TABLE OF CONTENTS

REPORTS OF THE STANDING COMMITTEES

AND OTHER COMMITTEES

As Considered by

The Council of the City of Toronto

on October 1 and 2, 1998

ECONOMIC DEVELOPMENT COMMITTEE

REPORT No. 2

1Milne House Garden Club Donation (Don Parkway)

2Todmorden Mills Wildflower Preserve Donation (East York)

3City of Toronto Arts and Culture GrantsJanuary to June 1998 10736

4Bank Mergers - Impact on Toronto as a Financial Centre and Legislation Respecting Canadian Financial Institutions

5The Greater Toronto Marketing Alliance (GTMA)

6International AIDS Conference in 2004

7Proposed Plan for Developing an Economic Development Strategy for the City of Toronto

8Dundas West Regeneration Project (Davenport-High Park)

9Appointments to Boards of Management for Business ImprovementAreas and Amendments to the (former Toronto) Municipal Code Chapter 20, Business Improvement Areas - Various Wards

10Fashion Industry Liaison Committee Membership and 1997/1998 Activities

11PATH - Promotions Link Inc. Proposal for Public Access Terminal System

12Play Structure and Waterplay Areas

13Upper Village (York) Business Improvement Area (BIA) -1998 Operating Budget

14Issuance of Tax Receipts for Toronto 2000

15Other Items Considered by the Committee

City of Toronto

REPORT No. 2

OF THE ECONOMIC DEVELOPMENT COMMITTEE

(from its meeting on September 18, 1998,

submitted by Councillor Brian Ashton, Chair)

As Considered by

The Council of the City of Toronto

on October 1 and 2, 1998

1

Milne House Garden Club Donation (Don Parkway)

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of the report (September2, 1998) from the Commissioner of Economic Development, Culture and Tourism.

The Economic Development Committee reports, for the information of Council, that Mrs. Gwen Gray and Mrs. Betty Crosby, Co-Chairs of the Milne Hollow Committee of the Milne House Garden Club presented a cheque to the City for the purpose of planting trees at Milne Hollow.

The Economic Development Committee submits the following report (September 2, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

To acknowledge receipt of a donation by the aforementioned club for the purpose of planting trees at Milne Hollow.

Funding Source, Financial Implications and Impact Statement:

The club's donation will cover the full costs through to the end of the warranty period for the purchase and installation of hickory trees at Milne Hollow parkland.

Recommendations:

It is recommend that:

(1)the City acknowledge the generosity of the Milne House Garden Club for this donation that will enhance the Toronto Parks system;

(2)the $15,000.00 donation by the club be credited to the Milne Hollow capital account (account number CPC018); and

(3)the appropriate City officials take the necessary action to give effect thereto.

Council Reference/Background/History:

In 1997, parkland at Milne Hollow (Don Valley Parkway at Lawrence Avenue East) was opened for public use. This park which is strategically located in the Don River Watershed provides an important gateway to the East Don parklands. The development of the park is a long term effort and stresses site rehabilitation using native trees, shrubs and wildflowers. One component is a hickory tree laneway.

Upon learning of the plans for this area, the Milne House Garden Club, whose club takes its name from the Milne family one of the city's most famous pioneer families, approached the department regarding the donation of monies for hickory trees.

Conclusion:

To acknowledge receipt of a donation by the Milne House Garden Committee.

Contact Name:

Frank Kershaw

392-8199

2

Todmorden Mills Wildflower Preserve Donation (East York)

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of the report (September2, 1998) from the Commissioner of Economic Development, Culture and Tourism.

The Economic Development Committee reports, for the information of Council, that Mr. Ernie Baltz of the Todmorden Mills Wildflower Preserve presented a cheque to the City for the purpose of implementing site improvements at the Todmorden Mills Wetland.

The Economic Development Committee submits the following report (September 2, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

To acknowledge receipt of a donation by the aforementioned organization for the purpose of implementing site improvements at the Todmorden Mills Wetland.

Funding Source, Financial Implications and Impact Statement:

The organization's donation will partially cover the costs of various site improvements to be implemented at the Todmorden Mills Wetland.

Recommendations:

It is recommended that:

(1)the City acknowledge the generosity of the Todmorden Mills Wildflower Preserve for this donation that will enhance the Toronto parks' system;

(2)the $20,000.00, as well as future donations by the organization, be credited to the Lower Don capital account (account number CPC044); and

(3)the appropriate City officials take the necessary action to give effect thereto.

Council Reference/Background/History:

The Lower Don River valleylands have been the subject of a wide variety of ecological and facilities' improvements by this department and local interest groups for a number of years. The Todmorden Mills Wildflower Preserve is one group which has focused its tireless efforts at the Todmorden Mills Park.

The Todmorden Wildflower Preserve organization, with this department and The Toronto and Region Conservation Authority, have developed plans which will significantly improve public awareness and access to the wetland as well as creating and enhancing the surrounding wildlife habitat. This donation will help make this important work possible.

Conclusions:

To acknowledge receipt of a donation by the Todmorden Mills Wildflower Preserve.

Contact Name:

Frank E. Kershaw

392-8199

3

City of Toronto Arts and Culture Grants

January to June 1998

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee received the report (August, 1998) from Anne Collins, President, Toronto Arts Council and requested that it be forwarded to City Council for information.

The Economic Development Committee reports, for the information of Council, having referred the following Recommendation No. 103 of the Toronto Transition Team to the Commissioner of Economic Development, Culture and Tourism with a request that he submit a report to the Special Committee to Review the Final Report of the Toronto Transition Team and that the Special Committee forward its recommendation in this respect to the Economic Development Committee for consideration and subsequent submission to City Council:

"Council should establish a new city-wide Toronto Arts Council as an arm's length funding and peer review body to administer grants to arts and cultural organizations, according to policy guidelines established by Council."

The Committee submits the following report (August, 1998) from Anne Collins, President, Toronto Arts Council:

(Report, titled "City of Toronto Arts and Culture Grants, January to June, 1998",

dated August, 1998, addressed to the Economic Development Committee, from

Anne Collins, President, Toronto Arts Council)

Table Of Contents

Introduction

1998 Grants: January to June

Economic Analysis

Loan Fund

Method of Grants Evaluation

Statement of Revenues, Expenses & Program Balances - Second Quarter

Grant lists:Project Grants - March 16, 1998 deadline

Operating Grants - March 16, 1998 deadline

1998 Appeals list

Project Grants:March 16, 1998 deadline

Operating Grants:March 16, 1998 deadline

Cultural Facilities Support Grants

Grants Rescinded

Board of Directors

Committees

Introduction:

This report, covering the first six months in 1998 (January 1 to June 30), describes the economic impact of the City's financial investment in the arts community and the impressive array of new work, creativity and community animation which resulted.

Jurisdiction:

At its meeting held on January 2, 6, 8, and 9, 1998, City Council approved the final report of the Transition Team on an interim basis. In doing so it approved Recommendation 103 which provides that for 1998, the Toronto Arts Council will continue to allocate grants within its former area of jurisdiction, which is the former City of Toronto.

Budget:

At its meeting held on May 13-14, 1998, City Council approved that a Cultural Grants budget in the amount of $7,285,118.00 be assigned to the Toronto Arts Council for the allocation of Cultural grants in the former City of Toronto. This amount combines the 1997 TAC budget with the portion of the former Metro Toronto cultural grants budget for which Toronto Arts Council has jurisdiction in 1998.

A budget of $557,154.00 (7.1 percent of total budget) was approved for TAC grants management and administrative costs.

1998 Grants: January To June:

Toronto Arts Council's overall goal is the continued encouragement of diversity and innovation in professional and community-based arts and culture expressions.

ApplicationsReceivedGrantsAwarded

Organizations/Collectives:

March 16th deadline

Dance 30$ 760,27229$ 657,245

Festivals/Urban Arts27$ 894,98527$ 781,650

Literary 5$ 40,600 5$ 38,600

Music54$1,186,38154$1,085,325

Theatre 70$2,749,41765$2,531,825

Visual Arts 22$ 720,11520$ 627,353

Film & Video10$ 369,588 9$ 301,510

Total 218$6,721,358209$6,023,508

Cultural Facilities: 7$ 102,715 7$ 100,000

Total Grants/Awards225$6,824,073216$6,123,508

Economic Analysis:

During the first half of 1998, small and medium-sized arts organizations received City of Toronto cultural grants totalling $6,123,508.00. In 1997, with a similar amount of City funding, these sectors of the non-profit arts community generated additional cash flows of $58,726,080.00:

City of Toronto Arts and Culture Grants$ 6,123,5089.5%

which leveraged the following additional revenues:

Other Government$16,857,55226%

Self-Generated$24,774,25938.2%

Donations and Corporate Sponsorships$17,094,26926.3%

TAC funded organizations are part of a much larger non-profit sector in the City of Toronto which had a total 1996/97 cash flow of $211 million and a national economic impact of $800 million resulting in a local economic impact of $600 million.

Loan Fund:

Toronto Arts Council administers a Loan Fund which provides short-term bridge financing to arts organizations. The Loan Fund, which made 8 loans totalling $69,000.00 in the first half of 1998 through a rotating fund of $178,472.00, is a program which puts the City of Toronto in the vanguard with respect to its support of the arts. Toronto is one of only three North American cities and the only Canadian city to provide this much needed and very appreciated service to its arts community.

Method Of Grants Evaluation:

Grants to Organizations:

TAC's grants review process has been modified for 1998, as approved by City Council at its February 4, 5, 6, 1998 meeting, in keeping with the review processes for all City grants programs. TAC staff, in consultation with TAC's arts discipline committees, identified those organizations applying to the March 16, 1998 deadline that had a history of stable municipal funding and whose applications demonstrated consistency of programming, and administrative and fiscal management. These applications were reviewed by staff who prepared a written report on each applicant for the respective arts discipline committee. These organizations were recommended to receive allocations equal to their combined 1997 municipal funding. All other applications underwent the regular review process: that is they were reviewed by TAC staff for adherence to eligibility criteria and correct submission of budgetary, program and operational information, divided into their respective disciplines and sent for further review to one of the Theatre, Music, Dance, Visual Arts/Film & Video, Festivals/Urban Arts or Literary Committees.

Committees are chaired by members of the TAC board; collectively they represent a broad spectrum of artistic and cultural practices. All committee members are volunteers with extensive professional experience in their fields and are selected through a process of consultation with the arts community. All grants are approved by TAC's Board of Directors (Board and Committee members are listed on pages 32-33.)

Appeals are available: 1) to any group to whom a grant was not recommended; and 2) to any group whose recommended 1998 grant level is less than their 1997 grant level, assuming their 1998 request is equal to or greater than their 1997 grant. (Appeals results are listed on page 8.)

Grants to Individuals:

The Choreographers, Composers, Visual Artists and Writers programs are adjudicated by a representative independent jury of professional artists working within the respective discipline. Jury members are selected by members of the appropriate Toronto Arts Council arts discipline committee.

As with grants to organizations, applications are reviewed by Toronto Arts Council staff for adherence to eligibility criteria and correct submission of budgetary, program and applicant information and are then forwarded to the appropriate adjudication body for review and recommendation. All grants are approved by TAC's Board of Directors.

--------

The Economic Development Committee reports, for the information of Council, having received an overhead presentation on the City of Toronto Arts and Culture Grants, January to June, 1998, by Anne Collins, President, Toronto Arts Council.

(A copy of the aforementioned presentation is on file in the office of the City Clerk.)

The following persons appeared before the Economic Development Committee in connection with the foregoing matter:

-Mr. Kim Tomczak, Vice-President, Toronto Arts Council;

-Ms. Yvonne Chiu, Board Member, Toronto Arts Council;

-Mr. Greg Cromwell, Board Member, Toronto Arts Council; and

-Mr. Tom Hendry, Q.C.

(A copy of the 1998 Project Grants, 1998 Operating Grants and list of Committee members, which was 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.)

4

Bank Mergers - Impact on Toronto as a Financial Centre

and Legislation Respecting Canadian Financial Institutions

(City Council on October 1 and 2, 1998, deferred consideration of this Clause to the next regular meeting of City Council to be held on October 28, 1998.)

The Economic Development Committee recommends the adoption of the report (September15, 1998) from the Commissioner of Economic Development, Culture and Tourism subject to striking out Recommendation No. (3) therein and substituting in lieu thereof the following:

"3.it is recommended that the Managing Director of Economic Development prepare a brief highlighting the importance to Canada of Toronto as an internationally competitive financial centre, and requesting the Federal Minister of Finance to prepare short and long-term employment impact assessments for the proposed bank mergers on Toronto and Canada, and that the Mayor, or his designate, make a deputation based on this brief to the Commons and Senate Hearings on the report prepared by the Task Force on the Future of the Canadian Financial Services Sector."

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

(1)received the report (September 17, 1998) from the Commissioner of Economic Development, Culture and Tourism regarding Legislation Respecting Canadian Financial Institutions;

(2)referred the following motion of Councillor Giansante to the Commissioner of Economic Development, Culture and Tourism for a report thereon directly to Council for its meeting on October 1, 1998:

"(7)that the report (September 15, 1998) from the Commissioner of Economic Development, Culture and Tourism be amended by adding thereto the following additional recommendation:

'that the Brief to the Federal Minister of Finance:

(a)outline the concerns of the City of Toronto and the safeguards required to remain a major financial centre; and

(b)request the Federal Government to:

(i)support our efforts and programs to improve our infrastructure;

(ii)insist the Banks explore and evaluate other options;

(iii)retain current barriers for foreign ownership of Canadian financial institutions; and

(iv)support stronger controls to regulate tied (linked) selling of services'"

(3)requested the Commissioner of Economic Development, Culture and Tourism to submit a report directly to Council for consideration at its October 1, 1998 meeting on appropriate conditions which Council could recommend to the Federal Minister of Finance based on the recommendations proposed by Mr. Banka, Toronto Small Business Support Organization and Rosario Marchese M.P.P., presented to the Economic Development Committee meeting on September 18, 1998:

Proposed by Rosario Marchese, M.P.P.

"(1)That a Financial Consumers Association be established which could utilize the expertise of various lawyers, solicitors and economists with funding provided from the banks via their statement distribution;

(2)that a mechanism be established (such as the Community Reinvestment Act) which could allow access to the banks credit information with a view to achieving accountability; and

(3)that membership on the Boards of Directors of Banks be opened up to include representation from sectors such as consumers; shareholders; financial consulting groups, etc. in order to make banks more accountable." and

(4)referred the following recommendation to the Chair for consultation with the Commissioner of Economic Development, Culture and Tourism as to its feasibility:

"That Recommendation (3) of the report (September 15, 1998) from the Commissioner of Economic Development, Culture and Tourism, as amended, be further amended to provide that the requested Brief to the Minister of Finance be first submitted to the Economic Development Committee for consideration and subsequent submission to City Council."

The Economic Development Committee submits the following report (September 15, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Recommendations:

(1)It is recommended that City Council ask the Minister of Finance to consider the impact of the proposed bank mergers on Toronto's status as an internationally competitive financial centre when reviewing the mergers;

(2)it is recommended that the Managing Director of Economic Development monitor the public hearings on the proposed bank mergers scheduled by the federal government in October and November, and report to the Economic Development Committee as required.;

(3)it is recommended that the Managing Director of Economic Development prepare a brief, based on this report, to be forwarded to the Minister of Finance respecting the bank mergers, and that the Mayor, or his designate, make a deputation at the Commons and Senate hearings in Ottawa;

(4)it is recommended that the Economic Development Committee meet with representatives of small businesses and affected special interest groups to ensure their concerns are identified and responded to in any future regulatory regimes;

(5)it is recommended that Council establish an on-going forum with the financial services sector including all of the major banks in Toronto, to address the issues surrounding the structural and technological changes occurring domestically and nationally in the financial services industry. These forums will provide input to the City's Economic Development Strategy Plan; and

(6)it is recommended that the Economic Development Committee oversee a process for effectively evaluating and responding to changes resulting from the proposed bank mergers and other changes occurring in the financial services sector.

Purpose:

To report on the implications for Toronto of the proposed mergers between the Bank of Montreal and the Royal Bank of Canada and between the CIBC and the TD Bank.

Funding Sources, Financial Implications and Impact Statement:

None at this time.

Background:

On January 23, 1998, the Bank of Montreal and the Royal Bank of Canada announced their intention to merge both banking groups into a new bank. At its meeting on February 4, 5 and 6, City Council had before it a motion from Councillor Moscoe asking staff to report on the implications for Toronto of the proposed merger. This motion was referred to the Urban Environment and Development Committee.

At its meeting on March 23, 1998, the Urban Environment and Development Committee had before it two reports from staff on the proposed merger. (City Treasurer dated March 9, 1998, and Economic Development dated March 6, 1998). The Urban Environment and Development Committee received the two reports and referred the matter to the first meeting of the Economic Development Committee.

On April 17, 1998, the TD Bank and the CIBC also announced their intention to merge.

At the first meeting of the Economic Development Committee on July 17, 1998, the bank mergers issue was deferred to the September 18, 1998 meeting of the Economic Development Committee.

Subsequently, staff organized meetings with all five of the major banks in Toronto, for all members of City Council. This report has been written to integrate the results of that consultation process and to reflect the announcement of the second bank merger (CIBC/TD Bank).

Both of these mergers require regulatory approval by the Canadian Competition Bureau and the federal Minister of Finance, as well as the shareholders of the four banks. In addition the federal Task Force on the Future of the Canadian Financial Services Sector, chaired by Harold MacKay, which was established before the mergers were announced, is expected to report on September 15, 1998. It is expected that the federal government will hold public hearings on the proposed bank mergers during October and November, 1998.

The Canadian Competition Bureau will report in November, 1998, on whether a merger lessens or prevents competition substantially when it creates, enhances or preserves market power. Market power is the ability to profitably maintain prices, quality, service and/or product variety for a significant period of time at levels that are less favourable to consumers than would exist in competitive markets. While the Bureau is often focussed on post-merger prices, service levels are recognized as being particularly important when analysing bank mergers.

The Minister of Finance will make the final decision as to whether the mergers are to be permitted or not. The Bureau's views will be an important input to this final decision-making process. There are, however, issues that lie beyond the mandate of the Competition Bureau that will also form a critical part of the government's final decision on the current merger proposals. These include: the impact of the proposed mergers on jobs; the accessibility and affordability of quality services for Canadian consumers; the ability of the banks to compete internationally; their ability to help Canadian businesses expand at home and abroad; and the impact on neighbourhoods and communities, whether large or small, urban or rural.

Comments:

Overview

The two bank mergers are being proposed by the management of the banks. Assuming that the management of the banks is acting in the best interests of their shareholders and that they know their business better than most others, one has to conclude that the mergers are likely in the best interests of the banks. Therefore, the main question is whether the merger is good for the banks because it will make the banks more competitive, or because it will allow the banks to reduce competition thereby raising prices/reducing service.

If the merger allows the banks to become more efficient and the market for their services is largely competitive, these efficiency gains will be translated into reduced prices/improved services for the banks' customers as well as increased market share for the newly merged banks.

On the other hand, if the mergers allow the banks to restrict competition sufficiently to exercise market power, the mergers would tend to reduce the level of service enjoyed by the banks' customers and to increase the prices of those services. Another version of this second hypothesis is that the mergers will allow the merged banks to become more efficient, and that they therefore will initially offer better services at lower costs, which will put their other competitors (smaller banks, trust companies and credit unions) out of business. Finally, after solidifying their duopoly, the two remaining banks will take advantage of their market power in the domestic market to raise prices and take advantage of retail and small business customers.

