Loading...
HomeMy WebLinkAboutCAO-14-011 - Startup Landing Pad Community Improvement Program Staff Report ITC:HFI ? .R CA0 Office www.kitchenerca REPORT TO: Planning & Strategic Initiatives Committee DATE OF MEETING: February 24, 2014 SUBMITTED BY: Rod Regier, Executive Director, Economic Development PREPARED BY: Cory Bluhm, Manager, Downtown Development (519)741-2200 ext. 7065 Thom Ryan, Sr. Business Development Officer (519)741-2200 ext. 7826 WARD(S) INVOLVED: 9,10 DATE OF REPORT: February 12, 2014 REPORT NO.: CAO-14-011 SUBJECT: Startup Landing Pad Community Improvement Program RECOMMENDATION: That approval of the Startup Landing Pad Program, as shown in the attached appendices of report CAO-14-011, be referred to a subsequent Council meeting after such time as the Ministry of Municipal Affairs and Housing has completed their pre-consultation review. EXECUTIVE SUMMARY: The Startup Landing Pad Opportunity The City of Kitchener has a unique and transformative opportunity to stimulate long-term community-wide economic growth. The proposed Startup Landing Pad Program is unlike any other in the province or across the nation, one which can only have come about in a community where a thriving startup ecosystem and unconventional real estate meet head-on. "Startup Landing Pads" typically house a startup after it has graduated from an incubator program and is of high growth potential and market-ready. Often with some financial backing, endorsed by an incubator program, these high-growth, high-potential startups need economical and strategic office space to grow and develop from a small (1-5) to medium (5-30) employment base. Critically important to the continued success of these startups are efficient costs and the ability to attract talented people. Dozens of these post-incubation startups emerge per year, graduating from programs at the Communitech HUB, VeloCity, Accelerator Centre, Waterloo Research Centre, or from short-term lease spaces such as Work Place One, Treehaus, Regus Corporate Suites, the Nexxus Centre and more. Notable recent examples in Downtown Kitchener include Thalmic Labs, NetSuite (TribeHR), Mappedln, SweetTooth, Embium and VidYard. But looking at the long term, companies like Desire2Learn, IGLOO and PeerGroup all started in landing pad style space before eventually 2 - 1 growing to become major employers in the region. These three companies now occupy space in Kitchener as headquarters for their respective global operations. Foreign acquisitions of startups have also viewed downtown as a desirable location, including Google and Electronic Arts. Proximity to the Innovation District, Communitech HUB, walkability to downtown amenities, and the benefit of forthcoming multimodal amenities are valuable commodities. However, some startups select destinations outside of the core, such as I Think Security and Qwalify (Voisin Tech Suites), Aeryon Labs and Clearpath Robotics (Waterloo). Advantageously, Kitchener has something few locations can offer - traditional brick and beam buildings that can be converted into unconventional, yet attractive office spaces. Like rough gems, these spaces promise low-cost conversion into the compelling spaces that burgeoning startups critically need to attract and retain creative talent so crucial to their growth potential. But as startups emerge from incubators and accelerator centres, they typically cannot afford high real estate rental costs, standard long-term lease arrangements or significant leasehold improvement costs. To achieve early sustainability and to gain a secure foothold, startups require favourable lease rates and flexible lease arrangements. The Startup Landing Pad Program will capitalize on two of Kitchener's key competitive advantages: (1) a steady pipeline of emerging startups and (2) a significant number of under- utilized downtown spaces. Investments by the City of Kitchener of up to $1 million will result in more startups downtown, new employment opportunities, retention of creative economy workers, increased property tax revenue, fewer property tax holidays due to vacancy, and long- term increased value of downtown upper storey spaces. Economic spinoff effects would include increased shopping and dining, greater citizen participation and an increase in downtown residents. Perhaps more importantly, this program has the long-term potential to dramatically benefit the entire city and region. Every major company in this region was a startup at one point. Embedding them in our community early increases the probability that, as they mature from small to medium to large companies, from local to national to international players, they will remain in Kitchener. BACKGROUND: Community Improvement Plan Legislation Municipalities are prohibited from providing bonusing to private companies (ex: providing grants, loans, etc.). The only exception to this rule is through the Community Improvement Plan legislation of the Planning Act. Municipalities can designate Community Improvement Plan Project Areas and subsequently enact Community Improvement Plans (CIP) in these areas. CIPs are generally limited to the following applications: 1) To address community wide priorities (ex: brownfield remediation, heritage conservation); or, 2) To facilitate the improvement and revitalization of specific areas of the City that are in transition (ex: areas where repair and rehabilitation of numerous buildings are needed). 