Economic development board to get a re-purposing: a clear sense of purpose and then getting on with the mandate would be nice.

By Pepper Parr

February 15, 2014

BURLINGTON, ON.

It is surprising how little we hear from Council members on the issue of improving the dangerously low economic growth of the city.

Economic development for Burlington is done by a standalone unit that is not part of the city hall operation.  The Burlington Economic Development Corporation is a unit that is subsidized by the city and charged with attracting new business to Burlington and retaining the business we already have.

Burlington is now at a point where its financial growth is not going to come from the residential housing sector.  We are very close to build out – there are but two large developments left to get done, one in the east along Tremaine Road and the other in the west known as Eagle heights  – after that it is infill and small pocket developments.

The city has a lot of land that is designated and zoned “employment lands”.  The owners of much of that land would prefer to see it used for residential development where the profits are much higher.  Residential development will attract new families but also add a significant burden to the city’s cost structure.

The industrial commercial sector not only returns higher tax dollars to the city but creates jobs as well.  Those jobs attract younger people and for a city that has the largest growth in the seniors demographic in the GTA that growth is important.

In 2012 the city’s  tax growth in the ICI (Industrial Commercial Institutional) sector was a negative number compared to 2011 and will be the same for the 2013 tax year.  The prospects for the next couple of years are not a lot better.

Something had to be done with the BEDC – they just were not producing.  Burlington has a great story to tell and we were doing a terrible job of telling our story and attracting new business.  We don’t recall a single media release on a new business coming to town from the BEDC.  We did get media releases from a few new business operations – Lowes being one.

If the BEDC doesn’t tell its story – then its story doesn’t get told and when anyone goes to the internet and enters Burlington new business – there won’t be much to see.

The organization has taken on a secretive approach – getting information out of them has been very difficult – they are not exactly media friendly. They tend to hunker down and hope that things will just blow over – an attitude and approach that applies to both staff and the directors.  We recall two situations where we have asked for comment and were referred to the Executive Director who they later fired.

When the BEDC gets “repurposed” or “reinvented” or whatever they decide to call themselves they need to take on a good dollop of  media savviness as well.  They need to understand they are a sales organization charged with the responsibility of selling the city as a great place to live and do business.  When Burlington was named the best medium-sized city in Canada to live in the BEDC immediately took out a full-page advertisement in a leading business magazine. It was the best they could do.

The administrative structure of the BEDC from about 2009 through to 2011 required them to raise a large part of their budget which they did with events.  The focus often went to creating, marketing and then putting on a series of networking events.  BEDC management couldn’t manage to operate on the two fronts and the attraction of new business suffered.

The BEDC kept producing reports which all too often suggested yet another report.  Early in the fall the BEDC Board came to the conclusion that the Executive Director was not the man for the job and the two parted ways – but not before a Board member, who should have known better, made statements that added to the size of the separation package the city had to pay out.

The BEDC is now looking for a new Executive Director but can’t start that process until there is a clear, strong governance model in place.  That task seems to be taking quite a bit of time and is in the hands of Gerry Smallgange, Burlington Hydro president and Pat Sugrue of Fearmans Pork Inc.; both BEDC board members..  Acting Executive Director Scott Stewart, who is also the General manager for the city of Infrastructure and Development,  put it very bluntly when he said: “These gentlemen and the board owe you a report on this topic in April”.  The BEDC board owes the city a lot more than a single report.

In the past year Burlington managed to lose one of our historically long operations – International Harvester, that got scooped up by Hamilton.

Some of the data presented to the Standing Committee earlier in the week suggests BEDC has upped their game and they are now doing the job they were put in place to do.  Not everyone agrees with that assumption.

Stewart, serving as Acting Executive Director since November of last year took the Committee though the data pointing out that 2013 has been a “transition” year for the BEDC. Scott comments:

The governance model is expected to come up with a “completely re-constituted board”.  The term for the current board ends at its AGM on May 29th

That base budget Stewart was delegating on was originally submitted in October by the previous and now departed Executive Director.  The base budget is now set at $958,000 which includes a reduction of $22,000 that the BEDC was directed to remove.