All of the five large banks in Canada operate in multiple markets, offering many products and services. In some of these markets, it seems likely that the bank mergers will significantly reduce competition, particularly if federal legislation continues to restrict access to these markets by foreign competitors. However, most of the banks' lines of business are in markets that are unlikely to become less competitive because of the bank mergers. For example, 40 percent of the banks' earnings are outside Canada¹. To the extent that the mergers allow Canadian banks to reduce their costs and therefore become stronger competitors abroad, the mergers are good for Canada and Toronto.

It appears that we must choose between two views of the future of Toronto as a financial centre. Either Toronto is the third largest financial centre competing in a North American market, or Toronto is the dominant Canadian financial centre protected by natural and institutional/regulatory barriers to entry.

The view of the future presented by the banks that have expressed a desire to merge is of competing in a North American market. They say that competition is here now, and they need to remain among the 10-15 largest banks in North America to compete. "The status quo is not an option for the Canadian financial services sector."²

The other view says that it is difficult for foreigners to penetrate a market and that an integrated North American market for financial services is many years away. The markets for many financial services products are already highly concentrated and the mergers will allow the two largest banks to dominate the Canadian market for financial services. Furthermore, through the ability to restrict credit, the two banks could end up dominating most of the Canadian economy. If this later position is true, then the mergers are not good for Canada or Toronto.

It is clear that the financial services industry is currently undergoing a period of change in Canada and throughout the world. These changes are being driven by three forces: globalization, changes in information and communications technology and the changing demands of financial services customers. As recently as four years ago 50 percent of banking transactions took place in branches, today just 12 percent of the CIBC's transactions in the Toronto region are in branches.

The technological changes evident in retail banking, such as Automated Teller Machines (ATM's), telephone banking and most recently Internet banking, have been matched by advances in back office technology in financial institutions. As a result it is now possible for a foreign bank or, for that matter a non-bank, to offer many financial services products directly to customers, without investing in a branch banking network. Most people do not shop for a residential mortgage on the Internet today; however, it is easy to believe that in five or ten years these new distribution channels will have attracted substantial market share.

It was in recognition of these changes in the financial services industry that the federal government appointed the Task Force on the Future of the Canadian Financial Services Sector, chaired by Harold MacKay, which is expected to report on September 15, 1998.

Impact on Toronto as a Financial Services Centre

Toronto's financial services cluster, largely located in the downtown, is very important, both to the regional economy and the Canadian economy. A 1991 study by Alan Rugman and Joseph D'Cruz, based on Michael Porter's work in the United States, identified ten strategic clusters of economic activity in Canada. Three of these clusters are located in Ontario: Toronto's Financial Services Cluster, the Southwest Ontario Automotive Cluster and the Southern Ontario Advanced Manufacturing Cluster. These clusters "form the basis for the development of an internationally competitive economy."³ Therefore, their importance is much greater than their direct employment, which is substantial in its own right.

Clusters of economic activity are very important because, "Once it has achieved a critical mass, a successful cluster will be self-reinforcing. The presence of a successful industry attracts new players, promotes product innovation and competition and encourages new businesses to grow."⁴ Furthermore, financial services is largely a traded service, and countries and regions have to export something in order to earn the ability to purchase goods and services produced elsewhere - Hollywood movies, Caribbean vacations, French wine or Romaine lettuce in December. Forty percent of the CIBC's net earnings are from outside Canada and ninety percent of their employment (though perhaps not payroll) is in Canada. Many of the best jobs are here, including many higher order head office functions, the design of new banking products and the development of training programs. Local economic multipliers are also much higher for a head office than for a branch plant.

The Boston Consulting Group estimated that in 1996, 25 percent of the output of the financial services sector in the Toronto region was traded internationally, 30 percent was traded nationally and only 45 percent was a non-traded local service. Boston Consulting also notes that in the future even many of the services they identified as "non-traded" (retail banking, life insurance sales, etc.) could be internationally traded if delivered electronically.⁵

Financial services is also an important sector because it is a high productivity and high investment sector. In a recent study for the Canadian Bankers Association, Peter Dungan, of the Institute for Policy Analysis at U of T, notes that output per employee is between 20 percent (for banking) and 10 percent (for financial services) higher than the private-sector average in Canada.⁶ In the long-run, productivity determines the incomes and hence the standard of living of Canadians.

Canadian banks may not be as large as the New York "money centre" banks that concentrate on the wholesale market, or as large as some of the new super-regionals that have been formed over the last ten years in the United States and are located in places like Charlotte, North Carolina. However, they are accustomed to running a continental branch network that is more advanced than anywhere in the United States outside California and are widely viewed as more efficient than many of their U.S. rivals.

The financial services sector employs 94,000 people in the City of Toronto and is the second largest contributor to total output (GDP) after the manufacturing sector. Directly and indirectly, the financial services sector generated nearly $21 billion in GDP in 1995, and was responsible for the employment of more than 320,000 people in the Toronto area. The banks are estimated to generate between 60 and 70 percent of all financial services GDP in the GTA.⁷

Table 1: Financial Services Sector Employment

In The City Of Toronto (1997)

Total Employ. Suburban Downtown

Branches15,45912,017 3,442

Admin Offices 50,49810,51039,988

Investment18,668 2,48216,186

Financing 9,050 4,818 4,232

Total93,67529,82763,848

Source: City of Toronto Planning Department Employment Survey 1997, see Appendix for more detail.

Clearly, the impact of the bank mergers on Toronto's status as an internationally competitive financial services centre must be one of the key considerations for the Minister of Finance when he reviews the bank mergers.

In the early 1970's, two Canadian banks were in the top 20 in the world (measured by size of assets); by the early 1980's, only one Canadian bank was in the top 20; today, only one Canadian bank remains in the top 50. The Royal Bank is currently the 49th largest bank in the world. The proposed merger between the Bank of Montreal and the Royal Bank would lift the new bank to among the top 25 banks in the world and the top 10 in North America. However, it is unclear if this will make the new bank more efficient. The recent experience of the Japanese banks (some of the largest in the world) shows that size is not in itself sufficient to guarantee success.

It is true, however, that in many of the banks' lines of business size does offer a competitive advantage. For example, the borrowing/underwriting needs of the world's largest corporations can only be served by very large banks. Size also matters to use back-office systems efficiently. Since many of the costs of developing new computer systems are fixed, larger banks can spread these costs over a larger number of customers and achieve lower average costs. Recent technological changes have increased the potential for these economies of scale.⁸

Scotiabank, and others arguing against the mergers, have pointed out that even with the mergers Canadian banks will be small by international standards. The Royal/Bank of Montreal would be one quarter the size of the largest American banks. Similarly, the largest mono-line financial services firms in the U.S., which specialize in the low-cost, large-scale delivery of a single standardized product such as credit cards, mortgages or mutual funds, are in some cases larger than the entire Canadian market for this service.

The mergers will not make the Royal Bank/Bank of Montreal or the CIBC/TD into a global full service bank, like Citibank or Barclays, but the new banks would rank in the second tier in North America. For example, in the market for credit card services, Citibank has approximately 50 million cards outstanding, MBNA (a mono-line firm) has about 30 million, and the newly merged Canadian banks would have about 10 million each.

After the merger, the Bank of Montreal/Royal Bank would continue to focus firstly on the Canadian market, secondly on NAFTA, and third on selected products in selected overseas markets. CIBC/TD plans to expand quite aggressively into the American market, building on the TD's strength in discount brokerage and probably by acquiring a mid-size bank in the United States. Without the merger it is unlikely that either the CIBC or the TD could purchase a mid-size bank in the U.S.

In the short-run it is expected that the proposed bank mergers will have a negative impact on bank employment in Toronto; however, in the long-run it is expected that the efficiency gains that the merger will achieve will make Toronto banks more competitive and therefore will increase their international market share, which should lead to higher employment levels. Of course the greatest threat to Toronto as a financial centre would be if one or more of the banks were to be taken over by a larger bank from outside the country. For example, Los Angeles lost most of its banking jobs when the two major banks headquartered in Los Angeles were taken over by San Francisco based banks.

Closure of Bank Branches

One of the expected outcomes of the proposed bank mergers is the closure of many bank branches across the country. In fact, a recent study published by the C.D. Howe Institute cites branch closures as the main source of efficiency gains from the mergers. These efficiency gains were estimated to be 20 percent of the non-interest expenses of the banks that are merged.⁹ Because of technological changes, such as the introduction of automatic teller machines and a population shift from rural parts of the country to the cities, Canada has more bank branches than is efficient. The closure of some of these branches would take place without the mergers; however, the mergers allow this process to be accelerated.

While the closure of bank branches presents many adjustment issues, it is also the source of much of the efficiency gains that are possible in retail banking now that 85 percent of banking transactions are automated. The issues raised for retail customers are similar to the adjustments that were experienced in food retailing in Toronto in the 1970's, as a relatively large number of small grocery stores, dating from the 1920's (5-6,000 sq ft) and from the immediate post-war period (15-20,000 sq ft) were replaced by a much smaller number of larger stores (30,000 sq ft).

A significant reduction in the number of bank branches in Toronto also presents some interesting challenges to the City in how these buildings can be recycled in ways that maximize employment opportunities and minimize the loss of property tax revenues. Concerns have been raised about the impacts on the rest of the retail strip when bank branches are closed. These issues need to be addressed. However, it must be recognized that the number of bank branches will continue to decline with or without mergers.

It is expected that the banks will continue the dialogue that they have started with the City over the last six months, and that they will work with local economic development offices to ensure that as many of the branches as possible are recycled for employment uses. Many of the bank branches are grand buildings, which are located on some of the most prominent corners of our retail strips; therefore, it would be a shame if a concerted effort were not made to preserve these buildings.

Many owner/operators of small businesses, particularly retail businesses, fear that the closure of bank branches will exacerbate a problem that they have been encountering with increased frequency when dealing with the banks. Local branches of banks are refusing business deposits, forcing the owner or employee to drive or walk, sometimes several kilometres, to their local business branch. The owners/operators of small retail businesses need to make cash deposits quickly, easily and safely. Night deposits are a particular issue for many retailers. If the bank mergers accelerate the trend to specialized business branches, many small retailers may be negatively impacted by the mergers. However, there is no evidence that the bank mergers will accelerate the trend to local branches that refuse business accounts.

Impact on Employment

The most obvious consequence of closing a large number of bank branches is the potential impact on employment. The Bank of Montreal has closed six branches in Toronto and the Royal Bank has closed eight since the announcement of the merger in January. Both banks maintain there have been no layoffs; all employees were offered positions within the banks except for one who retired. Generally, the trend over the past few years has been towards fewer branches with increasing use of ATMs, phone banking, personal computer banking, and, more recently, home banking. While jobs at the branch level are also decreasing, it is important to note that employment overall in the financial services sector has risen.

The expected loss of branch jobs is not expected to result in an overall loss in employment by the financial services sector. While there may be fewer branch oriented positions, it is anticipated that positions in call centres and administrative centres will be increasing as will positions in the middle to upper range of investment and global banking. The Royal Bank and Bank of Montreal have committed to spending $750 million over five years in retraining and repositioning employees.

The Bank of Montreal/Royal Bank have predicted that the short-term impact of their merger could be an up to ten percent (9,000 jobs nationally) reduction in total employment at the Bank of Montreal and the Royal Bank. However, the banks predict that at the end of a five year period post-merger, employment at Royal/Montreal will actually have increased. For Toronto this could be good news overall, as a lot of the increase in centralized employment is likely to take place in Toronto. The 1995 merger of two major Toronto brokerage firms, Nesbitt Thomson and Burns Fry, creating Nesbitt Burns, saw predictions of a 25 percent decrease in the work force. Three years later there were 700 more employees with the company than before the merger, a 20 percent increase.

The American experience with bank mergers also indicates that total employment at the merged institutions increased on average within two to three years of the merger. However, it is difficult to draw conclusions about the proposed Canadian bank mergers from the American data, because many of the American mergers were of banks that had geographically complementary rather than substitutable assets.

Impact on Competition:

The largest worry about the impact of the bank mergers is a possible decrease in competition. While it is clearly beyond the scope of this report to determine the impact of the proposed mergers on competition, several observations are likely to be helpful. Firstly, most of the figures that have been reported on both sides of the debate are subtly misleading. Scotiabank has reported that Royal/Montreal will have a 39 percent market share of "core banking" personal deposits; they are excluding trust companies and many other institutions that offer similar services. The Bank of Montreal, on the other hand, reports that Royal/Montreal would have a combined 16 percent of the total domestic assets of financial institutions, which includes many dissimilar products (including pension funds).

A recent study, published by the C.D. Howe Institute, which concluded that the mergers provide benefits for Canadian consumers, added the following caveat "if and only if the government allows the rationalization of the branch network and domestic staffing and if it permits the entry of other firms, domestic and foreign, into the market for banking services".¹⁰ Clearly, there are lines of business and/or specific markets where the mergers will create situations where the banks could exercise market power to raise prices and take advantage of consumers and other bank customers.

Generally, there are two ways of dealing with the potential of these mergers to reduce competition in the market for financial services in Canada: regulation and new competitors. Both of these approaches present risks.

If we allow foreign competitors more access to the Canadian market, Canadian customers will benefit from lower prices and the product innovations that increased competition offers. However, there is a very real risk that we may lose many financial services jobs to other cities, outside Canada.

The regulatory route is even riskier. Highly regulated markets are not places where innovations are developed or even rapidly adopted, as it is not possible for regulators to adapt as quickly as firms to changes in this rapidly changing industry. For example, New York lost a great deal of business to London in the 1970's with the emergence of Euromarkets, which are U.S. dollar denominated bonds issued outside the United States in order to avoid U.S. regulations, that have subsequently been lifted.

The market for lending to small and medium size businesses (SME's) is of particular concern as this sector is one of the most important sources of new jobs in the Canadian economy and is much more reliant on the banks for debt finance than are large corporations, which increasingly are accessing capital markets directly. However, in this area Wells Fargo has recently pioneered a new program of business loans that are approved over the phone from a call centre in the U.S. Rather than incurring the substantial costs involved in setting up a subsidiary in Canada, Wells Fargo contacted a large number of potential clients (mostly small businesses) in Canada by direct mail, offering unsecured lines of credit between $15,000.00 and $75,000.00. The loans were processed over the phone by the bank's call centre in Colorado using a 1-800 number, and were approved within 48 hours of application.

The Wells Fargo example provides both comfort and concern to the Canadian policy maker: comfort that if the mergers are approved new competitors will emerge to serve Canadians, and concern that Wells Fargo has developed risk management systems that it allow it to offer its services in a fairly complicated market segment without making any investment in bricks and mortar (and jobs) in Canada.

A recent survey of their members by the Canadian Federation of Independent Businesses shows that 68 percent are opposed to the mergers, and 20 percent are in favour of the mergers. The numbers for Toronto show 66 percent opposed and 23 percent in favour. This does not mean that the mergers will be detrimental to small businesses; it only shows that small businesses perceive that the mergers will have a negative impact.

Scotiabank also cautions us that even in the absence of market power, the newly merged banks will be inwardly focussed for several years, as they try to make these amalgamations work; therefore, the newly merged banks are likely to become more conservative in their lending practices, which could lead to a credit crunch for small and medium size businesses in Canada. Banks have credit limits by market and sector; Scotiabank argues that these limits will be lower for a newly merged bank than they were for both existing banks combined.

Conditions on Approval of the Mergers

The Minister of Finance does not only have a choice just between saying yes or no to the mergers, he could also approve the mergers subject to several conditions, such as no branch closures and no employment cuts. We would then get the reduction in competition caused by the mergers without benefiting from most of the potential efficiency gains, thereby limiting the long-term potential of these mergers to expand Toronto's role as an internationally competitive financial centre.

Other conditions that could be considered include those set out in the motion that is before your committee from Councillor Mihevc and Councillor Walker. The intent of the recommendations in this motion is certainly good - to improve access to banking services by small businesses and less affluent retail customers. The mechanisms to achieve these objectives may, however, create the need for another expensive bureaucracy and may create substantial compliance costs for the banks. Also, if Toronto City Council decides to ask the Minister of Finance to increase the amount of "red tape" with which the banks have to deal, this sends out a very negative image about Toronto as a financial centre. For these reasons, it is not recommended that City Council ask the Minister of Finance to impose numerous conditions on the proposed bank mergers. "Much of an international financial centre's success hinges on perception. Financial service centres must not only be open for business, but be seen to be open for business."¹¹

Conclusions:

It seems to be clear that, with or without the bank mergers, the financial services sector in Canada is currently undergoing a period of change. The changes in the financial services sector are largely being driven by technological changes; however, changes in customer preferences are also a major factor. The need for a branch network is no longer as paramount as it was even five years ago, and it is easy to foresee a world in which bank branches are only one way of delivering a wide range of financial services products. At the same time, the banking industry in the United States is also rapidly restructuring, as a wave of bank mergers there is creating ever larger institutions.

With all these changes in the market for financial services that are occurring around the world, it is important that we do not allow ourselves to become complacent about Toronto's position as a financial services centre. Toronto's financial services cluster is one of the ten strategic clusters of economic activity in Canada, on which the prosperity of all Canadians depends.

Permitting the four banks to merge into two, will create winners and losers. The shareholders in the merged banks are expected to be winners, otherwise the management of these banks would not be proposing the mergers. It is reasonable to assume that many (or even most) of Toronto residents are directly or indirectly (through mutual funds and pension plans) shareholders in these institutions. Other potential winners include new bank employees in expanding lines of business.

Whether the banks' customers are winners or losers depends on whether the mergers do more to increase efficiency or to reduce competition. On balance, it is expected that, particularly in a large market such as Toronto, there may be a modest positive impact from the mergers. At the same time, the mergers may have a negative impact on competition in some sectors, for example in the very important small business sector. Therefore, we are recommending that City staff track the impact of the mergers and work with the banks to explore ways of mitigating any negative impacts.

Clearly some people will lose because of the merger - for example employees that are made redundant and who do not want to be re-trained or are incapable of being re-trained. However, on balance, there will likely be more winners than losers because of the mergers. In the short-run, we expect that there will be some negative impact on bank employment in the City. Some analysts have predicted employment reductions as high as 5,000 in Toronto's Central Area. However, in the long-run, the mergers have the potential to be good for Toronto.

Contact Names:

Brenda Librecz 397-4700Peter Viducis392-1005

Ron Wandel 392-3384

Marion Brayiannis396-5056

¹Canadian Bankers Association, Canadian Bank Facts (1997/98), page 7.

²Bank of Montreal, Information on Merger Issues (1998), page 5.

³Alan Rugman and Joseph D'Cruz, Fast Forward: Improving Canada's International Competitiveness (1991), page 34.

⁴Boston Consulting Group, Financial Services at the Crossroads: The Current and Potential Role of Financial Services in the Greater Toronto Area (1997), page 19.

⁵Ibid, page 11.

⁶Peter Dungan, The Impact of Banking and Financial Services on the Canadian Macroeconomy (1997).

⁷Boston Consulting Group, Op. Sit. (1997).

⁸Frank Mathewson and Neil Quigley, Canadian Bank Mergers: Efficiency and Consumer Gain versus Market Power (1998), page 5.

⁹Ibid, page 19.

¹⁰Ibid, page 3.

¹¹Boston Consulting Group, Op. Cit. (1997), page 27.

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Appendix: The Financial Services Sector in Toronto: Background Report

Toronto has long been known as a major financial services and manufacturing centre in Canada. The financial service industry's significant place in the city is evident in its strong contribution to GDP and employment (figure's 1 and 2). Financial services represents the GTA's second largest contributor to GDP and its number five direct employer, placing the sector ahead of other major industries, including construction, transportation and communications. Over 70 percent of the financial services sector GDP contribution comes from the GTA, thus magnifying its importance to the local economy.