2 - 2 Downtown Kitchener is already identified as a Community Improvement Plan Project Area with an associated CIP. The Startup Landing Pad Program would be an additional program within the Downtown CIP, with a major intention of facilitating the rehabilitation of underutilized and vacant upper storey space. Startup Growth Downtown In the last 10 years, the epicentre for startup business activity has shifted from around the University of Waterloo to around Kitchener's Innovation District, and especially The Tannery. In 2010, the City of Kitchener supported the development of the Communitech HUB — a business incubator and accelerator centre for technology-based startup companies. Companies are provided space, mentorship and services until they reach a point where they can succeed on their own. Dozens of companies will graduate from innovation business incubator programs like the HUB in Waterloo Region every year, needing a location to support the next stage of their growth. As a result, a new opportunity has emerged to revitalize vacant and under-utilized upper storey space by facilitating the relocation of these post-incubation startup companies — companies that are motivated to invest in downtown office spaces with historical, "brick-and-beam" character. At the same time, the former Upper Storey Renovation Program, focused on providing grants and loans to incentivize residential renovations of underutilized upper floors Downtown, did not maximize its potential. The market demand for downtown residential renovations was replaced by economical new loft building projects, leaving the program funds largely unused. The Startup Landing Pad Program would leverage existing and immediate market demands to achieve the same ultimate goal of the Upper Storey Program — to facilitate the conversion of under-utilized upper floor space into high performing, code compliant occupied space. REPORT: The recent success of the City of Kitchener's investments into the downtown and Communitech HUB have laid the groundwork for the next step in maturation of our startup ecosystem. This has created a unique opportunity to capitalize on an under-utilized downtown asset (upper- storey space) to create long term employment and economic growth for the entire community. As such, the objectives of the Startup Landing Pad Program are: 1) to assist emerging startup companies transition from accelerator programs, incubator facilities, and short-term lease space into more permanent locations in Kitchener; 2) to assist property owners and tenants with the financing of interior leasehold improvements and/or accessibility improvements to upper storey (2nd storey and higher) properties that are currently underutilized or in a state of disrepair; 3) to enable the City to repair, rehabilitate or improve buildings on land it holds or acquires, and to sell, lease or dispose of any such buildings and land for the purpose of establishing Startup Landing Pads; and, 4) to support municipal investments in Downtown Kitchener infrastructure. To implement these objectives, there are two main components of the program — a Startup Landing Pad Improvement Grant and the use of City-owned buildings. 2 - 3 STARTUP LANDING PAD IMPROVEMENT GRANT The general terms of the program are as follows: • City of Kitchener to allocate up to $1 M to support a interior leasehold improvements grant program • Eligible buildings generally include those located in downtown Kitchener (within the Kitchener downtown "Community Improvement Area" boundary) with ground floor commercial uses and under-utilized upper storey building spaces. Office towers, shopping malls, hotels and single detached dwellings would not be eligible. Street-level, basement and first-floor spaces are ineligible. Staff would have discretion to consider unique buildings which may not meet the above criteria. • Applications accepted from owners and/or tenants/startups in concert with property owners. • Up to $20,000 matching grant for leasehold improvements per floor. • Up to $40,000 matching grant for common area accessibility improvements per building. • Grants are only reimbursed on paid expenses, and will be paid upon occupancy of the space. • Some restrictions apply on acceptable design, quality and type of depreciable "leasehold" and "accessibility" improvements which will have at least a 10-year or greater depreciable life. • Space use restrictions will apply, eg: limited to uses like scientific or technological, music production, research and development, laboratory, biotechnology, computer electronic or data processing. Grants will not be issued for uses like performance studio, retail, professional, recreational, restaurant, or retail. • A letter of endorsement is required from a startup program partner such as Communitech or the Waterloo Region Small Business Centre. • Applications must pass a Downtown Incentive Review Team and design/project approval process and shall be subject to a scorecard review process. • The program is expected to be open to applications in Q3 2014. • The program is non-retroactive. • City of Kitchener reviews all applications, subject to city design, planning and heritage guidelines, and reserves right to reject projects. Full terms of the program are available in APPENDIX 2: Downtown CIP Section 9.7 (Startup Landing Pad Program) and APPENDIX 3: Proposed amendment to Council Policy 1-535. STARTUP ELIGIBILITY Endorsement by startup experts such as Communitech Executives-in-Residence or the Waterloo Region Small Business Centre staff is essential to ensure the Startup Landing Pad Program is focused on startups with strong potential to grow and thrive. A formal letter of endorsement is required for any startup applying to the program from these startup program partners. Landing Pad Program applicants will generally be limited to uses such as: Biotechnological Establishment, Computer, Electronic or Data Processing Business, Digital Media Establishment (excluding graphic design firms), Laboratory, Music Production, Research and Development Establishment, and Scientific or Technological Establishment. 