Commentary on the March 14 Council Meeting
Ron Bolin: March 16, 2011
Monday’s four hour plus Council meeting generated some heat but not a lot of light. Issues of lasting concern which were broached included: , the transfer of $1,357,000 in taxpayer funds to an “Arm’s-Length Economic Corporation”; the Brechin-Newcastle Neighbourhood Plan; an Amendment to the Zoning Bylaw in the case of Containers; and a Business License Amendment Bylaw which would restrict the hours on a proposed 7/11 store which was approved at the last Council meeting. For a variety of reasons these matters all involve complex issues which have ongoing significance for our city and for our financial viability. These are all issues which, in my estimation, require reflection and will be dealt with in separate posts
Up first (item 9(b) in the agenda and in the video available on the city web site) was a recommendation to “direct the (Economic Development Commission) to proceed with the establishment of an Economic Development Corporation within the constraints of existing City funding levels and appoint the existing Commission members as the interim board of directors;”. This recommendation passed and the sum of $1,357,000 (the amount shown for the “existing City funding levels”) moved, in effect, from the monies entrusted to our Staff, to the account of the not yet registered Corporation. The report further noted that this sum did not include all costs.
The current plan, as approved, indicates expenditures of $1,497,000 which is to be pruned to the currently approved sum by not filling all positions in this first year or enhancement by other means. No budget estimate was provided for the other four financial plan years. The proposed budget, sans shortfall, indicates Staff costs of $760,000 for a complement of 12 Staffers at an average cost of $63, 333 each and consumes over half of the budget.
The report provided waxed eloquent, if noncommittal, on the possibilities of income to the Corporation from regional alliances and projects and on the long discussed but thus far rejected idea of a provincially permitted 2% hotel tax which is used by many communities to help pay for the infrastructure required by tourists and overnighters. This latter sum was estimated, if approved by the Nanaimo Accommodation Sector Association (NASA), at $400,000. If the hoteliers approve the 2% hotel tax, a move which is their prerogative to approve or deny, where does this money go? Back to the taxpayers or into the coffers of the Corporation? If it all goes back to the taxpayers, are the hoteliers sufficiently moved by the idea of the Corporation to be willing to leave behind the free ride in this regard which they have enjoyed until now?
While the idea of an Arms-length economic development corporation may be a good one, I would suggest that the proper model would be for those most benefitting from the plan (I would not deny that we may all benefit, but some certainly benefit considerably more than others.) to establish and fund the corporation directly and request some interim funding from Nanaimo taxpayers. Given $400,000 from the hotel association, $70,000 in membership fees, some substantial funding from the Chamber of Commerce (while not double taxing the hoteliers) many of whose members will benefit most, and using its skills to undertake inter-corporate and regional growth contracts, the burden on taxpayers would be reduced and the independence of the Economic Development Corporation would be greatly enhanced.
The present scheme tries to play both sides of the dependent/independent net. It is neither a sustainable nor a stable model. While the concept may be good, I doubt that any legitimate bank would fork over funds on such a flimsy business plan and do not believe that our taxpayers should either at this time.
Posts and Comments on Nanaimo Governance 
Economic Development Commission. The only thing approved was to continue with the potential setup of the comission. All m oniews are still 100% under control of City Council and wull be until Council if and when decides otherwise. This report is in error.
Wally: I am sure that you are correct in pointing out that this is a work in progress. Reading the recommendation that was passed however, appears to at least tie up the funds at “existing City funding levels” and to establish an interim Board. It is too bad that Council video is discontinued at 11pm. I would appreciate having the opportunity to review the responses given to my questions.
There is always the issue about what an economic development commission or corporation can actually accomplish. On the tourism side it can “advertise” the locale in potential market areas. An advertising campaign does not require a whole bunch of local employees with various expensive titles. In other business areas???? If it is simply going to be a distributor of information about Nanaimo surely this can be done in a cheaper and simpler fashion. Is a forest products company going to build a new mill in Nanaimo because of the activities of the economic development corporation? Unlikely? Will it bring new retail outlets to Nanaimo (which just cannibalizes the business of existing retail outlets anyway) – again unlikely. The big retailers like Target, Marshalls, etc have huge departments which are constantly exploring business opportunities through their own resources. Nobody is going to convince them to open up a store in a particular location because of a rah-rah display. If a company is going to be influenced to locate in a particular area, it is because it is offered lots of incentives (grants, tax concessions, cheap land, etc.) which changes the economic equation. These kind of “bribes”, however, are not being offered locally and, in any event, mostly are not legally possible in B.C.at the municipal level.
The existing economic development commission has been around for a long time. It should be possible to honestly determine whether it has had much effectiveness and correspondingly whether these bodies can ever have much effectiveness in today’s world.
David Brown 16 March 2011 at 7pm said:
“There is always the issue about what an economic development commission or corporation can actually accomplish. On the tourism side it can “advertise” the locale in potential market areas.”
Speaking of tourism marketing, I refer to the Partnering Agreement of October 25, 2004 between the City of Nanaimo and Triarc International, Inc. that was the subject of the November, 2004 Referendum. Clause 9.1 – “City Spending on Tourism Marketing”, which stated that the City was to “increase its spending on tourism destination development and marketing.”
City was to spend a minimum $350,000 in 2005 to be increased by a maximum annual amount of $200,000 per year to a maximum annual total amount of One Million Dollars, to be reviewed in 2012.
Here we are, in 2011, and I’m curious to know if anyone knows the outcome of the above.