High Concentration in the Core

Financial services are particularly important to the City of Toronto because of the industry's high concentration in the city centre. The sector is more heavily represented in the city than is any other industry in the province. Financial services is the second largest contributor to the City of Toronto's GDP and represents the third largest direct City employer. Also, over 60 percent of the sector's GDP contribution emanates from the City--over $10 billion.

Financial services were directly responsible for $12.2 billion in regional GDP in 1995 (9.5 percent of the GTA total). An additional $8.6 billion in GDP was injected into the GTA economy through the sector's spinoff benefits, which included purchases of professional services, telecommunications and computer specialists, etc.

The employment impact is equally significant: the finance sector directly employed 165,000 individuals (7.6 percent of total GTA employment). Secondary effects accounted for the additional employment of 158,000 people in the GTA. In the City of Toronto alone, over 93,500 people were employed directly in the financial services sector in 1997 (table 1). In total, the financial services sector generated nearly $21 billion in GDP and was responsible for the employment of more than 320,000 people, either directly or indirectly in the Toronto region.

The Banking Industry

The main driver of financial services in the Toronto region is the banks, which generate between 60 and 70 percent of all financial services GDP in the GTA. In addition to providing channels for funds, banks also facilitate economic activity by directly financing governments, business investments and consumer purchases. At the end of 1996, Canadian chartered banks held almost $90 billion in personal loans, $200 billion in residential mortgages, $165 billion in business loans (including non-residential mortgages), and $130 billion in corporate and government securities, They are also substantial contributors to employment and the local tax base. As Table 1 revealed, nearly 66,000 persons were employed directly by banks and trust companies in the City of Toronto in 1997.

A major portion of employment in the financial sector is in the high value-added jobs upon which a strong economy depends. The sector typically provides employment with above-average salaries, a high degree of stability and strong qualification levels. In recent years, as growth has tended to concentrate in investment management and securities, the number of high-paying jobs has been increasing. There are nearly 50 percent more university graduates employed in the financial services industry than there are in the working population of the Toronto area overall. The same holds true for high school educated employees. Furthermore, financial services ranks third among the top GTA employers in terms of payroll per employee.

Many high-paying professional services rely upon the presence of a strong financial services sector for their business. Twenty percent of all lawyers and accountants are dependent on the financial sector, as are ten percent of all advertising professionals in Toronto. The creation of premium employment opportunities is a particularly important benefit as it helps maintain the vibrant downtown core associated with Toronto's financial centre.

The presence of a strong financial services sector is a major force driving the growth of the high tech industry in Toronto. Financial services account for 35,000 jobs directly in computer and telecommunications related functions in the region. Through its purchases, the industry also accounts for 9,000, or one in four computer service firm jobs, and almost 5,000, or one in seven telecommunications jobs in the Toronto region. It is also important to note the high degree of interdependence between financial and other services. Financial services are highly dependent on telecommunications and software services, sectors which, in turn, owe much of their growth to the success of financial services. The introduction of teller less banking and electronic trading, among other advancements in financial services, has prompted technological innovations in the telecommunications and computer industries.

The Structure of Banking and the Financial Services Sector

One of the primary dichotomies of the financial services sector is between traded and derivative (or non-traded services). Traded goods and services are the main engine of economic growth. These are the goods and services that attract new wealth into the regional economy through exports by replacing imports (figure 3).

Non-traded goods and services, on the other hand, compete with firms within the economic region. While they are not primary wealth generators, the non-traded sectors are, nevertheless, an important base for traded services and help them maintain their competitiveness. Some businesses, including some financial services, have both traded and non-traded elements.

Financial services in the Toronto area are 55 percent traded and 45 percent non-traded (figure 4). Prime examples of non-traded services are sales offices for insurance and local bank branches. These offices compete with one another in providing services such as cashing cheques, withdrawing money and offering advice on financial matters. These are mainly local services that traditionally do not compete with others outside the region. In the future, however, some of these non-traded financial activities could be performed remotely through electronic means and become traded services.

A substantial portion of financial services in Toronto are nationally traded and could be located elsewhere in Canada. Some back office functions of banks and the headquarters of some domestic firms could, for instance, be located outside of Toronto and still operate just as effectively. About 30 percent of all financial services are traded nationally and could become internationally traded.

About 25 percent of the financial services activity in Toronto is internationally traded. Corporate finance and investment banking, for instance, are subject to intense international competition. In these areas, financial services in Toronto compete against the likes of New York, Chicago and even London. The clients for these services don't have to consult Toronto based banks to purchase the services they need; with modern telecommunications and air travel, they can buy similar services worldwide. Increasing global competition, deregulation and technical advancements are making it possible - indeed essential - for financial services firms to compete internationally in these areas. Over time, the proliferation of electronic banking and telephone and computer sales activities will mean that steadily growing portions of financial services will become nationally and eventually internationally traded.

The presence of large, successful, internationally competitive companies in Toronto clearly benefits the region. Canadian banks have been effective international competitors for a long time, and although they are growing their global operations, the vast majority of their employees continue to work in the region's downtown core. The international competitiveness of the financial sector thus preserves and creates valued employment in the city.

The Twin Engines of the Economy

Toronto is one of few regions in North America with both a strong manufacturing and a strong financial services sector. The automotive industry, representing 17 percent of traded manufacturing, is the main driver of manufacturing in the region. Similarly, financial services, which accounts for 29 percent of all traded services, leads the local services industry.

Although both financial services and automotive are economic growth leaders, there are several key differences in the activities and impacts of these sectors.

Unlike automotive industry suppliers, most of Ontario's financial services suppliers (almost two-thirds) are located within the GTA's borders and these tend to be densely concentrated in the downtown core. Financial service businesses are additionally important to the GTA economy because of the many businesses that are headquartered here.

As the financial services industry has grown, so has its importance and contribution to the Toronto and Ontario economies. An economic modelling study carried out by Peter Duggan of the Institute for Policy Studies at the University of Toronto demonstrated that additional growth of $1 million in revenue in financial services generated 33 percent more jobs in the Toronto area than an equivalent increase in automotive industry revenue.

Public Policy and the Banking Industry

In 1900, changes to the Bank Act allowed banks to merge, thus anticipating the need for consolidation and economies of scale in banking and ultimately increasing the stability of financial institutions in Canada. It also allowed for national banking decades ahead of U.S. banks, which were limited to state banking activities.

In the 50s and 60s, the Bank of Canada removed interest rate caps. The fact that the U.S. did not remove caps destabilized its system and contributed ultimately to the savings and loans debacle of the 1980s.

In the late 80s, when capital markets were changing, Canadian banks were allowed to enter the securities business. Up to this point, Canadian investment banks tended to be small and undercapitalized on a worldwide scale. But mergers with chartered banks have allowed Canadian investment banks and securities firms today to compete on a more equal footing with large U.S. banks.

The Toronto Financial Services Cluster

Toronto clearly dominates the Canadian scene for financial services. The Toronto financial services cluster is also strong in international terms.

Toronto is among the fastest growing financial centres in North America in terms of GDP growth and has the third highest concentration of financial services (figure 5).

Financial service firms have traditionally clustered in a few cities. These clusters have emerged as a result of numerous factors. London developed a strong financial services cluster as a world centre for trade in the 18th century. New York achieved financial services dominance by developing one of the first capital markets in the world in the 1860s and managing North American trade with Europe.

Currently, 75-percent of all Canadian banks and 70 percent of all Canadian insurance companies are headquartered in Toronto. Compared to other countries such as the U.S. and Germany, this is one of the highest levels of national clustering. Financial services cluster because the industry derives substantial value from co-location. Once it has achieved a critical mass, a successful cluster will be self-reinforcing. The presence of a successful industry attracts new players, promotes product innovation and competition and encourages new businesses to grow.

There are three types of financial services clusters (figure 6):

Global Clusters are international trading centres where many global firms are headquartered. New York, London and Tokyo are all global clusters, each located in a different time zone allowing for worldwide trading around the clock.

Secondary International Clusters are substantial clusters that serve regional markets in most businesses are perhaps global leaders in one or two segments. Chicago, for example, is a leader in commodities and derivatives trading. There are approximately twelve secondary international centres in the world today. Toronto, Hartford and Boston are secondary international centres that clearly depend on the strength of individual companies located in their midst. As a financial services centre, Toronto defines itself mainly through the presence of five large banks and the Toronto Stock Exchange's role as a regional stock market. Hartford is a major centre for insurance companies, while Boston is defined by its large mutual fund companies like Fidelity.

Local Clusters serve mainly local markets, have only limited national activity in large countries and are often the national centre in smaller countries. Local financial services clusters are found in Montreal, Vancouver, Los Angeles and Stockholm.

It is important to note that clusters at any level in the hierarchy are not static, having the ability to improve or worsen their positions with changes in circumstance and strategic positioning. Many financial clusters have moved up or down in the hierarchy as their situations have changed. Financial clusters depend on five underlying support mechanisms to provide the foundation for their growth and stability:

Structural Anchors - the presence of exchanges and a concentration of headquarters of financial services clients.

Accessibility and Quality of Infrastructure - telecommunications, roads and airports, high quality of life, excellent universities

Public Policy Environment - supportive regulatory environment, efficient regulatory bodies, policies that enhance competitive industry positions

Non-Financial Business Environment- strength of local economy, strength of national currency

Cost of Doing Business - taxes, wage rates, real estate costs

Some centres are beginning to move up the hierarchy by capitalizing on their unique strengths. Singapore, for example, has been able to secure a strong position through strategic marketing. On the other hand, financial centres like Frankfurt have declined because many of their growth foundations were weak and unnurtured. Los Angeles, once a secondary international centre, has been reduced to a local centre as San Francisco's financial services cluster continues to gain ground. Los Angeles has lost almost 45,000 jobs in financial services since 1990. Los Angeles suffered from the 1992 Bank of America takeover of Security Pacific, which resulted in headquarters functions and more than 10,000 jobs being eliminated or transferred to San Francisco. The financial services cluster in San Francisco has also been the beneficiary of the Wells Fargo acquisition of First Interstate (another Los Angeles company) in 1996, which brought more headquarters activity and employment to the area. Both of these cases demonstrate how the consolidation of headquarters was a key factor in determining the fortunes of financial services clusters.

Business Trends Affecting the Industry

Several business trends are changing the face of the financial services industry in Toronto and in the industry worldwide:

CTechnology is increasing the mobility of industry functions. Satellite links and imaging technology, for example, are making distance irrelevant and allowing some business functions to move offshore. As telecommunication costs decrease, more functions can move anywhere and remain just as accessible and affordable.

CDecentralization of management authority is tending to weaken existing clusters. As businesses decentralize to be close to their customers and to where they do business, they may establish functions in places like Shanghai, Jakarta and Sao Paolo.

CNew competitors and the restructuring of distribution networks are also leading to job losses. In Toronto, the number of branch employees may decline as centralized call centres are established elsewhere. In the future, competitors who offer mortgages and loans over the Internet will increase competition for the local branches of banks.

Toronto will also face growing global competition in the mutual fund management area, which is becoming increasingly global. U.S. based firms are already tapping into this lucrative Canadian market. Toronto will also face increasing pressure to transfer functions out of the city region in order to compete with other attractive locations. While Toronto has not yet been adversely affected by global business trends, the region cannot afford to be complacent about the potential threat that these developments represent.

In some cases, these trends may become sources of new competitive advantage. For instance, unprecedented growth in personal advisory and money management services between 1990 and 1995 is now presenting some new opportunities for the financial.

Risks and Opportunities

The increasingly traded nature of financial services in Toronto presents opportunities for growth and at the same time poses some competitive threats.

There are several factors prompting the increase in traded financial services activity (figure 7). Technological innovation and automation, in the form of automated teller machines and home banking, for instance, are replacing face-to-face activity for many customers. Communications costs are falling, allowing for increased remote processing and the placement of call centres in locations like New Brunswick. Furthermore, deregulation is opening the doors to new international competitors.

These trends are making an increasing number of financial services jobs mobile. Potentially up to 55 percent of all financial services jobs in Toronto could be performed elsewhere as new technologies are introduced in the future. These same technologies can enable Toronto to increase its employment through the export of newly mobile services. Maintaining and improving the foundations for financial services clusters can increase the likelihood of these functions remaining and growing in Toronto over the long run.

Technological Innovation

New technologies ae making it easier to enter the U.S. market from Canada, just as U.S. competitors are gaining easier access to our market. Canadian banks, insurance companies and fund manager can capitalize on technological innovations to sell services to the U.S. via phone or electronic media without being physically present. The export of certain financial services does not require a local presence and can be handled via telecommunication. Money management and mutual funds are a case in point.

The Efficiency of Canadian Banks

Canadian banks are widely viewed as more efficient than their U.S. counterparts (figure 8). Productivity ratios (expenses as a percentage of taxable revenues) of the top five banks in the U.S. and Canada show Canada's banks operating more efficiently. This is an area of expertise and success that our banks should be able to apply to other business activities, including the purchase and management of other interests, the use of new technologies, and the export of new services to international clients from their home base locations.

International Expansion

Canadian banks and life insurers also have significant experience in international expansion as a means of leveraging their strength. Several Canadian banks are expanding into Latin America. Scotiabank has invested in Grupo Financiero Inverlat in Mexico, which will allow it to take a 55 percent interest by the year 2000. It is also building on existing affiliations with smaller banks in Chile and Argentina. Meanwhile, The Bank of Montreal has also bought a 16 percent share of Grupo Financiero Bancomer in Mexico.

There are an increasing number of Canadian banks buying U.S. institutions. The Bank of Montreal purchased Harris Bank and other Illinois based banks; The Toronto Dominion Bank bought the discount broker Waterhouse; and National Bank bought parts of New England Commercial Finance. Manulife and Sun Life have each expanded aggressively internationally, particularly in Asia.

Maintaining Back Office Jobs

The loss of mobile back office jobs is a natural development of many large financial centres. The challenge for Toronto in this area is to develop employment in core areas of strength to stem the outward migration of jobs to other parts of Canada or to the U.S.

One of those core strengths is in educational infrastructure and skills concentration. Through its extensive network of post-secondary institutions, Greater Toronto offers advanced education and training programs that turn out highly qualified employees. The region's solid reputation for producing skilled knowledge workers in data processing and math may offer further opportunities for keeping and attracting specialized back office functions.

Strategic Niches

Strategic niches can also be developed by building on national strengths in such areas as mining finance or in other resource sectors like forestry, oil and gas and utilities.

One financial services niche that exists in Toronto is mining financing. About 40 percent of all worldwide mining financing originates in Toronto. This strength can be traced back to the existence of a strong mining industry cluster in Canada and the fact that many senior executives and mining officials throughout the world were educated in Canada.

Sources:

The Boston Consulting Group (1997) Financial Services at the Crossroads: The Current and Potential Role of Financial Services in the Greater Toronto Area.

City of Toronto Planning Department (1997) Toronto Employment Survey. Various years.

De Reus, Mary ed. (1998) Toronto Business and Market Guide: A Profile of Toronto and the Greater Toronto Area. The Toronto Board of Trade.

Statistics Canada (1998) Employment Statistics for Metropolitan Toronto. Custom run--unpublished data

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Financial Services Sector Employment

In The City Of Toronto (1997)

Total Empl. Suburban Downtown % Downtown

Branches15,45912,017 3,44222.3%

Admin Off.50,49810,51039,98879.2%

Investment18,668 2,48216,18686.7%

Financing 9,050 4,818 4,23246.8%

Total93,67529,82763,848 100.00%

Table 1

Source: City of Toronto Planning Department Employment Survey 1997.

Employment Totals For Banks Requesting Merger

Table 2.

Source: Bank of Montreal, Royal Bank of Canada, CIBC and Toronto Dominion (1998).

The Economic Development Committee also submits the following report (September 17, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

To report on possible federal legislation that would help ensure that Canadian financial institutions remain accountable to consumer, small business and community interests.

Funding Sources, Financial Implications and Impact Statement:

None.

Recommendation:

It is recommended that this report be received for information.

Background:

At its meeting on June 3, 4 and 5, 1998, City Council had before it a motion from Councillor Mihevc and Councillor Walker asking Council to urge the federal government to enact legislation to ensure that Canadian financial institutions remain accountable to consumer, small business and community interests.

The motion was referred to the Strategic Policies and Priorities Committee, which received the motion and forwarded a copy to the federal government. At its meeting on July 8, 9 and 10, 1998, City Council referred the Clause of the report from Strategic Policies and Priorities Committee to the Economic Development Committee for consideration. City Council also requested the Commissioner of Economic Development, Culture and Tourism to report thereon to the Economic Development Committee at the same time as the report is brought forward regarding the proposed bank mergers. This report was prepared to respond to that request.

Comments:

Overview:

The motion tabled by Councillor Mihevc and Councillor Walker includes 14 separate recommendations directed at the federal government, which are designed to improve the level of service that financial institutions offer small businesses and consumers. All of these measures depend on regulation/moral-suasion to achieve the goal of encouraging the banks and other financial institutions to provide better service for their customers. An alternate approach, which could achieve the same results, would be to adopt measures that encourage competition in the market for financial services.

While one approach is not necessarily better than another in all cases, it is generally agreed that competition is preferable to regulation for several reasons. First, there can be significant compliance costs associated with regulatory regimes. Furthermore, requiring detailed reporting of operating decisions, may require firms to disclose information that would more properly be considered proprietary. It is also very difficult for regulators to adapt as quickly as firms are able, to changes in the environment; therefore, overly strict regulation is often a disincentive to developing new products and services or in adopting new practices developed elsewhere. Firms also waste resources lobbying for changes to regulations, and there is a risk that the regulations will not achieve the public policy goals they were designed to achieve or that they will compromise other, equally important, public policy goals. Finally, excessive financial sector regulation will create a negative image of Toronto as a financial centre. For all these reasons, over-regulation could make Toronto less competitive than other financial centres in the United States and overseas. Regulation should be seen as a second best solution, to be explored only if it is clear that competition is unable to achieve our public policy goals.

On the other hand, moral-suasion can be a very powerful force in society. People and firms act, not only in response to competitive pressures within a framework of laws and regulations, but also in response to subtle, and not so subtle, cues about what is right. For example, drunk driving is discouraged as much by our peers as it is by RIDE programs. Similarly, financial institutions are sensitive about their public image. When asked why service charges are lower in Canada than they are in the United States, a Canadian bank's representative's response had nothing to do with competitive pressures, but was that if the bank raised service charges it would be all over the front page of the newspapers the next day.

The first 52 recommendations in the report of the federal Task Force on the Future of the Canadian Financial Services Sector, released on September 15, 1998, are about enhancing and preserving competition in the financial services sector. It is clear that the Task Force is depending on competition as the primary means of ensuring that our financial services sector serves the needs of Canadians. However, the Task Force also notes that there is a legitimate basis in our history and our public policy framework for Canadians to have higher expectations with respect to banks than other private businesses. The Task Force's report includes several recommendations along the lines of those outlined below.

Specific Recommendations:

The recommendations in the motion before your committee include a variety of measures that can be grouped into six categories as follows:

(1)collect data about how well financial institutions are serving customers, with an emphasis on small business and retail customers;

(2)grade each institution's performance based on the data collected above;

(3)create incentives for financial institutions to achieve good grades under the performance grading system;

(4)establish an independent ombudsman for financial institutions;

(5)guarantee every resident of Canada a low-cost, no frills bank account; and

(6)require financial institutions to include flyers about a "Financial Consumer Organization" in their mailings to customers.

