Economic Development Corporations


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Local development corporations are arms length corporations often created by, or for the benefit of, local governments for economic development or other public purposes. Local development corporations as well as certain other types of private entities (e.g., limited liability companies), are being utilized with increasing frequency by cities, towns and villages to finance local government operations and projects.

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  • A development corporation model provides communities with a vehicle to separate municipal governance from economic development – as well as a vehicle for achieving successful economic development initiatives.
  • A development corporation model provides communities with a vehicle to separate municipal governance from economic development – as well as a vehicle for achieving successful economic development initiatives.
  • The mandate of early Inuit development corporations in the 1970’s and 1980’s was to invest capital, which they derived in part from the “regional agreements”, into companies to create economic and business opportunities and through that jobs and income for the Inuit. Likewise, we saw many First Nation development corporations starting up during this same timeframe in Saskatchewan and Canada.In our observation, the successful application of this model within First Nations led to a growing adoption by municipalities.Some municipalities of course set up independent not-for-profit corporations to manage economic development functions for the community. However our focus in this session is discussing for-profit corporations that an play a role in Raising Capital to assist in growing the community.
  • Development Corporations describe their success not only in terms of specific project accomplishments (e.g., construction of facilities or large-scale developments) and financial growth, but also in terms of the economic and social benefits for the community. Development Corps can also be a source of employment for community members and they create opportunities in addition to employment. These may include drawing business investment interest into their community by networking, engaging local industry and actively seeking partners, and supporting small business owners in the community, with preferred supplier relationships, and by mentoring and providing financial assistance
  • Community-wide benefits are the driver for establishing an economic development corporation and as we will highlight later in this presentation – they are an important element of how development corps evaluate their success.
  • A development corporation model provides communities with a vehicle to separate municipal governance from economic development – as well as a vehicle for achieving successful economic development initiatives.
  • A variety of leadership skills are considered essential to running a successful development corporation.It may be more advantageous to retain management who bring previous enterprise or industry management experience – including business strategy, experience with joint ventures etc
  • Doug – what to emphasize that this model is one option for communities to take ownership of their future.
  • Each community must harness its own unique local and regional assets wherever possible.
  • Investment criteria targeted to providing the maximum degree of benefit to the community’s residents
  • Credibility, integrity and reliability in a potential business partner are naturally of the utmost importance. How does the market perceive them?How do their clients perceive them?Doug – how did you folks choose partners??
  • Here are some examples of wholly owned ventures established by Sakitiwak
  • Here are some examples of their joint ventures
  • SDC has assisted in developing local infrastructure and services by providing funds and other assistance to the community and were made though dividends to the shareholder from Profits. These are only an example of the contributions back to the community – as you can see they total over $1 million
  • Over ---- million back to the community.
  • A corporation offers the autonomy and provides ability to operate with aminimum of bureaucracy. This is particularly important in an economicdevelopment office which often requires fast-paced decision-making in anenvironment of constantly shifting priorities based upon client needs. Theseparation in reporting structure helps ensure focus remains on economicdevelopment rather than becoming a special projects department or one assigned projects that don’t fit with any other department such as capital projects, municipal real estate matters and tenancy agreements.A corporation has the ability to have its own set of policies including pay scalesand labour policies which can be tailored to align best with the nature of thework of the employees. Hours of work can be adjusted to match those of theprivate sector to improve access to information and resources.A corporation provides full-cost accounting; all expenses associated with thecorporation are accounted for including rent, office equipment, phone expenses,computers, postage, reception, etcetera. The corporation, which has a separateset of financial records, has the ability to carry forward surplus or deficits fromyear to year.
  • A development corporation model provides communities with a vehicle to separate municipal governance from economic development – as well as a vehicle for achieving successful economic development initiatives.
  • A development corporation model provides communities with a vehicle to separate municipal governance from economic development – as well as a vehicle for achieving successful economic development initiatives.
  • Economic Development Corporations

    1. 1. WelcomeEconomic DevelopmentCorporationsUnleashing Local Capital
    2. 2. AgendaDashboardSpeakerQ&AFollow-Up
    3. 3. Guest SpeakerDoug EddyFormer CEO, Buffalo Narrows Development Corporation2007 - Honoured as Economic Development Officer of the Year by his peers at SEDA.
