If the Economic Development Corporation is wrapped up - what does that do to TechPlace and the hefty lease they signed?

SwP thumbnail graphicBy Pepper Parr

July 30th, 2019

BURLINGTON, ON

 

What started out as a comment made at the annual Chamber of Commerce State of the City address given by newly elected Mayor Marianne Meed Ward may become a rather impressive Trojan Horse.

Red tape red carpet

Was this initiative a brilliant Trojan Horse?

The Mayor made mention of a committee she was setting up – to be called the Red Tape – Red Carpet (RTRC) initiative during which she, along with her colleague ward 1 city Councillor Kelven Galbraith, were to listen to various groups in the city about their concerns with city hall and the help they needed to grow their businesses.

Lurking in the background was a consistent complaint on the part of the developers and a number of businesses that had found it was very difficult to get anything through city hall in a reasonable amount of time

The RTRC team met with

Rural Business Focus Group, Development and Real Estate Industry Focus Group, Large Business and Manufacturers Focus Group, City Staff and Partner Organization Focus Group, Small Business Focus Group and heard what expected – the departments don’t talk to each other- the agencies (Fire, Education, Region, Conservation) are brought into the picture one at a time.

While Meed Ward was meeting with the various groups – all of which were closed to media – a consistent trait we have noticed from a Mayor who touts her 22 years as a journalist with a high regard for the role the media plays, the Burlington Economic Development Corporation was in the process of looking for a new Executive Director. Anita Cassidy has been serving as the Acting Executive Director for more than a year.

Her predecessor, Frank McKeown, who was at one point Mayor Goldring’s Chief of Staff and went on to run the BEDC, fully understood what the job was – keep the business we have and find new ones – he was just never able to land a really big one.

McKeown thought he was going to be able to put together a partnership with a German consulting group that wanted to get into the North American market. McKeown had his eye on a partnership with McMaster’s DeGroote School of Business and the Fraunhofer Institute for Industrial Engineering – it didn’t work out – the Germans chose Hamilton instead,

Frank McKeown and Mayor Meed Ward never broke bread together – they had strong differences of opinion on what economic development was all about.

Frank McKeough, former Chief of Staff to MAyor Rick Goldring asked about how politicians can handle complex issues when voters tend not to be informed and don't have the background needed to arrive at decisions.

Frank McKeown, asking about how politicians can handle complex issues when voters tend not to be informed and don’t have the background needed to arrive at decisions.

Some think that McKeown resigned as head of BEDC when he could see that Meed Ward was going to be the next Mayor. McKeown always did have a good eye for figuring out which was the wind was blowing and whose sails it was going to fill.

While he ran BEDC, McKeown created TechPlace – a location where small start-ups could move in for a period of time and find their footing and then move out of TechPlace and set up shop in Burlington and grow as a new business opportunity for the city.

During this mix of events Mayor Meed Ward got invited to take part in a “Tale of Two Cities” with Oakville Mayor Rob Burton who explained to a good audience at the Performing Arts Centre that economic development should be an in house operation.

There are dozens of business people with tonnes of experience in drawing new business to a municipality that will tell you it is nuts to put that kind of an operation in city hall. Views are clearly divided on that issue.

At roughly the same time Burlington learns that L3Wescam is going to move out of the space they are in on the North Service Road to a new site in Waterdown. The Mayor was caught off guard and had to scramble to put a decent spin on the news.

L3WEscam Burlington location

L3Wescam will be leaving these premises for a new purpose built location in Waterdown.

It isn’t clear if Hamilton had gotten to L3Wescam and found them a deal they couldn’t refuse; they did that with International Harvester who were all set to move their parts distribution operation from Burlington to Mississauga – then they got a great deal from Hamilton and a time frame that worked for them.

The new Mayor had ideas of her own – she had begun toying with the idea of creating an MDC – Municipal Development Corporation that would be an in-house operation. In the material she prepared she went so far as to describe the job the Chief Development Officer of such an organization would be doing.

