TAMRMS#: B06
10.1
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Edmonton Global Withdrawal
Notice given by: Councillor Joly
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PROPOSED MOTION(S):
recommendation
1. That the City of St. Albert provide notice that it is withdrawing from Edmonton Global.
2. That this decision be presented to Council in Q1 or Q2 2026 to allow for reconsideration prior to withdrawal.
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ADMINISTRATION’S UNDERSTANDING OF THE INTENT OF THE MOTION
To present a motion for which Councillor Joly gave notice on October 1, 2024, to provide notice to withdraw as shareholder of Edmonton Global.
As there is a two-year notice period to withdraw from Edmonton Global, the motion would require that the decision be presented to Council for reconsideration by Q2 2026, prior to the conclusion of the two-year notice period.
PURPOSE OF REPORT
The purpose of this report is to present a motion for which Councillor Joly gave notice on September 28, 2024.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
N/A
BACKGROUND AND DISCUSSION
Edmonton Global Overview
Edmonton Metropolitan Region Economic Development Company, known commonly as Edmonton Global, is a not-for-profit company established under Part 9 of the Companies Act to carry out a broad range of economic development activities on behalf of the citizens and taxpayers located in the Edmonton Metropolitan Region. Its focus is on attracting foreign investment, helping regional businesses export, enhancing the region’s global competitiveness, and presenting a unified voice to attract the attention and interest of investors around the world.
Edmonton Global was formed in 2017 with 15 shareholder municipalities. The City of St. Albert has been a member of Edmonton Global since its inception, and was a signatory to the Memorandum of Association and Articles of Association that formed Edmonton Global. In signing the Memorandum of Association, each of the municipalities subscribed for one share in Edmonton Global.
Municipal Shareholder Withdrawal
Conditions for withdrawal from Edmonton Global are established within the company’s Articles and Edmonton Global's Policy G001 - Shareholder Onboarding / Withdrawal. If a shareholder wishes to withdraw, they must provide written notice to Edmonton Global at least 2 years in advance. A request to withdraw from Edmonton Global must be accompanied by a Council motion supporting the withdrawal request.
Once the request has been submitted, a shareholder is required to continue to make annual contributions during the two-year notice period. If a Shareholder were to provide notice to withdraw prior to the end of 2024, the Shareholder would be required to make annual contributions for 2025 and 2026 at the current 2024 annual contribution rate. Whereas, if a Shareholder were to provide notice to withdraw in 2025, the Shareholder would be required to make annual contributions for 2025, 2026, and 2027, at the 2025 annual contribution rate.
During the two-year notice period, the off-boarding shareholder municipality continues to receive the same assistance, services, and voting powers as all other Shareholders.
At any time within the two-year notice period, a municipality can reverse their decision and decide to remain a shareholder.
Shareholder Withdrawal History
In 2020, the Town of Morinville issued a notice to withdraw from Edmonton Global, however in 2022, they rescinded that decision and remained a Shareholder.
In 2021, the Town of Bon Accord withdrew from Edmonton Global.
In 2023, five shareholder municipalities, including Strathcona County, Sturgeon County, the City of Fort Saskatchewan, the Town of Devon, and Parkland County elected to provide notice to withdraw from Edmonton Global. Some of these municipalities have cited rising costs, insufficient return on investment, and use of funds for regional events as rationale for providing notice to withdraw.
