HomeMy WebLinkAboutCAO-13-019 - Economic Development Investment Fund (EDIF) Impact Analysis
REPORT TO: Finance & Corporate Services Committee
DATE OF MEETING: May 27, 2013
SUBMITTED BY: Rod Regier, executive director, 519-741-2200 ext. 7506
Janette MacDonald, analyst, 519-741-2200 ext. 7760
PREPARED BY:
WARD(S) INVOLVED: All
DATE OF REPORT: May 21, 2013
CAO-13-019
REPORT NO.:
EDIF Impact Analysis
SUBJECT:
RECOMMENDATION:
For information only.
BACKGROUND:
KitchenerÓs Economic Development Investment Fund is entering its
program. In 2009, city staff provided a five-year review on the
number of variables with available data. In 2010, staff collabor
on an academic review of the report methodology. Suggestions from those discussions have
been taken into account in both the 2011 report as well as the u
REPORT:
When EDIF was established in 2004, Council identified five key o
1. Stimulate assessment growth
2. Stimulate employment
3. Stimulate the development of residential units in the downtow
4. Seek maximum contributions in addition to the cityÓs funding
target of securing 15% overall from such sources, where possible
5. Strive to achieve a return on investment, both direct and ind
While these objectives remain the focus of the impact analysis,
academic panel from Wilfrid Laurier UniversityÓs School of Busin
introduced a number of qualitative measures. These include, for example, perceptions of safety
in Downtown Kitchener and investor confidence.
It is important to note that this report reflects a number of limitations in the availability of data.
First, while a Canadian Census was undertaken in 2011, the full
released. Other information such as assessment data also has sig
Moreover, many of the objectives relate to real estate developme
cycles and only result in increased assessment, tax revenue, and employment many years after
they are conceptualized. As a result, projects that are in the planning or development process
right now (e.g., City Centre Condominiums) will not have had a material impact yet.
3 - 1
There are still many early indicators that EDIF has had a positive impact on the city and the
region. These include:
Assessment growth near EDIF investments is $30 million in excess of expected
assessment growth
1,569 jobs that can be directly linked to EDIF investments inclu
as jobs in manufacturing and education
City Centre Condominiums has filed a site plan application for s
of their first phase of 179 residential units
Since 2004, the population in downtown neighbourhoods increased
including 482 urban core residents, mostly in Kaufman Lofts Ï a
as a direct result of EDIF investments
As of 2012, the city had spent $97.8 million, and partner invest
million, representing $2.38 in additional funding by partners pe
More local family doctors due to the location of the McMaster Sc
Health Sciences Campus
Dramatic improvements in perceptions of safety Downtown
Environmental improvements including cycling and pedestrian-friendly streets, more trees,
and brownfield remediation
Investor confidence Ï since 2004, the construction value of buil
neighbourhoods has reached $752 million, while Communitech alone
million in equity investments to date.
EDIF has had a significant and growing impact on the City of Kit
Assessment, tax revenue, employment, and residential development all increased more than
would otherwise have been expected in the period following the launch of the program in 2004.
Upon the conclusion of the EDIF program in 2013, it is expected
data to enhance analysis of the impact of municipal investment.
and 2012 MPAC market valuations should be available. There will
investments that will not be fully measurable for years to come, especially the redevelopment of
Centre Block. After 2017, it is expected that it will be increas
of EDIF from other significant investment decisions such as the
multi-modal station at King and Victoria.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
By providing a systematic and critical examination of the impact of a significant program, this
report is directly aligned with the objective of providing efficient and effective government.
FINANCIAL IMPLICATIONS:
Not applicable
COMMUNITY ENGAGEMENT:
The report is available for public information. In this way, it
the Community Engagement Strategy.
ACKNOWLEDGED BY: Jeff Willmer, CAO
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City of Kitchener
Economic Development Investment Fund
Impact Analysis as of 2012
Report CAO-13-019
Janette MacDonald
Economic Development Analyst
janette.macdonald@kitchener.ca
Last updated May 22, 2013
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Report CAO-13-019 EDIF Impact Analysis 2012
Since 2004, the population in downtown
Executive summary
neighbourhoods increased by 1,718 residents,
including 482 urban core residents, mostly in
The City of KitchenerÓs $110 million Economic
Kaufman Lofts Ï a project that proceeded as a
Development Investment Fund (EDIF) has provided
direct result of EDIF investments.
a funding source for the cityÓs strategic investments
in major projects including the University of Waterloo
Leveraged funds
School of Pharmacy, the Communitech Hub, and
As of 2012, the city has spent $97.8 million, and
King Street Streetscaping. Through these
partner investments have reached $232.9 million,
investments there has been a remarkable
representing $2.38 in additional funding by partners
turnaround, with the city and especially the
per $1 spent by the city.
downtown recognized as a location for innovation,
entrepreneurship, and a sought-after urban lifestyle.
Other benefits
Some results can not yet be quantified due to a time
More local family doctors due to the location of
lag in the data, but early results demonstrate many
the McMaster School of Medicine on the Health
benefits have been realized through EDIF.
Sciences Campus
Highlights
Awards in planning, brownfield remediation,
design and environmentalism for EDIF initiatives
Assessment growth
Dramatic improvements in perceptions of safety
Downtown properties near EDIF investments are
Downtown
valued over $30 million in excess of expected
assessment growth.