“Establish a position at City Hall to act as our Chief of Business Development, serving as a primary outreach for attracting new businesses to Burlington, overseeing and expediting applications through the system and reporting progress and obstacles regularly to City Council and the City Manager

During the July 15th Council meeting- the last one until September the Mayor asked her colleagues to support her idea and move it forward – the support she needed wasn’t there – council deferred the matter to the September meeting when the consultant’s report on the future of BEDC was in hand.

Anita Cassidy

Anita Cassidy finds herself facing an uncertain future over decisions she didn’t make.

One wonders what Anita Cassidy was thinking as she watched this parade of events pass her by.

The city, which provides most of the BEDC budget is current having a study done on what their role should be. As Mayor, Meed Ward sits on the BEDC Board.

Economic Development is critical to the growth of a municipality – some do it very effectively – Welland Ontario is a great example. Others slip and slide around and lose opportunities that they didn’t even see.

The business of attracting a corporation to move to town is really a networking game – you need someone who knows the players, plays a decent game of golf and has a great story to tell.

Burlington has the elements of a great story – parts of which are buried because their value is not perceived.

What isn’t clear yet is whether or not Mayor Meed Ward has the capacity to listen and to surround herself with people who she trusts and will rely upon when it comes to the complex process of how decisions are made. The jury is out on that one – and when it does return it might well be a hung jury.

There is one final irritant – a fly in the soup if you will.

Tech Place has just under five years left on a lease that has a sliding scale of rent increases. In the final full year of the lease rent will be a combination of net rent and additional rent for a total of $301,877 in the 6th year. That is a big nut to crack in anyone’s language.

TechPlace is a program of the BEDC, it has a staff of 1.5 people and an average annual contribution from BEDC’s core budget of approximately $220,000 per year.

Gross rent over the 6-year contract varies from $24,000 in year 1 to an annual cost of $301,000 in the final year.
There is basically nothing in the way of a revenue stream and while there are some bright spots in the Tech Place story it isn’t enough to cover the rent or justify the expense.

In material from BEDC we learn that “TechPlace is a one-stop destination for new and growing technology companies. TechPlace was established to support Burlington’s Strategic Plan 2015 – 2040 that calls for “Innovative, entrepreneurial businesses have settled or developed in Burlington. The city has helped create the technological support, business supports, infrastructure and educational environment to attract start-ups and growing businesses” and to “Create and invest in a system that supports the start-up and growth of businesses, innovation hubs and entrepreneurship.

“Following best in class ecosystem research and stakeholder engagement conducted in 2017 a clear need to have a physical space to build a successful entrepreneurial ecosystem in Burlington was identified to create connectivity, vibrancy and tell our entrepreneurial story. Burlington Economic Development Corporation became the change champion and opened TechPlace to accomplish the City of Burlington Strategic Plan in a way that was aligned with community need and stakeholder input.”

Angelo B

Angelo Bentivegna wanted more information on that Tech Place lease.

This is the kind of language developers trot out when defending applications.  No one appears to have asked the hard question: How are we going to pay rent of $300,000 in the last year?  Ward 6 Councillor Angelo Bentivegna kept asking questions about that lease – bless him for that – no one else was.

“TechPlace is focused on supporting the scale up and growth of high potential companies through its Launch Pad program and a host of wrap around services delivered through partners such as Haltech, Angel One, Mentorworks, Mohawk College, McMaster University and Halton Region Global Business Centre.

“In addition, BEDC has created a “Soft Landing” program to use as a unique business attraction tool that allows companies considering a location in the west GTA to establish a footprint in Burlington and begin operations while BEDC supports their long term business relocation to Burlington through its traditional business support services.”
There is some pretty fancy language in the BEDC material – the results, while interesting, are not going to do much in the way of changing the makeup of the commercial sector in the city.

