SUPPORTS ITEM NO. 1
CS&B COMMITTEE AGENDA
SEPTEMBER 14, 1995
ADMINISTRATIVE REPORT
Date: April 11, 1995
TO: Vancouver City Council
FROM: General Manager of Corporate Services
SUBJECT: City of Vancouver
Economic Development Task Force - Final Report
RECOMMENDATION
A. THAT Council receive the report of the Task Force for
information, and thank the members for their effort.
CONSIDERATION
The following are submitted as optional courses of action for
Council to consider with respect to the Economic Development
function and the City's role. Each option is outlined more fully
in the body of this report.
Option 1: Retain existing Economic Development Office, but revise
mandate.
B. If Council chooses Option 1, then B1 and B2 are recommended.
B1. THAT Council approve Option 1 in principle, as described in
this report, which includes continuing with the existing
Economic Development Office and Budget.
B2. THAT Council instruct the General Manager of Corporate
Services to report back on a new mandate and budget for the
Economic Development Office, consistent with the findings of
the task force.
- or -
Option 2: Create an Economic Development Commission and an Economic
Development Department as per the Task Force
recommendations, and close the existing Economic
Development Office.
C. If Council Chooses Option 2, then C1, C2, C3, C4 and C5, and
collateral actions E1, E2, and E3 are recommended.
C1. THAT Council approve in principle the recommendations of the
task force as outlined in this report under Option 2, which
includes establishing a new Economic Development Department
and an Economic Development Commission.
C2. THAT the City Manager report back on the structure, budget,
mandate and role for the new Economic Development Department.
C3. THAT Council fund the Commission with a grant to be reviewed
and set annually upon receiving an application and annual
report of the activities of the Commission and that Council
approve an initial grant of $100,000 to the Commission for
1995.
C4. THAT Council appoint the Economic Development Task Force
members to the Economic Development Commission on an interim
basis, subject to a report back with confirming details.
C5. THAT Council instruct the interim Commission, in consultation
with the City Manager and other stakeholders, to report back
on the proposed structure of the Economic Development
Commission, including terms of reference, role, number of
members, protocol, objectives, reporting relationships,
initial work plan, and budget, along with a list of potential
candidates to serve on the Commission.
- or -
Option 3: Create an Economic Development Commission, with no new
department, and close the existing Economic Development
Office.
D. If Council chooses Option 3, then D1, D2, D3, D4, and D5, and
collateral actions E1, E2, and E3 are recommended.
D1. THAT Council approve in principle the formation of an Economic
Development Commission as described in this report under
Option 3, which does not include a new Economic Development
Department or the current Economic Development Office.
D2. THAT Council fund the Commission with an annual grant with a
May 1 to April 30 fiscal year, to be reviewed and set annually
upon receiving an application and annual report of the
activities of the Commission, and that Council approve an
initial grant of $200,000 to the Commission for 1995.
D3. THAT Council appoint the Economic Development Task Force
members to the Economic Development Commission on an interim
basis, subject to a report back with confirming details.
D4. THAT Council instruct the interim Commission, in consultation
with the City Manager and other stake-holders, to report back
on the proposed structure of the Economic Development
Commission, including terms of reference, role, number of
members, protocol, objectives, reporting relationships,
initial work plan, and budget, along with a list of potential
candidates to serve on the Commission.
D5. THAT the General Manager of Corporate Services be named as the
senior staff liaison to the Commission.
- or -
Option 4: Close the Economic Development Office, and do not act on
any Task Force recommendations.
E. If Council chooses Option 4, then E1, E2, and E3 are
recommended.
E1. THAT Council approve the closure of the Economic Development
Office effective April 30, 1995, and that union employees be
issued appropriate lay-off notice.
E2. THAT Council abolish the following union positions made
redundant by closing the Economic Development Office:
Position # 3379 Clerk Typist II (Vacant)
Position # 3041 Clerk Steno III
Position # 0241 Research Assistant
Position # 3380 Economic Development Officer
The position of Director of Economic Development will be
eliminated after an appropriate transition period to be funded
out of Budget Management transition funds.
E3. THAT Council approve the transfer of the BIA function, staff
position #4373, and delegation hosting function to the City
Clerk, along with related funding ($83,300 in 1995).
