TAMRMS#: B06
7.4
title
Edmonton Global Investment Plan Effectiveness Report
Presented by: Mike Erickson, Director, Economic Development
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RECOMMENDED MOTION(S)
recommendation
That the September 13, 2021 report entitled "Edmonton Global Investment Plan Effectiveness Report" be received as information.
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PURPOSE OF REPORT
As directed by Council on October 19, 2020, Administration is providing a progress update and an assessment of the effectiveness of Edmonton Global's Investment Plan Proposal, which was initiated in October of 2020.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
Strategic Priority #2: Economic Development: Enhance business/commercial growth.
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
N/A
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
On October 19, 2020, Council approved the following three motions:
1. That Council recommend Edmonton Global Shareholder representatives from the City of St. Albert to commit to support Option C of the proposed Investment Plan Proposal and associated Top Up Cost Allocations for a one (1) year period, at the October 22nd, 2020, Edmonton Global Extraordinary Shareholder meeting.
2. That Council direct Administration to bring back a report by Q3 2021 on the effectiveness of the one (1) year investment.
That any top up amount the City is required to pay be allocated from the Stabilization reserve for the 2020 fiscal year
BACKGROUND AND DISCUSSION
On August 20, 2020, Edmonton Global held a Shareholders Extraordinary Meeting to present an investment case referred to as the “Investment Plan Proposal”, with an expectation that a decision would be made by Shareholders regarding level of support by October 22, 2020. A copy of the agenda package is attached as Appendix A.
On September 21, 2020, Edmonton Global provided Shareholders with a revised Investment Plan Proposal, attached as Appendix B, which outlined seven outcomes for their organizational performance and the focus for the Investment Plan resources.
On October 19, 2020, Administration presented the Edmonton Global Investment Plan Proposal to Council. Officials from Edmonton Global also attended the Council Meeting to speak in support of the Investment Plan Proposal. Council provided a recommendation, to the City’s Edmonton Global Shareholder representative, to support Investment Plan Proposal Option C.
On October 22, 2020, at the Edmonton Global special meeting, despite St. Albert Council’s recommendation, the fifteen Edmonton Global Shareholders approved Option B of the Investment Plan Proposal. Each of Edmonton Global’s fifteen Shareholders received one vote. Approval of the Investment Plan resulted in Shareholder contributions increasing from $2 million in 2020 to $5 million by 2022.
On April 21, 2021, at the Edmonton Global Annual General Meeting, Shareholders approved a three-year budget commitment, which maintained the financial commitments of the Investment Plan from 2020 to 2022, but also committed Shareholders to $5 million in funding for 2023.
The shaded rows in following table highlight the Investment Plan’s financial impact to all Edmonton Global Shareholder contributions and the City of St. Albert’s contributions:
|
Year |
All Edmonton Global Shareholder Contributions |
St. Albert Shareholder Contributions |
|
2017 |
$500,000 |
$23,839 |
|
2018 |
$1 million |
$50,274 |
|
2019 |
$2 million |
$98,667 |
|
2020 |
$3.3. million |
$162,353 |
|
2021 |
$3.5 million |
$167,978 |
|
2022 |
$5 million |
$238,165 |
|
2023 |
$5 million |
$238,165 |
Note that St. Albert’s contribution in 2022 and 2023 are estimated as Edmonton Global Shareholder contributions are calculated each year using the following variables:
• Core Fee per municipality ($10,000)
• Weighting (50% population and 50% Total Equalized Assessment)
Edmonton Global Shareholder contributions will also be affected by the withdrawals of the following three shareholder municipalities:
• Bon Accord to withdraw on October 2, 2021
• Parkland County to withdraw on November 15, 2022
• Morinville to withdraw on December 12, 2022
Shareholders that wish to withdraw from Edmonton Global are required to provide a two-year notice period and must continue to pay annual contributions until their two-year notice period is complete.
Investment Plan Impact on Edmonton Global Resources
The Investment Plan was proposed to Shareholders as an opportunity to improve the outcomes of several organization performance measures such as informational data, active opportunities, marketing campaigns and final investment decisions. The Investment Plan resulted in an increase to Edmonton Global’s financial resources, growing their operating budget from $2 million to $5 million.
