Short-term pain essential for city's long-term gain?
PART THREE OF SEVEN
The Hamilton Spectator
(Oct 2, 2007)
The forecast calls for pain, the kind taxpayers get in the back when they carry most of the load.
As a broad prescription, many observers feel some more short-term hurt is needed to jolt Hamilton out of an economic rut. That and a consensus-maker extraordinaire to sell the notion to skeptical politicians and long-suffering ratepayers.
Brace yourself. Here are some hard suggestions from insiders and observers of Hamilton's economy.
* Live without planned improvements to existing roads, sidewalks and other housekeeping so new roads and sewers can open up development lands.
* Subsidize new businesses for the city core to a greater degree, building on tax relief and other incentive programs. Also consider more partnerships incorporating both public and private money.
* Provide the city's economic development department with the money and bodies so that it can work on three key areas: Selling businesses on that new serviced land, aggressively work to retain existing manufacturing and push brownfield development.
That's a regimen of economic medication sure to make some folks ill.
This is how the trade-off would work: ask Hamiltonians to pay higher taxes or live without the kind of capital programs they see and experience daily on their streets so that the city can service land, deliver new businesses and produce long-term gain in the form of those businesses picking up more of the tax bill down the road.
In sum, you'd ask someone with crumbling sidewalks to live with that while services for Hamilton's industrial parks were made a priority.
The payoff? Right now the tax load is split 60 per cent residential, 40 per cent business. In the city's glory years it was the reverse. Could it be again?
The loss of jobs over time, 11,600 in manufacturing in 2006 alone, and smaller economic blows has left Hamilton with a $302-million debt and one of the highest poverty levels in Ontario. Moreover, the lifeblood of growth, immigration, has slowed as newcomers bypass the city.
It all starts with the city's economic development office, a key point of access to this city for developers, industry and business. That department has just seven bodies to promote growth and retain existing enterprises. Most agree that it could surely use a boost, particularly as it unfurls later this month a course adjustment for a strategic plan. The department is likely to recommend a more intense focus on clusters of freight and delivery businesses which would benefit from the city's transportation grid, biotech industries and green energy technology like windmill manufacturing and related industry.
But perhaps something even more radical is needed for the department. Other cities have revamped economic development into new forms, cities like Burlington, Halifax and Winnipeg.
Right next door Team Burlington collects city, tourism and business offices under one roof for one-stop shopping. (See accompanying story).
Halifax's plan centres on changing attitudes internally and perceptions of the port city from outside with a focus on retraining and quick adjustments to the whims of markets in a public-private partnership.
Winnipeg, meantime, pushes serviced shovel-ready land and low business costs as inducements.
The Halifax mode, fixing a muddied image, is a popular theme for critics of Hamilton, who prefer action to fancy labels like The Waterfall City. To polish an image, then be unable to deliver on interest generated, is viewed as wasted money.
Many say that first and foremost, Hamilton needs what Winnipeg is pushing, serviced land. It's the No. 1 problem facing the city's economic development department. The city simply starves for shovel-ready land with spines of road, sewers and water pipe for new businesses and industries to plug into.
There is a ready list of interested parties for that newly serviced land. Toronto-area industrial realtors are waiting for land to open up as many GTA businesses look to move down the QEW corridor and escape gridlock, high taxes and a rising cost of living for employees.
The brownfields, meantime, the residue of an industry-rich 20th century, come with some time bombs. That is tainted land that must be cleansed, about 200 sites with potential as locations for various sized businesses.
It adds up to a small inventory of serviced land across the city and not enough in the right places, along major highways. That's causing some businesses to locate short of Hamilton, in Burlington, or to leapfrog the city entirely.
Another prescription, if critics could wave a magic wand, would be to declare a tax-free core zone that draws in new business. It has worked in U.S. cities (see accompanying story).
Hamilton already has ambitious programs of tax relief and interest-free loans to foster development. It is the education component of property taxes, about 40 per cent, that can't be waived under provincial legislation. Would Hamilton want to go as far as to seek special concessions on this tax?
The alternative to making bold moves in this city may be to stay a current course that seems prudent, if overly patient.