GENERAL MANAGER'S COMMENTS
This report presents four options open to Council flowing from the
Budget Management Program recommendations and the final Report of
the Task Force. Option 1 is essentially to keep the current EDO
structure, but modify its role and mandate; Option 2 represents the
recommendations of the Task Force in full; Option 3 is a modified
version of the Task Force recommenda-tions; and Option 4 represents
the Budget Management recommendations and is a complete closure of
the current office, with the City providing no further economic
develop-ment functions in any form.
The General Manager of Corporate Services RECOMMENDS approval of A,
and submits a choice among options B, C, D or E for CONSIDERATION.
The General Manager of Corporate Services believes that the
Economic Development function as described in Option 3 would
provide the best opportunity to meet Council's budget needs while
at the same time satisfying the general thrust of the Task Force
recommendations.
CITY MANAGER'S COMMENTS
The City Manager supports the position of the General Manager of
Corporate Services. While Option #3 does not endorse the complete
proposal of the Task Force, our discussions suggest that it will
provide an effective and viable function. Obtaining comments and
advice from the business community directly rather than from staff
on their behalf is consistent with a partnership approach, and we
can anticipate that the Commission will work hard to establish
effective joint operations with other private sector and government
agencies. Accordingly, the City Manager RECOMMENDS approval of
Option 3 - creation of an Economic Development Commission liaising
with City staff, and closure of the existing office.
COUNCIL POLICY
In April 1994, when Council considered the Budget Management Program,
the following was approved by Council:
" THAT Council indicate its intent to restructure the Economic
Development Office, and that Office be continued until
December 31, 1994, to maintain service to the business
community;
FURTHER THAT Council appoint a Task Force with representation
from the Federal and Provincial Govern-ments, Port of
Vancouver, Vancouver Board of Trade and the business community
at-large, to consider the City's role in economic development
and the Task Force to report by October 31st with
recommendations on an appropriate mandate;
AND FURTHER THAT the Mayor appoint three members of Council to
work with the City Manager's Office in developing terms of
reference for the Task Force, which are to include a joint
approach with other Government agencies and the business
community."
Also, in November 1994, the following was approved by Council:
" THAT Council approve the extension of the deadline for
implementing the Budget Management Program recommenda-tions to
eliminate the Economic Development Office from December 31,
1994 to March 31, 1995, with funding to be provided in the
1995 operating budget. "
PURPOSE
The purpose of this report is to present the final report of The City of
Vancouver Economic Development Task Force for Council's consideration.
BACKGROUND
As a result of Council's decisions on the Budget Management Program, a
task force was formed to consider the future role of the City with
respect to Economic Development. The Task Force objectives were to:
- identify an appropriate economic development role for the City of
Vancouver;
- identify economic development goals;
- identify the potential for cost-shared partnerships with other
economic development agencies; and,
- recommend an economic development mandate, structure and budget to
Council.
The task force began their study in July, 1994. Since then, they have
sifted through volumes of information, studies and surveys. Further,
they have conducted interviews, and held a workshop with Council to seek
direction and to clarify issues. The report attached as Appendix A is
the culmination of their research into this issue.
DISCUSSION
The report of the Task Force highlights many findings, and draws
conclusions about the role and direction of economic development
activities in the City as well as the region. The Task Force also
outlined the elements of an Economic Vision Statement, and developed a
list of principles and priorities to be considered. The report makes
several recommendations to redefine the City's role in economic
development activities. The highlights of the Task Force's findings,
conclusions and recommendations are as follows.
FINDINGS AND CONCLUSIONS OF THE TASK FORCE
The Task Force concluded that there is a need to: support economic
development activity; to build a strategic vision and plan; to provide
leadership for the region; to improve communications with the business
community; and, to provide Council with sound economic policy advice.
The Task Force made the following points to justify these needs.
Support for economic development activity:
- Vancouver must compete with other Pacific Coast gateway Cities that
are aggressively pursuing new business and investment;
- the City of Vancouver's expenditures on economic development are
far less than most other major Cities;
- planned economic growth may mitigate many related problems, such as
congestion, pollution and other social ills.
- planning and co-ordination is needed to maximize all of the
benefits of economic growth, and to ensure growth matches local
needs. Decisions must be made with the full knowledge of potential
economic impacts that may result;
- without an economic development strategy, competitive strengths and
potential may not be fully used and realized; and,
- the City's current position and links to the Pacific Rim do not
guarantee economic well being. Increasing global competitiveness
demands effort to retain existing business, and to attract the
right investment.
