include replacement of an aging computer server, purchase of a new laptop and upgrading software. Capital expenditures have not been budgeted in the past, but have been made from savings in operations. For 2005, it is expected that these expenditures will be funded from the 2004 surplus.
Strategic Initiatives |
||||||
|
Program Cost |
Funding from Third Party Partners |
Funding from VEDC 2004 Surplus | ||||
Plan 2010 |
10,000 |
10,000 | ||||
Economic Development Strategy Plan |
40,000 |
40,000 | ||||
Regional Labour Study |
21,100 |
21,100 |
||||
Film Competitiveness Analysis |
50,000 |
35,000 |
15,000 | |||
121,100 |
56,100 |
65,000 | ||||
The Strategic Initiatives represent key projects that have been identified as supporting the economic development of Vancouver. The additional revenues noted will be used to partially fund these initiatives. Funding in the amount of $21,100 has been received for the Regional Labour Study and $35,000 has been requested from Provincial authorities for the Film Competitiveness Analysis.
It is intended that a portion of these initiatives be funded from 2004 savings. While this is not a sustainable funding source for the long-term, it is appropriate to make use of generated surpluses (in 2004 - $88,577) on a timely basis to fund special initiatives.
Summary
The VEDC staff and Executive Committee have worked closely with City staff from across the organization throughout the year on issues including permitting, business licenses, downtown eastside initiatives and planning. The VEDC team (staff and the Board) are committed to building effective relationships with the City.
The 2005 business plan will continue to build upon the work completed in 2004, and look forward to the opportunities created by 2010. The significant challenge of developing a long-term economic strategy for the City will be reviewed and a report presented back to City Council late in 2005.
FINANCIAL IMPLICATIONS
The financial resources required to carry out the core activities in this business plan are $616,000, which represents an increase of 4.9%. This increase is made up of normal inflationary increases (totaling 2.4%) and an uncontrollable and necessary increase of $15,000 (2.5%) for payroll benefit costs.
VEDC has also identified needed capital expenditures totaling $14,000 and 4 priority strategic initiatives totaling $121,100 in the 2005 business plan, outside of the core budget. Funding required, $135,100, is not included in the budget request to the City. It is anticipated that $56,100 will be received from third parties as partner funding and the VEDC’s 2004 surplus will be utilized to provide the remaining $79,000.
CONCLUSION
The VEDC has submitted its 2005 Business Plan and Budget and has requested that Council renew the annual operating contract and provide the funding necessary to fund core activities. Staff recommends the renewal of the contract and approval of funding in the amount of $616,000 for 2005.
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