The Greater Toronto Marketing Alliance (GTMA)

The Economic Development Committee recommends the adoption of the report (September 1, 1998) from the Commissioner of Economic Development, Culture and Tourism.

The Economic Development Committee reports, for the information of Council, having:

(1)requested the Chair of the Economic Development Committee to invite a representative from the Greater Toronto Marketing Alliance to give a presentation to a future meeting of the Committee; and

(2)requested representative(s) of the Greater Toronto Marketing Alliance to meet with Councillor Giansante prior to Council's meeting on October 1, 1998.

The Economic Development Committee submits the following report (September 1, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

The purpose of this report is to provide City Council members with background on the Greater Toronto Marketing Alliance, and to outline the desirability of the City's continued support of this organization.

Financial Implications and Impact Statement:

Continuation of support by the City of Toronto of the GTMA as recommended in this report will require a payment of $80,000.00 to the GTMA from the Economic Development Division for fiscal year 1998/1999. This amount has already been included in the approved budget of the Economic Development Division.

Recommendations:

It is recommended that:

(1)the City of Toronto continue to support the activities of the Greater Toronto Marketing Alliance based on the concurrence of all members to the GTMA principles and protocols;

(2)that the City of Toronto undertake a review of our role with the GTMA after a period of one year in assessing benefits attributable to Toronto;

(3)$80,000.00 be paid to the GTMA by the City of Toronto Economic Development Division as the City's contribution to cover operational costs of the GTMA fiscal year July 1, 1998 to June 30, 1999;

(4)the Mayor of the City of Toronto or his designate be the political representative from the City to sit on the Board of Directors of the GTMA; and

(5) the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Reference/Background:

The Greater Toronto Marketing Alliance is a public/private partnership established to provide international marketing and seek international investment for businesses in the Greater Toronto Area. This type of activity is similar to that of a number of regional municipalities in North America, and is a continuation of support given by municipalities in this region over the past year.

In the next few weeks the Economic Development Division will receive an invoice for $80,000.00 from the GTMA-- the City's contribution to the GTMA for fiscal year 1998/1999. This amount was agreed upon by the Regional Chairs and Mayors of the GTA, and is the same as the amount paid by the former municipalities of Metropolitan Toronto within fiscal year 1997/1998. Each of the other four regional governments paid a similar amount, and will be invoiced this amount for the upcoming fiscal year.

This $400,000.00 received annually from the five regions is held in escrow until it is matched by private sector funds, according to the terms of the agreement. This insures that the public-private nature of the undertaking is upheld. As private funds are contributed through the year, regional municipal monies are released in matching amounts.

The Board of Directors of the GTMA is composed of both public and private individuals who help to direct activities. A new Board is now being finalized, and one elected member from each region are requested to sit on the Board for a period of two years. The annual meeting of the Board of Directors will be held on September 24, 1998. Therefore a decision of board representation from the City of Toronto will be required as soon as possible.

Comments:

To meet the need to optimize the marketing of the GTA to investors outside the region, the GTA Economic Development Partnership and the GTA Boards and Chambers Alliance have helped to create a regional marketing agency. This alliance is called the Greater Toronto Marketing Alliance.

This Alliance is a public/private partnership, receiving support from the GTA municipalities, the Province, Federal Government, the Boards and Chambers of the GTA, and private sector investors.

Greater Toronto is an attractive product to sell, especially in respect to quality of life, number and diversity of knowledge workers, infrastructure, and proximity to the North American market; however, unlike most urban regions in the United States, Greater Toronto does not have a region wide agency marketing its assets to business. The Greater Toronto Marketing Alliance will provide

this role, marketing the attraction of Greater Toronto to prospective investors in collaboration with economic development officers at the municipal, provincial and federal, levels of government.

Several urban regions in the United States, have established an effective regional marketing agency, with annual budgets in the range of $1 million to $3 million. The Greater Toronto Marketing Alliance is an important tool, providing a regional investment and marketing agency comparable to those in such areas as Atlanta, Cleveland, Louisville, Charlotte, and Phoenix.

A Public/Private Partnership

The Greater Toronto Marketing Alliance (GTMA) is a public/private partnership established to take advantage of the assets offered by both sectors. Traditionally, the private sector has not been actively involved in economic development, unlike the situation in many other jurisdictions, particularly in the United States. To meet the challenge of intense global competition for investment, it is essential to have a first-rate marketing agency that draws on the assets of both the private and public sectors.

As a partner in the GTMA, business adds value in a number of ways:

-effective and efficient management and marketing expertise

-generating leads

-credibility with business contacts, "business talking to business"

-access to business and political leaders to "close deals"

-sector specific knowledge relevant to marketing Greater Toronto

-private sector funding which reduces the cost to the taxpayer at a time of public sector cost cutting and privatization.