Vision and strategy:
- there is no clearly articulated, comprehensive economic strategy
for the City or the Region that would unite the key players;
- any economic development should be sustainable and consistent with
the quality of life and values of the community;
- there are many other players in the economic development area,
including crown corporations, other municipalities, the GVRD, the
provincial and federal governments, as well as the private sector.
Each has its own vision and set of priorities; and,
- although there is overlap among the various parties, there is
little regional co-ordination of their efforts. Furthermore, their
activities tend to focus on national or provincial goals which may
or may not be consistent with local needs.
Regional focus and leadership:
- most economic development issues tend to be regional but there is
no strong regional economic development leadership;
- most of the business community expects the City of Vancouver to
take a strong leadership role in the context of regional economic
development, and that primary responsibility and accountability for
economic development in the City rests with City Hall; and,
- there must be leadership for the region, and given this need, the
City of Vancouver, by virtue of its position in the region, is the
natural leader by default.
Relationship with the business community:
- there is a lack of understanding in the business community as to
the current level of economic development activity;
- a small Economic Development unit at City Hall is not able to
properly deliver all of the economic development functions
envisaged by the Task Force;
- the business community feels that opportunities have been lost
because of what is perceived to be overly excessive City
regulation, delays and bureaucratic rigidities;
- many in the business community feel cut off from the policy making
function at City Hall, and believe that Council is not receiving
the benefit of advice from this community;
- there are no on-going communication links that would ensure both
Council and the business community are kept informed and have
input; and,
- the various City departments must bear some responsibility for
meeting the economic development needs of communities affected by
their actions.
Policy advice and role of other agencies:
- provision must be made for participation of the business community
in the development of the City's economic policy;
- Council should be apprised on a routine basis on the economic
impacts of all up-coming major policy or program decisions, and
this responsibility should rest with an Economic Development
Department, or a senior City official vested with suitable
authority;
- the City's economic development strategy should have a built-in
commitment to partnerships in order to optimally utilize the
resources and energies of all key players; and,
- the private sector must move toward greater participation in the
economic development function, including creation of programs,
policy advice and funding.
In summary, the Task Force concluded that an economic development
function is essential to the economic future of Vancouver, and that the
current program does not meet the needs of the business community or
Council. In order to address the issues outlined in their report, the
Task Force made the following recommendations.
TASK FORCE RECOMMENDATIONS
Along with endorsing the current efforts at streamlining and improving
City business processes, the Task Force made two broad recommendations
to address the their findings and conclusions.
CREATE A NEW ECONOMIC DEVELOPMENT DEPARTMENT
The first major recommendation is to create a new Economic Development
Department, complete with a director who would be on an equal footing
with other department heads. This department would report directly to
the City Manager, and would deal primarily with developing a strategic
vision and providing policy advice to Council and other departments on
economic issues. Services currently provided by the Economic Development
Office such as, providing information, troubleshooting, hosting trade
delegations and business promotion would be provided by other agencies
now providing these services, and by a proposed new Commission. The
Director would be the main link between Council and the business
community, and it is proposed that the position should be filled by
someone with recent experience in, or knowledge of, the business and
development sector.
CREATE AN ECONOMIC DEVELOPMENT COMMISSION
The second major recommendation is to create an Economic Development
Commission. The Commission would serve as a forum for dialogue between
the City and the business community, would undertake typical economic
development activities such as promotion, providing information, hosting
delegations, and research on major issues. Further, the Commission
would regularly provide Council with general information and with
progress reports, and would serve as an ongoing feedback mechanism for
departments that deal with the business community. The Task Force also
sees the Commission establishing partnerships with other agencies for
delivery of common economic development services.
ANALYSIS AND OPTIONS
The following presents an analysis of four basic courses of action,
including the Task Force recommendations.
BUDGET ISSUES
The following analysis provides the financial baseline for comparing and
evaluating the Task Force recommendations and the other options
presented. It shows that about $365,800 would be eliminated from the
operating budget should the proposed Budget Management cuts occur. The
remaining BIA function, and some delegation hosting will be retained
under all options. Therefore, the related funding of $83,300 is
excluded from further analysis.