Edmonton Global Funding
Currently, Edmonton Global has an annual budget of $5,000,000, which is funded through shareholder fees. Shareholder annual contribution fees are established through a funding formula, which entails the combination of a core fee of $10,000 per municipality and the proportional share of each shareholder’s population and total equalized assessment. The following table summarizes Edmonton Global’s total budget along with St. Albert’s shareholder contributions from 2017 to 2024.
|
Year |
All Shareholder Contributions |
St. Albert Shareholder Contributions |
St. Albert Regional Air Service Opportunity Fund Contributions |
|
2017 |
$500,000 |
$23,839 |
|
|
2018 |
$1,000,000 |
$50,274 |
|
|
2019 |
$2,000,000 |
$98,667 |
|
|
2020 |
$3,300,000 |
$162,353 |
|
|
2021 |
$3,500,000 |
$167,978 |
|
|
2022 |
$5,000,000 |
$243,659 |
$145,153 |
|
2023 |
$5,000,000 |
$242,207 |
|
|
2024 |
$5,000,000 |
$240,349 |
|
|
TOTAL |
$25,300,000 |
$1,229,328 |
$145,153 |
It is unknown whether Edmonton Global’s total budget would be reduced from its current $5 million, should the 5 municipalities complete their two-year notice period and withdraw from Edmonton Global. For the purposes of this report and at this period in time, it is assumed that Edmonton Global’s budget will remain at $5 million.
Impact of Shareholder Withdrawal
Once a shareholder has completed the two-year notice period and is withdrawn from Edmonton Global, the proportional share of Shareholder fees is recalculated amongst the remaining shareholders. Should Strathcona County, Sturgeon County, the City of Fort Saskatchewan, the Town of Devon, and Parkland County complete their notice period, St. Albert would become the second largest contributor to Edmonton Global. As a result, St. Albert’s annual Shareholder fees are expected to increase approximately 23%, from $240,000 annually to close to $295,000 annually.
IMPACTS OF MOTION
Financial:
During a two-year notice period:
In providing notice to withdraw, the City would expect to see cost savings during the two-year notice period. Shareholder fees are fixed at the rate of the current year’s annual contribution fee. Thus, in 2026, when St. Albert’s shareholder fees are expected to increase, due to the 5 shareholders’ withdrawing, the City’s fees would be fixed at the current annual rate of $240,350, saving the City roughly $55,000 that year.
In Q1 or Q2 2026, when the decision is presented to Council for reconsideration prior to withdrawal, Council may choose either:
Option 1: Continue with the withdrawal and follow through to the termination date: or
Option 2: Rescind our notice to withdraw prior to the termination date.
Following the decision being presented to Council for reconsideration in 2026:
In Option 1, the City would cease to be a Shareholder of Edmonton Global in 2027 and would no longer pay Shareholder fees. This would result in an annual cost savings of approximately $240,000 to $295,000 per year moving forward, depending on Edmonton Global’s future annual budgets and the number of shareholder municipalities.
Additionally, the City would benefit from the fixed annual Shareholder Fee in 2026, which is estimated to be approximately $55,000 less.
In Option 2, if a shareholder notifies that it is withdrawing and then subsequently rescinds their withdrawal notification before the termination date, they are responsible to pay the difference between the fixed rate, paid during the notification period, and what they would have paid, had they not provided notice to withdraw. Thus, in Option 2, the City would essentially pay the same shareholder fees it would have paid, had it not issued a notice to withdraw.
Compliance & Legal:
The compliance and legal implications have been explained in the “Background and Discussion” section above.
Program or Service:
During a two-year notice period:
No impact. It is expected services and supports Edmonton Global provides to Shareholder municipalities would remain the same.
Following the decision being presented to Council for reconsideration in 2026:
1. Scenario 1 - Some or all of Strathcona County, Sturgeon County, the City of Fort Saskatchewan, the Town of Devon, and Parkland County also complete their two-year notice period and withdraw from Edmonton Global.
• It is possible that a reduction in Shareholders with the same budget would result in greater capacity for Edmonton Global to serve the remaining fewer Shareholders.
• It is also possible that Shareholders may vote to reduce Edmonton Global’s budget, which could result in a maintained or reduced level of service to remaining Shareholders.
2. Scenario 2 - Some or all of Strathcona County, Sturgeon County, the City of Fort Saskatchewan, the Town of Devon, and Parkland County rescind their notice to withdraw and remain a Shareholder of Edmonton Global.