The trade-offs to that? It's considered by some to be a stand-still policy at a time when a race is on to bring in business and jobs at a pace faster than they are lost in traditional manufacturing.
Brantford: The comeback city
Brantford was buffeted by the same ill economic winds that battered Hamilton but has been rebounding thanks to two major factors.
The completion of Highway 403 to connect with Highway 401 positioned the city to attract industry wanting to import into the United States through Michigan.
And Brantford accelerated development of serviced land bordering Highway 403 with easy access to interchanges.
New business is aggressively targeted through Economic Development Brantford. Brant has a comprehensive website and an ambitious "food cluster" plan that looks to marry agriculture and industry.
The city's history paralleled Hamilton's in the sense it relied heavily on one sector, farm equipment, and reeled painfully when companies like Massey-Ferguson and White declined.
"It was survival," says John Frabotta, head of the economic development body. "I've seen the good, the very ugly and now a return of the good" in 19 years on the job.
Brantford benefited from tight budgeting though the 1990s which paid off the city debt in 1998.
The city then turned around and borrowed some more to speed servicing of land around a crucial Highway 403 interchange.
And when industries bought in, a good mixed pool of skilled and unskilled labour was at hand.
The effects of the 1980s plummet are still there in downtown Brantford, empty storefronts with sale or lease signs, but the new core rises near them thanks to a marriage of public and private interests.
A large civic square development is under way to provide a mix of affordable and upscale housing as well as public-sector and private business offices.
Burlington: Working as a team
Burlington set a policy in the 1970s that it did not want to be a bedroom community and pursued business aggressively.
To facilitate that, the non-profit Burlington Economic Development Corporation was created.
The 50-50 public-private economic body is composed of the major bodies serving business.
This Team Burlington includes the City of Burlington, Burlington Chamber of Commerce, Tourism Burlington, Burlington Downtown Business Association and Aldershot Business Community.
Together they form a one-stop shopping location, with adjacent offices, to serve enterprises already located in the city or interested in locating.
Executive director Don Baxter says the co-operative is unique to Canada and promotes ease of communication and execution in trying to foster economic growth.
Burlington benefits from the movement down the QEW from the Greater Toronto Area and the attraction of Hamilton's transportation nodes.
High taxes, cost of living and gridlock in Toronto make Burlington's open spaces and lifestyle attractive for a business and its workforce.
A big UPS facility and its 450 jobs recently located in Burlington wouldn't be there if not for John C. Munro Hamilton International Airport, Canada's largest air freight centre.
"Hamilton's day is coming," Baxter says, for the same reasons of population and cost-of-living pressures that saw Toronto-area businesses move to Burlington.
He believes in the theory that high tides lift all boats in an economic region.
Team Burlington does not see itself in competition with Hamilton, Baxter noted.
In his view, new businesses in either community will benefit the other as wealth is spread around the Bay area.
The U.S. model: Forging a new direction
The successful turnaround of former Pennsylvania towns Bethlehem and Allentown is founded in early recognition that the steel industry was fading.
Strong local business leadership, armed with that foresight, forged political consensus and will to drive change.
As early as 1958, executives with Bethlehem Steel were forging links with universities to study diversification for the Lehigh Valley area. A 130-day strike that year underscored vividly the risk of a one- industry economy.
So local investors, including Bethlehem Steel, developed one of the first industrial parks in North America, at a local airport.
The nonprofit Lehigh Valley Industrial Park sold the land, then bought and serviced another package of property.
Almost 50 years later there are six parks employing 17,000 people in the high-tech and health fields.
The Lehigh Valley Economic Development Corporation has promoted location and transportation, short swift runs to New York and Philadelphia, in some cases winning major employers such as Olympus.
The medical-imaging wing of the company moved from Long Island due to those factors, cost of living and lifestyle in the leafy east Pennsylvania region.
Allentown, dimly portrayed in the Billy Joel song, also revived the town-centre pulse with a tax-free zone.
Several businesses relocated from the suburbs with the promise of being spared city and state taxes for 10 years.
Meantime, a business incubator developed with Lehigh University was launched in 1983, stumbled early on, but then hit stride.
It nurtured companies such as OraSure Technologies, a medical testing company that grew from a handful of jobs to 2,400 today and grossed $69 million US in 2005.