In addition to the base budget there are three business cases council is being asked to consider for a total of $275,000

 What is a bit surprising and disturbing is that the BEDC has had three months and to re-develop their raison d’êtreand craft a governance model – and there is nothing to show yet.  This isn’t rocket science; these governance models are done in the private sector every day. 

A legitimate question would be – why hasn’t this been done by now and what have you been doing for the past three and a half months?  There are three  members of Council on the BEDC; the Mayor, Councillors Sharman and Dennison.  Earlier in the day the BEDC delegation was heard Councillor Sharman had asked Rishia Burke, who was delegating on behalf of a Community Development Halton initiative, what she did each day.  Ms Burke acquitted herself quite well – the same cannot be said for Councillor Sharman if he had been asked what he has done on the BEDC.

The citizens of the city just don’t hear what that board does; what the wins have been and what the problems are – and there are very clearly serious and significant problems.  It appears that the problem has been a lack of both leadership and focus – this Board doesn’t seem to know what it is supposed to be.  It is far too large a board and it isn’t clear where the leadership is coming from.  For the immediate future the day-to-day operations are being led by a city General manager who spends half a day a week at that office. 

As the Acting Executive Director Scott Stewart was the person that spoke for the BEDC at the Standing Committee meeting; not  word from the Chair who was in the room and nothing from the council members who sit on that board.  Stewart does the best that can be expected under the circumstances he has to work with.

Were those three doing a three monkey act: See you evil, hear no evil, speak no evil?   What the public hears is that we have a Prosperity corridor and somebody is interested in some property over there.

Questions were asked at the Standing Committee by ward 2 councilor Marianne Meed Ward who said she had plenty of questions which she had sent to the BEDC board.  They were not read out in the open meeting but here they are:

1.       What is the result of the marketing funds the city gave the BEDC last year? Any new businesses locate here as a result? Any leads?

2.       What is the current staffing, in terms of roles? Is there a full-time person devoted to lead generation/sales?

3.       What is the current staffing requirement for events?

4.       Could the BEDC get out of events this year (i.e. how many are already booked/paid for; can you release the balance so by 2015 there are no more events)? Which events remain on the books this year?

5.       What are the marketing funds for the 2014 budget going towards? What are the measurables – i.e. what is the BEDC expecting in return for this investment? Jobs? Leads? Etc.

6.       What’s included in the marketing and investment attraction “employment lands marketing initiatives” line item?

7.       How many sales calls are staff expected to generate, leading to how many leads, leading to how many news jobs/business/sq ft in Burlington?

8.       Where does the money in the innovate Burlington line item come from?

9.       Salaries saw an increase in 4.18%. Can you advise why? More staff?  What’s the budgeted raise? At the city, the compensation amount is set at 1%. How much would your budget be reduced by if you also kept HR to 1%?

10.   What are the contract services for corporate restructure, for both 2013 and 2014?

11.   What’s in the parking line?

12.   What’s the scholarship funding line item?

13.   What’s the TEAM Burlington line item?

14.   How many net jobs came to Burlington this year (how many left; how many came – are we up or down)?

15.   Have the commuting patterns gone up or down versus last year (i.e. are more, or less, people commuting outside Burlington for work?

16.   What is the $40,000 for investment attraction, and why so low?

17.   The 2014 budget is less than the 2013 actual. I assume that is because some projects in 2013 were one-time and not repeated? If so, which ones? If not, why is 2014 budget lower than 2013 actual?

 Mead Ward says she is supportive of the BEDC and the city investment and is “looking for more detail on the specific budget items, with a goal to accelerate work on business attraction”.  Her concern relates to any continued involvement in events, which take a huge amount of staff time to run.

The events part of the BEDC operation used to be run by Jackie Isada who got talked into joining the Mayor as his Chief of Staff.  Isada once said that she had raised more than $2 million for the BEDC through events while she held that job.