Environmental improvements including cycling
and pedestrian-friendly streets, more trees, and
Industrial properties on the Shirley Drive extension
brownfield remediation
and newly-constructed Cedarview Place have grown
in value by more than $10 million, up from only $1.3
Investor confidence
million in 2004.
Since 2004, the construction value of building
Employment growth
permits in downtown neighbourhoods has reached
$752 million, while Communitech alone has seen
There are 1,569 jobs that can be directly linked to
$333 million in equity investments to date. Kitchener
EDIF investments including high tech jobs, as well
is attracting national and international media
as jobs in manufacturing and education.
attention. Perhaps one of the most significant
The Hub alone accounts for the creation of 620 jobs,
benefits is this recognition that Kitchener now has in
including 495 in digital media.
the investment community as an innovative
community for entrepreneurs and investors.
Major employers have found space in Downtown
Kitchener due to EDIF investments including Google
"The changes we have witnessed over the past
(200 employees) and Desire2Learn (540 employees)
fourteen years are nothing short of spectacular.
More people work and live here than ever before.
Residential growth Downtown
The plans we see for the future are exciting,
City Centre Condominiums has filed a site plan
enlightened and bold. I predict that downtown
application for summer 2013 construction of their
Kitchener will be seen as an outstanding example of
first phase of 179 units in a self-contained building
downtown revitalization in North America."
fronting on to Young Street.
-- Colliers, 2012.
The Upper Storey Renovation Program has resulted
in six projects underway or complete, producing 28
units valued at $2.3 million.
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Report CAO-13-019 EDIF Impact Analysis 2012
Introduction
Catholic School Board offices and Downtown
Community Centre, the Wilfrid Laurier University
The City of KitchenerÓs Economic Development
Faculty of Social Work, and the University of
Investment Fund Ï known as EDIF Ï is a $110
Waterloo School of Pharmacy. The fund also
million commitment by the city to invest in catalyst
included allocations for downtown streetscapes,
projects to strengthen the local economy and
parking solutions, and greenfield industrial land
stimulate urban development in Downtown
projects.
Kitchener.
EDIF investment opportunities were assessed on a
EDIF was approved in 2004, and made possible
case-by-case basis by staff and council, based on
through a 10-year tax levy and annual debt issuance
their alignment with EDIFÓs stated goal: ÐTo ensure
of approximately $8.9 million/year. The fund was
that the Corporation receives maximum value for its
conceived in response to emerging opportunities in
capital investments in economic development
the downtown, particularly the University of Waterloo
initiatives.Ñ Further, staff identified objectives for
proposal to establish a School of Pharmacy. At the
EDIF investments including stimulating assessment,
same time, it was evident that local manufacturers
employment and residential growth, as well as
were struggling with a soaring Canadian dollar and
leveraging EDIF dollars by partnering on projects to
increased foreign competition Ï while the city faced
achieve a greater impact Î both direct and indirect.
a shortage of developable industrial land. EDIF
provided the city with a mechanism to address both
Monitoring constraints
urban development opportunities and the need to
From the outset, it was recognized that the benefits
realign economic development tactics to better
of the program will be realized well beyond the 10-
support the changing needs of manufacturers.
year implementation period, especially given the
An extensive public consultation process gave staff
long-term planning horizon for major projects like the
and council direction to allocate the majority of EDIF
redevelopment of Centre Block.
spending toward the urban economy. A smaller
There is also a time lag in some of the indicators,
portion was allocated toward employment lands, but
including assessment values which are updated
the cityÓs economic development strategy identified
every four years, and census results which are
tools outside of EDIF to provide more effective
available every five years, with an additional time lag
support to the manufacturing community. This has
in the release of local data. As a result, it will be
included the cityÓs corporate consultation program
likely several years after the end of EDIFÓs last year
and the launch of the Manufacturing Innovation
Ï 2014 at the earliest Ï before the City of Kitchener
Network (MIN).
is able to evaluate the impact of EDIF more
The Economic Development Investment Fund is
completely.
complemented by a number of other policies
However as time goes by, while there are more
including a new Regional Brownfield remediation
complete data available, it is increasingly difficult to
program, the cityÓs Downtown Strategic Plan and the
isolate the full impact of these investments. A major
Region of WaterlooÓs Growth Management Strategy.
benefit of the program has been an increase in
Implementation
investor and public confidence in downtown
Kitchener, where much of the money has been
While EDIF has a 10-year time frame for
invested. As such, many non-EDIF projects are
implementation Ï with 2013 being its final year Ï
underway and will continue to positively impact the
most of the funds were quickly allocated in its early
economic and social well-being of the core and the
years. The public consultation produced
local economy as a whole. Therefore it is challenging
recommendations to pursue strategic investments in
to recognize the direct impacts of EDIF amidst the
education institutions starting with the Waterloo
momentum it created.