Preliminary 1995 EDO Budget under the Budget Management Program:
Functions to be eliminated:
Salaries and Benefits $305,100
Rent 44,600
Supplies & Services 16,100
Total submitted for cuts $365,800
Functions to be retained:
Business Delegations $ 7,100
BIA Salaries 66,500
BIA Supplies & Expenses 9,700
Total retained 83,300
Total Budget (1995) $449,100
Any proposal put forward that requires less than $365,800 in City
funding would result in net savings to the budget.
OPTIONS
The following presents and analyses four basic options for providing
Economic Development services, including those put forward by the Task
Force.
OPTION 1 - Retain Existing Office and Re-define Mandate.
Under this option, the existing office would be retained, but activities
would be re-focused to satisfy the needs of the business community as
described in the Task Force report. There would be no outside
Commission, and most of the activities suggested for the Commission,
such as securing private sector partnerships and funding, co-ordinating
with other agencies, and providing policy advice would be undertaken by
the Economic Development Office.
The primary advantage of this option is that there would be less
disruption of services currently provided. Many of these services, such
as helping navigate through red tape and providing informa-tion, are
valued by investors and small business. Also, it would utilize the
existing knowledge base and would have experienced staff overseeing
transition to a new mandated direction. It should be noted that the
existing office has not been free to pursue the mandate as envisaged by
the Task Force, and therefore has not been able to provide the kind of
service contemplated.
The disadvantages are that it would not necessarily provide savings to
the budget, would not give the business community the communica-tion and
contact with council as envisaged by the Task Force, and would not
satisfy many of the issues raised by the Task Force. It is also likely
that a City operated Economic Development function would have more
difficulty attracting private sector funding, and therefore may be too
small to effectively deliver the services desired by the business
community and Council.
OPTION 2 - Establish an Economic Development Department and an Economic
Development Commission as Described by the Task Force
This option essentially represents the Task Force recommendations in
full, as summarized earlier in the report. It entails a new department
and director at a senior level, and an external Commission. The
commission is to provide the Economic Development services, and the
department is to concentrate primarily on policy and communications.
The Task Force report puts forward suggested budgets for both the
internal Economic Development Department, and the Commission.
Budgets proposed by the Task Force
1995 1996
Economic Development Department $300,000 $300,000
Economic Development Commission 100,000 300,000
Projected total budget 400,000 600,000
Funding available from EDO cuts 365,800 365,800
Additional funding required $ 34,200 $234,200
Note: This analysis does not include the $83,300 that stays with the
BIA and hosting functions that are retained.
The proposal put forward by the Task Force would require the City to
provide $400,000 annually from general revenue, which is a net increase
of $34,200. This would be further augmented by private sector funding
in 1996 of about $200,000 which the Task Force believes could be raised
in 1996 by a proposed $5 increase in business licence fees. Given that
there is no clear evidence that the majority of businesses would
willingly accept this fee to be used for this purpose, it has the
flavour of an additional business tax as opposed to voluntary private
sector funding.
The primary advantage of a new department is that Council could
routinely receive ongoing economic policy feedback on issues before
Council, both from internal analysis and from the business community.
As a result, Council could be better informed about economic impacts of
City actions. Overall, an ongoing senior staff link with the business
community could provide for expert advice on special issues, give a
voice to business, allow for better decisions, ensure fewer unintended
consequences, improve community relations, and give better feedback on
City services and needs of business.
The disadvantage of an additional department is that it means more
government via another costly bureaucracy, which is contrary to current
budget management and reorganization goals. Furthermore, most
departments already attempt to provide economic impact analysis where
needed. A new department as described by the Task Force may be
excessive, as the basic role envisioned could adequately be filled by
an existing department head.
The advantages of an independent Commission are as follows: it could
provide Council with expert and independent policy advice on major
issues; it could provide early warning on emerging economic and business
issues; it could provide a voice to a group of taxpayers; it allows for
the business community to help fund economic development activities, as
business is better at promoting themselves; it can focus the activities
of the many players; it can allow for ongoing two-way communication
between Council and the business community; and, it can provide a
mechanism to set up partnerships among the various agencies.