2 - 4 Grants will not be issued where the space is to be used for any of the following uses: Personal Services (beauty salon, etc.), Professional Services (architectural, marketing, graphic design, financial, etc.), Recreational (yoga studio, fitness facility, etc.), Restaurant or Retail, Artist Studio, Music Hall (where no production occurs, and/or the sole use is for performance or practicing). Kitchener City Council may from time to time, through Council policy, identify additional eligible uses. ACCESSIBILITY As standards related to Ontario's Accessibility for Ontarians with Disabilities Act (2005) come due leading up to more rigorous requirements for accessible buildings and built environments, the accessibility grant portion of the program is designed to incent property owners to undertake work related to improvements to accessibility of the building and common areas. ADMINISTRATION From an administrative perspective, the Startup Landing Pad Program is modelled after the Downtown Facade Improvement Program. The Downtown Financial Incentives Review Team will assume the role of reviewing applications, with administrative tasks led by Economic Development staff and supported from other appropriate departments. The program is aligned with the City's building, planning, heritage and development guidelines, as well as Ontario's building standards. ECONOMIC IMPACT In terms of direct economic impact, the Startup Landing Pad Improvement Grant has the potential to create new space for up to 600 jobs in 30+ startups (based on the renovation of 30 floors, with an average of 20 workers per floor). 600 new jobs in the Downtown would increase retail and restaurant spending, festival and event attendance, volunteer hours and downtown residents. More importantly, the potential for these companies to grow into larger companies, taking over larger office space or building new buildings throughout the community, is immeasurable. While the initial benefits will be focused Downtown, this program has the potential to lead to significant community-wide job growth. RISK OF LOST OPPORTUNITY Without the creation of landing pad space, startups may not be able to access the type of space they need to grow their company. This could result in startups relocating outside of downtown and potentially outside of the region. If this occurs, the community-wide job growth potential may fail to materialize. A secondary, but important risk, is the prolonged vacancy and deterioration of upper-storey space. As has been witnessed in recent years, this has the potential to increase the likelihood of fires or structural instability in our downtown buildings. 2 - 5 USE OF CITY-OWNED BUILDINGS & EXPANDED DOWNTOWN BOUNDARY While it is anticipated that most of the startup landing pads will occur in privately owned space, a number of City-owned buildings are ideally positioned for use as landing pads — either directly leased to a startup or through a third-party organization who would in turn sub-lease the space to a startup. While none are contemplated at this moment, provisions have been included in the CIP to enable the City to do so without being limited by the restrictions of the Municipal Act. 79 Joseph Street is one such ideal building which is presently just outside the Downtown boundary. As such, staff feel it is appropriate to expand the boundary to include this building, to allow for its potential use as a landing pad, either in partnership with the current tenant or through future lease negotiations. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: The Startup Landing Pad Program is the realization of a core strategy outlined in the Kitchener Economic Development Strategic Plan (KEDS), and adheres to the Downtown Kitchener Community Improvement Plan. The Startup Landing Pad Program is aligned with priorities in the City of Kitchener Strategic Plan such as "core revitalization" and "new employment opportunities," with a focus on retaining and creating new employment opportunities (at tech firms and for burgeoning entrepreneurs) and revitalizing under-used buildings in the core. In addition, the program's accessibility grant meets with the City's commitment to increased accessibility throughout the city. Growth of employment in the Urban Growth Centre aligns with the provincial targets of Places to Grow to achieve 200 jobs and people per hectare. FINANCIAL IMPLICATIONS: Staff propose up to $1 million be allocated to fund the Startup Landing Pad Program over 5 years. An initial $850,000 would be reallocated from the remaining funds in the Upper Storey Improvement Fund. An additional $150,000 would be earmarked (but not committed) in the Economic Development Infrastructure reserve fund. Prior to formally allocating the additional $150,000, a report would be presented to City Council for approval at a later date. This program would potentially add new tax assessment without the need to take on any new operational costs. COMMUNITY ENGAGEMENT: During the development of the Kitchener Economic Development Strategy (KEDS), the community clearly identified support for startup companies as a key priority for the City. In the recent (January 2014) Environics/Compass Kitchener report, citizens identified "Economic Development" as the #2 priority. The City's Economic Development Advisory Committee and Downtown Advisory Committee unilaterally endorsed the Startup Landing Pad Program on December 13, 2013. City staff held consultations with downtown property owners; tech startups at The Tannery, the Communitech HUB, University of Waterloo VeloCity Garage Communitech and the Waterloo Region Small Business Centre; and with the Downtown Kitchener BIA. All have expressed support for the program. 