The first group of recommendations includes measures designed to collect data about how well our financial institutions are serving customers, with an emphasis on small business and retail customers. Most of this data would have to be collected by the financial institutions themselves. Data to be collected includes: number of loan applications, approvals and rejections by type, size and location; loan default rates, loan loses and number of loans called, by type, size and location; complaints received, complaints resolved; lawsuits by customers and their resolution; branch closures. In addition, the motion recommends an independent audit of whether the banks are providing basic banking services for all residents of Canada.

It is clear that reporting data about the number of branch closures would not be onerous, and in fact it would be reasonable to ask the banks to provide advance notice of branch closures, which would allow communities more time to adjust. It may also be reasonable to ask all financial institutions to provide more information about their lending activities to small businesses; however, it is also important to maintain the confidentiality of commercial relationships and not to create excessive reporting requirements. For example, it is not reasonable to ask financial institutions to report detailed data about every loan that was turned down.

The second measure, which is that the federal Superintendent of Financial Institutions grade each financial institution's performance based on the above data, may present some problems in determining the appropriate weighting for each variable. If all of these data are published, it would not be unreasonable for a number of agencies (public, private or non-profit) to determine their own weighting formulae and publish independent scorecards.

The third group of measures is designed to provide incentives for financial institutions to achieve good grades under the performance grading system described above, in addition to the subtle but important moral-suasion of publishing grades for each institution. Three measures have been suggested to put teeth into the performance grading system: a surtax on all financial institutions, combined with a tax credit based on the institution's performance; allocating government business only to those institutions that have good performance grades and denying expansion and merger applications by institutions with poor performance records. While the intent of these proposals is certainly good, Council should not endorse these recommendations for several reasons. First, different financial institutions may have, legitimately, chosen different niche marketing strategies. Second, these measures would appear to be much more interventionist than in other jurisdictions and, therefore, may make Toronto appear to be an undesirable place to locate traded financial services activities.

The fourth measure recommended in the motion is for financial institutions to fund an independent ombudsman. This measure, also recommended in the recent federal Task Force report, should be supported as it may provide more comfort to individuals and firms that feel that they have been treated unfairly than the existing Canadian Banking Ombudsman (CBO), which is industry sponsored, does not cover all financial services firms and is not be perceived as entirely independent.

The fifth measure, also supported by the federal Task Force, is to guarantee every resident of Canada access to a low-cost, no frills bank account. Access to a bank account at reasonable cost could be considered a necessity for most people in our society. The real question is who should subsidize this service. Food is a necessity; however, we do not ask supermarkets to subsidize food for low income Canadians. Similarly, if access to a basic bank account at reasonable cost requires subsidies, it would be more appropriate that these subsidies are from general tax revenue than from the providers/consumers of financial services.

The sixth measure is for financial institutions to include flyers about a "Financial Consumer Organization" in their mailings to customers. The task force also considered this proposal, but concluded that is was not comfortable making a recommendation in support of this measure. The groups supporting this measure were encouraged to further develop this proposal and once a broad consensus is reached to present a refined proposal to the Government.

Other Initiatives to Enhance Access to Capital by Small Businesses:

Staff of the Economic Development Division have been participating on a steering committee which is studying the access to capital issue in the GTA. The Toronto Access to Capital Committee (TACC) is composed of representatives from the Ministry of Economic Development Trade and Tourism, Industry Canada, Human Resources Development Canada (HDRC), private venture capital sector, Small and Medium Enterprise (SME) information providers, Credit Union Central of Ontario, and the major chartered banks. Facilitation has been made possible through seed funding provided by HRDC's Industrial Adjustment Service.

The original mandate of the Committee was threefold:

(a) to develop a "one-stop" shopping information and referral source for SME's to access information related to accessing capital to start or grow their business;

(b)to develop a communication strategy to increase the capacity of SME's to become investor ready; and

(c)to design a strategy that would develop the capacity of organizations acting as intermediaries to SME's to assist their clients in accessing appropriate forms of financial support.

This mandate has been developing since the Committee's inception in May, 1998. Recently, in response to an RFP, a consultant was approved to put together an inventory of SME information and help providers. Further RFP's are anticipated in the future to: 1) study/inventory capital providers; and 2) to develop a communications strategy. Additional research may be needed as the Committee's mandate grows.

Conclusions:

Supporting the development of small business is a key component of the City's economic development strategy, and access to capital continues to be a major concern for many small businesses. Therefore, the issues surrounding the financing of small businesses are a key component of the Economic Development Division's on-going workplan. The work of the Toronto Access to Capital Committee supports these objectives as do the recommendations in the motion before your committee today.

The report of the Task Force on the Future of the Canadian Financial Services Sector, released on September 15, 1998, also addressed many of the recommendations in the motion before your committee. Several of these recommendations should be supported and they could be included in the City's brief to the House of Commons and Senate hearings on the Task Force's report.

The recommendations to collect more data about each financial institution's record of small business lending is supportable, noting that it is necessary to maintain a balance between the desire for more data about lending to this very important sector and the confidentiality of commercial relationships as well as compliance costs.

It is expected that a variety of organizations (public, private and non-profit) will grade the institutions based on the published data and that the subtle but effective power of moral-suasion will help to achieve the important public policy objective of increasing the availability of capital to small and medium sized enterprises.

The proposal to create an independent ombudsman for financial institutions is also supportable and this measure should help reassure the banks' clients that they have not been treated arbitrarily.

Contact Names:

Brenda Librecz 397-4700

Peter Viducis392-1005

Ron Wandel 392-3384

Marion Brayiannis396-5056

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The Economic Development Committee reports, for the information of Council, also having had before it during consideration of the foregoing matter the following material:

-communication (March 30, 1998) from the City Clerk forwarding the action of the Urban Environment and Development Committee on March 23 and 24, 1998, wherein it directed that the matter of the impact on Toronto of the proposed merger of the Royal Bank of Canada and the Bank of Montreal be referred to the first meeting of the Economic Development Committee, once it is established;

-submission from the Bank of Montreal and Royal Bank;

-submission from the Canadian Federation of Independent Businesses;

-submission from ScotiaBank;

-submission from the Toronto Dominion Bank;

-submission from the Canadian Imperial Bank of Commerce;

-communication (August 12, 1998) from the City Clerk forwarding Clause No. 3 of Report No. 14 of the Strategic Polices and Priorities Committee, headed "Legislation Respecting Canadian Financial Institutions" and advising that City Council, at its meeting on July 29, 30 and 31, 1998 struck out and referred this Clause to the Economic Development Committee for consideration, with a request that the Commissioner of Economic Development, Culture and Tourism report thereon to the Economic Development Committee at the same time as the report is brought forward regarding the banking industry, which was previously requested by Councillor Moscoe.

The following persons appeared before the Economic Development Committee in connection with the foregoing matter:

-Mr. Maurice Hudon, Executive Vice-President, Ontario Division, Bank of Montreal and Mr. George Gaffney, Executive Vice-President and General Manager, Metro Toronto, Royal Bank;

-Ms. Judith Andrews and Mr. Ted Mallett, Canadian Federation of Independent Businesses;

-Mr. John Anderson, Vice Chair, Toronto Small Business Support Organization;

-Mr. John Banka, Toronto Small Business Support Organization;

-Mr. Warren Jestin, Senior Vice-President and Chief Economist, ScotiaBank;

-Mr. Bob Kelly, Vice-Chair, Retail Banking, Toronto-Dominion Bank and Mr. Mike Pedersen, Executive Vice-President, C.I.B.C. Branch Banking;

-Mr. Rosario Marchese, M.P.P., Trinity-Spadina; and

-Mr. Hugh Brown.

(City Council on October 1 and 2, 1998, had before it, during consideration of the foregoing Clause, the following report (September 30, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

To provide a draft brief to the Minister of Finance as requested by the Economic Development Committee on September 18, 1998. This brief could be the basis of a presentation by the Mayor, or his designate, to the House of Commons and Senate hearings on financial services sector legislation.

The attached brief highlights the importance of Toronto's position as a major North American financial centre, and it also raises several other issues that are of particular concern to Toronto residents such as access to capital by small businesses.

Funding Sources, Financial Implications and Impact Statement:

None, at this time.

Recommendation:

It is recommended that City Council approve in principle the attached brief, and request the Mayor, or his designate, make a deputation to the Senate and Commons hearings on the report of the Task Force on the Future of the Canadian Financial Services Sector.

Council Reference/Background/History:

At its meeting on September 18, 1998, the Economic Development Committee had before it a report from the Commissioner of Economic Development, Culture and Tourism, which, as amended, recommends that staff prepare a brief to the Minister of Finance highlighting the importance to Canada of Toronto as an internationally competitive financial centre, and that the Mayor, or his designate, make a deputation based on this brief to the Senate and Commons hearings on legislation respecting Canadian financial institutions.

The Economic Development Committee also requested that the Commissioner of Economic Development, Culture and Tourism report directly to City Council on possible conditions that Council should request the Minister of Finance to place on the proposed bank mergers, and on the feasibility of submitting the brief to the Economic Development Committee for consideration before it is presented to the Federal Government.

Background:

The Federal Government established the Task Force on the Future of the Canadian Financial Services Sector, chaired by Harold MacKay, in December, 1996, to review financial services sector legislation. Subsequently, the Bank of Montreal and the Royal Bank of Canada announced their wish to merge (January 23, 1998). On April 17, 1998, the Toronto-Dominion (TD) Bank and the Canadian Imperial Bank of Commerce (CIBC )also announced their intention to merge.

The task force released its final report on September 15, 1998, which is the subject of Senate and House of Commons hearings. The House of Commons hearings in Toronto will be held during the week of October 14, 1998. The Senate hearings will be held in Toronto during the first week in November, 1998. It will not be possible to bring the brief back to the Economic Development Committee before the House of Commons hearings. However, the brief to the Senate Committee could be considered by the Economic Development Committee at its meeting on October 19, 1998.

In addition, the Canadian Competition Bureau is to report in November, on the impact of the proposed bank mergers on competition in the financial services sector. The Minister is expected to make the final decision, on whether the mergers are to be permitted, late in 1998 or early in 1999.

Conditions on the Bank Mergers:

Several of the deputants at the Economic Development Committee raised the possibility of asking the Minister of Finance to place conditions on the proposed bank mergers. A number of these initiatives were also addressed in the September 17, 1998 report to the Economic Development Committee.

The specific initiatives on which the Department was asked to comment include:

(1)Improved data collection about how well financial institutions are serving small businesses and other targeted groups;

(2)establishment of a Financial Consumers Association to be funded by the banks;

(3)widen membership of the Boards of Directors of the banks, to include representatives of consumers, shareholders and financial consulting groups;

(4)establish a mechanism similar to the Community Reinvestment Act; and

(5)measures to increase competition.

These initiatives could apply to all financial institutions, to all institutions that meet certain criteria, or only to large institutions that wish to merge with other large institutions. In the latter case, these initiatives would be conditions for the bank mergers.

It is difficult to imagine why these measures should be applied only to those institutions that wish to merge. The Federal Government has the authority to pass legislation requiring banks to comply with all of these measures as a condition of continuing to operate in Canada. The Federal Government does not need to negotiate with the banks. If these proposals are good public policy, they should be implemented whether or not the banks choose to merge. In addition, basic equity considerations imply that it is preferable to provide a level playing field for all competitors in an industry than to put different requirements on different organizations, though consideration could be given to exempting very small institutions from some of the proposed requirements.

The initiative to improve data collection by financial institutions was discussed at some length in the September 17, 1998 report to the Economic Development Committee. In addition, the MacKay Task Force report includes several recommendations dealing with these issues. Generally, these measures are supportable, subject to maintaining the confidentiality of commercial relationships.

The Task Force report also dealt with the proposal to require the banks to pay for a Financial Consumer Organization. The Task Force concluded that this proposal needs more work, and it encouraged the groups supporting this measure to further develop this proposal and to present a refined proposal to the Government.

The proposal to require that the banks broaden the representation on their boards of directors of certain sectors such as consumers, shareholders and financial consulting groups needs careful consideration. The board of directors of a public corporation primarily exists to represent the interests of the shareholders, though in many cases other stakeholders will also be represented. To require banks to modify the composition of their boards of directors, without consulting their shareholders, seems to usurp the authority of the shareholders.

The Community Reinvestment Act (CRA), which applies to banks in the United States, was designed to deal with a problem that was identified in the United States: that many banks deny loans to borrowers in poor inner city neighbourhoods. The MacKay Task Force notes that it has not been established that similar conditions exist in Canada, and that a full-blown CRA approach would be inadvisable in Canada at this time.

The specific community reinvestment proposal put forward by the Toronto Small Business Support Organization was that each of the banks that had expressed a desire to merge would be required to set aside at least ten percent of their assets for small business loans (less than $50,000.00). This proposal needs to be reviewed very carefully. The intent is to increase the availability of capital for small businesses, which is a goal that is shared by almost all policy makers in Canada. Small businesses are the most important job creators in Canada, and access to capital continues to be a major concern for many small businesses.

The main question is whether this measure is the best way to achieve the objective of increasing the availability of capital to small businesses. The Toronto Small Business Support Organization also recommended several measures to increase competition, which were similarly designed to improve the level of service provided to small businesses. It is preferable to rely on competition to achieve important public policy objectives, such as ensuring that small businesses have access to capital.

Competition is preferable to regulation for several reasons. First, it is very difficult for regulators to adapt as quickly as firms are able, to changes in the environment; therefore, overly strict regulation is often a disincentive to developing new products and services or in adopting new practices developed elsewhere. There can also be significant compliance costs associated with regulatory regimes. Furthermore, requiring detailed reporting of operating decisions, may require firms to disclose information that would more properly be considered proprietary. Firms also waste resources lobbying for changes to regulations, and there is a risk that the regulations will not achieve the public policy goals they were designed to achieve or that they will compromise other, equally important, public policy goals. Finally, excessive financial sector regulation will create a negative image of Toronto as a financial centre. For all these reasons, over-regulation could make Toronto less competitive than other financial centres in the United States and overseas. Regulation should be seen as a second best solution, to be explored only if it is clear that competition is unable to achieve our public policy goals.

In addition, the significant improvements in the reporting of small business loan activities endorsed by the MacKay Task Force, if implemented, will provide the public with improved information about the small business lending records of each financial institution, which will create public pressure on those institutions with poor records to improve their practices.

The measures proposed to increase competition include: reducing the barriers to the creation of new Schedule "A" banks, providing access to the Canadian payments system for a wider variety of financial institutions than at present, and eliminating the ownership restrictions on banks. Concomitantly, it may be necessary to tighten regulations regarding self-dealing. Measures to increase foreign competition should improve the financial services available to Canadians; however, they will also increase the risk of losing valuable financial services jobs to American centres.

The proposal to increase access by non-banks to the payments system is also a positive step; however, care must be taken to ensure that the integrity of the payments system is not endangered by allowing less creditworthy institutions to participate in the payments system. Like many of the other measures proposed by deputants at the Economic Development Committee, widening access to the payments system is a change that the Federal Government can make irrespective of the proposed bank mergers.

Brief to the House of Commons and Senate Hearings:

Appendix A, is a draft brief to the Minister of Finance as requested by the Economic Development Committee on September 18, 1998. This brief could be the basis of a presentation by the Mayor, or his designate, to the House of Commons and Senate hearings on financial services sector legislation.

The attached brief highlights the importance of Toronto's position as a major North American financial centre, and it also raises several other issues that are of particular concern to Toronto residents such as access to capital by small businesses. Rather than create a shopping list of every financial reform that would be desirable, it was decided that to achieve maximum impact, the brief should focus on the issue which affects Toronto disproportionately, which is the potential impact of the proposed changes on the financial sector in downtown Toronto.

This is not to say that the other issues surrounding the bank mergers are unimportant. The other issues are very important; however, most of these issues seem to be getting a lot of attention in the national debate over the bank mergers. What needs to be added to this debate is some consideration about Toronto's unique position. Toronto is the only place in Canada that has the potential to emerge, from the restructuring of the banking industry in North America currently underway, as a major North American financial centre.

There are two possible approaches to the goal of ensuring that Toronto remains a major financial centre. One approach is to ensure that Toronto based financial institutions are globally competitive. From a public policy perspective this does not mean do nothing; however, it is much less interventionist than the other approach, which is to try to achieve our public policy objectives by regulation. Unfortunately, it is not possible to put conditions on bank mergers that will ensure that Toronto based financial institutions will be successful in the North American marketplace. It may be possible, to the extent permitted under our foreign obligations (NAFTA and GATT), to limit entry to the Canadian financial services market and thereby try to ensure that Toronto remains the dominant financial centre in Canada.

There are, however, several risks associated with the protectionist/highly regulated approach. First, it may not be possible to exclude foreign competition. Second, other countries may retaliate. Third, Toronto's financial sector will become less innovative and will become slower to adopt innovations developed elsewhere. The MacKay Task Force points out that the world is moving toward a truly global capital market. "...money markets are almost fully global, bond markets are rapidly globalizing and the globalization of the world's equity markets has begun. ... Personal financial services are primarily domestic and, indeed, most retail and small business financial services are local. But even in these areas, movement is occurring that suggests the nature of the business will change over the coming decades." In the long-run, the protectionist approach would not be in the best interests of most of the consumers of banking services in Canada, and certainly would not be in the best interests of Canadian financial institutions.

The issues concerning the impact on competition of allowing the mergers to go forward are being addressed by the Competition Bureau in great detail and their report is expected in November. At that time, we will be in a better position to evaluate the impact of the mergers on competition and what conditions need to be placed on the banks to ensure that the mergers do not provide the banks with opportunities to exercise market power to the detriment of their Canadian customers.

There is also the alternative of insisting that the banks look at other options, such as joint ventures, in order to achieve the objectives such as efficient scale that the proposed mergers were designed to achieve. However, it should be noted that the banks are adamant that these kinds of arrangements do not work, and that it is likely that they have explored these alternatives in some detail.

Conclusions:

The attached brief highlights the importance of Toronto's position as a major North American financial centre, and it also raises several other issues that are of particular concern to Toronto residents such as access to capital by small businesses.

As instructed by the Economic Development Committee and to achieve maximum impact, the brief focuses on the issue which affects Toronto more than anywhere else in Canada, which is the potential impact of the proposed changes on the financial sector in downtown Toronto.

This is not to say that the other issues surrounding the bank mergers are unimportant. The other issues are very important; however, most of these issues seem to be getting a lot of attention in the national debate over the bank mergers. What needs to be added to this debate is some consideration about Toronto's unique position.

Contact Name:

Brenda Librecz, Economic Development397-4700

Peter Viducis, Economic Development392-1005

Appendix A

Draft Brief to Senate/House of Commons Hearings on Financial Services

I have come here today to speak to you about the recommendations in the report of the Task Force on the Future of the Financial Services Sector, and to convince you that Toronto matters.

Like people all over Canada, the residents of Toronto are concerned about the bank mergers. However, the level of anxiety is even higher in Toronto, because the decisions you make could have ramifications for Toronto that are larger than anywhere else.

As you consider the needs of all Canadians, I would also like you to consider the impact of your decisions on Toronto as an internationally competitive financial services centre. This is not merely a parochial concern. The financial services cluster, largely located in downtown Toronto, is very important, both to our regional economy and to the Canadian economy.

The first 52 recommendations in the Task Force's report deal with enhancing competition and competitiveness. I agree that competition is the paramount concern, and I want you to consider for a few moments the competitive position of the Toronto city region in North America.

Today, Toronto is the dominant financial services centre in Canada. Tomorrow, Toronto will have to compete directly with long-established financial centres in the United States, such as New York and Chicago, as well as emerging financial centres such as Charlotte, North Carolina.

I am not convinced that the proposed bank mergers will make Canadian banks better able to compete with their rivals south of the border. I do know that it is critically important to Toronto and Canada that they are successful.