The Investment Plan also enabled Edmonton Global to increase to their human resources, growing their organization from 12 staff in 2020 to 23 staff in 2021. The following table demonstrates the changes to staff positions from 2020 to 2021.
|
Area |
2020 |
2021 |
|
Operations |
Chief Executive Officer |
Chief Executive Officer |
|
|
Office Manager |
Office Manager |
|
|
|
Accountant |
|
|
|
Administrative Assistant |
|
Marketing & Communications |
Director, Marketing & Communications |
VP, Global Marketing & Communications |
|
|
|
Manager, Digital Marketing |
|
|
|
Marketing & Communications Strategist |
|
|
|
Intern |
|
|
|
Intern |
|
Investment & Trade |
VP, Investment & Trade |
VP, Investment & Trade |
|
|
|
Director, Business Development |
|
|
|
Director, Hydrogen Initiative |
|
|
|
Director, Research & Business Intelligence |
|
|
Senior Business Development Manager |
Senior Manager, Business Development |
|
|
Senior Business Development Manager |
Senior Manager, Business Development |
|
|
Senior Business Development Manager |
Senior Manager, Business Development |
|
|
Manager, Business Development |
Manager, Business Development |
|
|
Business Development Associate |
Research Analyst |
|
Strategy & Innovation |
VP, Strategy & Innovation |
VP, Strategy & Innovation |
|
|
Manager, Strategic Initiatives |
Manager, Strategic Initiatives |
|
|
Manager, Policy & Advocacy |
Manager, Strat. Insight & Global Competition |
|
|
|
Manager, Engagement & Partnerships |
|
|
|
Intern |
Like most organizations the COVID-19 pandemic has affected many of Edmonton Global’s in-person investment attraction initiatives. The organization pivoted to offer a number of sector specific webinars target toward an international investment audience. As international travel restrictions have relaxed, Edmonton Global is preparing to have a presence at the following events:
|
Events |
Focus / Sector |
Location |
|
Grenoble High Level Forum |
Energy, health, information technologies and innovation management. |
Grenoble, France |
|
ADIPEC |
Energy, Oil, Gas |
Abu Dhabi , United Arab Emirates |
|
World Summit AI |
Artificial Intelligence |
Amsterdam, Netherlands |
|
Expo Dubai |
Sustainability, mobility |
Dubai, United Arab Emirates |
|
London Tech Week |
Tech |
London, England |
|
Inventures |
Tech |
Calgary, Canada |
|
Collision |
Tech |
Toronto, Canada |
|
International Nanotech |
Nanotech |
Virtual |
|
Global Energy Show |
Energy, Oil Gas |
Calgary, Canada |
|
Hydrogen North America |
Hydrogen |
Virtual |
|
Economic Forum of the Americas |
Economy, Globalization |
Montreal/Toronto, Canada |
Effectiveness of Investment Plan
To evaluate the effectiveness of the Investment Plan, Administration has attempted to provide an assessment of the outcomes to-date from both an Edmonton Metro Region perspective and a St. Albert perspective. The following table lists the performance outcomes committed to within the Investment Plan Proposal and compares the progress at the regional and local level.
|
Category |
“Option B” Investment Plan Proposal Performance Outcomes (Q3 2020) |
Investment Plan Regional Impact Progress Status (Q3 2021) |
Investment Plan St. Albert Impact Progress Status (Q3 2021) |
|
Informational / Data |
Enhanced build-out of regional database |
Regional Real Estate / Site Selector Tool developed. |
Regional Real Estate / Site Selector Tool developed. |
|
Active Opportunities |
Increase by 50% (from 40 to 60 opportunities) |
Unknown |
1 |
|
Regional Business Promoted through Marketing Material |
Direct support up to 20 businesses per year |
Unknown |
1 St. Albert business included Area Development Magazine article |
|
Foreign Investors Hosted |
18 |
Unknown |
2 |
|
Site Selectors Hosted |
5 |
Unknown |
0 |
|
Marketing Campaigns by Focus Sector |
Active across all sectors with priority to 2 vertical sectors 6 Business Cases |
Unknown 3 Business Cases |
Unknown 3 Business Cases |
|
Final Investment Decisions (FID) Per Year |
6 |
1 |
0 |
Proper evaluation of the regional benefit of the Investment Plan has been challenged by the timeliness and comprehensiveness information and formal reporting received from Edmonton Global.