2 - 6 Additional public consultation was held as part of the Downtown Financial Incentives Review in 2013. CONCLUSION: Since 2005, growth attributed to startup activity in Kitchener has helped to change and improve the reputation of downtown Kitchener. The potential to grow and thrive as well as the excitement of new technologies and creative talent will enable the community and the world to see Kitchener in a whole new light. To meet the demand of startups, to build on positive momentum in downtown Kitchener, and to facilitate long-term economic growth for the entire community, the Startup Landing Pad Program is a logical next step in the evolution and investment of our Startup City. As such, staff recommend approval of the Startup Landing Pad Program, including the proposed expansion to the Downtown Community Improvement Plan boundary, pending the results of the pre-consultation review by the Ministry of Municipal Affairs and Housing. APPENDICES APPENDIX 1: Draft Bylaw to Amend the Downtown Community Improvement Plan Project Area (includes proposed boundary in Schedules `A' and `B') APPENDIX 2: Draft Bylaw to Amend the Downtown Community Improvement Plan to include Section 9.7 - Startup Landing Pad Program APPENDIX 3: Draft Amendment to Council Policy 1-535 CKNOWLEDGED BY: Jeff Willmer 2 - 7 APPENDIX: 1 DRAFT BYLAW TO AMEND THE DOWNTOWN COMMUNITY IMPROVEMENT PLAN AREA (includes proposed boundary in Schedules `A' and `B') *NOTE— this By-law is still subject to review by the Ontario Ministry of Municipal Affairs & Housing. Date, 2014 BY-LAW NUMBER OF THE CORPORATION OF THE CITY OF KITCHENER (Being a by-law to amend the Downtown Kitchener Community Improvement Plan Project Area) WHEREAS Sections 28 and 17 of the Planning Act, R.S.O, 1990 Chapter P.13 as amended, provide for the adoption of a Community Improvement Plan; AND WHEREAS the Official Plan for the City of Kitchener, known as the Municipal Plan, contains provisions relating to community improvement in the City of Kitchener; AND WHEREAS the Council of the Corporation of the City of Kitchener designated the downtown area of the City as a Community Improvement Project Area by By-law Number 97-12, passed on January 20, 1997; AND WHERE AS the boundaries of the Community Impvoment Project Area were expanded by By-law 2001-73, passed on April 23, 2001, and by By-law 2004-151 passed on June 29, 2004; AND WHEREAS it is deemed desirable to further expand the boundaries of the Community Improvement Project Area; NOW THEREFORE the Council of the Corporation of the City of Kitchener enacts as follows: 1. The Community Improvement Project Area more particularly described in Schedule "A" to By-law Number 2004-151, as amended, is hereby deleted and substituted therefor is The Downtown Kitchener Community Improvement Project Area more particularly described in Schedule "A" attached hereto. 2. The Community Improvement Project Area illustrated as being bound by a grey line on the map attached as Schedule "B" to By-law Number 2004-151, as amended, is hereby deleted and substituted therefor is The Downtown Kitchener Community Improvement Project Area illustrated as being bound by a grey line on the map attached as Schedule «B„ PASSED at the Council Chambers in the City of Kitchener this day of A.D. 2014. 2 - 8 Mayor Clerk 2 - 9 SCHEDULE "A" That Area which is bounded: Commencing at the northeast corner of the intersection of Weber Street and Cedar Street; Then southerly along the east side of Cedar Street to the southeast corner of the intersection of Cedar Street and Charles Street; Then westerly along the south limit of Charles Street to the southeast corner of the intersection of Charles Street and Benton Street; Then southerly along the east limit of Benton Street to the southeast corner of the intersection of Benton Street and Courtland Avenue; Then westerly along the south limit of Courtland Avenue to the southwest corner of the intersection of Courtland Avenue and David Streets; Then northerly along the west limit of David Street to the southwest corner of the intersection of David Street and Joseph Street; Then westerly along the south limit of Joseph Street to the westerly property line of Part Lot 17 RP58R4191 Parts 1 & 2 of Plan 80; Then southerly to the rear property line of Part Lot 17 RP58R4191 Parts 1 & 2 of Plan 80; Then westerly to the rear property line of Part Lot 12 Part Lot 17 RP58R 10941 Parts 1- 2 of Plan 80; Then northerly along the easterly side property line of Part Lot 12 Part Lot 17 RP58R 10941 Parts 1-2 of Plan 80; Then westerly along the south limit of Joseph Street to the southeast corner of the intersection of Joseph Street and Linden Avenue; Then southerly along the east limit of Linden Avenue to the southeast corner of the intersection of Linden Avenue and Oak Street; Then westerly along the south limit of Oak Street to the northeast corner of Lot 27, Plan 418; The southerly along the east property line of Lots 27 & 28, Plan 418 to the southeast corner of Lot 28, Plan 418; 2 - 10 Then westerly along the south limit of Michael Street to the easterly limit of Victoria Street South; The southerly along the east side of Victoria Street South to the southeast corner of the intersection of Victoria Street South and Park Street; Then westerly along the south side of Park Street to the easterly limit of the CNR Branch line right-of-way; and northerly along this Branch line to its junction with the CNR Mainline; Then north-easterly along the southeast limit of the Canadian National Railway Mainline right-of-way to the south limit of King Street West; Then north-westerly along the south limit of King Street West to the northwest corner of the intersection of King Street West and Moore Avenue; Then northerly along the northwest limit of Moore Avenue to the intersection of Moore Avenue and Breithaupt Streets; Then easterly along the north limit of Breithaupt Street to the southwest corner of Breithaupt Street and Weber Street; Then north-westerly along the west side of Weber Street approximately 30 meters; Then easterly following the north-western property boundary of PT LOT 157 TO PT LOT 159 PLAN 376 (municipally known as 130 Breithaupt Street) and PLAN 376 LOT 