    4. 4. Economic Development CorporationsIn this Session1. Historical View2. The Municipal EDC Model • Structure • When to establish an EDC • How to establish2. Examples of Saskatchewan EDC’s • Ile a la Cross Saskatchewan • Buffalo Narrows Saskatchewan3. Potential Investment Strategies4. Pros and Cons of this Model5. Community Benefits
    5. 5. Historical View• Inuit Development Corporations• First Nations Development Corporations• Municipal Development CorporationsCommon Challenges:• Scarce business and employment opportunities• Need to build sustainable community capacity and infrastructure
    6. 6. Create sustainable local and regional development Generate revenue to support economic development staffWHY? Provide business and employment opportunities Support community projects sustainable communities
    7. 7.  A for profit and business corporation ECONOMIC at arms length from Mayor and Council DEVELOPMENT Involvement in variety of business CORPORATIONS ventures, community ventures and infrastructure projects Facilitates local and regional employment opportunities
    8. 8. When to establish an EDC?When the community:• Has made a commitment to increase their economic future and increase employment• Has made a bylaw establishing the Corporation and empower it with an arms length Board of Directors• Has made a commitment to find and secure the seed funds for the first project(s)
    9. 9. How to establish an EDC• Lay out a plan of approach.• Identify source(s) of seed funds• Start small• Elect a Board of Directors upon passing of Corporation Bylaw establishment• Undertake a Strategic Planning exercise• Monitor – Monitor -Monitor
    10. 10. Staffing• Strategic thinking• Solid business background• Excellent management skills• Expert communication• Community-focused• Results-oriented• Must act with integrity
    11. 11. Meeting the Needs of Municipalities Today • Funding economic and community development • Address aging infrastructure • Business development • Employment
    12. 12. Village of Ile a La Crosse• Sakitiwak Development Corporation• Wholly owned by the village• Established in 1989 and has successfully invested many regional and community businesses• Mission: to develop, maintain and expand the economic base of Ile-a-la-Crosse – thereby benefiting its residents
    13. 13. Buffalo NarrowsBuffalo Narrows EconomicDevelopment Corporationestablished in 1989Wholly owned by the villageMandate: to create viable opportunities fordevelopment and stimulate employment throughbusiness ventures.The Corporation is governed by a Board of 7 DirectorsEmploys a CEO and office manager – Secretarial andthrough various ventures may employ 20-25 persons
    14. 14. Potential Investment StrategiesDevelopment Corporations must - by their very nature – mustadapt to local circumstances, local leadership and localresources. 1. Independent development projects 2. Shareholder in an established venture(s) 3. Joint Ventures with private and public sectors where opportunities are present
    15. 15. Potential Investment Criteria• Joint ventures on existing businesses or investments• Joint ventures on new businesses or investments• Job creation within the community• Job creation outside the region with investment accruing to the community• Resource related opportunities• "Return on Investment” opportunities that enable the corporation to provide benefits to the community
    16. 16. What to look for in a Business Partner• Trust• Financial Success• Industry Experience• Financial management skills• Reputation
    17. 17. Independent Investments: SakitawakSDC Security Services, established in 1995, is wholly owned by SDC. Provides trained uniformed security guards equipped with mobile patrol units to businesses, mine sites and special events.SDC Construction Ltd., established in 2003, is wholly owned by SDC. Provides general construction services including heavy equipment operations, carpentry and labour supply. The company has also operated as a general contractor for multi-million dollar highway improvement work.Northern Sunset Motel has 16 rooms, a restaurant and tavern with off-sale and video gaming services. The motel is wholly owned by SDC.Land Development- SDC owns land in and around the community which it will sell, and lease for rural residential and business development purposes.