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Report CAO-13-019 EDIF Impact Analysis 2012
Municipal Property Assessment Corporation (MPAC)
For example, a number of projects including the
Kaufman Lofts, the Tannery District, and Shoppers conducts an assessment of market values of
Drug Mart at 250 King St W have, according to their properties periodically, with the last valuation date
owners, been initiated almost entirely because of the recorded as January 1, 2008. The resulting 2008
development of the Health Sciences Campus. With market values are phased in over the 2009 to 2012
the future multi-modal hub to be established in this tax years. The market valuation conducted in 2012 is
same area Ï known as the Innovation District Ï not yet available. In between valuation years, MPAC
there will be another major non-EDIF investment will update assessed values for properties with new
influencing growth in the core. development, or those that undergo changes in use
or renovations.
Outcomes
To determine the impact of EDIF on assessment and
tax revenue, it is possible to estimate the
Despite these monitoring constraints, there are still
incremental change of property values for those land
current data available to provide some preliminary
parcels that are affected by EDIF investments.
conclusions about the impact of EDIF investments.
However, properties that are unchanged between
The following sections will outline the current
2009 and 2012 will remain on the established 2008
findings against the key objectives for EDIF, as
market value progression schedule. Yet the value of
established in 2004.
these properties may be appreciating faster than the
The five objectives are:
phased-in values due to their proximity to EDIF
1. Stimulate assessment growth
investments, but this will not be recognized until
2012 market values become available.
2. Stimulate employment
Downtown changes in assessment values
3. Stimulate the development of residential units in
the Downtown
To isolate the impact of EDIF on downtown
properties, land parcels in close proximity to EDIF
4. Seek maximum contributions in addition to the
investments were compared to a control group of
cityÓs funding for each project with a target of
land parcels within the downtown neighbourhoods
securing 15 per cent overall from such sources,
(planning communities 1, 2, 3, 4, 5, 7, 8, 9, 10, 13,
where possible
and 14), but further removed from EDIF investments.
5. Strive to achieve a return on investment, both
The following graph illustrates the change from 2004
direct and indirect
to 2012 in the assessed values for three groups: the
two downtown groups mentioned above, as well as
Objective 1: Stimulate assessment
the entire city for reference.
growth
The cumulative change since 2004 demonstrates a
positive post-EDIF growth pattern. From 2004 to
Measurables
2006 the properties near EDIF were not increasing in
value as much as the control group or city-wide
Assessment change
properties. However, beginning in 2007 the Ònear
Tax revenue change
EDIFÓ properties quickly surpassed the other two
groups and have continued to outperform them in
Results
cumulative assessment growth since that time. This
suggests a positive impact on assessed property
The City of Kitchener collects property taxes based
value directly related to EDIF investments
on municipally-determined tax rates and
downtown.
independently-assessed property values. The
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Report CAO-13-019 EDIF Impact Analysis 2012
Figure 1
Property assessment value
70%
60%
50%
40%
30%
20%
10%
0%
200420052006200720082009201020112012
-10%
Near EDIFDowntown Control GroupCity-wide
It is noteworthy that downtown Ònear EDIFÓ Using the control group, the average assessment
assessment growth exceeds city-wide assessment growth rates were calculated by tax class (e.g., CT
growth for most of the post-EDIF years. Assessment Ï Commercial Taxable: Full). These average growth
is more likely to rise in Greenfield parts of the city rates were then applied to the Ònear EDIFÓ properties
where new development of formerly agricultural land to provide the expected assessed value for each
creates a very large jump in the value of property. property. This is then compared to the actual
Assessment growth in the downtown is occurring in assessed value to determine if there is additional
growth near EDIF investments, beyond typical
an already developed area with set boundaries on
properties that are often severely constrained by growth downtown.
environmental factors. The pace of assessment
Since the 2008 market values are phased in until
growth downtown is therefore a strong indicator of
2012, in order to use the most current market value
the speed of change underway in the downtown,
the 2012 assessed value should be used. However it
especially in the context of rapid Greenfield
should be noted that unless there has been a
development.
reassessment since the 2008 market valuation,
Downtown estimated impact of EDIF on much of the indirect impact of EDIF investments will
not yet be visible in assessment data.
assessment and tax revenue
Over time most properties increase in value. To A comparison of expected 2004 to 2012 assessment
growth to actual 2004 to 2012 growth for Ònear EDIFÓ
demonstrate the impact of EDIF it is necessary to
estimate any additional increase in value beyond properties shows that assessed values are $30
1
million
expected growth. To determine this expected in excess of expected growth. While it is
growth, the downtown neighbourhoodsÓ properties possible that other market factors have influenced
were divided into two groups as above. The land
parcels in close proximity to EDIF investments are
classified as part of the Ònear EDIFÓ group, while the
remaining downtown properties became the control
1
The group of land parcels included this year has changed
group. The Ònear EDIFÓ group represents about 10
compared to prior years so this report can not be directly
per cent of all downtown properties.
compared to last yearÓs report.