160 TO 162 PT LOTS 86 87 89 159 163 164 PT 15 LANE CLOSED RP 58R2921 PART 1 TO PART 5 (municipally known as 111 Ahrens Avenue West) to the southwest limit of the Canadian National Railway Branch line; Then south-easterly along the southwest limit of the Canadian National Railway Branch line to the northwest corner of the intersection of Breithaupt Street and Ahrens Avenue West; Then north-easterly across Ahrens Avenue to the northeast corner of the intersection of Ahrens Street West and Breithaupt Street; Then south-easterly along the north east limit of Ahrens Street West to the southwest corner of the intersection of Ahrens Street West and Victoria Street North; Then south-easterly along Ahrens Street West approximately 28 metres to the south- eastern property boundary of PLAN 401 PT LOT 9 (municipally known as 103 Ahrens Street West); 2 - 11 Then south-westerly along the rear property lines of those lands which front on to Water Street and the southeast property boundary of PLAN 401 PT LOT 9 (municipally known as 88 Weber Street West) to the north limit of Weber Street; Then south-easterly along the north limit of Weber Street to the northwest corner of the intersection of Weber Street and Queen Street North; Then northerly along the west limit of Queen Street North to the northwest corner of the intersection of Queen Street North and Ellen Street; Then easterly along the north limit of Ellen Street to the northeast corner of the intersection of Ellen Street and Lancaster Street; Then southeasterly along the east limit of Lancaster Street to the southeast corner of the intersection of Lancaster Street and Frederick Street; Then southwesterly along the east limit of Frederick Street to the northeast corner of the intersection of Frederick Street and Spetz Street; Then easterly along the north limit of Spetz Street to the northeast corner of the intersection of Spetz Street and Scott Street; Then southerly along the east side of Scott Street to the northeast intersection of Scott Street and Weber Street East; Then easterly along the north limit of Weber Street to the northeast corner of the intersection of Weber Street and Cedar Street, such point being the point of commencement. 2 - 12 SCHEDULE " B " Z 0 0 T 3 o t ado // cOi 0 � v O TP Q LM ta ANNA J / O O 0 O LM 0 ■� ,�sp�� �. c� ..�tiy?���� iG .. o L NpOr��� S GGGGOGOppGD U GG � O O N nO, i 9 T! � �W -10 LD O ' Q //// G %oii Q LM - //j � do E o L G O t U O V /GG O ✓/// h! O ^L D GjG O U 70 O// 'Q �q�cc� /ii N N U 0 r Q� p rn O m N rn 0 ��p� N C..) CL LL C U) N of LL F U N LL 2 13 APPENDIX: 2 DRAFT BYLAW TO AMEND THE DOWNTOWN COMMUNITY IMPROVEMENT PLAN TO INCLUDE SECTION 9.7 - STARTUP LANDING PAD PROGRAM *NOTE— this By-law is still subject to review by the Ontario Ministry of Municipal Affairs & Housing. Date, 2014 BY-LAW NUMBER OF THE CORPORATION OF THE CITY OF KITCHENER (Being a by-law to amend the Downtown Kitchener Community Improvement Plan) WHEREAS Sections 28 and 17 of the Planning Act, R.S.O, 1990 Chapter P.13 as amended, provide for the adoption of a Community Improvement Plan; AND WHEREAS the Council of the Corporation of the City of Kitchener designated the downtown area of the City as a Community Improvement Project Area by By-law Number 97-12, passed on January 20, 1997; and subsequently amended by By-law 2001-73, passed on April 23, 2001, by By-law 2004-151 passed on June 29, 2004 and by By-law passed on , 2014; AND WHEREAS a Community Improvement Plan, known as the Downtown Kitchener Community Improvement Plan, was adopted for the said area by By-law Number 97-13, passed on January 20, 1997 and approved by the Minister of Municipal Affairs and Housing on April 2, 1997; AND WHEREAS The Downtown Kitchener Community Improvement Plan was amended by By-law 2001-74, passed on April 23, 2001 and approved by the Minister of Municipal Affairs and Housing on November 1, 2001; further amended by By-law 2004-152, passed on June 29, 2004 and approved by the Minister of Municipal Affairs and Housing on July 29, 2004; further amended by By-law 2005-112, passed on June 13, 2005 and approved by the Minister of Municipal Affairs and Housing on July 6, 2005; and further amended by Bylaw 2009-018; AND WHEREAS The Downtown Kitchener Community Improvement Plan, as amended, was applied to The Downtown Kitchener Community Improvement Project Area; AND WHEREAS it is deemed desirable to further amend The Downtown Kitchener Community Improvement Plan and to apply the plan as amended to The Downtown Kitchener Community Improvement Project Area; NOW THEREFORE the Council of the Corporation of the City of Kitchener enacts as follows: 1. That "The Downtown Kitchener Community Improvement Plan" be adding the following section 9.7 Startup Landing Pad Program, as follows: 2 - 14 9.7 Startup Landing Pad Program A. Background In 2010, the City of Kitchener supported the development of the Communitech HUB—a business incubator and accelerator centre for technology-based startup companies. Companies are provided space, mentorship and services until they reach a point where they can succeed on their own. Dozens of companies will graduate from innovation business incubator programs like the HUB in Waterloo Region every year, needing a location to support the next stage of their growth. As a result, a new opportunity has emerged to revitalize vacant and under-utilized upper storey space by facilitating the relocation of these post-incubation startup companies —companies that are motivated to invest in downtown office spaces with historical, "brick-and-beam" character. Unique to downtown Kitchener, the number of startup companies seeking space, the opportunity to attract and retain creative talent in the downtown core, and to revitalize underused real estate in the core matches with and enhances the City of Kitchener's core investment strategy. Without such a