The financial services sector is important to Canadians in two ways:

First, as customers we all benefit from an efficient and innovative financial sector - whether it is to pay our bills, save for retirement, or borrow to buy a house or start a business.

Second, this sector is an industry. Firms in this industry create jobs, pay taxes and contribute to our balance of payments. Firms in this industry, like in any other, must compete successfully in order to survive.

Firms in the financial services sector, as in most other industries, are not randomly scattered across the landscape. They are clustered in one place, which happens to be at the centre of the City that I represent and that I love.

By clustering in one place, financial services firms benefit from the synergies that develop between firms, customers and their suppliers. Clustering contributes in a major way to the success of these firms.

Ten strategic clusters of economic activity have been identified in Canada. Three of these clusters are located in Ontario: Toronto's Financial Services Cluster, the Southwest Ontario Automotive Cluster and the Southern Ontario Advanced Manufacturing Cluster.

These clusters are large employers in their own right; however, their importance is much greater than their substantial direct employment. Clusters of economic activity are very important, because they form the basis for the development of an internationally competitive economy.

Once it has achieved a critical mass, a successful cluster will be self-reinforcing. The presence of a successful industry attracts new players, promotes product innovation and competition, and encourages new businesses to grow.

Financial services is largely a traded service, and countries and regions have to export something in order to earn the ability to purchase goods and services produced elsewhere.

Forty percent of the CIBC's net earnings are from outside Canada and ninety percent of their employment is in Canada. The numbers for the other banks are similar.

Many of the best jobs are here, including many higher order head office functions, the design of new banking products and the development of training programs.

Local economic multipliers are also much higher for a head office than for a branch plant.

The Boston Consulting Group estimated that in 1996, 25 percent of the output of the financial services sector in the Toronto region was traded internationally, 30 percent was traded nationally and only 45 percent was a non-traded local service. Boston Consulting also notes that in the future even many of the services they identified as "non-traded" (such as retail banking and life insurance sales) could be internationally traded if delivered electronically.

The Task Force expressed it as follows, "We believe it is inevitable that direct access, increasingly through electronic channels, will take a far greater share of the market and that this will happen sooner rather than later." This means that Toronto will go from being the largest financial centre in Canada to the third, fourth or fifth(?) largest in North America.

Financial services is also an important sector because it is a high productivity and high investment sector. Peter Dungan, of the Institute for Policy Analysis at the University of Toronto, notes in a recent study that output per employee is between 20 percent and 10percent higher than the private-sector average in Canada. This matters!

In the long-run, productivity determines the incomes and hence the standard of living of Canadians. Or to quote a recent Industry Canada publication, "Total Factor Productivity is the broadest measure of the economy's efficiency in turning labour, capital, raw materials and ideas into goods and services. Our real wages and standard of living are largely determined by how fast our Total Factor Productivity grows."

Canadian banks may not be as large as the New York "money centre" banks that concentrate on the wholesale market, or as large as some of the new super-regionals that have been formed over the last ten years in the United States and are located in places like Charlotte, North Carolina. However, they are accustomed to running a continental branch network that is more advanced than anywhere in the United States outside California, and they are widely viewed as more efficient than many of their U.S. rivals.

The financial services sector employs 94,000 people in the City of Toronto and is the second largest contributor to total output (GDP) after the manufacturing sector. Directly and indirectly, the financial services sector generated nearly $21 billion in GDP in 1995, and was responsible for the employment of more than 320,000 people in the Toronto area. The banks are estimated to generate between 60 and 70 percent of all financial services GDP in the GTA.

Like Canadians everywhere, my constituents are worried about the proposed bank mergers. In the short-run it means branch closures and reduced employment levels. In the long-run we hope that the efficiency gains that the mergers will achieve will make Toronto banks more competitive and therefore will increase their international market share. If the banks are successful in completing in the North American market place, these mergers could lead to employment gains in the long run.

Of course, the greatest threat to Toronto as a financial centre would be if one or more of the banks were to be taken over by a larger bank from outside the country. Los Angeles lost most of its banking jobs when the two major banks headquartered in Los Angeles were taken over by San Francisco based banks.

It would be wonderful if we could wave a magic regulatory wand to ensure that Toronto based firms will be successful in the emerging North American financial services market. We cannot. However, there is an important role for regulation to ensure that all of our communities are well served by our financial services providers.

The financial district at the heart of Toronto is critically important; however, it would not be the great success that it has become if it were not surrounded by an exciting and vibrant city. Small businesses, like those that line many of our retail strips ensure that Toronto continues to offer a quality of life that is unmatched on this continent.

Small business is the largest job creator in our economy, and many owners of small businesses tell me that access to capital is their number one issue. We have to address this issue. The proposal in the MacKay report, to improve the data published about small business lending, is an important first step. Measures to encourage more competition may be necessary if the mergers are approved. Stricter controls to regulate tied selling may be necessary. The proposed bank ombudsman could also have an important role in ensuring that all Canadians are treated equitably by the major financial institutions.

Clearly, the impact of the bank mergers on Toronto's status as an internationally competitive financial services centre must be one of the key considerations for the Minister of Finance when he reviews the bank mergers. I trust that the Minister will keep Toronto's unique place in this issue in mind during his review and decision making process.)

(Councillor Pitfield, at the meeting of City Council on October 1 and 2, 1998, declared her interest in the foregoing Clause in that her husband is employed by one of the major banks.)

5

The Greater Toronto Marketing Alliance (GTMA)

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of the report (September1, 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.)

6

International AIDS Conference in 2004

(City Council on October 1 and 2, 1998, amended this Clause by adding thereto the following:

"It is further recommended that the joint report dated October 1, 1998, from the Commissioner of Economic Development, Culture and Tourism and the Chief Financial Officer and Treasurer, entitled 'Provision of a Loan Guarantee for the International AIDS Conference in 2004', embodying the following recommendations, be adopted:

'It is recommended that:

(1)if Toronto is selected as the host city for the 2004 International Conference on AIDS, the City agree to provide a loan, or loan guarantee, in the amount of $1.0 Million (US) to the legal entity established by the International AIDS Society for the Toronto Conference, provided that a satisfactory business plan for the subject event is made available to the City;

(2)authority be granted to staff to negotiate an agreement with the legal entity established by the International AIDS Society for the Toronto Conference, which sets out the terms and conditions under which a loan or loan guarantee would be provided, subject to the satisfaction of the City Treasurer, the City Solicitor and the Commissioner of Economic Development, Culture and Tourism; and

(3)the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.' ")

The Economic Development Committee recommends the adoption of the following report (September 2, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

To seek the support of Council for the potential hosting of the International Aids Conference in 2004.

Funding Sources, Financial Implications and Impact Statement:

No immediate financial implications.

Recommendations:

It is recommended that:

(1)Council confirm its support, in principle, for Toronto as the host city for the International Aids Conference in 2004;

(2)staff report to the next meeting of the Economic Development Committee on mechanisms whereby the City, in association with Federal, Provincial governments and the private sector, could provide a loan guarantee in the amount of $1.0 M required to secure the Aids 2004 conference;

(3)staff report on the merits of developing a formal support program whereby the City, in association with Federal, Provincial governments and the private sector, could provide bid support for upcoming major convention bids; and

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

Background:

Staff have received a request from the President of the International Aids Society, confirming that a local organizing committee has submitted the City of Toronto as the candidate to host the International Aids Conference in 2004. As a prerequisite of this submission, the organizing body requires a loan guarantee in the amount of $1.0 million be provided by the host community.

The City of Toronto presently does not have a formal mechanism whereby such a loan guarantee can be provided. The former Metro Council established a Tourism Event Development Loan Program in 1994 for the express purpose of assisting in the up-front financing of special events in support of Metro's tourism strategy. This program's terms of reference, attached as Appendix One, were designed to encourage cultural, sport or entertainment events of significant duration which could generate incremental visits by the leisure traveller. The parameters of the fund do not easily apply themselves to convention bids.

Recognizing the significant economic impact that conventions do contribute to a city, this report also proposes the possible reconfiguration of the City's funding program to accommodate major convention bids.

Comments and/or Discussion and/or Justification:

(1)Aids 2004 Conference

The Aids 2004 Conference provides the City of Toronto with an exceptional opportunity, both to capture substantial convention spending by attending delegates, as well as to help support the positioning of Toronto as a world leader in the medical/pharmaceutical research industry as part of its economic development strategy.

Economic impact estimates provided by the International Association of Convention Bureaus (IACVB)¹ puts the direct impact of the anticipated 15,000 delegates to this conference at a value of $17,280,000.00 to the Toronto economy.

Obtaining this conference is of particular interest to Toronto, given its potential to profile our position as a North American centre of medical research and to profile the network of biotechnology and medical equipment firms which are linked to this medical/educational complex.

In the absence of a detailed business plan for a Toronto bid, we can look to the experience of Geneva this July 1998 as typical of this bi-annual event. In Geneva an estimated 11,000 delegates came from 136 countries and spent five days discussing the scientific and community aspects of HIV/Aids. Financing for the Geneva event was generated by participant revenues (40 percent), sponsors (45percent) and exhibitors (15 percent). A guarantee of 2.5 M Swiss Francs was guaranteed by the State of Geneva. Principal sponsors for the event included major medical/pharmaceutical firms such as: Abbott Libraries, Bristol-Myers Squibb, Du Pont, GlaxoWellcome, Roche and technology companies such as Hewlett Packard. The budget for the event was approximately $18.9 Million with an estimated surplus of $365,000.00 being achieved.

The organizing committee expects that five other cities, Hong Kong, Rio de Janeiro, Salvador del Bahia (Brazil), Birmingham and Vienna, will submit bids to host the 2004 conference.

The organizing committee for the Toronto bid is being led by Dr. Mark Wainberg from McGill Aids Centre, an internationally recognized scientist in the field of HIV/AIDS who recently assumed Presidency of the International AIDS Society.

The requirement by the International Aids Society to provide a $1.0 M loan guarantee to pre-finance the costs of the conference is unique to the experience of Toronto's tourism industry. In Vancouver, which hosted the 1996 conference, this loan guarantee was provided for by a local hospital, Tourism Vancouver and the Province of British Columbia. This conference generated demand for 9,300 rooms in the city.

Recognizing the significant opportunity that this opportunity could provide for the City of Toronto, staff recommend that consideration be given to the provision of a loan guarantee and that staff be directed to immediately commence discussions with the Provincial and Federal Governments, Tourism Toronto and other private sector interests to determine possible mechanisms whereby a loan guarantee could be provided to the bid committee by December 1998.

(2)Support for Other Convention Bids

Conventions are an important source of business to Toronto, with 800 to 900 conventions held annually in this City. In 1997 Toronto received an estimated 898,000 convention delegates at 911 events, generating 1.1 billion in revenues.

While the above strategy responds to the immediate needs of the Aids Conference, it should be noted that Tourism Toronto and the City of Toronto receive numerous requests to support convention bids on an ongoing basis. At the present time there are at least two large conventions on the horizon that will likely be coming forward with requests for financial support.

While support for conventions by the City has ranged from protocol involvement, facilitating business linkages, staff participation on organizing committees, hospitality-related activities, provision of in-kind services and facilities, Toronto does not have a formal mechanism to respond to convention bid support requests.

Looking more broadly, the City does have a mechanism in place to support events rather than conventions. In 1993 Metro Toronto Council approved the concept of establishing a loan program to assist in the up-front financing of special events for the purpose of tourism and economic development in support of Metro's tourism strategy. Council, at that time, was interested in creating a funding mechanism to facilitate "blockbuster" tourism events at no cost and minimum risk to the Metro Corporation.

The Barnes Exhibition at the Art Gallery of Ontario (AGO) was recommended as a pilot project to test the feasibility of a loan program concept with the AGO receiving a loan in the amount of $1.0 million. The event was very successful with respect to out of town visitor attendance, media coverage and revenue generation and the AGO repaid the loan to Metro in full including interest charges.

Based on the success of the pilot, Metro Council approved guidelines for a permanent Tourism Event Development Loan Program which was subsequently used to support tourism marketing costs associated with the White Lions Exhibition at the Metro Toronto Zoo and upfront financing for the Festival of the Future. It should be noted that there is no dedicated source of revenues to support this loan program. Proposals were critically reviewed on a case by case basis, due diligence conducted by Economic Development, Treasury and Legal staff and monies to provide this funding were drawn from the City's current account. Further, the terms of reference of this program clearly spell out that any funding is to be repaid to the Corporation including interest charges. The program was directed to support the efforts of the not-for-profit public attractions in diversifying their tourism product as compared to bids by local convention organizing committees.

In the past Tourism Toronto and the Metro Toronto Convention Centre created a Convention Development Fund which was designed to support major conventions and did not apply to events. Due to funding pressures, this program was discontinued in 1994 and the organization continues to support bids on a case-by-case basis including room revenue rebate programs put in place by its members to subsidize the costs of hosting a convention in Toronto. Other Canadian and US destinations who compete with Toronto for conventions have the ability to present more financially attractive bids typically as a result of revenues generated by a visitor tax. Discussions have taken place on the possible institution of such a revenue source for Toronto's tourism industry, however no consensus has been reached by the industry in support of such an initiative.

It is also interesting to note that the City of Montreal, which does not have a room tax, typically is able to offer a secured loan (bridge financing) to local organizing committees as the Government of Quebec will guarantee such loans under certain conditions.

Tourism Toronto and the City continue to react to convention bids and request for support on an ad-hoc basis. Recognizing the growing competitiveness of the lucrative convention market, and the significant investment which has been made by all levels of government in convention and trade show facilities in Toronto, staff recommend a revisiting of the City's existing Tourism Event Development Loan Program to explore ways its might be applied to major convention bids. Alternatively, this review may suggest that it is more appropriate to institute a new program that responds to the specific requirements of the convention market and allows the existing program to continue to focus on the development of blockbuster events. Appendix Two outlines the conceptual differences between convention and events that will form the basis of this evaluation.

Conclusions:

This report recommends that the City support, in principle a future bid for the 2004 Aid Conference due to the associated Economic Impacts and potential to position Toronto as a leader in the context of international medical research. The report further recommends undertaking the necessary due diligence and negotiations to facilitate the provision of a $1.0 million loan guarantee in support of this bid.

Recognizing the potential that conventions have to enhance the City's economy, this report also recommends a revisiting of the City's funding mechanisms, to explore ways in which we can elevate our support for major convention bids in association with other levels of government and the private sector.

Contact Names:

Christine Raissis, Manager, Business Development, Economic Development, 392-3385

Eva Pyatt, Director, Business Development, Exhibition Place, 393-6076

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

¹IACVB estimate is not calibrated specific to Toronto, rather based upon a survey of its 75 member bureaus. Assumptions are based upon convention duration of 4.19 nights and per delegate spending of $1,152.00 on accommodation, meals, sundries and ground transportation.

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Appendix One

Tourism Event Development Loan Program Terms of Reference

Purpose:

To support incorporated not-for profit organizations to create, expand and solicit major exhibitions and events capable of generating incremental tourism to the community, in turn generating economic benefits to Metropolitan Toronto.

Eligible Activity:

Loans can be made to support one of a kind "blockbuster" sporting, cultural, entertainment and multi cultural events that can demonstrate increased ability to attract a significant percentage of attendees from outside of Metropolitan Toronto by participating in the local program.

Priorities:

(1)Events that have a high probability of attracting overnight visitors to Metropolitan Toronto;

(2)Events that take place throughout Metropolitan Toronto resulting in economic benefits throughout the entire region; and,

(3)Events that allocate at least 35 percent of their marketing budget to out-of-town markets.

Limits:

Loans will not exceed $1 million. Applicants will be expected to repay the Corporation the full amount of the loan plus interest and/or service charges to be negotiated on a case-by-case basis. Disbursements and repayment schedules and use of funds will be negotiated as part of the terms and conditions of the loan agreement.

Evaluation Criteria:

The following criteria will be used to evaluate applications.

The event should:

(a)provide unique programming capable of attracting new and repeat out of town visitors to the region;

(b)help build Metro's reputation as a leading leisure/pleasure destination in North America and create an urgency to visit;

(c)demonstrate direct economic benefits and support for jobs in accommodation, food and beverage, transportation, retail, travel trade and tourism services;

(d)induce overnight travel in paid accommodation and increase the length of time that a visitor spends in Metro;

(e)generate positive media exposure - creating greater awareness of Metro and further enhance the community's image as a leisure destination;

(f)create opportunities for leveraging the event media coverage to assist in marketing Metro as a good place to live and conduct business;

(g)create awareness of the value of tourism for local residents, businesses and governments, leading to greater long term commitment and support for the industry by the community;

(h)serve not only the visitor market but impact positively on residents enjoyment of, and pride in, their community;

(i)capitalize on opportunities to package the event with other local businesses;

(j)provide opportunities for complementary programming throughout Metro, thereby enhancing the benefits of tourism across the region;

(k)demonstrate international appeal; and

(l)not be available in nearby markets.

Preference will be given to events lasting more than one (1) month in duration.

Out of town marketing plans will be evaluated in cooperation with the MTCVA management and reviewed for completeness and adequate budget allocation.

Administrative Capability and Financial Management:

(1)proven track record of management team, Board of Directors and/or Advisory Boards to fundraise and produce similar events;

(2)feasibility of budgets and business plans;

(3)financial resources to repay Metro's loan; and

(4)demonstrated commitment of revenues from other public and private sources

Approvals:

Each proposal will be evaluated by the Economic Development Division and submitted to Metro Council for Consideration. Legal and financial matters will be acceptable to the Metro Solicitor and the Metro Treasurer.

¹Terms of Reference based upon By-Law No. 107-95 of the Municipality of Metropolitan Toronto by authority of Financial Priorities Committee Report No. 6(4) February 22-24, 1995 and Financial Priorities Committee Report No. 12 July 5, 1995.

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Appendix Two

Differentiation between Conventions and Major Events

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The Economic Development Committee reports, for the information of Council, also having had before it during consideration of the foregoing matter the following communications:

-(August 31, 1998), addressed to Councillor Ashton, from Mr. Andrew M. Pringle, President, Canadian Foundation for AIDS Research (CANFAR), expressing CANFAR's support of Dr. Mark A. Wainberg's proposal to have Toronto chosen as the city to host the International Conference on AIDS in the year 2004; and

-(September 17, 1998) from The Honourable Alan Rock, Minister of Health, expressing support of the City of Toronto's application to host the 2004 World AIDS Conference.

Dr. Mark Wainberg, President, McGill AIDS Centre, Jewish General Hospital, introduced various community representatives.

The following persons appeared before the Economic Development Committee in connection with the foregoing matter:

-Mr. Ron Rosedale, Member, AIDS Committee of Toronto;

-Ms. Louise Binder, Chair, Voices of Positive Women;

-Ms. Bluma Appel, Chairperson, Canadian Foundation for AIDS Research (CANFAR).; and

-Dr. Sheela Basrur, Medical Officer of Health.

(City Council on October 1 and 2, 1998, had before it, during consideration of the foregoing Clause, the following joint report (October 1, 1998) from the Commissioner, Economic Development, Culture and Tourism and the Chief Financial Officer and Treasurer:

Purpose:

To seek Council's approval to provide a loan, or loan guarantee, in the amount of $1.0 Million (US) in support of hosting the International Conference on AIDS in 2004 in Toronto, should Toronto be selected as the host city for the event.

Funding Sources, Financial Implications and Impact Statement:

No immediate financial implications.

