September 2017

The Lost Craft: Municipal Industrial Land Development - Part 2

In this blog, I will address a few fundamental questions you may be asking yourself.
Where do I start?
Begin by understanding the simple truth that under every business is land, and typically a building. This means: No land and/or buildings available = no business start-up, expansion and/or relocation.
Why do I, as an economic developer have to engage in land development?
As an economic developer, you (and only you – not the planner, or anyone else) are responsible for ensuring a business environment exists to accommodate the growth of business. Remember, planners are concerned with land use designations, not how much actual industrial land is immediately available to businesses. Your responsibility includes, but is not limited to, a sufficient supply of shovel-ready land, serviced with all utilities and infrastructure to meet today’s business needs of your community. You may be lucky enough to live in a community with a number of competing quality industrial developers that do this for you. If you are, count yourself among the very few across the country. 
Why can’t I rely on the private sector doing it?
The private sector naturally seeks to maximize profitability – and this is often at odds with the economic development objective of having a sufficient supply of reasonably priced industrial land for sale. Here are a few issues to consider:
  • Private owners may effectively hold land off the market by over-pricing it (for various reasons);
  • Many private owners do not wish to sell the land at all (again for a variety of reasons);
  • Some private owners will only do “build to suit or lease”, profiting on both land and building development. This eliminates businesses requiring ownership of their real property; 
  • Private owners often acquire industrial land with the intent or hope to re-designate to higher value uses such as commercial or residential; 
  • Sales of privately-held lands are less discriminate and/or counter to municipal objectives, such as selling to land extensive – low employment uses (think auto wrecker), or retail uses.
Next in this blog series:
Do I have the skills? Can I do this? And trepidations of an economic developer getting engaged in land development.

In addition to his international and Canadian economic development certifications, Eric McSweeney is an Accredited Land Consultant (ALC) and a Commercial Investment Member (CCIM). He has completed land development related projects for more than two dozen communities, and has developed and sold more than $20M of business park lands. One of his innovative public-private land development projects has been published in the International Economic Development Council Journal.   

"McSweeney & Associates developed our land sales policy and procedures for us and we are very excited that it has helped facilitate a land sale for a potential new industrial development, a first in years for Elliot Lake”  
Ashten Vlahovich, Economic Development Coordinator, City of Elliot Lake
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Does Your Community have its Act Together?

I’m going to try to dispel the mystery of success to support economic diversification, economic development or whatever else you want to call what it is you do. If you are currently functioning as an economic developer, your role is essentially about first ensuring your community’s act is together – seriously, it’s as simple as that.

No magic, no special hidden secret - just getting back to the basics – and being good at it. Regardless of your program or focus, in this day and age, it’s all about ensuring the economic development fundamentals are met. Unfortunately, a large number of communities (big/small, urban/rural) across Canada have either forgotten, or have never been enlightened on this point. 

It’s definitely not sexy, and doesn’t win any economic development awards, but the fundamentals of economic development are sadly being overlooked in favour of a focus on the sizzle – I’m being completely honest when I say this.  Ironically, award-winning glossy/flashy marketing pieces are effectively useless if you don’t have the basics, right (no awards for that, only rewards…).

So, the two fundamentals that make all communities unique and special are also what most often holds them back – people and place. That’s pretty obvious you would say, yet surprisingly, very difficult for communities to get right. If a community has no people (or not the right kind of people in its labour force) and nowhere for a business to locate (or not the right places), your diversification efforts, business development efforts, and/or investment attraction efforts are all a waste.

No matter what your community chooses to focus its efforts on, as an economic development professional – take a realistic look in the mirror and see if your community has the people and places to support economic development. If your community does not have these two basic essentials right, you may want to refocus efforts to correct this, otherwise you are wasting both your time and your community’s money.

In my next blog (rant), I will pose some questions to help you self-assess whether or not your community has its act together.

Ian Duff, Vice-President, Economic Development Consulting
Twitter: @IanDuff583
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Diversification - A Journey, not a Destination

Low oil and gas prices have many communities focusing on diversification as a way of stabilizing their local economy. Some Economic Development Officers see diversification as a radical change, maybe a complete retooling or re-build of what they have.