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Report CAO-13-019 EDIF Impact Analysis 2012
Excluding the above property, the remaining
growth, it is unlikely that other factors alone could
explain an improvement of this magnitude. participant properties increased in value by $768,020
between 2004 and 2012. The combined 2012 tax
While there have been significant gains in
revenue from these properties was up 24 per cent
assessment, this has not translated directly into
compared to 2004, resulting in $10,042.79 in
comparable tax revenue increases. This is due to
additional revenue to the city.
two factors. First, several of the downtown properties
with significant assessment growthÏparticularly the Shirley Drive employment lands
University of Waterloo School of Pharmacy and
In the case of the Shirley Drive employment lands,
Wilfrid Laurier UniversityÓs Faculty of Social WorkÏ
the increase in assessed value or taxes billed
are now (or already were) tax exempt. Second, there
following 2004 can be directly attributable to EDIF,
are several large office towers in downtown
since those lands would not likely have been
Kitchener that have declined dramatically in their
developed without the cityÓs participation.
assessed value. There are 10 properties that have a
In 2004, the total assessed value among the
combined decrease of $11.5 million in assessment.
properties that later constituted the Shirley Drive
This could be caused by a number of challenges
extension and the newly-constructed Cedarview
including new management and competition from
Place was about $1.3 million. The 2012 phase-in
newly developed and more marketable Class A
value is $11.2 million, an increase of almost $10
office space in the core. As a result, the net
million in value. As well, the total tax amount billed
municipal tax benefit attributed to near-EDIF
was only $9,184 in 2004, but has since grown to
properties is $81,704 in excess of expected growth,
$306,725 in 2012. This return to the city is
during the time period from 2009 to 2011.
particularly noteworthy given that the cityÓs loan to
The year 2012 represents the final year of the
develop the land was paid back by the developer in
phase-in period for 2008 market value adjustments.
full with interest Ï early.
As such, in 2013 new information will be available
Since the subject properties are not fully developed,
that will provide a much better representation of the
both assessed values and the corresponding taxes
current market values and corresponding
billed will continue to grow.
assessment/tax revenue.
Downtown residential incentives
Future developments
The downtown residential incentives also provide an
There are several major projects that will significantly
opportunity to evaluate the impact of an EDIF
affect downtown assessment including the second
investment on property assessment. About $489,250
phase of the Tannery, the Breithaupt Block, and City
has been paid out to owners responsible for
Centre Condominiums. The City Centre project will
developing 28 upper storey residential units for six
directly stimulate assessment in its own properties,
projects estimated to be worth $2.3 million.
with tax revenues to the City of Kitchener estimated
Unfortunately, one of the properties that benefitted
to be in the range of $400,000 annually, and will
from the program decreased significantly in value Ï
likely positively affect the assessments of those
by 63 per cent or $820,000 between 2004 and 2012.
surrounding it.
There are no data available to city staff to provide an
As well, outside downtown, the former Maple Leaf
explanation as to the cause of either decreases or
employment lands in the Huron Business Park offer
increases in assessed value; thus the challenge in
an opportunity for further development which will
using MPAC data is in attempting to draw
increase assessment and revenue.
conclusions about patterns without knowing the true
causes of change.
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Report CAO-13-019 EDIF Impact Analysis 2012
Objective 2: Stimulate employment
Table : Direct employment
1
Measurables
Business/Institution Employment
Downtown
Employment
Health Sciences Campus 74
Business counts
Faculty of Social Work 43
Communitech Hub 620
Vacancy rates
Desire2Learn 540
Google 200
Results
Sub-total 1,477
Employment and business counts
Shirley Drive employment lands
Bavarian Window Works 18
There are several EDIF projects that have directly
ACL Steel 46
affected employment levels, most significantly the
Snap-Edge Canada/Great North 5
Communitech Hub. The Hub alone accounts for the
Outdoor Living Products
creation of 620 jobs, including 495 in digital media. It
CARSTAR Collision and Glass Services 4
has played a key role in the emergence of 413 new
Droven Flooring Supplies 3
Clarkson-Weiser Manufacturing 16
companies in 2012, of which 313 are in digital
Sub-total 92
media. The Hub currently houses 90 start-ups
Several other EDIF projects have directly affected
Total 1,569
employment levels such as the Shirley Drive
With two university incubators (UWÓs VeloCity and
employment lands, the University of Waterloo Health
LaurierÓs LaunchPad) now in the Hub and 14,000
Sciences Campus, and Wilfrid Laurier UniversityÓs
sq.ft. of additional space, the Hub is generating
Faculty of Social Work. As well, the location of
attention far beyond Waterloo Region. It has brought
Google in downtown Kitchener likely occurred only
in 11,700 visitors to date, including representatives
as a result of the redevelopment of the Tannery Ï a
from China, Brazil, Hong Kong, India, Taiwan, Africa,
project that proceeded directly as a result of EDIF
Latin America, and Europe. This activity is
investments.
generating media interest and investor awareness
for Downtown Kitchener and the entire region.
The Tannery also provided the required space for
the expansion of Desire2Learn, which has added
Downtown employment
300 jobs downtown in 2012 alone. In total, there are
While some historical employment data are available
1,569 jobs that can be directly linked to EDIF
for EDIF-related projects, it is not meaningful to
investments (see Table 1).
compare year-to-year changes in the employment
In some cases, the jobs already existed (e.g., the
levels for specific businesses. These fluctuations are
Faculty of Social Work moved to downtown
largely due to economic conditions or business
Kitchener) so from a regional perspective no jobs
performance. Rather the absolute employment level
were gained. But the Communitech Hub employment
is only relevant compared to what existed prior to
is especially noteworthy because it plays a role in job
EDIF investment Ï which in some cases amounted
creation, and also in raising the profile of Kitchener
to vacant land, parking lots or underutilized space
as ÒStart-Up CityÓ. In 2012, Google became a Hub
What is also difficult to measure is the number of
Strategic Partner, joining other multi-nationals
jobs that have been created or protected indirectly
including BlackBerry and OpenText. As well, the
through EDIF investments Ï without the availability
HYPERDRIVE Program was launched, bringing in
of redeveloped space or land, employment may
seven companies in this $30-million-plus program to
have been lost from the region. The development
turn seed-level tech start-ups into Series-A financed
work also creates benefits for the construction
companies.