Stewart set out the problem better than he may have realized when he told the Standing Committee that “the board will need your patience as they determine what they want to be and will have to define their recommendation for you and put dollars to this final outcome”.   He added that “you may see a re purpose of the proposed work in 2014.”

Not mentioned at the committee meeting on Thursday was that there is to be a Committee of the Whole on February 27^th to provide an update on BEDC. The agenda for this meeting will be completed  February 24^th following a BEDC board meeting on February 21^st.

City manager Jeff Fielding sits on the BEDC board as does the Mayor and Councillors Sharman and Dennison.  There wasn’t a single question from any of the elected representatives on the BEDC board.

Up until November of last year there was an Executive board which was merged back into the full board which now consists of:

P.K. (Phil) Nanavati (Chairman) Fengate Capital Management – Broker of Record, an investment management firm specializing in originating and managing investments in the infrastructure and real estate sectors.

Alf Zeuner (Past Chairman), President AXYZ Automation Inc.; a global company manufacturing, selling and servicing computerized industrial machinery, specifically CNC router tables.

John Chisholm, CEO and Partner SB Partners LLP,  a full-service financial services firm and trusted resource for assurance/advisory services, tax minimization, valuations, estate and succession planning, SRED tax credits, U.S. tax services, mergers and acquisitions.

Mayor Rick Goldring

Jeff Fielding, Burlington City Manager

Councillor Jack Dennison, owner of Cedar Springs Health Racquet and Sportsclub.

Councillor Paul Sharman, a professional accountant and has a successful career as a consultant and as President and CEO of one of the largest professional US-based associations of accountants in the world.

John Lever, Regional Vice President, Halton South, RBC Royal Bank.  The bank provides services to the city of Burlington.

Gerry Smallegange, President & CEO, Burlington Hydro Electric Inc. –

Ruta Stauskas, Vice President, Human Resources, Boehringer Ingelheim Canada Ltd., one of the world’s largest pharmaceutical companies.

Louise St-Pierre, Senior Vice-President, Residential Services, Cogeco Cable Canada LP, the second largest cable system operator in Ontario.

Paul Subject, President, STANMECH Technologies Inc. specializes in innovative, customer-focused engineering solutions.

Patrick Sugrue, President, Fearmans Pork Inc., the largest pork packing company in Ontario and the largest employer in Burlington.

Ronald J. Weston, Partner, Feltmate Delibato Heagle LLP  a team of innovative legal experts who cover wide-ranging areas of practice.

It is a very large board which former Mayor Goldring Chief of Staff Frank McKeown thought should be “blown up”.

During a tour of the employment lands in Burlington with the former Executive Director he commented that there were significant opportunities on the north side of the 407 for development.  Might be,  but there is a provincial policy that has those lands set aside a part of the Green Belt and if Burlington is to maintain its municipal integrity those lands have to be kept green.

The BEDC doesn’t tell its story and when anyone goes to the internet and enters Burlington new business – there won’t be much to see.

The organization has taken on a secretive approach – getting information out of them has been very difficult – they are not exactly media friendly. They tend to hunker down and hope that things will just blow over – an attitude and approach that applies to both staff and the directors.  We recall two situations where we have asked for comment and were referred to the Executive Director who they later fired.

When the BEDC gets “repurposed” or “reinvented” or whatever they decide to call themselves they need to take on a good dollop of  media “savviness” as well.  This Board needs strong leadership which they are not going to be able to hire until they have a governance model in place that will guide whoever is brought in.  Expect to see something come out of the Committee of the Whole later this month.  Will someone within city hall suggest the existing Board be dismissed and the responsibility be brought in-house – at least until things are stabilized and we are where we should be and need to be?  Is there a member of council with the courage to step forward and talk about some  “out of the box” ideas.  Surely Burlington can do better than this.

When Burlington was named the best medium-sized city in Canada to live in the BEDC immediately took out a full-page advertisement in a leading business magazine. It was the best they could do.