Recommendations:

It is recommended that:

(1)if Toronto is selected as the host city for the 2004 International Conference on AIDS, the City agree to provide a loan, or loan guarantee, in the amount of $1.0 Million (US) to the legal entity established by the International AIDS Society for the Toronto Conference, provided that a satisfactory business plan for the subject event is made available to the City;

(2)authority be granted to staff to negotiate an agreement with the legal entity established by the International AIDS Society for the Toronto Conference, which sets out the terms and conditions under which a loan or loan guarantee would be provided, subject to the satisfaction of the City Treasurer, Solicitor and the Commissioner of Economic Development, Culture and Tourism; and

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

Background:

The President of the International AIDS Society has submitted Toronto as the candidate city to host the International AIDS Conference in 2004. As a prerequisite of this submission, the International AIDS Society requires that the host community demonstrate that they have sufficient capital (minimum $1.0 million U.S.) available to support the pre-financing of the conference, which amount can be turned into a loss guarantee.

At its October 1, 1998 meeting, Council is being requested to confirm its support, in principle, for Toronto as the host city for the International AIDS Conference in 2004 and requested staff to report on mechanisms whereby the City could provide a such a loan guarantee to the International AIDS Society to secure the event.

The recommendations in this report reflect discussions held between staff from Economic Development, Finance and Legal departments as to how to implement the objectives of the Economic Development Committee in supporting the AIDS 2004 bid in light of the event bid process and timing.

On a separate but related note, staff will be coming back to Council with recommendations for a more comprehensive, formal program to deal with Convention bid requests.

Comments and/or Discussion and/or Justification:

(1)Background on the AIDS 2004 Conference.

The AIDS 2004 Conference provides the City of Toronto with an exceptional opportunity, both to capture substantial convention spending by attending delegates, as well as to help support the positioning of Toronto as a world leader in the medical/pharmaceutical research industry as part of its economic development strategy. Obtaining this conference is of particular interest to Toronto, given its potential to profile our position as a North American centre of medical research and to profile the network of biotechnology and medical equipment firms which are linked to this medical/educational complex.

As a prerequisite of a Toronto-based submission, the International AIDS Society requires that the host demonstrate that they have sufficient capital available to support the pre-financing of the conference, which amount can be turned into a loss guarantee. The host must also provide for a legal body whose sole purpose is to organize the Conference in accordance with the IAS Bid Manual requirements and to, after the closing of the Conference, administrate an eventual surplus generated from the Conference towards future projects in areas of HIV/AIDS. The Bid Manual also stipulates that any surplus generated from an International AIDS Conference will be divided according to the following ratios: 60 percent to the legal body of the organizing committee, 20 percent to the next International AIDS Conference and 20 percent to the IAS.

As a detailed business plan for a Toronto bid is not yet available, nor has a body been incorporated to organize the event, we can look to the experience of Geneva this July 1998 as representative of this bi-annual event. In Geneva an estimated 11,000 delegates came from 136 countries and spent five days discussing the scientific and community aspects of HIV/AIDS. Financing for the Geneva event was generated by participant revenues (40 percent), sponsors (45 percent) and exhibitors (15percent). A guarantee of 2.5 million Swiss Francs was provided by the State of Geneva. Principal sponsors for the event included major medical/pharmaceutical firms such as: Abbott Laboratories, Bristol-Myers Squibb, Du Pont, GlaxoWellcome, Roche and technology companies such as Hewlett Packard. The budget for the event was approximately $18.9 Million with an estimated surplus of $365,000.00 being achieved.

The organizing committee expects that five other cities, Hong Kong, Rio de Janeiro, Salvador del Bahia (Brazil), Birmingham and Vienna, will submit bids to host the 2004 conference, however Toronto's North American location makes a Toronto-based bid very promising, given that some 70-80 percent of delegates are generated from this continent.

The committee for the Toronto bid is being led by Dr. Mark Wainberg from McGill AIDS Centre, an internationally recognized scientist in the field of HIV/AIDS who recently assumed Presidency of the International AIDS Society.

(2)Process to Be Followed.

The process of securing the subject conference, establishing the legal structures necessary, preparing detailed business plans and negotiating partnerships will all take time. The City of Toronto will not be the only partner involved in this event; the Federal Government has indicated its support for the conference, the Provincial Government and Metro Toronto Convention Centre will be asked to assist, the Tourism industry has indicated its willingness to participate by considering a room rebate program supported by the hotel community and the health/hospital community is also expected to be supportive.

Over the course of the six months, during which time legal structures will be established and Toronto's bid will be confirmed, many partnerships, financial and otherwise, will form the basis for the preparation of a full business plan for the event. However, in order for Toronto to be considered in the first place, the International AIDS Society requires a loan guarantee from the host community. This report recommends the provision of this financial guarantee to allow the other steps in the process to unfold.

It should be noted that the precedents established by the thirteen (13) previous International AIDS Conferences will be followed in Toronto including: the appointment and establishment of various formal and legal structures to deal with all aspects of the conference including conference organization, scientific programs and community programs; the appointment of a professional conference organizer (Congrex) by the International AIDS Society to deal with such logistical and technical issues as project management, finances, participant administration, exhibition management, abstract handling and the hiring of local convention organizers; securing international sponsorships by drug companies and involving a variety of governments and hospitals in the event.

In the case of the 13th International AIDS 2000 Conference in South Africa, a not-for-gain company has been incorporated under the South African Companies Act with the sole purpose to organize the Durban Conference in accordance with agreements established with the International AIDS Society and, at the close of the Conference any eventual surplus generated by the Conference will be directed to future projects in the area of HIV/AIDS. The legal body is accountable to the IAS for the administration and use of an eventual surplus. In the case of the 11th International Conference on AIDS held in Vancouver, a society was registered and granted Charitable Status by Revenue Canada with Director and a Financial Advisory Board structured to provide advice on the financial affairs. Other Committees were also established including an International Advisory Committee, a National Advisory Committee, a Local Advisory Committee, and various program committees.

In the case of Toronto, the business plan provided by the legal body established by the International AIDS Society for the Toronto Conference, will be reviewed for completeness by City staff from Finance, Legal and Economic Development Departments including:

-event: theme, image, components;

-objectives: conference and operational objectives;

-organizational structure: legal form, directorship, financial advisory structure, committees, contractors, personnel;

-financial plan: financial objectives, financial plan, budget monitoring, revenues, cash flows, sponsorship/fund-raising, financial statements, cost control;

-contributions to be provided by others (e.g., Federal, Provincial governments, tourism industry, health community); and

-marketing/communications plan: target groups, delivery mechanisms, marketing budget.

Staff will then structure an agreement which sets out the terms and conditions under which the City would provide a loan or loan guarantee, including:

-type and limitation on use of funds provided by the City (i.e., Loan guarantee, bridge financing);

-structure and form of organizing body including involvement of City staff where appropriate;

-interest charges, repayment of principal and use of eventual surpluses generated by the Conference;

-scheduling/release and approval of funds and requirements for reporting to Council;

-right of City Auditor to access books and records; and

-contributions to be provided by others (e.g., Federal, Provincial governments, tourism industry, health community).

(3)Type of Support to be Provided by City.

In the earlier report to Council on this subject, the request spoke to the provision of a loan guarantee in the amount of $1.0 Million. Discussions with Treasury indicate that assistance from the City may take the form of either a loan guarantee, whereby the legal entity established for the conference will arrange a line of credit with a financial institution with the City as a guarantor, or the City could provide the loan funds directly. A determination as to the preferred vehicle will be determined at the time of negotiating the agreement.

The level of risk to the City associated in providing loan funding to this event has been generally reviewed both from the perspective of past event performance and the support anticipated from other organizations. According to the International AIDS Society, no International AIDS Conference has experienced a loss since the initial conference held in 1985, with expectations for significant profits to be generated from a Toronto event. Event organizers expect to secure significant financial support for a Toronto conference from drug companies and anticipate support from a variety of governments. In fact, should the federal support for the conference be sufficient, Toronto's loan may not be required.

The Treasurer has certified that either a loan or a loan guarantee in the amount of $1.0 million (U.S.) are within the City's debt and financial obligations limit.

(4)Timeframes.

For clarification purposes, the following general time frames are expected with respect to conference decisions:

Establishment of local organizing bodyUnderway, to be completed in early 1999

Selection of host city by International Aids SocietyLate spring 1999

Furnishing of business plan for reviewSpring 2000

Release of loan by CitySpring 2001

Securing of major sponsorsWinter 2002

International Conference on AIDS-TorontoSummer 2004

Conclusions:

This report recommends that the City confirm its approval to provide a loan, or loan guarantee, in the amount of $1.0 million (U.S.) to the International AIDS Society as its commitment to be the host city for International AIDS Conference in 2004 due to the associated economic impacts and potential to position Toronto as a leader in the context of international medical research.

Contact Names:

Christine Raissis, Manager, Business Development, Economic Development, 392-3385,

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

Len Brittain, Director, Treasury and Financial Services, 392-5380,

Martin Willschick, Manager, Treasury, 392-8072.)

7

Proposed Plan for Developing an

Economic Development Strategy for the City of Toronto

(City Council on October 1 and 2, 1998, deferred consideration of this Clause to the next regular meeting of City Council to be held on October 28, 1998.)

The Economic Development Committee recommends the adoption of Recommendations Nos.(1) and (3) of the report (September 2, 1998) from the Commissioner of Economic Development Committee.

The Economic Development Committee reports, for the information of Council, having forwarded Recommendation (2) of the foregoing report to the Chair of the Economic Development Committee with a request that he submit this Recommendation to Council for its meeting on October 1, 1998 together with the names of two other members of the Economic Development Committee for appointment to the Economic Development Strategy Steering Committee.

The Economic Development Committee submits the following report (September 2, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

This report seeks Council endorsement for the proposed plan, process and timing for developing an economic development strategy for the City of Toronto, a key element of which will be the involvement of the broader business community.

Funding Sources, Financial Implications and Impact Statement:

Estimated at a maximum of $20,000.00 plus printing costs to be accommodated within current budget.

Recommendations:

It is recommended that Council:

(1)endorse the proposed plan, process and timing for developing an economic development strategy for the City of Toronto, a key element of which will be the involvement of the broader business community;

(2)approve the creation of an Economic Development Strategy Steering Committee to oversee the process, to be chaired by the Chair of the Economic Development Committee and comprised of two other members of the Economic Development Committee, the Commissioner of Economic Development, the Managing Director of Economic Development and three representatives of Toronto's business community; and

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

Council Reference/Background/ History:

The Transition Team was presented with a proposed work plan for Economic Development for the newly amalgamated city. This plan represented the consolidated input from the seven municipal Economic Development Offices without any formal input from the business community. Since this time, an Economic Development Committee of Council has been established and the departmental structure is in the process of being formalized.

The Economic Development Committee, Economic Development staff and, indeed the business community itself, requires a strong, clear and concise vision which can coalesce effort, focus priorities and mobilize resources to effect positive change in Toronto's economy. This is reinforced in the discussion paper "Toward a Strategic Agenda - Key Issues and Opportunities in Economic Development, Culture and Tourism" which prioritizes the need to develop a strategic focus for Economic Development services in the City.

The following report proposes an approach to formulating such a strategic vision for the City, a process which will result in a clear set of vision statements, strategic goals to achieve this vision, key priorities to focus our efforts over the next three to five years and, where appropriate, recommended actions. The role of the Economic Development Office will be articulated through this process as will mechanisms for ongoing business involvement and interface with municipal efforts. The proposed product should be viewed as a foundation document which will focus our future actions and priorities and set the stage for more detailed work plans and industry involvement opportunities.

Based upon the experience of staff who have undertaken similar exercises in the past, it is clear that the process which is followed is equally important as the product which emerges. It is the process which will result in mobilizing the interests of a variety of forces across the city to achieve success in implementing the final plan.

Comments and/or Discussion and/or Justification:

(a)Objectives of Developing a Strategic Plan for Economic Development

The following have been established as the key objectives of embarking upon this process:

(i)to establish a vision which can help guide the economic development efforts across the City; a vision which has relevance and validity for Council, the private sector and City staff efforts;

(ii)to establish a context for the development of a more detailed work plan and budget for the Economic Development Office over the next three to five years;

(iii)to undertake a consultation process with key business groups and clients to ensure that the City's economic development effort recognizes and reflects current issues, priorities and identifies new opportunities and ways of doing business;

(iv)to seek input from a broad cross section of the community including: a cross section of business interests by type (ie. Private sector, public sector, quasi-public, industry associations, not-for-profit, foundations, labour), by sector (ie. Medical, technology, financial services, development, tourism, etc) by geographic orientation (ie. Business Improvement Areas, ratepayer organizations, community-based service groups) and interest area (e.g. Education/training, infrastructure providers, utilities, etc.);

(v)to invite the active participation of Economic Development Committee members in the process to allow them to hear and understand first hand the issues and priorities of Toronto's business community; and

(vi)to involve Economic Development Office staff in the process to assist in cross-jurisdictional team building, to gather current industry intelligence and to expand its business contact base.

(b)Role of the Economic Development Committee

The proposed Strategic Planning Process has been designed to involve the Economic Development Committee throughout its six month process. The objective of this involvement is two-fold; first to bring committee members up to date on priority industry issues and secondly, to create a network between city officials and the private sector which will be key to ultimately implementing the final product.

The process proposes the formation of an Economic Development Strategy Steering Committee to oversee the process, to be chaired by the Chair of the Economic Development Committee and comprised of two other members of the Economic Development Committee, the Commissioner of Economic Development, the Managing Director of Economic Development and three (3) representatives of Toronto's business community.

While this Steering Committee will have primary responsibility to oversee all aspects of the project, facilitated by Economic Development staff, all members of the Economic Development Committee will be directly involved in the process including participation in consultation activities such as plenary sessions, workshops and interviews. Appendix One provides a terms of reference for the Steering Committee.

(c)Proposed Process

The following outlines the proposed steps in developing an Economic Development Strategy for the City. A key element in the process of articulating a vision for the City is to seek the ideas and input from the broader business community. The proposed consultation program is designed to elicit response to the following types of questions:

(i) What is your vision for our City and its future economy?

(ii) What are the major priorities and concerns we should be focussing our collective efforts upon? (e.g. business infrastructure needs, labour force issues, key cluster opportunities sector issues, government/city policy concerns, marketing opportunities, local and regional development limitations, etc.);

(iii)What role should be played by the EDO and the private sector? What opportunities exist for public-private partnerships?; and

(iv)What performance measures could be used to chart our progress in achieving the vision?.

Key steps in the process are described below and in schematic form in Appendix Two:

(1)Development of a Consultation Kit for distribution to all participants. This kit will include a variety of information which will assist in orienting participants to the process including, for example: Terms of Reference of the Economic Development Committee; current structure and proposed mandate of the Economic Development Office; an environmental scan of the Toronto economy (e.g. Key facts, trends, industry snapshots); examples of other jurisdictions' economic development approaches (e.g. Tools list, best practices, innovative ideas); and, a questionnaire (fax/e-mail) to solicit their issues and ideas at the outset of the process. The kit will also act as an attractive "sales kit" to encourage participation by business representatives.

(2)Development web-based materials to allow ongoing outreach with businesses including materials from the above-noted Consultation Kit.

(3)Development of participant invitation list. The target is to involve approximately 500 participants in the process, representing a cross section of business in terms of type, size, sector, geography, etc.

(4)Undertake consultation process which provides a number of discrete opportunities for the private sector to have input into the process. The consultation process will include:

(i)Introductory Plenary Session and Workshop

This first session will seek the involvement of all interested participants in an introductory session to "kick off" the process. This half day event will begin with presentations by the Mayor and Chair of the Economic Development Committee followed by presentations by guest speakers/panelists who will set the context and challenge for the City/industry in this effort. The plenary session will break out into smaller discussion groups as the first round of input into the strategy. As the starting point in the process, the session will be intentionally "open-minded" in its approach and focus on obtaining input about top-line issues and priorities of participants.

(ii)Post Plenary Workshops

Following up on the introductory session, four to six separate workshops will be carried out in geographically dispersed locations across the city. Participants who attended the first session, as well as other more locally based interest groups, will be invited to attend workshops which begin to isolate concerns and more critically discuss issues which emerged from the introductory workshop. Workshops will be chaired by members of the Steering Committee and members of EDC will be invited to attend the sessions.

(iii)Individual Consultations with Key Business Leaders

In addition to the workshop format, senior economic development staff and Steering Committee members will meet with a cross section of business leaders and industry associations on a one-on-one basis. The objective of this approach, in addition to gathering information and ideas, is to continue to build good personal relationships with those individuals and organizations who can have a role to play in implementing the strategy. Consultations will take place with such organizations as Boards of Trade/Chambers of Commerce, sector organizations (e.g. Toronto Real Estate Board, Toronto Biotechnology Initiative, Tourism Toronto, SMART Toronto, Design Exchange), business improvement associations and industrial revitalization interests, educational and training interests (e.g. HRDC, educational institutions), labour organizations, ratepayer groups, major infrastructure providers (e.g. Greater Toronto Airports Authority, Toronto Harbour Commission, telecom companies, utilities) and a sampling of both small and large employers in the city.

(iv)Internal Consultations with Members of Council and Senior Staff

In tandem with the above, senior economic development staff will endeavour to meet with interested members of City Council and senior staff from relevant departments across the corporation to learn of their interests and ideas as input into the process;

(5)At the conclusion of this phase of the consultation process we expect to have a solid understanding of the major issues and priorities which have been raised and the Steering Committee and staff from Economic Development will consolidate a draft strategy document. The draft strategy will present:

(i)a vision to guide the economic development efforts across the City;

(ii)key priorities and concerns with respect to such issues as infrastructure, labour force development, government policies, marketing approaches, geographic issues, sector-specific concerns;

(iii) proposed role for the Economic Development Office and the private sector as well as opportunities for public-private partnerships; and

(iv)performance measures will be used to evaluate the progress made in implementing the strategy.

(6)Economic Development Committee Feedback and Validation Session

A half-day workshop session will be organized to seek feedback and validation on the draft strategy. All organizations and individuals who had input into the process will be invited to meet with the Economic Development Committee to review the draft strategy, make comments and discuss opportunities for further involvement.

(7)Input from the feedback session will be incorporated into the strategy and the finalized document will be presented to Council. Upon adoption of the report, the final document will be published and distributed to all participants.

Next Steps:

The next steps in this process will be to prepare a detailed work plan and budget for the Economic Development Office which reflects the intent, and begins to act upon the directions, set out in the Vision. The work plan will include specific recommendations for the continuing involvement of the business community and the potential need for more detailed input on site-specific issues and/or sector-specific work groups to provide more detailed and comprehensive industry input into the work of EDC/EDO.

(d)Proposed Time Frames

Preparation of background materials for consultation kitSept/Oct . 1998

Invitations listSept/Oct. 1998

Consultation Process - InterviewsOct/Nov. 1998

Consultation Process - WorkshopsNovember 1998

Draft strategyDecember 1998

EDC Feedback/Validation workshopJanuary 1999

Report to Economic Development CommitteeFebruary 1999

Publication of StrategyFebruary 1999

(e)Costs

The costs for undertaking the above process are to be carried out within current EDO budget. The out of pocket costs are estimated at $20,000.00 exclusive of printing costs. These costs will include the hiring of external facilitators to guide the consultation process and train economic development staff to allow them to assist in the process. It is anticipated that the costs for bringing in speakers for the introductory plenary session can be defrayed by other organizations who wish to be involved in the process.

Conclusions:

The newly formed Economic Development Committee, Economic Development staff and the business community of the City of Toronto requires a strong, clear and concise vision which can coalesce effort, focus priorities and mobilize resources to effect positive change in the city's future economy. This report proposes an approach to formulating such a strategic vision for the City, a six month process which will result in a clear set of vision statements, strategic goals to achieve this vision, key priorities to focus our efforts over the next three to five years and, where appropriate, recommended actions.