Page 7 of 15
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Report CAO-13-019 EDIF Impact Analysis 2012
an additional 4,000 residents under a medium
industry. Further, intensification of employment in the
downtown affects demand for other consumer goods density scenario. This is in part dependent on the
and services in the core, such as restaurants. establishment of sufficient transportation
infrastructure to move potential employees into the
For this reason, total downtown employment is
core. In particular, tech companies indicate a need
assessed to measure EDIFÓs impacts. Aggregate
for an upgrade to existing GO Transit to offer two-
downtown employment increased by 118 people
way commuter rail service between Kitchener and
during 2012. But actual private sector growth was
Toronto.
much higher as gains were offset by the City of
KitchenerÓs move of approximately 200 staff from the From 2004 to 2012, downtown employment rose by
former Bramm Street yards to a new operations 2,107 or 20 per cent. During that same time period,
facility outside downtown. Were it not for this move, Kitchener-Cambridge-Waterloo Census Metropolitan
2
employment growth in 2012 would have been 318 Area employment grew by 14 per cent, indicating
employees. This is evident in business counts which that downtown employment growth outpaced CMA
show a net gain of 27 businesses this year (see employment growth. While these labour force
Figure 2). indicators for the CMA provides additional context,
these two growth rates cannot be directly compared,
The vacancy in the former Bramm Street yards
as the downtown employment numbers are based
creates an employment opportunity for the future
on a municipal census of workplaces, while the
with the potential to convert the space into much
labour force survey is a Statistics Canada survey of
higher density office space. This land makes up a
households which includes commuter traffic.
large share of an area in the Innovation District that
has the potential to host over 18,000 employees and
Figure 2
Employee and business counts
(urban core)
775
748
14,000800
704
696
750
681
13,000
674
665665
636
700
12,000
12,461
12,343
12,316
11,967
11,959
650
11,000
11,437
11,373
600
10,941
10,000
10,354
550
9,000
500
8,000
450
7,000400
350
6,000
300
5,000
250
4,000
200
3,000
150
2,000
100
1,000
50
--
200420052006200720082009201020112012
EmployeesBusinesses
2
Kitchener CMA: Kitchener, Waterloo, Cambridge,
Woolwich and North Dumfries.
Page 8 of 15
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Report CAO-13-019 EDIF Impact Analysis 2012
Figure 3
Office vacancy and lease rates
Average vacancy rate
13.9%
12.1%
12.0%
10.9%
10.0%
9.9%
8.8%
10.4%
7.9%
10.3%
10.1%
7.2%9.9%
9.1%
8.6%
7.3%
7.0%
6.5%
Average asking lease rate per sq.ft.
$11.73
$11.55$11.55
$11.46
$11.40
11.29
$11.11
$10.99
$10.95
11.67
$11.21
$10.79
$10.62
$10.40$10.41
$9.92
$9.74
$9.41
200420052006200720082009201020112012 YTD
CoreCity-wide
Vacancy rates Elements, 271 West, Xtea Co, and
Guanaquita
Restaurant.
From 2004 to 2009 the downtown office vacancy
As well, the value of downtown land is rising. About
rate fell steadily until it was lower than the city-wide
3 seven years ago, downtown land was selling for
rate (see Figure 3). Since 2009, there has been a
about $1 million an acre. The 2012 sale of the
substantial increase in the inventory of available
4
property known as ÐOne VictoriaÑ was $5.1 million
space in the core through the redevelopment of
an acre, though this was acknowledged as a
underutilized buildings such as the Tannery or the
premium price that was paid for a unique
ShopperÓs Drug Mart building at 250 King St W.
opportunity. The Lang Tannery was purchased in
Approximately 350,000 sq.ft. of office space was
2007 for $10 million, underwent $20 million in
added to the core between 2004 and 2012.
improvements and sold in 2012 for $60 million. This
Therefore the increase in downtown vacancy in 2011
demonstrates that investors are realizing significant
was not indicative of waning demand, but rather
financial returns from downtown projects.
strong investor confidence in the ability to attract
tenants to newly developed space. But in 2012 the
Future Developments
vacancy rate fell to 10 per cent, only slightly higher
than city-wide vacancy of 9.9 per cent as occupancy
The $35 million redevelopment of the Breithaupt
caught up with newly developed space.
Block (formerly the Collins and Aikman plant) is
creating an additional 175,000 square feet of
On King Street itself, retail vacancy has fallen from
downtown office space to accommodate as many as
12.5 per cent in late 2010, to 8.9 per cent in 2012.
875 employees. It is already home to five new
Most of the new occupants are restaurants or food-
tenants: BDO Financial Recovery Services,
related including, for example, Entertaining
4
Source: Pender, Terry. ÐGateway to downtown taking
3
CBRE MarketView Reports, www.cbre.ca shapeÑ, The Record, August 2, 2012.