Most regional investment marketing agencies in the United States are making effective use of their private sector assets, to maximize our competitiveness, we need to do the same.

Government as a partner in the GTMA, is also critical for the following reasons:

-public sector support signifies an "open for business" attitude by government.

-economic development officers are necessary partners in generating leads, marketing the region, and in assisting in the site selection process.

-municipalities play a key role in the servicing of investors and in facilitating the closing of deals.

-public sector funding is important and necessary.

Benefits of the GTMA to the Community

(1)Growing the Regional Economy:

Business investments and associated employment increases customers and clients for most industries and particularly for real estate, utilities, financial and business services, retail and entertainment. Business benefits from new investment and a growing economy and the additions wealth created spreads throughout the community.

(2)Improving the Regional Tax Base

Investments by business are critical for controlling tax rates for all tax payers as well as for maintaining service levels to which the residents of Greater Toronto have become accustomed. With the reduction of tax transfers to municipalities from senior levels of government, attracting new sources of revenues is essential. Municipalities, residents, and businesses all benefit from real estate taxes resulting from business investment.

3)Job Creation for Our Residents

Job creation is a major concern in the country, and the region. Downsizing is expected to continue in both public and private sectors. The efforts of the Greater Toronto Marketing Alliance to generate jobs through business investments is a positive, meaningful way to respond to serious social and economic problem.

(4)Leveraging of Private Sector Involvement

The financial challenges municipalities have faced with downloading, and declining assessments have resulted in reduced resources to effectively market their communities internationally. Since, international marketing is very costly combining limited municipal resources and leveraging private sector contributions enables the GTA to enter the international stage at the same levels as our international competitors in U.S. and Europe. Undertaking this one component of economic developing in a cooperative manner enables existing EDO's resources to be more effective in servicing local businesses and building strong retention strategies.

GTMA--Conditions for Success

The GTA Economic Development Partnership and the GTA Boards and Chambers consider the following to be conditions of success for the Greater Toronto Marketing Alliance:

-strong commitment to a regional marketing model.

-active participation of both the private and public sectors.

-strong private sector leadership.

-sustained financial contributions from both the private and public sectors.

-a results-oriented strategic marketing plan focused on investment marketing and raising the profile of the GTA.

-co-operation and collaboration with economic development agencies from all levels of government.

-client-driven focus:

-pro-business attitude

- quick and reliable service

- unbiased, accurate information

- confidentiality

- seamless business development service, co-ordinated with other economic development agencies.

Areas of Focus

(a)The Greater Toronto Marketing Alliance is taking a lead role on behalf of the public and private sectors for marketing and promotional activities related to new investment attraction to the GTA.

(b)The GTMA is co-ordinating data collection to develop comparative analyses of business statistics in support of business investment activity.

(c)The Alliance provides a support role to municipal economic development efforts in making existing business in the GTA aware of the benefits of a GTA location.

Marketing Activities

The Greater Toronto Marketing Alliance is taking a lead role on behalf of the public and private sectors for marketing and promotional activities related to new investment attraction to the GTA. For example, it will:

-Initiate a strategic marketing program promoting business investment activity (key areas: real estate; new development and redevelopment opportunities; and equity investment) emphasizing the image of the GTA as a business and tourist destination.

-Act as an aggressive sales force promoting the region in international markets. Attend trade shows, site selection conferences/events. Coordinate municipal and corporate participation via liaison with GTA Economic Development Liaison Team.(Local Economic Development Offices)

-Undertake corporate call campaigns and investment missions in key external markets.

-Provide a one-window, business development service for international and new business inquiries in the GTA.

-Work with site selection firms, key associations and private sector companies to identify markets and sectors.

-Coordinate the tracking and follow-up of direct leads with municipalities.

Co-ordination Data Collection

The GTMA plans to co-ordinate data collection and develop comparative analysis of business statistics in support of business investment activity. It will, for example:

-Develop regional based statistics from data collected by municipal EDO's and other sources for marketing purposes.

-Respond to general requests for GTA business information and statistics and develop custom proposals.

-Track key investment activity to demonstrate the dynamic nature of investment in the GTA.

-Monitor the source and type of business inquiries for strategic planning purposes and share the results with municipal EDO's.

Support Municipal Economic Development Initiatives

The GTMA supports Municipal Economic Development Initiatives. For example, The Alliance:

-Assists municipalities where necessary and appropriate with prospective and existing business investment clients.

-Facilitates involvement of municipal Economic Development Officers in GTMA initiatives.

-Encourages the use of a GTA message/logo in local marketing and business retention efforts.