Contact Names:

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

¹Professional facilitators on staff within the City will also be approached to assist with this task.

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Appendix One

Draft Terms of Reference for the Economic Development Strategy Steering Committee

(1)Purpose:

To develop an Economic Development Strategy which will guide the City of Toronto for the next 3 - 5 years.

(2)Mandate:

The primary function of the Steering Committee will be to develop a strong, clear and concise vision which can coalesce effort, focus priorities and mobilize resources to effect positive change in Toronto's economy.

The Committee will work as a whole in developing this plan with the support of staff from Economic Development.

(3)Objectives:

To provide input and direction to assist in:

• establishing a vision which can help guide the economic development efforts across the City; a vision which has relevance and validity for Council, the private sector and City staff efforts;
• establishing a context for the development of a more detailed work plan and budget for the Economic Development Office over the next three to five years;
• undertaking a consultation process with key business groups and clients to ensure that the City's economic development effort recognizes and reflects current issues, priorities and identifies new opportunities and ways of doing business;
• seeking input from a broad cross section of the business community;
• inviting the active participation of Economic Development Committee members in the process to allow them to hear and understand first hand the issues and priorities of Toronto's business community; and
• involving Economic Development Office staff in the process to assist in cross-jurisdictional team building, to gather current industry intelligence and to expand business contact base.

(4)Time Frame:

The Committee will complete its work with a target completion date of February 1999.

(5)Expected Product:

The final strategy will generally include the following:

• a vision to guide the economic development efforts across the City;
• key priorities and concerns with respect to such issues as infrastructure, labour force development, government policy, marketing, geographic issues, sector-specific concerns;
• proposed role for the Economic Development Office and the private sector as well as opportunities for public-private partnerships; and
• performance measures will be used to evaluate the progress made in implementing the strategy.

(6)Reporting:

The Steering Committee will submit a draft final strategy at a feedback and validation session for both the Economic Development Committee and participants in the process. A final report will be presented to Council at the end of the process.

(7)Composition:

The Economic Development Strategy Steering Committee will be chaired by the Chair of the Economic Development Committee and comprised of two other members of the Economic Development Committee, the Commissioner of Economic Development, the Managing Director of Economic Development and three (3) representatives of Toronto's business community.

(8)Decisions by the Steering Committee:

The Steering Committee should proceed on a consensus approach rather than a voting basis.

(9)Documentation:

Minutes and agendas should be prepared and distributed in advance of each meeting. Minutes should contain brief summaries of the proceedings to enable the Committee to monitor and direct its progress and record decisions and other actions taken.

(10)Work Plan:

At its initial organizational meeting, the Steering Committee should confirm a work plan and schedule of meetings.

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Insert Table/Map No. 1

Appendix Two

8

Dundas West Regeneration Project

(Davenport-High Park)

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of the following report (September 3, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

This report outlines the progress which has been made to date with the Dundas West Regeneration Project, and seeks authority for staff to release the funds contributed by Provigo for the purposes of the project to the West Toronto Junction Team.

Funding Sources, Financial Implications and Impact Statement:

No funding is required and there are no financial implications for the Corporation of the City of Toronto.

Recommendations:

It is recommended that:

(1)City Council endorse the terms of reference for the Dundas West Regeneration Project as set out in the body of this report, and grant authority to make available monies provided by Provigo for the purposes of the Dundas West Regeneration Project pursuant to the Section 37 Agreement authorized by (former) City of Toronto Council in adopting Land Use Committee Report 12, Clause 11, Recommendation 2 on August 21, 1997 to the "West Toronto Junction Team" as set out below.

(a)The funds be used for the purposes of retaining a Project Director and undertaking activities agreed to by the Commissioners of Economic Development, Culture and Tourism and Urban Development Services that are required to develop new markets for Dundas Street West and attract new business locations and investment;

(b) the Commissioner of Economic Development, Culture and Tourism be authorized to disburse the funds in installments of up to $25,000.00 to the West Toronto Junction Team upon the submission of both a current financial statement for the project, and copies of invoices documenting the expenditure of the previously disbursed funds, except as noted in 1c, and that no more than $100,000.00 be provided before June 30, 1999; and

(c)permission be given to provide the first installment when the West Toronto Junction Team has entered into a contract with a Project Director;

(2)the interest accruing on the funds held by the City be deposited in Account 304426 and be made available to the West Toronto Junction Team for the purposes of the project;

(3)staff be requested to facilitate and accommodate any requests for support, within their resource capabilities from the West Toronto Junction Team;

(4)the West Toronto Junction Team invite the four Ward Councillors and Economic Development and Urban Planning and Development staff to all meetings and provide them with copies of the Minutes and financial statements for the project;

(5)the management of Provigo be thanked for its contribution and support to date for this important regeneration project;

(6)the Commissioners of Economic Development, Culture and Tourism and Urban Development Services be requested to report to Economic Development Committee on the progress of the project, results achieved and future directions after one year; and

(7)the appropriate staff be authorized to take the steps necessary to implement the foregoing.

Background:

At its meeting on August 21, 1997, the Council of the (former) City of Toronto approved draft by-laws for an Official Plan Amendment and Rezoning permitting a retail warehouse to locate on a portion of the CP Railway yards on the south side of West Toronto Street (110 West Toronto Street) (Clause 11 of Land Use Committee Report No. 12). The store is to be operated by Provigo under its banner "Maxi & Co", and will be primarily a grocery store but will also offer ancillary general merchandise and in-store banking and photofinishing services. Among the conditions of the rezoning was the requirement that, prior to the issuance of a building permit, the owner pay the City $100,000.00 and two Letters of Credit for $20,000.00 dated one year and two years in the future respectively, to contribute towards the cost of the Dundas West Regeneration Project.

This $140,000.00 contribution was required because the market impact studies completed for the Maxi & Co application indicated that supermarkets and small specialty stores along Dundas Street West could expect to experience a loss of business after the store opened. Because Dundas Street West is in a fragile economic condition, a fairly small loss of business could significantly increase its level of deterioration. Such an outcome would be particularly undesirable since Dundas West is one of the City's key main streets and the historic downtown of the West Toronto Junction. Both the City and the local business community have committed considerable resources over the last three years to encourage its revitalization, and these activities are beginning to produce positive results. The opening of Maxi & Co threatened to thwart these efforts unless additional funding were made available to undertake an accelerated and focused revitalization program.

Comments:

Maxi & Co has now deposited the required $100,000.00 and two $20,000.00 letters of credit. Staff of Urban Planning and Development and Economic Development have been working with a community based steering committee for several months to determine how the Dundas West Regeneration Project can best be undertaken. The steering committee is called "The West Toronto Junction Team", and includes representation from the Junction Gardens BIA, Malta Village Business Association, local area residents, and the West Toronto Junction Historical Society.

City Staff and the West Toronto Junction Team have successfully used the regeneration funding secured from Provigo to lever the participation of Human Resources Development Canada (HRDC) in the area's revitalization. HRDC has committed $100,000.00 for the first year of the project beginning in June 1998. Thus, as is summarized in Table 1, the total project budget for the first twelve months is $200,000.00. The Team is proposing to use these resources for the following:

(a)A senior project director with extensive experience and credibility in the commercial sector: This person will advise the Team as to the current impediments to Dundas West's regeneration, and will recommend and direct an action plan addressing them. He or she will represent and market the area to the media, business, and real estate and site location industries with the objective of developing new markets for the area and attracting new business locations and private sector investment.

This position will be funded by the contribution made by Provigo.

(b)A project co-ordinator who will work in close association with the project director to assist in developing and implementing the action plan, building community partnerships and liaising with the local business and residential communities and other agencies and stakeholders in the area.

This position will be funded by HRDC. A co-ordinator was recruited and retained in July.

(c)A storefront action centre on Dundas Street West to provide a visible focus for the project and a place to demonstrate ideas and results as well as office and meeting space. The Junction Gardens BIA and a community newspaper will sublease a portion of the space within the action centre.

The majority of expenses associated with the action centre will be funded by HRDC. The Steering Committee has been investigating possible locations, and is now in the final stages of negotiating a lease. It is anticipated that the action centre will open in September.

(d)Additional Project Implementation Resources for marketing and recruitment packages, newsletters, publicity, information gathering and other ingredients needed to build new markets and attract business locations and investment to Dundas Street West. The West Toronto Junction Team has identified the need for some preliminary actions, but the development of a detailed project implementation budget will be prepared as part of the action plan to be developed by the Project Director.

These expenses will be funded by both HRDC and Provigo's contribution.

Table 1:

Dundas West Regeneration Project Budget June 1998-1999

These resources will be additional to those already committed and available for the area's revitalization: $200,000.00 for facade improvement grants over the three year period 1997-1999; a $16,000.00 market adjustment budget for $100.00 training subsidies that are available to individual merchants in the area until December 31, 1998; and $66,000.00 for streetscape improvements to be implemented in conjunction of the undergrounding of the hydro wires which is scheduled to begin in September 1998. The Junction Gardens BIA also raises about $50,000.00 a year from area businesses which it reinvests in promoting the area and in undertaking streetscape improvements. The retention of the project director and co-ordinator will permit the implementation of these already ongoing initiatives to be accelerated.

The project will be highly results oriented. The terms of reference for the action plan will include the specification of concrete objectives for each three month period, and performance and success will be measured against the achievement of those objectives. Planning and economic development staff are closely involved with the project and will consult with and advise the Steering Committee and the project co-ordinator and director and facilitate access to City resources. The four Ward Councillors will be invited to all Steering Committee meetings and provided with copies of the Minutes.

Provided that satisfactory progress is achieved, it is anticipated that the project will continue for a three year period. Experience in other communities has shown that typically a three to five year period is required to develop self sustaining economic growth. The only funds secured to date for the second and third years are the two $20,000.00 letters of credit provided by Provigo. However, it is anticipated that other funding partners will be found if the report on the first year of the project demonstrates positive results and potential for future change.

Conclusions:

The West Toronto Junction Team has formed an effective partnership within the community, with the Federal Government and the City for the regeneration of Dundas Street West. The recommendations of the report authorize staff to release regeneration funds contributed by Provigo to the Team for the purposes of the project. They also seek the continued joint efforts of staff in Economic Development and Urban Planning and Development Services and the City's support for providing any in-kind services or the loan of equipment and furnishings that may be feasible without incurring additional unbudgeted costs.

Contact Names:

Judy Morgan, Economic Development, 392-1003

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

9

Appointments to Boards of Management for Business Improvement

Areas and Amendments to the (former Toronto) Municipal Code

Chapter 20, Business Improvement Areas - Various Wards

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of the following report (September 3, 1998) from the Commissioner of Economic Development, Culture and Tourism, subject to the addition of the following recommendation:

"4.That authority be granted for the introduction of the necessary bill in Council to give effect thereto.":

Purpose:

Changes to membership of Boards of Management for Business Improvement Areas require Council approval and a by-law amendment. Attached is Schedule A detailing the amendments to (former Toronto) Municipal Code, Chapter 20 and Appendix 1 listing the names of the nominees to be appointed.

Source of Funds:

No funds required. Business Improvement Area operating budgets are raised by a special levy on members.

Recommendations:

It is recommended that:

(1)amendments be made to Schedule A Individual Boards of Management, of the (former Toronto) Municipal Code Chapter 20, Business Improvement Areas as set out in the attached Schedule A. These changes are specific to Number of Members and Members Needed for Quorum and are highlighted by "Changes From and To";

(2)Council appoint the nominees listed in Appendix 1 of this report to the Boards of Management for Bloor/Bathurst-Madison, Eglinton Way, Greektown on the Danforth, Harbord Street, Kennedy Road, Queen/Broadview Village, Upper Village (York) and Weston Business Improvement Areas. The term of office is to expire on November 30, 2000, or as soon thereafter as successors are appointed. Each of the named nominees meets the requirements of Section 220 of the Municipal Act, as amended.

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

Comments:

The Board of Management of the Bloor/Bathurst-Madison Business Improvement Area has requested that the size of their Board be increased from ten to eleven. The nominee to be appointed is Mr. Brian Burchell. The quorum should be changed from five to six.

The Board of Management of the Eglinton Way Business Improvement Area has requested that the size of their Board be decreased from ten to nine following the resignation of Ms. Kelly Watt. The quorum should remain at five.

The Board of Management of the Greektown on the Danforth Business Improvement Area recommends that Chris Trahiotis be appointed to the Board following the resignation of Jane Klianis.

Neither the size of the Board of Management of the Greektown on the Danforth Business Improvement Area or the quorum are affected by these appointments.

The Board of Management of the Harbord Street Business Improvement Area has requested that the size of their Board be decreased from nine to eight. The quorum should remain at four.

The Board of Management of the Kennedy Road Business Improvement Area requests that Gloria Savaglio be removed from the board due to her resignation.

Following the elections held at the Annual General Meeting of Queen/Broadview Village Business Improvement Area, amendments are required to the number of members and members needed for quorum. These amendments must be reflected in Schedule A Individual Boards of Management of the (former Toronto) Municipal Code Chapter 20, Business Improvement Areas.

Following the elections held at the Annual General Meeting of the Upper Village (York ) Business Improvement Area and as per Councils resolution at it's meeting of February 5 & 6, 1998, attached in Appendix 1 are the nominations for appointments to other Business Improvement Area Boards of Management in the former Area Municipalities.

The Board of Management of the Weston Business Improvement Area recommends that Sue Johnson and Roy Brown be appointed to the Board following the resignation of Simon Gilmartin. As per Councils resolution at it's meeting of February 5 & 6, 1998, attached in Appendix 1 are the nominations for appointments to other Business Improvement Area Boards of Management in the former Area Municipalities.

Conclusions:

These amendments should be reflected in Schedule A, Individual Boards of Management of the (former Toronto) Municipal Code Chapter 20, Business Improvement Areas.

The nominees listed in Appendix 1 of this report should be appointed to the Business Improvement Area, Boards of Management. The terms of office are to expire on November 30, 2000, or as soon thereafter as successors are appointed. Each of the named nominees meets the requirements of Section 220 of the Municipal Act, as amended.

Contact Name:

Ingrid Girdauskas, Economic Development, (tel.) 392-1134

Brenda J. Librecz, Managing Director, Economic Development, (tel.) 397-4700

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Schedule A

Business Improvement Areas

Individual Boards of Management

Name ofBy-lawMembers

Business WhichNumberCouncil MembersNeeded

ImprovementDesignatesofFor

AreaAreaMembersNumber WardQuorum

ChangedChanged

FromToFrom To

Bloor/Bathurst

- Madison 1995-06881011 1 Midtown56

Eglinton Way662-8610 9 1 North Toronto55

Harbord Street555-85 9 8 1 Downtown44

Queen/263-80 910 1 Don River55

Broadview

Village

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Appendix 1

Bloor/Bathurst-Madison BIA

Brian BurchellBurchell Publishing Co. Ltd.

174 Spadina Avenue

Suite 604

Toronto, Ont. M5T 2C2

Greektown on the Danforth BIA

Chris TrahiotisOuzeri

500 A Danforth Avenue

Toronto, Ont. M4K 1P6

Queen/Broadview Village BIA

Albert EdelsteinAlbert Jewellers Ltd.

718 Queen St. E.

Toronto, Ont. M4M 1H2

Harry LazarouSunnyview Meats Market Ltd.

738 Queen St. E.

Toronto, Ont. M4M 1H2

Arthur KellerDowntown Toyota Ltd.

677 Queen St. E.

Toronto, Ont. M4M 1G6

Colin ClaxtonLancaster Flowers

790 Queen St. E.

Toronto, Ont. M4M 1H4

Michael MozasAlbion Open Kitchen Restaurant

686 Queen St. E.

Toronto, Ont. M4M 1G9

Nick KarrasRegal Hardware

800 Queen St. E.

Toronto, Ont. M4M 1H7

Jack KormanCorby's Custom Clothier

721 Queen St. E.

Toronto, Ont. M4M 1H1

Joe TangirGallery Wall

783 Queen St. E.

Toronto, Ont. M4M 1H5

Yong HaNew Doyle's Discount Cigar Store

724 1/2 Queen St. E.

Toronto, Ont. M4M 1H2

Upper Village (York) BIA

Ara KurkFrame Gift Inc.

1005 Eglinton Ave. W.

Toronto, Ont. M6M 2C7

Elaine LevineShortcuts Hairplace for Kids

963 Eglinton Ave. W.

Toronto, Ont. M6M 2C4

George MilneGeorge Milne Health Solutions

898 Eglinton Ave. W.

Toronto, Ont. M6C 2C6

Loon TaorminaPenthouse Hair Salon

959 Eglinton Ave. W.

Toronto, Ont. M6C 2B4

Bonnie PlecashTD Bank Financial Group

949 Eglinton Ave. W.

Toronto, Ont. M6C 2C3

Weston BIA

Sue JohnsonRoyal Bank

1906 Weston Rd.

Toronto, Ont. M9N 1W2

Roy Brown, D.D.2103 Denture Clinic

2103 Lawrence Ave. W.

Toronto, Ont. M9N 1H7

10

Fashion Industry Liaison Committee

Membership and 1997/1998 Activities

(City Council on October 1 and 2, 1998, deferred consideration of this Clause to the next regular meeting of City Council to be held on October 28, 1998.)

The Economic Development Committee recommends the adoption of Recommendations (1) and (3) of the report (September 3, 1998) from the Commissioner of Economic Development, Culture and Tourism subject to Recommendation (1) being amended to read:

"(1)the membership of the Fashion Industry Liaison Committee be approved as outlined in Appendix B appended to this report, to reflect changes amongst participating organizations, and that such persons be appointed for the period ending November 30, 2000, and until their successors are appointed."

The Economic Development Committee reports, for the information of Council, having referred Recommendation (2) of the foregoing report to the Chair of the Economic Development Committee with a request that he submit this recommendation to Council for its meeting on October 1, 1998 together with the name of a member of the Economic Development Committee for appointment as Co-Chair to the Fashion Industry Liaison Committee.

The Economic Development Committee submits the following report (September 3, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

This report includes the Fashion Industry Liaison Committee's (FILC) Annual Report for 1997 and Workplan for 1998. The Committee's membership list for the current term of Council is also forwarded for approval.

Funding Sources, Financial Implications and Impact Statement:

Funding is included in the City of Toronto, Economic Development 1998 Operating Budget.

Recommendations:

It is recommended that:

(1)the membership of the Fashion Industry Liaison Committee be approved, as outlined in Appendix B, to reflect changes amongst participating member organizations;

(2)a member of the Economic Development Committee be appointed to Co-Chair the Fashion Industry Liaison Committee, together with Councillor Olivia Chow (Councillor Chow represents Ward 24, which contains the City's King-Spadina Fashion District); and

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

Background:

One of the largest industrial employers in Toronto, the fashion/apparel industry is made up primarily of small, Canadian-owned companies who can benefit from our support. The Fashion Industry Liaison Committee was established by Toronto City Council in 1984 to support and promote Toronto's fashion industry. The Committee is comprised of volunteers who represent all sectors of the industry, including education, design, manufacturing, wholesale, retail and labour. Subcommittees are created to work on various projects such as Marketing; Human Resources Development; Education; Awards; Technological Innovation; Export Promotion; Fashion District Revitalization; and Quick Response.

The City has established a proven track record in adding value to the industry and increasing Toronto's international reputation as a centre of excellence in fashion design. By bringing all sectors of the industry together and focussing on key issues and needs, FILC provides valuable information and advice to the City and the industry. Program initiatives have, in the past, been predominantly funded and supported by Economic Development in the range of $100,000.00 per annum.