Page 9 of 15
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Report CAO-13-019 EDIF Impact Analysis 2012
Workplace One, Lesley Warren Design Group, Dillon
The projects underway or complete have a total
Consulting, and Associated Engineering.
project cost of $2.3 million, of which $489,250
was or will be loaned by the city.
Also, Class B and C office space in the core
provides more affordable options for landing pad
While the direct impact of EDIF on residential
space for companies graduating from the Hub (e.g.,
permits to date is minimal given the long timelines
the McPherson Building). Higher occupancy rates in
associated with the redevelopment of Centre Bock,
these buildings will contribute to increases in their
EDIF projects have indirectly built demand for
assessed values.
downtown housing. The decision by Andrin
Investments to proceed with the redevelopment of
Objective 3: Stimulate development of
the Kaufman Lofts was a direct result of the
residential units in the Downtown investment made by the city in the Health Sciences
Campus. This resulted in 270 new residential units
downtown, with an approximate sales value of
Measurables
6
$45,000,000. Assuming 1.8 people per unit, this
Residential building permits
project added 486 residents to the downtown.
Number of residential units
Overall, from 2004 to 2012, there were permits
7
issued for 1,145 residential units. The population in
Population estimates
8
downtown neighbourhoods increased by 1,718
residents (6 per cent), including 482 residents in the
Results
core. Residential building permit values in downtown
EDIF has directly funded two initiatives to increase
neighbourhoods totalled $157.3 million.
the residential population downtown: the
redevelopment of Centre Block as City Centre
Future developments
Condominiums, and the creation and execution of an
City Centre Condominiums will add additional units
upper storey renovation program.
in its next phase. While it is the largest residential
City Centre Condominiums has built a sales suite on
project under development in the downtown core,
site and has proceeded to file a site plan application
there are numerous other developments in the
for construction in the summer of 2013. The first
planning stages in downtown neighbourhoods
phase of the plan calls for 179 units in a self-
ranging in size from 8 to 958 units. In total, there are
contained building fronting on to Young Street. The
2,844 units underway or in planning stages,
entire project is expected to add 397 new residential
including One Victoria by Momentum Developments,
units downtown. Using the assumption of 1.8 people
Queensgate at 1 Adam Street, Arrow Lofts, as well
5
per unit, this project has the potential to bring 715
as some smaller-scale redevelopments by the
residents to the core, a substantial population
Madison Development Group in the east-end and
increase of 34 per cent over the current estimate of
near Victoria Park. These projects and others have
2,089 people.
the potential to add 5,119 residents downtown.
The Upper Storey Renovation Program produced the
following results:
6
Source: Statistics Canada, 2006 Census of Population,
Six projects underway or complete;
Statistics Canada catalogue no. 97-554-XCB2006032.
7
28 units under construction or built;
Source: City of Kitchener AMANDA database, Statistics
Canada, 2006 Census, Economic Development Population
Estimates
58
Source: Statistics Canada, 2006 Census of Population, Includes planning communities 1, 2, 3, 4, 5, 7, 8, 9, 10,
Statistics Canada catalogue no. 97-554-XCB2006032. 13, and 14.
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Report CAO-13-019 EDIF Impact Analysis 2012
Objective 4: Seek maximum
this objective. In fact, the 15 per cent target turned
out to be very conservative. EDIF-funded projects
contributions in addition to the cityÓs
were actually able to attract more funding from other
funding for each project with a target of
sources than from EDIF.
securing 15 per cent overall from such
For most projects involving additional funding, the
sources, where possible
city was able to double the value of the project.
Among all projects so far, including projects with no
Measurables
additional investment by partners, the city has spent
$97.8 million, and estimated partner investments
Contributions from other agencies or partners
have reached $232.9 million (spent and allocated),
Results representing $2.38 in additional funding per dollar
spent by the city, or 238 per cent of EDIF was
One of the ways that EDIF is especially effective is in
matched by partners.
leveraging funds to initiate investments that may not
otherwise have been possible. Table 2 illustrates the
extent to which the city has succeeded in achieving
Table : Summary of projects with additional funding from partners
2
EDIF allocation Partners' Additional investment per
Project over 10 yearsallocationdollar spent by city
Health Sciences
Campus $30,000,000$47,244,460$1.57
Faculty of Social Work $6,500,237$10,599,763$1.63
Victoria Park
improvements $2,700,000$1,200,000$0.44
King Street
Streetscaping $5,680,000$4,443,500$0.78
Communitech Hub $500,000$46,530,000$93.06
City Centre $18,360,000$90,000,000$4.90
Downtown Community
Centre $777,680$1,300,000$1.67
KPL expansion $32,500,000$31,631,182$0.97
Total $98,102,337$232,948,905
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Report CAO-13-019 EDIF Impact Analysis 2012
From the class of 2010, of 15 students, four chose to
Objective 5: Strive to achieve a return on
practice family medicine, with three remaining in
investment, both direct and indirect
Kitchener-Waterloo to practice. From the 2011 class,
four have also chosen family medicine with their
The concept of Return on Investment (ROI) is
residency programs currently underway.
difficult to define for EDIF-funded projects. A
traditional definition of ROI is not appropriate for
The School of Medicine has also begun specialist
projects in which the funds are granted to a not-for-
training, with one student in residency now in each of
profit corporation such as a university, or invested in
the following programs: internal medicine,
a downtown community centre, road infrastructure,
psychiatry, and emergency medicine. Beginning in
or public library renovation. For these projects, ROI
July 2013, the School will introduce pediatrics as
must be defined much more broadly to attempt to
another area of study.
identify if the City of Kitchener has achieved its
The Centre for Family Medicine residency program
strategic objectives, thereby setting the stage for
began graduating family physicians in 2007, and has
new industries or clusters, improved employment,
achieved a 70 per cent retention rate (the
and increased tax revenue over time. This is
percentage of residents remaining in the community
therefore reflected in the analysis of the first four
to practise), much higher than traditional residency
objectives.
teaching sites.