I recently stumbled across a document outlining the progress of agriculture and food production in the High River – Okotoks area, where I now live. It is evident our forefathers looked for diversification opportunities much like us, as illustrated by the following:

Before 1879 families depended upon grazing animals but that year John Glenn broke about 4 acres to grow oats and barley that he harvested by hand. By 1882 Mr. Glenn moved to Fish Creek and used irrigation to grow cabbage and other vegetables (new products to the area); he sold over $2000 worth of cabbage alone – a small fortune when land price was $2 per acre.
By 1885, land was fenced and livestock was raised differently - their diets supplemented with grain and produce. Farm products were sold in Calgary (a new market) and businesses expanded with the introduction of equipment and more sophisticated irrigation.
Neighbours expanded their holdings - added more livestock – pigs, sheep and improved breeds of cattle. Risky growing conditions convinced some farmers to process raw products, turning milk into butter and cheese to be sold both locally and outside the region (increasing the production sectors and adding more customers). 
By 1900, a number of farmers had facilities in more than one location (spreading the risk of flood or frost) and crops were being shipped by rail to eastern Canada and Europe (marketing in more markets and jurisdictions).
The experiences of the early settlers demonstrate what the Business Development Bank of Canada has been saying. BDC documented 5 types of business diversification in their study of Alberta SME success: 
  1. more than one product/service line
  2. clients in more than one city/town
  3. not reliant significantly on a single major client 
  4. operate in more than one sector (oil & gas, construction, manufacturing) more markets served (reduces dependence on a single market)
  5. more than one production location (not in the same city/town)
It may mean adding new sectors to your business community, but it doesn’t mean abandoning what you have. As an Economic Developer, you can facilitate growth through diversification by enabling innovation, supporting new market development, recruiting or developing new skilled workers, having land available to support expansion into new products or processes, and having infrastructure – including broadband to serve new markets.
Just like our forefathers, we want a stable, prosperous economy and like them we’ll find it’s not a new destination; it’s a journey with businesses in your community that can diversify and prosper. 

Art Lawson B.Sc, M.Sc, Ec.D is a McSweeney Economic Development Associate Consultant. Based in Alberta, Art began his career in business management and applied those foundational skills in community economic development – initially in business diversification.  Art moved from diversification to pioneering the development and implementation of a number of economic development tools for communities, including BR+E, Downtown Revitalization and Economic Analysis & Planning.  Art has also served as the General Manager of the South Central Ontario Economic Development (SCOR) Corporation (former tobacco region) focused on economic recovery and business diversification.  Communities and sectors were assisted with capacity building, foreign investment attraction and the process of establishing the Region as a Foreign Trade Zone.

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Planning for Resiliency

An effective strategic plan is one of the most important tools that a municipality can use to bring together the public, municipal staff and members of Council in the development of a common vision, direction and goals for a community.  
The plan should also function as an evaluation framework against which decisions by Council and staff can be measured. It also enables management and the public to evaluate municipal progress towards the right objective – and that objective should be resiliency and sustainability.   
Resiliency looks different in every community as each municipality has its own economic base and locational risks.  There are internal risks like inadequate business succession planning and external risks like changes in commodity prices or Canadian currency, or emerging disruptive technologies.  More catastrophic risks can include flooding, fire, earthquakes, and terrorism threats.  All these risks and more need to be factored into your strategic planning.  
There is no silver bullet to creating resilience – it is different in every community, and it must be planned for in every case.  Resiliency, economic vibrancy and sustainability don’t just happen without leadership and a plan.  But the plan in itself is not enough.  Staff, local business leaders and provincial staff should have input and be trained on implementation (with regular refreshing).  As they say, the proof is in the pudding – and while one can never predict the future, planning will at least allow you to know which ingredients you need to have on hand!  
Next we look at a Community Case Study in Resiliency
Shawna Lawson (Stonehouse) BComm (UofA), MSc (Planning), EcD is a McSweeney Economic Development Associate Consultant. Shawna began her career in Red Deer and brings over 25 years of economic and business development experience in Alberta, Ontario and overseas (UK and Southeast Asia). She has a proven track record of bringing public and private sector interests together for successful results and project management of complex projects involving several, often conflicting, stakeholders. Over the past few years, Shawna has worked with several struggling communities to diversify their economy and develop their downtowns and image, all while building their internal capacity to carry on development on their own – using tools such as BR+E, Downtown Revitalization, Investment Attraction and data-based strategic planning.  
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