program, startups will evaluate spaces outside of the core, and potentially outside the region, while these underutilized spaces in downtown continue to sit empty. Instead, this program has the potential to focus employment intensification within Kitchener's urban growth centre. While the initial economic impact will be focused on the downtown, the long term growth potential of these companies could stimulate community-wide job growth and prosperity. B. Intent The objectives of the Startup Landing Pad Program are: 1) to assist emerging startup companies transition from accelerator programs, incubator facilities, and short-term lease space into more permanent locations in downtown Kitchener; 2) to assist property owners and tenants with the financing of interior leasehold improvements and/or accessibility improvements to upper storey (2nd storey and higher) properties located within the Downtown Community Improvement Area in the form of a grant; 3) to enable the City to repair, rehabilitate or improve buildings on land it holds or acquires, and to sell, lease or dispose of any such buildings and land for the purpose of establishing Startup Landing Pads; 4) to implement the City's urban design and heritage conservation policies; and, 5) to support municipal investments in Downtown Kitchener infrastructure. To implement these objectives, there are two main components of the program —a Startup Landing Pad Improvement Grant program and the use of City-owned buildings. C. Area of Application The Startup Landing Pad Program is available to all property owner(s), commercial tenant(s) and City-owned buildings within the Downtown Community Improvement Area for the City of Kitchener. 2 - 15 D. Eligible Works —Startup Landing Pad Improvement Grant The Startup Landing Pad Improvement Grant is intended to encourage, stimulate and incentivize interior leasehold improvements and associated accessibility enhancements to the upper storeys of downtown buildings. Interior leasehold improvements are fixtures or improvements made to rental premises in order to customize the rental unit for the specific needs of a tenant or to improve the quality of a property overall. Leasehold improvements can either be undertaken by property owners, who may offer to do so to increase the marketability of their rental units, or by the tenants themselves. Grants will only be issued for non-temporary leasehold improvements, which generally includes the following list of eligible works: Installation, change, repair and/or restoration of partitions, rooms; Installation, repair or reinstall of plumbing, heating, HVAC, electrical, fixtures, cable, telephone, fibre and other service-specific installations; Change, repair, re-install of flooring, ceiling, walls, fixed cabinets and other structurally permanent elements; Painting, repainting, or re-facing of interior platforms, walls, and any surfaces; Install, repair or restoration of masonry, brickwork or wood; Install, replacement, repair or restoration of other architectural features; Install, replacement or repair of windows; Entranceway modifications that improve the appearance and/or access to the commercial unit(s); Redesign and reconstruction of the front of building; Machinery and equipment if bolted to the floor; Demolition or removal of fixtures, structural and non-conforming or hazardous materials; Installation of appropriate new interior signage or improvements to existing signage; Installation or repair of interior lighting; and, Restoration of historic features. Accessibility improvements are undertaken by property owners and applied to amenities, common areas or infrastructure of the entire building for the purpose of increasing accessibility, usability and access to the benefit of the entire building. Eligible works include the following non- temporary common area building improvements: Installation, repair or reinstall of permanent accessibility devices such as elevators, lift assistance, ramps, railings, and stairs; Installation, repair or reinstall of assistive way finding assets such as braille, audio (signal), and other sensory assistive devices; Installation, repair or reinstall of accessible washroom, kitchen, shower, and/or storage facilities; Installation, repair or reinstall of common-area building use facilities such as shared hallways, stairwells, upper-storey entryways and lobbies, bicycle storage, shared meeting rooms and spaces; and Installation, repair or reinstall of permanent fixtures, barrier-free access and/or the built environment related to improved accessibility. Examples of non-eligible expenses: Any non-permanent or removable fixtures; 2 - 16 Any furnishings, including office and common area furnishings, computers, and art; Any intangible assets, such as software, human resources, outsourced services, etc.; Any consumables, such as mats, office supplies, stationery, plants, etc.; Regular interior building signage such as corporate logos, marketing/advertising, digital signage, etc.; Any items specific to the proposed current tenant which would be deemed unusable or undesirable to future tenants; Corrections to comply any Building Code, Fire Code or Property Standards orders; and, Taxes, levies, interest, permit fees, or other incidental fees. E. Eligibility Requirements —Startup Landinq Pad Improvement Grant- 1. All applications for grants under this program are subject to the availability of funding. The provision of any Startup Landing Pad Program grant will be administered on a first come first served basis to the limit of available funding in accordance with any administrative rules governing this and other grant or loan programs. 2. Applications will be prioritized by the Downtown Financial Incentives Review Committee. 