Other Outcomes
Together, McMaster and UW have 541 students
studying in downtown Kitchener, with another 23
While the framework for this analysis was provided
expected in 2013. This results in improved access to
with the establishment of the original five objectives
health care for the entire community, and also brings
of EDIF, there are other positive community benefits
research and commercialization opportunities to the
not directly associated with the stated objectives.
core. This is also complemented by the 199 students
These include an increase in the availability of
enrolled in Wilfrid Laurier UniversityÓs Faculty of
healthcare professionals, environmental benefits,
Social Work Ï another EDIF investment Ï which
improved perceptions of safety downtown, national
provides economic benefits downtown.
recognition in many award categories and improved
investor confidence.
Environment
Health care
EDIF has produced environmental benefits both
directly and indirectly. A portion of the fund is
EDIF provides funding for both physician and
allocated to support the Local Environmental Action
specialist recruitment. But the fund has also
Fund (LEAF), a program intended to reduce or repair
contributed to the teaching, research and
our city's impact on the environment.
professional opportunities in health care through the
Other EDIF investments have incorporated the
Health Sciences Campus comprising the University
environment as a priority. For example, the green
of Waterloo School of Pharmacy, the McMaster
features included in the King Street Streetscaping
School of Medicine, and the Centre for Family
earned a Tree Canada designation for the City of
Medicine.
Kitchener as a ÒGreen Streets Canada CommunityÓ.
The McMaster School of Medicine is now at full
Indirectly, EDIF supports the Economic Development
capacity with 84 full-time students. The inaugural
strategy and Kitchener Growth Management
class members of 2007 will be at varying stages of
Strategy by encouraging intensification and
their residency programs depending on their chosen
redevelopment. This also relates to the investment in
area of study, with some residency programs lasting
transportation infrastructure (e.g., Light Rail, GO
up to seven years.
Page 12 of 15
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Report CAO-13-019 EDIF Impact Analysis 2012
Transit) that supports urban intensification for energy Figure 4
efficiency.
Feelings of safety in downtown Kitchener
While the regional Brownfields incentive program is
not an EDIF-funded initiative, many EDIF-related
45
39
38
40
projects have benefited from both programs for
36
33
35
31
redevelopment. As such, EDIF investments have
2828
28
30
precipitated environmental remediation that may not
25
17
otherwise have been feasible without access to 20
15
12
these resources.
10
6
5
5
One of the extensive remediation projects partially
0
funded through EDIF was the removal of coal tar as
Very SafeSomewhat SafeSomewhatVery Unsafe
Unsafe
part of the Gaukel Street clean-up. The
200720082011
reconstruction of Joseph and Gaukel Street area
features the new entrance of Victoria Park, which
This survey question was asked again in 2012, but
offers a green community space and focal point to
using a different survey and methodology. This time
the park.
residents of other cities were also asked how safe
they feel in downtown Kitchener; a question which
Records of site conditions have been issued on over
demonstrates that perceptions vary considerably by
11 hectares of downtown land, related directly or
community of residence. More Kitchener and
indirectly to EDIF. There are another four hectares
Cambridge residents feel safe than unsafe in
expected through the second phase of the Tannery,
downtown Kitchener, but the same is not true in the
the Breithaupt Block, and the GO Transit station.
city of Waterloo and in the Townships, where 69 to
73 per cent of residents feel that Downtown
Perceptions of safety
Kitchener is unsafe. This suggests that there is still
Increased investment activity in the downtown
work to be done to expose community members to
should contribute to a more positive perception of
the change that have occurred Downtown.
the safety of the core. This is demonstrated through
Figure 5
the Waterloo Region Crime Prevention CouncilÓs
surveys which show that more people felt safe in
Feelings of safety in Downtown Kitchener
downtown Kitchener in 2011 than in prior years. In
(2012)
80
73
2007 only 36 per cent of respondents felt somewhat
69
70
safe or very safe, but by 2011 this had increased to
6054
51
49
46
50 percent.
50
40
31
27
30
20
10
0
CambridgeKitchenerWaterlooTownships
er safe/somewhat safeSomewhat unsafe/ver unsafe
Vyy
A separate downtown survey conducted by the City
of Kitchener showed that 75 per cent of respondents
feel safe on King Street day or night, but some are
bothered by activities such as panhandling or
solicitation.
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Report CAO-13-019 EDIF Impact Analysis 2012
Awards Table : Private investment downtown
3
for major projects
A number of the projects related to EDIF have been
recognized with a variety of awards. This recognition
Estimated private investment
not only confirms the quality of the investments, but
also sets the bar high for new development. For
Residential
example, the University of Waterloo School of
Le Marche
Mansion Street
Pharmacy received a silver Design Exchange Award
Kaufman Lofts
for architectural design.