    18. 18. Joint Ventures: SakitiwakCarver Sakitawak Corporation - An Aboriginal owned Northern Saskatchewan Project Management and Technical Services company that provides project management, consulting, staffing and training services.Mudjatik Thyssen Mining - A joint venture providing a multitude of underground mining services in Saskatchewan’s expanding resource sector, Mudjatik Thyssen is one of the newest of SDC’s partners.Northwest Communities Wood Products - This company is owned by several North West Saskatchewan communities including Ile-a–la-Crosse. Its mandate is to manage the region’s forestry development to benefit these communities.NRT: Northern Resource Trucking Limited Partnership is a company comprised of First Nations and Metis partners from communities throughout Northern Saskatchewan, along with Trimac Transportation.
    19. 19. Shareholders Board of Directors(Mayor and Council) BNEDC CEO Staff PROJECTSNWC (Forestry) NVG Mudjatik JV NW Fabricators (Mining) (Welding) Mamawi Golf Course BN Tourism NOG NRT (Trucking) Town Centre Camp Insurance Resort Lot Development Development Resource Development Building on our Strengths
    20. 20. BNEDC: Pioneer Point• New resort development estimated at 10-12 million dollars.• Joint Venture with a private consortium from Ft. McMurray and BNEDC• BNEDC negotiated share = 25%• Commenced development summer 2005
    21. 21. BNEDC Lot Development Have completed a 46 lot development on Kiezie Channel ( all lots sold) Development of another lot project Kiezie Point with for 61 lots and all sold Another 60 backside lots this year Project is 100% owned by BNEDC
    22. 22. TOWN CENTRE PROJECT• 32,000 Square feet• 2 Stories• Keewatin Yatthe Health District• Innovation Credit Union• North West Company• Tim Hortons• Village Office• Service Canada Building on our Strengths
    23. 23. Creating a Venture Group• A mutual understanding with all communities between Buffalo Narrows and Saskatoon.• All share common concerns about transportation.• Mutual agreement to speak as one with Government re projects.• No formalization but share mutual support and respect
    24. 24. Example 1: Northern Venture Group Currently 9 northern communities as members Incorporated in 2004, NVG Company is owned by participating 5 Economic Development Corporations Each Corporation holds 20% shares• In 2004, Company has partnered with Denison Environmental Services, a division of Denison Energy Successfully bid on Cluff Lake Uranium Mine Demolition. Project complete
    25. 25. Example 2: Mamawi Partnership• 9 communities on northwest side of province• 51 % owner in each partnership• Targeting Mining Sector• Opening opportunities to other Sources of revenue.
    26. 26. Sakitiwak Return to Community$175,000 to upgrade the fire hall, fire truck, town shop and arena.$110,000 provided to buy a local radio and TV station.$125,000 donation was toward the new regional health facility constructed in 2005$50,000 was provided to purchase a new Zamboni for the skating rink$10,000 directed toward a community development plan$300,000 provided to help the municipality offset costs with paving municipal streets$50,000 pledged towards proposed community swimming pool$55,000 contribution was made to a new Youth Activity centre$10,000 contribution to emergency medical equipment for the communitySDC also provides funds to many community charities and events throughout the year.
    27. 27. BNEDC Return to Community• $ 80,000 for new grader• $ 150,000 for municipal equipment• $ 600,000 for road paving• $20,000 for Saskatchewan Childrens Hospital• $ 350,000 for Resort development• $ 225,000 for Fabrication plant• New Town Center with value of 8.2 million
    28. 28. Pros and Cons of this Model Pros • Exempt from public procurement restrictions • Exempt from debt guidelines • Operates as a business • Working practices that are more closely aligned with the private sector than those of the public sector. • Removed from local politics • Boards allow for the presence of outside expertise or for the representation of a number of groups or interests.
    29. 29. Pros and Cons of this ModelCons• Liability Issues: As a shareholder, is the community liable to potential default on debt or other legal issues accruing to the corporation?• Negative impact on other competing businesses? Viewed as subsidizing?
    30. 30. In The Economic Development Corporation Model will be a good fit for your community ifConclusion There is a serious commitment by municipal leaders to be successful
    31. 31. Q&ASend us your questions or comments via theChat or Question module on your dashboard.
    32. 32. Thank you for joining us! Verona Thibault President, SEDA @ saskecdevassoc @ growourregion 306-384-5817 Douglas Eddy Economic Development Consultant