3. Kitchener City Council may specify, through council policy, that portions of available funding be directed to specific streets or areas within the Downtown Community Improvement Area. 4. Eligible properties include traditional mixed-use buildings along commercial streets, like King Street and Queen Street, located in the Downtown Community Improvement Project Area. Ineligible properties include office towers, shopping centres, factory conversions and single detached homes. Further, only those buildings with commercial use(s) at ground floor, such as restaurants, retail, shops, personal services and financial institutions, shall be eligible for grants. Notwithstanding the foregoing, the City reserves the right to approve or refuse applications for buildings which, by virtue of their unique design of historical context, do not fit into the above list of eligible or ineligible property types. The City may establish and maintain a list of eligible properties. 5. Only those improvements to the space which will permanently reside with the space, as identified in Section D, are eligible. Exterior enhancements, such as new windows, brick repointing, etc., are also eligible. Non-permanent improvements, such as light fixtures, furniture, etc., would not be eligible. 6. Eligible startup applicants must provide a letter of endorsement from a Startup Landing Pad Program partner, such as Communitech and/or the Waterloo Region Small Business Centre, indicating endorsement of the company based on participation in or graduation from accelerator programs, long term growth potential, anticipated investment, market and employment growth, reputation and good standing in the community. 7. Eligible Startup Landing Pad Program applicants will generally be limited to uses such as: Biotechnological Establishment, Computer, Electronic or Data Processing Business, Digital Media Establishment (excluding graphic design firms), Laboratory, Music Production, Research and Development Establishment, and Scientific or Technological Establishment. 2 - 17 Grants will not be issued where the space is to be used for any of the following uses: Artist Studio, Music Hall (where no production occurs, and/or the sole use is for performance or practicing), Personal Services (beauty salon, etc.), Professional Services (architectural, marketing, financial, etc.), Recreational (yoga studio, fitness facility, etc.), Restaurant or Retail. Kitchener City Council may from time to time, through Council policy, identify additional eligible uses. 8. Property owners must provide proof of a minimum 24 month tenant lease with an eligible startup company, with an option for a total 60 month lease term. Property owners must provide a letter of goodwill for at least 60 months within which the property owner will be a participant in the Startup Landing Pad Program. 9. All proposed improvements will be presented to and approved by city staff for design quality and adherence to City standards and guidelines; 10.Tenant(s) must provide written authorization from the registered property owner(s). 11.Property owner(s) and tenant(s) who have defaulted under any previous City loan program will not be eligible for a Landing Pad Interior Improvement Grant. 12.Startup Landing Pad Program grants will not be issued to any eligible applicants who are in arrears of any municipal financial obligation (ex: taxes, utilities, etc.). 13.The Startup Landing Pad Program will not be applied retroactively to works started prior to the commencement of this program, or to works started prior to the issuance of approval by the City. 14.The total value of the grant provided under this incentive plus any other incentive under Section 9 of this Plan shall not exceed the value of the work done. 15.The City of Kitchener reserves the right to deny or refuse any application. F. Program Assistance and Requirements— Startup Landing Pad Improvement Grant 1. Leasehold improvements. The maximum amount of any grant that may be issued under the Startup Landing Pad Program for leasehold improvements shall be $20,000 per eligible floor per municipal street address where at least $40,000 in eligible leasehold improvement costs has been committed and approved. No municipal street address shall receive more than a total of$20,000 per floor under this program within a five year period. The minimum amount of any grant that may be issued under this grant program shall not be less than $2,000. Not more than 10 percent of the entire grant may be used for soft costs, such as consultant, design or project management services. The grant shall not exceed 50% of the costs of the eligible work done per building; 2. Accessibility improvements. The maximum amount of any grant that may be issued under the Startup Landing Pad Program for common area accessibility improvements shall be $40,000 per eligible municipal street address where at least$80,000 in eligible costs has been committed and approved. Not more than 10 percent of the entire grant may be used for soft costs, such as consultant, design or project management services. Where multiple buildings share assets, only one grant application may be approved. The 2 - 18 grant shall not exceed 50% of the costs of the eligible work done per building. No municipal street address shall receive more than a total of$40,000 for accessibility improvements under this program within a five year period; 3. The City reserves the right to provide a grant in any value it sees fit, provided that value is in accordance with the minimum and maximum amounts identified in sub-sections 1 and 2 above. 