Eaton Lofts
Two downtown projects have been honoured by the
InTowns
560 Queen St S
Canadian Urban Institute with Brownie Awards, The
310 Queen St S
Tannery for Best Overall Project in Canada, and
Arrow Lofts
Kaufman Lofts for Best Project Ï Small/Medium
Upper Storey Residential
Scale. These prestigious awards recognize
Total residential $156,290,750
excellence in Brownfield redevelopment.
Commercial
The King Street Streetscaping won a gold award for
The Tannery
urban design from The Design Exchange Awards.
The Hub
This makes it the top Urban Design project in
Breithaupt Block
Canada that year. Tree Canada designated the City
Shopper's Drug Mart
of Kitchener as a Green Streets Canada Community,
Simpson Block
Total commercial $110,880,000
in recognition of the green features included in the
streetscape, and it was awarded an International
Total private investment
Making Cities Livable ÒCommunity PlacesÓ award.
(select projects) $267,170,750
The Downtown Kitchener Student Housing Program
Since 2004, the construction value of building
was honoured by the Economic Developers
permits in the downtown neighbourhoods has
Association of Canada. The program was developed
reached $752 million, of which $447 million has been
through a partnership between the city, the
invested in the core. In 2004, construction values in
University of Waterloo and Wilfrid Laurier University
downtown neighbourhoods made up only 8.4 per
specifically in preparation for the opening of the
cent of city-wide construction, but in the years since,
universitiesÓ two new downtown campuses.
the proportion of investment downtown has
averaged around 19 per cent per year. This
The Centre Block project was recognized by the
demonstrates the confidence of property owners and
Economic Development Council of Ontario (EDCO)
investors in the impact that EDIF will make in
for Product Development/Redevelopment Initiative.
downtown Kitchener.
Investor confidence
Aside from these major projects there have been
many small-scale developments in the core,
With the commitment by the city to invest in
especially in restaurants and retail. The Duke Food
economic development stimulus projects, the private
Block is home to a variety of independent
sector responded with renewed confidence in the
restaurants with vegan, Indian, Latin and Asian food.
future of the urban economy. The Communitech Hub
The Ontario Street retail cluster features unique
has generated $333 million in equity investments to
consignment and accessory shops, as well as a
date. Since the announcement of EDIF, the private
florist. These entrepreneurs have entered into the
sector has injected $267 million into major residential
Downtown market in part because of the growth in
and commercial projects alone (see Table 3).
activity necessary to support hospitality and retail.
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Report CAO-13-019 EDIF Impact Analysis 2012
Municipal leadership It is this confidence in Kitchener as a growth location
for business and investment that helps support
The City of Kitchener is increasingly recognized as a
additional non-EDIF investment. Since 2004 a
municipal leader in policy, planning and strategy.
number of other downtown developments have
There are other cities investigating the EDIF model
proceeded ranging from small façade improvements
for their own communities, such as London. The
to the massive consolidated provincial courthouse.
King Street design is being replicated in Buffalo,
But there is a portion of the fund still committed to
Toronto and Guelph. This demonstrates the quality
support industrial land, helping to balance the needs
of work that has gone on, as well as the potential for
of the manufacturing base with the expanding urban
Kitchener to elevate its profile through strategic
economy.
initiatives.
A significant factor in future development will be
transportation infrastructure, as Light Rail Transit
Conclusion
and GO Transit influence the movement of people
The Economic Development Investment Fund now
within the city and between cities. EDIF helped
has only one year remaining (2013) in its
position downtown Kitchener as the centre of the
implementation period, but its benefits are expected
region for business, transportation, and culture. And
to be realized well beyond this time frame. While it is
while many of the measurable benefits of EDIF are
difficult to capture the results given the time lag for
evaluated in terms of the impact on the downtown or
census and assessment data, perhaps the biggest
the city, the full benefits of EDIF extend much
challenge to this early analysis is the need to allow
further. For example, a new business may start up in
for the maturation of EDIF investments. Also, there
the Communitech Hub and graduate to another
are projects such as the Downtown Community
location in the region. As such the EDIF investments
Centre and the Library which do not directly meet an
benefit the entire community, but are much more
EDIF objective, yet they contribute to a positive
difficult to isolate in terms of cause and effect.
environment for investment in the downtown.
The benefits of EDIF are expected to continue to
Nevertheless, an examination of only the
grow over the remaining life of the fund and it will
measurable results demonstrates that EDIF has
have a lasting and measurable impact on the city
made a positive economic impact. Assessment is
and region over the long term.
growing faster near EDIF investments, and both
downtown developments and employment land
development have secured jobs. New residential
units have been added through the redevelopment of
Kaufman Lofts and through the Upper Storey
Renovation Program, and a number of other
residential projects are in the planning stages. For
every dollar in EDIF, other partners have
contributed, or will contribute $2.38, which
demonstrates the capacity to leverage city funds for
stimulus. Further, in some instances additional
spending comes from the private sector which shows
that investors have confidence in the projects made
possible through this fund. And some downtown
redevelopment is entirely driven by the private
sector, which demonstrates the commitment of
investors to downtown.
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