• If all were to rescind their notice, it is expected services and supports Edmonton Global provides to Shareholder municipalities would remain the same.
• If one or a few rescind their notice, it is expected services and supports Edmonton Global provides to Shareholder municipalities may be altered to varying degrees.
Organizational:
During a two-year notice period:
No impact.
Following the decision being presented to Council for reconsideration in 2026:
Option 1: Continue with the withdrawal and follow through to the termination date.
In this scenario, it is expected that completion of withdrawal would free up capacity for the City’s Shareholder representative and for City staff that engage with Edmonton Global and attend Edmonton Global meetings.
Option 2: Rescind our notice to withdraw prior to the termination date.
In this scenario, no organizational impact is expected.
Risks
During the two-year notice period:
• Operational/Compliance: Edmonton Global Shareholders may choose to change the withdrawal regulations, possibly restricting or eliminating options for St. Albert.
• Reputational: A notice to withdraw may affect the relationship between the City and Edmonton Global.
Although it is difficult to quantify, another Shareholder municipality demonstrating their intent to withdraw may draw more negative attention to Edmonton Global and challenge the perception of our region and regional foreign direct investment efforts.
Following the decision being presented to Council for reconsideration in 2026:
Option 1: Continue with the withdrawal and follow through to the termination date.
• Strategic: As Edmonton Global has represented the region’s investment attraction efforts internationally, City Administration would likely revisit St. Albert’s Investment Attraction Strategy, and give consideration to an alternative, more St. Albert- focused approach to foreign direct investment attraction.
• Financial: The City would save $240,000 or more annually. These funds could be repurposed for other investment attraction efforts or economic development purposes or to reduce the City’s budget.
Option 2: Rescind our notice to withdraw prior to the termination date.
Risks would be similar to the risks identified during the two-year notice period.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
None at this time
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
Stakeholder Relations
ALTERNATIVES
If Council does not wish to support the motion, the following alternative could be considered:
Do nothing. The City of St. Albert would remain a Shareholder of Edmonton Global.
Alternative 1:
Financial:
Based on notices to withdraw from five Shareholders, it is expected that St. Albert’s annual shareholder fees will increase from approximately $240,000 to $295,000 annually in 2026. It is also possible that the remaining Shareholders vote to reduce Edmonton Global’s overall budget, which would affect the City’s proportional fees.
Compliance & Legal:
None at this time.
Program or Service:
No impact is expected until 2026, when the five shareholder municipalities are scheduled to complete their notice period and would cease to pay Shareholder fees.
In 2026, it is plausible that either:
a) A reduction in Shareholders with a maintained Edmonton Global budget of $5 million would result in greater capacity for Edmonton Global to serve the remaining fewer Shareholders; or
b) Shareholders may vote to reduce Edmonton Global’s budget, which could impact the level of services to remaining Shareholders.
Organizational:
St. Albert’s Shareholder representative and City Administration would continue to work with Edmonton Global Board and staff and would continue to participate in related meetings and events.
If the 5 Shareholders withdraw, St. Albert would become the second largest funder of Edmonton Global and may serve a larger role.
Risks
• Operational/Compliance: Edmonton Global Shareholders may choose to change the withdrawal regulations, making it more difficult or extending the withdrawal notice period for municipalities in the future.
• Financial: One or some of the remaining nine Shareholder municipalities may elect to provide notice to withdraw between now and 2026, which would further increase the remaining Shareholder’s proportional share of funding.
• Reputational: Notices to withdraw by over one third of Shareholders has had an effect on the reputation of the region, shareholder municipalities, and Edmonton Global. Although, difficult to quantity, if there are further reputational impacts, St. Albert may bear some of the impact.
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Report Date: October 21, 2024
Author: Mike Erickson, Director, Economic Development
Department: Economic Development
Department Director: Mike Erickson
Managing Director: Adryan Slaght
Chief Administrative Officer: Bill Fletcher