4. The proposed improvements must satisfy the City's downtown design policies, King Street Facade Improvement Guidelines, and the Startup Landing Pad Program Guidelines, if applicable, to the satisfaction of the Downtown Financial Incentives Review Team; 5. Any proposed sign improvements must meet the City's Sign Bylaw, to the satisfaction of the City's Director of Planning or designate; 6. Any proposed improvements must adhere to the National Fire Code, Ontario Fire Code, Ontario Building Code (to the satisfaction of the Chief Building Official), the Life Safety Code, Occupational Health and Safety Act, Plumbing Code, Accessibility for Ontarians with Disabilities Act, and all regulations and laws of the Ministry of the Environment and Energy shall apply; 7. Any proposed modifications to buildings designated under the Heritage Act or listed on the Heritage Register by the City of Kitchener may be subject to additional approvals; 8. No grant shall be issued until such time as the eligible works are deemed to be complete by the Downtown Financial Incentives Review Team; 9. The City of Kitchener reserves the right to have a quantity surveyor inspect all completed eligible works to ensure the monetary value of work completed coincides with the monetary value of the work proposed as indicated on any approved grant application. Should the quantity surveyor deem the monetary value of work completed not to coincide with the monetary value of the work proposed, the City of Kitchener reserves the right to reduce the amount of the grant accordingly; 10. Approval of a grant and its amount shall be subject to the availability of funding as determined on an annual basis; and, 11. The City of Kitchener reserves the right to discontinue this program at any time. G. Procedures—Startup Landing Pad Improvement Grant 1. The applicant is required to submit a complete Startup Landing Pad Program application form to the Manager of Downtown Community Development prior to the submission of any sign or building permit application. The City may specify additional submission requirements, such as but not limited to plans, elevations and quotations. 2. Complete applications will be reviewed, and only those applications which meet all applicable guidelines, codes, bylaws and policies will be considered. 3. Applicants will be notified in writing if their proposed application has been accepted. 2 - 19 4. The final decision as to how much of the proposed work, if any, is eligible for funding under the Startup Landing Pad Program will be made by the Downtown Financial Incentives Review Team. 5. Should the applicant make any changes or alterations to the approved improvements without consent of the City's Manager of Downtown Community Development, the City may refuse the issue of the grant. 6. Prior to approving a Startup Landing Pad Program grant, City staff may inspect the building to review the condition of the property and the proposed improvements. 7. The grant shall only be issued upon such time as the following have been satisfied: a. the applicant has provided the Manager of Downtown Community Development with copies of actual invoices and proof of payment; b. City Staff have conducted an inspection of the completed work, and have done what is necessary to verify the accuracy of all invoices; and, c. City staff have verified that the space has been occupied by an eligible startup company with a minimum 24 month tenant lease with an option for a total 60 month lease term. 8. Upon verification that the eligible works are complete, invoices and proof of payment have been verified to be accurate, and the space has been occupied, the grant shall be issued. 9. Where construction or renovations are, in the opinion of the City's Chief Building Official, substantially suspended or discontinued for more than six months, the City may revoke any approved grant applications. H. Use of City-Owned Buildings The City may exercise its powers under section 9.5 of the Downtown Community Improvement Plan for the purposes of establishing Startup Landing Pads on municipally owned lands and buildings. 2 - 20 APPENDIX: 3 DRAFT AMENDMENT TO COUNCIL POLICY 1-535 That Council Policy 1-535 be amended to add the following section 3 as follows: 3. Startup Landing Pad Program Whereas section 9.7 of the Downtown Kitchener Community Improvement Plan outlines the Startup Landing Pad Program, as approved by the Ministry of Municipal Affairs and Housing, the following additional policies also apply. Those policies listed herein are not subject to Ministry approval, and may be modified from time to time through Council resolution: 3.1 Allocation of Funding Initial funding for this program, of up to $600,000 will be provided through the Economic Development Reserve Fund. 3.2 Termination of Program This program, unless otherwise extended by City of Kitchener Council, will expire December 31 st, 2019. 3.3 Submission Requirements As enabled through policy 9.7.G.1 of the Downtown Community Improvement Plan: 3.3.1 A complete application shall consist of: - Application form filled out in its entirety; - Applications from building owners must include a letter of good will indicating their willingness to maintain the space as a landing pad for a minimum of 60 months; - Applications from tenants require a letter of endorsement from Communitech or the Waterloo Region Small Business Centre (WRSBC), indicating the tenant is a high-potential post-incubation startup or small business client graduating from Communitech or WRSBC programs; - 2 written estimates from a qualified architect or contractor; - 2 copies of the conceptual elevation plan, identifying dimensions, materials and colours of the entire leasehold improvement; - 2 copies of the proposed leasehold improvement plans, identifying dimensions, materials and colours; and, - If applicable, tenant must provide written authorization from registered property owner. 3.4 Downtown Financial Incentives Review Team The Downtown Financial Incentives Review Team shall be comprised of the following: - At least 1 staff member of the City's Economic Development Division; - At least 1 staff member of the City's Building Division; - Finance, Legal, Heritage Planning and Urban Design staff as necessary. 2 - 21