The disadvantages include the following: the Commission could be seen as
just another lobby group; Council already has many links to the business
community, and may not need yet another; it could create expectations;
it requires additional funding, and the level proposed is high; there is
uncertainty about private sector funding sources, and the license fee
source suggested by the Task Force may not be feasible; and, the ability
to deliver services contemplated is not yet proven.
The report provides proposed breakdowns of tasks, responsibilities and
duties, but should Council act on any of these Task Force
recommendations, further work would be needed to detail the mandate,
protocol, terms of reference, budget, structure and reporting
relationships. OPTION 3 - Establish an Economic Development Commission
with a formal link to senior management, but with no City Department or
Office.
The general concept is to have a strong, independent economic policy
voice in the City administration through a senior position charged with
this role, and to have an external commission use this position as a
primary contact under a formal arrangement. The City would use the
commission for policy advice, independent research, and for the delivery
of economic development services as described in the Task Force report.
This option is essentially the same as Option 2 except that it does not
include a department, and envisages a more prudent level of funding for
the Commission. The suggested level of funding is $200,000 as anything
less would compromise the ability of the Commission to get established
and begin to implement programs, while at the same time allows for net
savings of $165,200.
Proposed Budget for Commission Under Option 3
Grant to the Commission $200,000
Funding available from EDO cuts 365,800
Saving to Operating Budget $165,200
It is important to note that with respect to the new department, the
Task Force is primarily concerned with establishing the role as
described, and this could be accomplished within an existing department,
with no budget impacts, so long as the appropriate level of authority
goes with the role. Also, this role is primarily seen as strategic and
oriented to policy advice, and would not be directly involved with
delivery of economic development services.
The advantages and disadvantages of this option are primarily the same
as for Option 2, except that there are savings to the budget, and less
bureaucracy, and it puts the onus on the Commission to secure additional
funding and deliver the services. Council could receive virtually the
same level of policy advice but at a far lower cost.
OPTION 4 - Close the Economic Development Office, and provide no further
Economic Development services.
Under this proposal, the City would cease to provide any Economic
Development services, and would close the existing Economic Development
Office. After an appropriate winding-down period, all positions and
functions, except those related to BIAs and hosting, would be
eliminated. The Clerk Typist II position to be eliminated is currently
vacant, and layoff notice will be required for remaining three of the
union positions. This option is essentially the same as the Budget
Management Program recommendation.
The primary advantage of this option is the savings to the budget of
approximately $365,800. Given that the current Economic Development
Office activities do not seem to fit the needs of the business community
as described by the Task Force, and given that there are many other
agencies providing similar services as currently provided, there is an
argument for eliminating this service completely.
The disadvantages to eliminating the Economic Development Office
function are: the current services provided to the business community
are valued by those who use them, (many in the small business
community), and therefore, will be missed; there would be no direct
linkage to the business community and as a result, an important
communication channel may be lost; there would be a reduced internal
Economic Development perspective available for input to issues; and,
eliminating the function could be sending the wrong message to investors
and the business community.
CONCLUSION
The task force has recommended that the City should take a leadership
role and make a firm commitment to Economic Development. They recommend
that this be accomplished through an appropriately funded and charged
Economic Development Commission along with a new Economic development
Department. The proposals in the Task Force report (Option 2) represent
the best case option for the proposed new structure, and as such,
present an ambitious work plan and budget. Given the current budget
climate, the proposed new structure could be modified (Option 3) and
still meet most of the objectives of the Task Force's recommendations.
A senior staff liaison could take the place of the department proposal,
as this role is primarily concerned with communications between the
Commission and Council, and ensuring that appropriate comments regarding
economic impacts are included in Council reports where necessary.
Further, a lower level of ongoing funding can adequately carry the
Commission until such time that other sources of funding from the
private sector and others can be secured. Council can revisit the
funding issue annually, and assess the degree of support for the
Commission from other sources.
Council has the choice of retaining the existing Economic Develop-ment
Office structure but changing the mandate to be consistent with the Task
Force recommendations (Option 1), accepting the basic proposal put
forward by the Task Force (Option 2), modifying the Task Force
recommendations by scaling down the funding for the Commission, and
excluding a new department (Option 3), or completely eliminating the
Economic Development function in any form (Option 4). Options 2,3 and 4
all contemplate the complete closure of the existing Economic
Development Office as proposed in the Budget Management Program.
* * * * *