Operational Overview

The Greater Toronto Marketing Alliance has to be selective, targeted and focused in its activities. According to the Ministry of Economic Development, Trade and Tourism, major sources of investment into Canada are from the United States, which accounts for about 65 percent of foreign direct investment in Canada, United Kingdom with about 12 percent, other European Community countries with 10 percent and Japan at 4.2 percent. Business immigration, which totaled about $47 million in 1994, is primarily from Hong Kong, Taiwan and Korea. The above mentioned areas will be the focus of investment prospecting for the Greater Toronto Marketing Alliance.

Organizational Structure

The GTMA was structured on the basis of a 50/50 partnership in terms of funding and representation initially. However, after the first year of operation it is anticipated that private sector funding will considerably exceed that of the public sector.

At present, the Board is structured with nine public sector representatives and nine from the private sector. The public sector includes one municipally elected official from each of the five regions, and two economic development officers from the GTA. One official is also designated by the Province, and one from the Federal government, to complete the nine.

The Economic Development Partnership--a group of economic development officers (EDO's) that work in support of the GTA Mayors and Chairs--has recommended that the GTA Economic Development Partnership has the following two representatives for the GTMA Board: Brenda Librecz, Managing Director of Economic Development, City of Toronto, and Pat Olive, Commissioner, Economic Development Department, The Regional Municipality of Durham. These appointments will be confirmed by the GTA Mayors and Regional Chairs.

The nine representatives from the private sector are appointed by the Boards and Chambers Alliance. The Board is chaired by George A. Fierheller, former Vice President of Rogers Communications and former Chairman of the Toronto Board of Trade. The GTMA President is Ken Copeland, former CEO of NAV Canada, former CEO of Digital Equipment Corporation, and former CEO of the Workers' Compensation Board.

The GTMA currently employs five people full-time, and this number is expected to grow by another three by the end of 1998. Fifteen staff are anticipated by the end of next year.

Alliance Agreement

To achieve the goals of attracting jobs and international investment into the GTA the GTMA requires a cohesive and unified effort from all private and public shareholders. The GTMA has proposed a GTMA Alliance Agreement which they will be asking all stakeholders to adopt.

The Agreement contains principles and protocol's based upon fairness, mutual respect and non competitive values and has been well received as a guide for all GTMA participants. The GTMA will present this for adoption at the September 18, 1998 GTA Mayors and Chairs meeting. The Alliance agreement includes Principles and Operating Protocols related to marketing, investor leads, business results and communications. An important component of the agreement is that "municipalities agree to not undertake negative economic development marketing and promotional activities directed at other GTA communities", which was a concern raised by Toronto as a result of past experiences. The protocol would include: marketing and promotion campaign or other types of communications that make negative references to other municipalities; and targeted solicitations to businesses in other GTA municipalities using such techniques as cold calls, direct mail or telemarketing.

The Alliance agreement also clearly articulates that the GTMA provides added value services to complement those provided by municipal EDO's and do not prohibit communities from undertaking their own marketing initiatives for business attraction.

Conclusions:

The Greater Toronto Marketing Alliance appears to be on a path of fulfilling its mandate as the principal international marketing agency for the Greater Toronto Area. Private sector funds for fiscal 1997/1998 exceeded the contribution of the regional governments, and many of those commitments are for a two-year period.

One of the key advantages of the GTMA is its ability to undertake international marketing through leveraging private funds. This allows the City economic development office to focus on local business retention and small business --both areas which are likely to generate higher employment in the region in the near term.

Concerns raised over the past several months have been discussed and addressed through the development of the Alliance Agreement. Issues included: negative marketing and targeted business relocations from 416 to 905; ability to continue our own marketing efforts in specific targeted areas of comparative advantage to Toronto; level playing field for property taxation in relation to provincial education levy; and an equitable public funding formula which ensures Toronto does not pay any more or any less than each of the other regions.

By supporting the GTMA through our $80,000.00 contribution for the forthcoming year, the City is able to participate actively on the Board of Directors. We thereby are able to help direct the initiatives of an organization whose annual budget is expected to grow to over $3 million in the near future, most of this from the private sector. As the "T" in the GTMA, there are clear advantages to Toronto in the profile it will receive for the dollars invested.

Contact Name:

Brenda Librecz, Managing Director, Economic Development, 397-4700

(A copy of the document "Alliance Agreement, Greater Toronto Marketing Alliance & GTA Mayors and Regional Chairs & GTA Boards and Chambers Alliance & Partners" (September 18, 1998), appended to the foregoing report, was forwarded to all Members of Council with the agenda of the Economic Development Committee for its meeting on September 18, 1998, and a copy thereof is on file in the office of the City Clerk.)