Proposed Industrial Development Charges
City of London, January 28th 2005
Chair and Members
Board of Control
The London Region Manufacturing Council (LRMC) appreciates this opportunity
to address the Board of Control regarding any thoughts of imposing
a Development Charge on new Industrial development in the City of
London. We hope to convince you that the introduction of a development
charge would be an unwise business decision based on a return of investment.
It would also have a strong negative effect on the future development
of this city.
The LRMC is a group of volunteers who are involved in the manufacturing
industries of London. We have participation from both large and small
manufacturers. When we asked for opinions regarding the proposed development
charges we had responses from more than the 20 companies that are
proud to be part of this presentation.
Let me begin with the arguments that were brought forward by the
group.
The proposed development charge of $1.86/ sq. ft. would result in
a one time revenue source of $186,000 on a 100,000 sq. ft. building.
Comparatively, the annual industrial tax, based upon the current tax
rate, would generate for the City (education portion excluded) between
$125,000 and $140,000 per year. If the company decided not to locate
in London due to the Development Charge, London would lose the annual
industrial tax contribution. Moreover, London would also loose the
spin off benefits and tax contributions from new employment, residential
assessment and suppliers. The short term cash of a development charge
would be a bad investment.
Why would London expend the capital to develop serviceable industrial
land and then make it unattractive to prospective industrial developments
by implementing a "development charge" on this land?
Why would London make itself uncompetitive with our neighboring municipalities
that do not have an industrial development charge? These competing
municipalities without this development charge include: Brantford,
Chatham-Kent, St. Thomas, Sarnia, Stratford, Windsor-Essex and Woodstock
The Report on Industry Magazine for December 2, 2004, provided in
your information packages, included an advertisement from the City
of Sarnia. This is an example of how important they consider the topic
of Industrial Development Charges. "No Development Charges"
is the first item mentioned after noting the available land.
Why would London want to hinder the excellent work it has done along
with the LEDC in attracting substantial new industrial development
to the City. These successes should be built upon rather than putting
up potential roadblocks. London has developed a reputation as a good
place to do business. This has been demonstrated by the new industrial
developments our city has seen over the past few years. Why would
London want to threaten its enviable status as the "fastest growing
industrial/ manufacturing region" in Ontario?
The proposed "Industrial Development Charge" would not
only discourage new industrial facilities from locating in London,
it would also discourage existing industrial companies from expanding.
Transform Automotive, a new manufacturing company that recently located
in London built a 65,000 sq. ft. facility on Commerce Drive, which
will initially employ 150 people, with future plans for expansion.
Transform officials stated in a news release dated December 12, 2003
that this "land acquisition was designed to allow for future
expansion of up to 200,000 square feet and up to an additional 450
employees". If London's proposed "Industrial Development
Charge" is implemented it would cost Transform an additional
$372,000 to expand. This is a substantial amount of money and would
be a definite deterrent to any future expansion plans.
Companies like Transform Automotive built facilities in London without
having to pay an "industrial development charge". When they
chose London they had substantial future expansion plans in mind.
These expansion plans did not include the added cost of this "Industrial
Development Charge". Implementing this charge on future expansions
of these companies would be contradictory to the initial financial
and economic reason that led them to locate in London in the first
place.
The City's proposed "industrial development charge" also
contradicts the Mayors statement in the same news release on December
12, 2003 in regards to Transform. It reads: "this significant
investment reinforces the value of our industrial land development
strategy in attracting new enterprises and creating new jobs for this
community." The City's proposed "industrial development
charge" is a radical change in the City's industrial land development
strategy.
The present economic conditions will only increase competition to
attract industrial development. A number of factors are considered
when a company is looking for a region which best suits their development
needs. One of the prevailing reasons for foreign industrial investment
in the Southwest Ontario region in recent years has been the value
of the Canadian dollar. The low value of the Canadian dollar in comparison
to the US dollar in recent years has made Southwestern Ontario very
attractive to export based industries (along with the region's proximity
to US markets). However, the recent rise in the value of the Canadian
dollar has made locating anywhere in the region much less attractive,
especially industries exporting product to the US. The City's proposed
"industrial development charge" will only add another deterrent
to locating in London, especially if neighboring municipalities are
not implementing this "charge."
On September 9th, 2004 the City of London held a "Strategic
Planning Session". City Councils goal was to confirm five priority
areas in need of strategic planning to help position London in the
top ranks of Canadian municipalities. The results of this session
led to "Council's establishment of its Strategic Priorities".
One of these strategic priorities is Commerce. Council's definition
of "commerce priorities" reads:
"Investments or incentives for the development of employment
lands, the adoptive reuse of obsolete or undervalued industrial and
commercial sites, the development of inner city and downtown properties,
or the support of private/public partnerships."(Media release
Sept 9, 2004)
The City's proposed "industrial development charge" is
a definite contradiction to its priority of "Investments or incentives
for the development of employment lands". City Council goes on
to list what "typically contributes strongly towards their objectives",
these include; - industrial land, economic development, and development
incentives."
I have attached a number of letters from manufacturers as examples
of their thoughts on the negative impact of the proposed Development
Charge. Please read them. They represent only a small portion of the
sentiments expressed.
In conclusion, industry calculates the dollars and cents of where
they locate. London has benefited by a competitive land base, a good
quality of life, and a favourable location on the 401 corridor. We
have lost a number of head offices and jobs in the financial sector
recently. Let us not lose those job opportunities in the manufacturing
sector. Industry pays 3 to 5 time the taxes of residential assessment.
High taxes and development charges are a double strike against industrial
development. Make a smart investment that pays back year after year.
Do not impose an Industrial Development Charges. Encourage industry
to locate in London.
Thank You
Denis Crane
Chair,
London Region Manufacturing Council (LRMC)