Tech place logoSince TechPlace launched in 2017 it has hosted over 10,000 visitors, 200 events, attracted 13 LaunchPad companies, creating a strong business attraction brand and value proposition for Burlington. Results since inception are:

Total LaunchPads -13
Total LaunchPads from outside of Burlington – 10 of 13 Graduates – 7
Graduates that stayed in Burlington – 5 of 7

The BEDC material adds: “There have been a number of recent changes to the local start-up support ecosystem including the launch of Nuvo Network and the review of the Regional Innovation Centre model by the provincial government including Haltech.

“This creates opportunities for reviewing TechPlace’s operating model and determining whether BEDC delivering TechPlace activities directly or spinning off the activities to a partner can create the same benefits for Burlington with a different operating and financial model.”

“As part of the overall BEDC review, it is worth reviewing the efficiency, effectiveness and optimal structure and mandate of TechPlace to determine the pros and cons of retaining it as part of BEDC or spinning it off to an independent provider. The review would include a cost-benefit analysis of the current investment in TechPlace and what it produces in business attraction, versus other strategies for business attraction (e.g., dedicated staff) that don’t rely as heavily on physical space.”

This amounts to Corporate Spin on a situation that is unraveling quickly.

Is the BEDC signalling that Tech Place has not panned out the way they had hoped and that it is time to bail out?

Ward 1 Councillor Kelven Galbraith was taken on a tour of the McMaster Innovation Park and had this to say: “It was amazing to see the business success stories that have emerged from the park and the continued investment into their facilities and operations.

‘The City of Burlington and Burlington Economic Development Corporation (BEDC) looks forward to a great business relationship with the McMaster Innovation Park in the future”. That train may have already left the station.

Meed ward looking askance

Mayor Meed Ward has a strategy and a long term objective – don’t get in the way.

The Mayor wasn’t all that interested in waiting for the result of the BEDC review – she had a job description in her hand for the person who is going to bring some life to attracting new enterprises to the city – all she needed was three of the six votes from her colleagues – they weren’t forthcoming.

Tech Place was seen by former Mayor Rick Goldring as one of his success stories – he really wanted it to work.

Wanting just isn’t enough – is it? The city just might have to suck up that rent cost and look for someone who will take over the lease.

Sean Saulnier over at NUVO One isn’t likely to be the white horse the city needs.

The financial reckoning will take place and a new story line will be spun out of city hall. Burlington learned to leave well enough alone when the New Street Diet proved to be a dismal failure. Are we about to repeat that performance?

Don’t expect to see much in the way of transparency in what happens next – and give up on the idea of holding anyone accountable.

Salt with Pepper is the musings, reflections and opinions of the publisher of the Burlington Gazette, an online newspaper that was formed in 2010 and is a member of the National Newsmedia Council.

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2 comments to If the Economic Development Corporation is wrapped up – what does that do to TechPlace and the hefty lease they signed?

  • Penny Hersh

    Stephen, I agree totally. My question is Do we really want the Economic Development Corporation to be “in house” as the Mayor has suggested? The City’s track record when they take on projects etc., has not been stellar.

  • Stephen White

    As a taxpayer, I don’t much care how many visitors or events have been hosted by TechPlace. What I do care about is how many substantive employers have established businesses here, and how many successful start-ups have been launched. 13 doesn’t strike me as a particularly significant number, and neither does 5 graduates staying in Burlington.

    The list of 500 Fastest Growing Companies in Canada lists 5 from Burlington, 11 from Oakville, 28 from Mississauga. When you consider the obvious advantages this City has in terms of an educated workforce, location, transportation network, educational resources, proximity to the U.S., abundance of industrial land, etc., we should have no trouble attracting, developing and sustaining local businesses. Whatever we are doing, or haven’t been doing, clearly isn’t working. Time to hit the re-set button.

    Once again….kudos to the Mayor for demonstrating some long overdue action leadership on this issue!

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