From a St. Albert perspective, the City has benefited from being short-listed for two opportunities that were funneled through Edmonton Global, since the inception of the Investment Plan. One opportunity was lost to a location outside of the Edmonton Metro Region, and the other opportunity is currently active, as the City’s Economic Development department continues to work with the prospective company.
Regional Air Service Opportunity Fund
In addition to St. Albert’s increased shareholder contributions through the Investment Plan, City Council also committed $145,154 to the Regional Air Service Opportunity Fund in 2021 and may consider additional funding in 2022 and 2023.
Edmonton Global led and coordinated efforts to establish the Regional Air Service Opportunity Fund. The fund was presented as a shared investment by municipalities in the Edmonton Metro Region to attract strategic direct international passenger and cargo flights to Edmonton International Airport. The fund was established at approximately $15 million through contributions from 14 of the 15 Edmonton Global shareholder municipalities. The fund is managed by Edmonton Global.
Since the establishment of the fund, Edmonton International Airport has added direct flights to the following international destinations:
• Las Vegas (Flair Airlines - December to Spring)
• Hollywood-Burbank (Flair Airlines - December to Spring)
• Phoenix (Flair Airlines - December to Spring)
• Palm Springs (Flair Airlines - December to Spring)
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
Administration has made requests to Edmonton Global for additional information and updates on the outcomes of the Investment Plan. At the time of this report, Administration has not received a response from Edmonton Global to this request.
IMPLICATIONS OF RECOMMENDATION(S)
Financial
In 2022, as a result of the Investment Plan, the City’s financial contributions to Edmonton Global will increase to approximately $238,000 per year, which represents an increase of approximately 145% compared to contributions prior to the establishment of the Investment Plan in 2020.
Risks
One of the primary risk is attempting to fairly evaluate international investment attraction efforts, after a short period of time. Often investment attraction opportunities, particularly those in the multi-millions to billions range, take several years to realize. Representatives from Edmonton Global emphasized this point during their address to Council on October 19, 2020. This position is consistent among economic development professionals in the region.
An addition risk, presented by Edmonton Global when proposing the Investment Plan in 2021, is the risk associated with not adequately funding a regional investment attraction organization, as it reduces the ability to compete against other jurisdictions. The following list of comparators was provided by Edmonton Global in 2020.
|
Regional Economic Development Organization |
Budget |
Organizational Mandate |
|
Montreal International |
$ 19.8 million |
Foreign Direct Investment, Trade, Talent Retention |
|
Toronto Global |
$ 6.84 million |
Foreign Direct Investment |
|
Minneapolis St. Paul |
$ 8 million USD |
Foreign Direct Investment & Trade |
|
One Columbus |
$ 8 million USD |
Foreign Direct Investment & Trade |
|
Calgary |
$ 12.8 million + $100 million Investment Fund |
Business Retention & Expansion, Foreign Direct Investment, Trade, and Film |
Service
As St. Albert’s Shareholder contributions to Edmonton Global are allocated from the City’s Economic Development department budget there is a resulting resource trade off. Contributions and increases to Edmonton Global affect the City’s Economic Development resources and the department’s ability to attract investment and assist businesses at a local level.
It is estimated that in 2022, Edmonton Global Shareholder contributions will represent approximately 18% of Economic Development’s budget, which is up from 6% prior to the establishment of the Investment Plan.
Organizational
In order to participate fully in Edmonton Global, City Council and Administration are required to provide a host of regular meetings and supports, including:
• Mayor, CAO, and Administration attending regular meetings
• Responding to requests from prospective investors, businesses, site selectors, etc.
• Organizing site visits, providing local market data, and coordinating with Edmonton Global staff related to investment opportunities.
• Providing of local information and data support to regional initiatives
• Reporting and information sharing with internal City department and stakeholders regarding Edmonton Global related initiatives and impacts.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
If Council does not wish to support the recommendation, the following alternatives could be considered:
Alternative 1 - That Council direct Administration to obtain additional information to evaluate Edmonton Global’s performance and outcomes of the Investment Plan.
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Report Date: September 13, 2021
Author(s): Mike Erickson
Department: Economic Development
Deputy Chief Administrative Officer: Kerry Hilts
Chief Administrative Officer: Kevin Scoble