Comments:

(a)Strength of the Industry:

According to Statistics Canada's latest sector competitiveness profile, "The Canadian apparel industry has taken important steps in adjusting to major changes in its environment. Firms that have developed the ability to respond quickly, flexibly, and have a reputation of excellent design and high quality have succeeded in gaining a foothold in export markets. However the industry will continue to face intense competition in both domestic and international markets."

Key facts:

• apparel accounts for 1.6 percent of Canada's manufacturing sector shipments and 6 percent of employment;
• the national market for apparel is in excess of $8 billion (wholesale);
• domestic shipments account for 58 percent of the market;
• Ontario's domestic shipments of apparel in 1996 were valued at $1.2 billion;
• Toronto has 80 percent of the province's apparel manufacturing jobs;
• the City's apparel shipments are estimated at almost $1 billion;
• clothing exports have risen steadily during this decade;
• Ontario's apparel exports accounted for almost $450 million in 1996; and
• preliminary figures suggest that Ontario's 1997 exports will be up 25 percent over 1996.

Toronto's fashion industry is making its mark as Canada's premier fashion centre. Many of our best designers and manufacturers are carried alongside top international lines at prestigious retailers such as Bergdorf Goodman, Saks Fifth Avenue and Harrods. The value-added through design is a important component of the industry's competitiveness, and is often overlooked when viewing the apparel sector from a traditional manufacturing standpoint.

Following the implementation of the Free Trade Agreement in 1989, and the recession of the early 1990's, the industry underwent a major restructuring. This process appears to be complete, and since 1994, employment in Toronto's apparel manufacturing has experienced annual growth in the range of 2-5 percent, resulting in almost 1300 new jobs.

The apparel industry is highly clustered with major agglomerations in the King-Spadina Fashion District, at Dufferin-Keele South, Tapscott Employment District, Dufferin-Keele North, Carlaw Avenue, Malvern and Progress Employment Districts. Employment figures for the fashion industry are difficult to obtain, since they cross many sector codes. However, we estimate Toronto has:

• 18,000+ apparel manufacturing jobs;
• 11,000+ apparel retail jobs; and
• 9,000+ fashion-related jobs (e.g. photographers, stylists, choreographers, media, makeup, etc.).

(b)Highlights of 1997 Toronto Fashion Support Program:

• almost 100 media and consumer events were held in the March and October Fashion Weeks;
• media coverage for the Ready-to-Wear Collections was valued at $16 million in 1997;
• the 1997 Awards for Excellence in Fashion Design featured increased industry sponsorship, prestige, media coverage and recognition for the Award winners;
• American Express sponsored the printing of 100,000 copies of Shop Canadian;
• $40,000.00 in federal and provincial sponsorship allowed the Committee to begin implementing pilot training programs for the industry;
• more than 15,000 people attended Street Style, the second annual consumer fashion and entertainment extravaganza; and
• with the Committee's support, Toronto became the third city in the world to host the Hollywood Costume Collection, seen by almost 70,000 people.

(i)Toronto Fashion Weeks

Two very successful Toronto Fashion Weeks served to increase awareness of the capabilities of Toronto's fashion industry as well as to promote sales of the spring/summer and fall/winter collections. In March and October, approximately 7,500 copies of the Toronto Fashion Week Calendar were distributed to the national media and industry representatives, and local consumers. Roughly 15 trade and 30 consumer events took place each Week. The Toronto Fashion Hotline broadcast the schedule. In September the schedule was also available in Flare magazine, on the City's website and the Toronto Star's City Search.

Under the sponsorship of the Matinée Fashion Foundation, the Ready-to-Wear Collections have grown in size and professionalism. Twenty of the country's top designers launched their Collections to the media, buyers and consumers with the support of our best show producers, choreographers, stylists, hair and makeup artists, sound and lighting professionals, dressers and support staff. 60 percent of the designers were from Toronto. Media coverage of the shows was estimated at $8million per season, or $16 million annually. With internationally syndicated television coverage on such programs as City tv's Fashion Television and CBC's Fashion File, the Ready-to-Wear Collections place Toronto and its designers on the international fashion map. Roughly 2500 people attended, including approximately 160 media and 175 buyers.

The City's position as a founding sponsor of the event has not diminished under this new sponsorship arrangement. In order to ensure the continued success of the shows, FILC's support was targeted toward a buyer attraction strategy, including sponsorship of the buyer's lounge, mailings to out of town buyers, and co-sponsorship of a buyer's luncheon with a well respected industry guest speaker. Early results have been positive, and continuation of this strategy is recommended.

In September, FILC's forty Fashion Week banners were hung in areas where events were taking place to broaden awareness amongst the trade and consumers. Industry members expressed their appreciation for this additional promotion.

(ii)Where Shop Canadian Supplement

Produced in co-operation with Where Toronto and American Express Canada, a supplement entitled Shop Canadian was included in the September and October issues of the magazine. This is the second edition of the supplement, designed to get information about where to buy local designs to the City's tourists. The City of Toronto paid for the writing of the piece. American Express underwrote the printing of 100,000 copies, a tenfold increase over our printing last year. As a result, the City was able to sponsor distribution to City visitors and residents through information kiosks across the GTA, as well as tourism organizations, transportation providers and international trade offices throughout the world. The response from the distributors, the retailers included, and additional retailers who have seen the piece and who would like to be included next year has been extremely favourable. The publication has grown in scope, is being adapted to other sectors, and has served as a catalyst for a national promotional initiative.

(iii)City of Toronto Awards for Excellence in Fashion Design

The 1997 Awards for Excellence in Fashion Design were presented on December18^th at the York Street Gateway to:

• Designer of the Year - Hoax Couture;
• New Designer - Joeffer Caoc and Crystal Siemens (two winners);
• Fashion Graduate - Kelly Smith (honourable mention in this category went to Angela Chen and Alec Popik for headhunter);
• Accessories Designer - Karyn Gingras for Lilliput Hats;
• Specialty Designer - Zalia Ribau for Moka Designs; and
• Industry Achievement award winners Jeanne Beker of Fashion T.V. (Image Builder) and Designers Ontario President Franco Mirabelli (Innovator).

For the first time the award winners were not notified in advance of the event and the three finalists in each category were presented to the audience. With creative input for the ceremony provided by the production team of Richard Lyle and Anthony Majanlahti, the '97 Awards ceremony was one of the most memorable to date and generated a great deal of excitement among the hundreds of guests who attended. News releases announcing the winners were sent out nationally following the event. CITY TV provided live eye coverage from 6-7 p.m., as well as a piece on the 11 p.m. news. Both the Star and the Sun ran articles, as did the Toronto Fashion Incubator newsletter, Style Magazine, Audrey Gostlin's Inside Fashion and Canadian Apparel Magazine.

Once again Smirnoff generously agreed to co-sponsor the reception. Awards co-sponsors included: Flare magazine, who provided a full-page ad to Designers of the Year Hoax Couture; the Ontario Fashion Exhibitors, who provided shared booth space to the new designers, Crystal Siemens and Joeffer Caoc; Jeanne Beker, who donated her $1,500.00 appearance fee for an industry event to the new designer winners; wenches & rogues who provided a $1,000.00 cash award to the student winner Kelly Smith; Welly, who provided a $500.00 cash award to the honourable mention in the student category Angela Chen and Alec Popic; the Mode Accessories Show, who provided booth space to Karyn Gingras; and the Toronto Fashion Incubator, who provided Outreach memberships to the student winners and the three finalists in the specialty designers category.

(iv)Retail Awards

Held in conjunction with the Toronto Ready-to-Wear Canadian Designer Collections during the spring Toronto Fashion Week, the Retail Awards were co-sponsored by FILC, the Bloor Yorkville Business Improvement Area, Style Magazine, and Designers Ontario. Recognizing retailers who promote Canadian fashion, the awards have been very well received. Nominations are provided by designers, industry members and the media. Selection is made by an independent jury of industry representatives. The awards are presented to the winners at a special luncheon attended by the fashion media, which results in good coverage.

The winners of the 1997 Awards were:

• Style Magazine - Canadian Fashion Retailer of the Year - Holt Renfrew;
• Designers Ontario - Ontario Fashion Retailer of the Year - At Izzy's;
• City of Toronto - Toronto Fashion Retailer of the Year - wenches & rogues; and
• Bloor Yorkville Business Improvement Area - Bloor-Yorkville Fashion Retailer of the Year - Accessity.

(v)Training Project

With $40,000.00 in funding from the Canada Employment Insurance Commission and the Ontario Ministry of Education and Training, the Fashion Industry Human Resources Adjustment Committee (FIHRAC) was established to begin to implement industry-wide pilot training projects for fashion industry workers. Initiated by the City of Toronto and FILC, this subcommittee includes representation from labour, management, educators and the City.

A full-time co-ordinator was hired in March 1997. Outreach was undertaken to inform the industry about assistance provided by the Committee and research was done to locate funding sources for the delivery of programs. A pilot sample-maker training course was held at George Brown College during the summer. Good employment opportunities resulted for the participants who were very pleased with the course.

Following the conclusion of the co-ordinator's contract and a brief transition period, a new co-ordinator was hired in November. Industry members are very supportive of this project, and are anxiously awaiting the development of new courses. The City of Toronto provides office space for the coordinator at Metro Hall.

(vi)Education Sector Initiatives

Under the leadership of the Toronto Chapter of the Fashion Group International, local educators and industry representatives developed a day-long seminar called Fashion Forum to educate first year fashion students about the wide variety of jobs available in the fashion industry. Over 500 students attended the panel discussions which were presented by some 40 industry specialists.

The City and FILC has a long history of cosponsoring the student's year end fashion shows. These shows can be very difficult for the students to finance, yet represent an important part of their education. In 1997 the schools were given the opportunity to change the form of the sponsorship. Several FILC bursaries were established for top students and some badly needed equipment was purchased in the Committee's name. Other schools elected to retain the show support, and ads were placed in the show programs thanking the City for its sponsorship.

(vii)Hollywood Collection

In December of 1997, the Hollywood Collection made its North American debut in Toronto as a result of the efforts of FILC and its members. The exhibit offered Toronto film and fashion fans alike the opportunity to see the breathtaking gowns and costumes worn by such silver screen legends as Greta Garbo, Marlene Dietrich and Claudette Colbert.

Dorothe Feldner and Bev Moore of International Arts and Cultural Connections, Inc. secured the rights from the Fashion Institute of Design & Merchandising (FIDM) in Los Angeles to bring the Collection to Canada. Through ongoing consultations between this company and FILC, a beneficial partnership was formed.

Combining the launch of the exhibit with the opening of the new Varsity Cinemas provided an opportunity for a major event that included a reception, fashion show and film festival. Other key sponsors included FIDM, the Matinée Fashion Foundation and Cineplex Odeon Corporation. Jeanne Beker, host of Fashion Television, m.c.'d a fashion show including the most glamorous designs of some of the City's top designers which were presented with jewels on loan from Birks. The show was followed by screenings of the newest holiday releases and fashion-related classic films.

Some 750 members of the fashion and film industries and media attended the opening party, almost double the expected number, establishing a linkage between the City's film and fashion industries. We were also provided with the opportunity to include a few pieces Toronto designers created for film and television in the exhibit, which was seen by approximately 60-70,000 people over a six week period.

(viii)Street Style

The second, annual, day-long consumer fashion and entertainment extravaganza, Street Style was held on Saturday, August 23^rd along Queen Street West between McCaul Street and Spadina Avenue. Its purpose was to showcase alternative fashion to the public and tourists, and participation resulted in additional business for many companies. FILC's cosponsorship provided funding to hire staff to develop and promote the event. Fifty visual and performance artists shared an outdoor stage with six bands and five fashion shows featuring twenty-eight designers. Booth space was rented by over 30 organizations including designers, artists, accessories companies, restaurants and other food vendors, consumer products companies and social service agencies.

Other sponsors included The City of Toronto (Economic Development Partnership Grant), Smirnoff, Labatt's, Westbury National, A.G. Hair Care, Plutino Group, Pizza Pizza, Smart(fx) and Liberty Entertainment Group. NOW distributed the official program and Energy-108 FM provided live to air broadcasts of the event. Additional media coverage was obtained from CITY TV, Global, CFTO and CFMT, The Toronto Star, Globe & Mail, Style Magazine, What's on Queen and Watch magazines, CFRB, CIUT, CBC Metro Morning, EZ Rock 97.3, CKFM 99.9, CISS FM 92.5, CHFI FM 98.1, CFTR AM 680, CHUM AM 1050, CHUM FM 104.5, CJRT FM 91.1 AND CFRB AM 1010. Advance information was provided on the Street Style Hotline and on a pixel board at Bathurst and Lakeshore Blvd. Event organizers estimated that more than 15,000 people attended the event.

(ix)Community Marker for the Spadina LRT

The Fashion Industry Liaison Committee has wanted to honour the important historical contribution made by the industry in the King-Spadina area for many years. In 1997, in co-operation with Metro Toronto and the Toronto Transit Commission, a Fashion District Community Marker was added to the public art competition for Spadina Avenue. Located at the northwest corner of Richmond and Spadina, Stack, by Stephen Cruise, was officially unveiled in October. A small reception for the guests was hosted by FILC in the Fashion District. Coverage was received in the Globe and Mail, Canadian Apparel magazine and urban zoo, a local Vancouver fashion television program.

(c)1998 Work Program and Budget:

(i)Toronto Fashion Week

Many designers, manufacturers and retailers will hold independent shows, and thus the co-ordinating and promotional role played by the Toronto Fashion Week Calendar will continue to grow in importance. Development of a web site to assist with scheduling and promoting industry activities throughout the year is also under investigation.

For the March Fashion Week, FILC and the City worked with the Ontario Fashion Exhibitors (OFE) and Designers Ontario to try to build a link between the two key trade events. The shows were scheduled in the same week and a Designers Way was created at the OFE Market. Designers participating were very pleased with the results.

The 1998 Fashion Retailer Awards were presented to:

• Visa Canada - Canadian Fashion Retailer of the Year - Roots;
• Where Toronto Magazine - Shopping Destination of the Year - Toronto Eaton Centre;
• City of Toronto (FILC) - Toronto Fashion Retailer of the Year - Maxi Boutique;
• Designers Ontario - Ontario Fashion Retailer of the Year - Saffron Road; and
• Visa Canada - Canadian Designer U.S. Retailer of the Year - Jacobson's Stores Inc.

The first of the two annual Matinée Fashion Ready To Wear Collections was a resounding success. Attendance increased by approximately 25 percent, with 3000 attendees including approximately 200 media and 225 buyers.

The Fall Fashion Week will be held from September 16 - October 3, 1998.

(ii)Fashion Industry Promotion and Marketing

FILC's work has enabled the City to establish a great deal of credibility within the fashion sector. The Committee Coordinator (Economic Development staff) serves as an advisor to several industry boards and committees, and responds to a variety of requests for information, advice and assistance from industry members, people wishing to enter or do business with the industry, and American and international investors and firms seeking opportunities to do business here.

FILC was allocated part of the City's transit shelter advertising space in 1998. A new poster was developed to promote the industry during the spring Fashion Week.

Funding has been disbursed to continue the distribution of the Shop Canadian fashion brochure through hotels and information centres across the GTA. The brochure will be updated in the fall.

(iii)Awards for Excellence in Fashion Design

The City's successful Awards program are proposed for the fall and will continue to develop, adjusting to suit the needs of the sector. Particular attention will be paid this year to increasing: representation across the new City; involvement of the various industry subsectors; the publicity received by the award winners; and corporate sponsorship.

(iv)Training

An additional $175,000.00 in funding has been provided to The Fashion Industry Human Resources Adjustment Committee from Human Resources Development Canada and the Provincial Ministry of Education and Training. Projects under development include industry-specific ESL training, a Sewing Machine Repair course, the second edition of the sample making course (available as a whole or in modules), development of a sewing co-op and cosponsorship of management training through industry seminars.

(v)Education

The FILC Education Subcommittee, made up of the heads of the Toronto area fashion programs, have undertaken the sponsorship of the Fashion Forum, student shows and awards, which forms the core of the program. The feasibility of establishing a regular program of industry seminars and networking opportunities is also being investigated.

(vi)Export Assistance

FILC has been approached by a customs brokerage firm interested in developing a special program to assist Toronto-area fashion/apparel companies increase their exports. Staff will work to support the company in their efforts to develop an initiative that meets the needs of the industry, and to disseminate information about the program.

(vii)Project Development Fund

Each year funding is set aside in the project development fund to undertake new initiatives or respond to sector requests for assistance.

• In 1997, a proposed export mission to New York proved to be infeasible and therefore was not undertaken. However, a new proposal is being developed which includes a high profile advertising feature supported by merchandising and publicity events in key U.S. cities. It will likely be forwarded with a request for support later in the year.
• The Ontario Fashion Exhibitors (OFE) is revising its market weeks to increase sales for participants. This year FILC is assisting in a direct mail campaign targeted at retailers in the Northern United States to encourage them to visit Toronto's Fashion Week and buy Canadian.

(d)Membership:

The Committee's current structure includes representation from provincial associations and other regional bodies. It therefore is now able to broaden its mandate to represent the industry across the new City without a substantial change in membership or structure. An outreach and consultation program is required to contact individual businesses outside of the former City of Toronto to determine how the Committee can best serve their needs. A workshop planning session will be held, as a component of the Economic Development Strategic Plan Consultation Process, with FILC, staff and industry representatives.

The membership of the Fashion Industry Liaison Committee must be updated to reflect changes in its member organizations. Tom Abrahams has been replaced as the representative of the Advisory Committee by its new Chair, Mr. Mike Canhas. Karen Leyland, Marketing Coordinator of The Bloor-Yorkville Business Improvement Area has replaced Lisa McGee, as their representative on the Committee.

Increased representation from across the new City is being sought. The names of the new members will be forwarded to Council for approval later in the year.

Conclusion:

Business retention, attraction, growth and export development are all key goals of the City's sector support for the fashion/apparel industry. FILC is unique in its ability to act as an advocate for the industry and bring all of the players to the table, providing them with the opportunity and the support to work together to benefit the sector.

By working with other private and public sector partners through the Fashion Industry Liaison Committee, the City is able to leverage its investment and provide the assistance required by the industry. In 1998 businesses will be consulted and strategies developed to ensure that the Fashion Industry Liaison Committee's initiatives continue to meet the needs of the fashion/apparel industry across the whole City. Activities such as the co-sponsorship of the Collections launch, export missions to the U.S., the promotion of industry stars through the Awards program, training, marketing and education will continue to enhance economic activity in this important sector of the City's economy.

Contact Name:

Brenda J. Librecz

Managing Director

Economic Development

Laurie Belzak, Coordinator

Fashion Industry Liaison Committee

Phone: 392-1296

Fax: 392-0675

E-mail: lbelzak@city.toronto.on.ca

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Appendix A

Fashion Industry Liaison Committee 1998 WorkPlan

(1)Toronto Fashion Week

-Spring Fashion Week Program$2,500.00

-Co-sponsorship of Spring Collections Launch$20,000.00

-Fall Fashion Week Program$2,000.00

-Co-sponsorship of Fall Collections Launch$7,000.00

-Co-sponsorship of Retail Awards$4,000.00

Total$35,500.00

(2)Fashion Industry Promotion and Marketing

-production of TTC Shelter posters$4,500.00

-distribution of '97 Shop Canadian brochure$5,500.00

-production of '98 Shop Canadian brochure$2,500.00

Total$12,500.00

(3)Awards for Excellence in Fashion Design

-reception, fashion presentation and awards$11,500.00

(4)Training and Education

-Fashion Forum Co-sponsorship$500.00

-Co-sponsorship of Student Year-End Fashion Shows & Awards$1,500.00

Total$2,000.00

(5)Project Development Fund

-cosponsorship of export mission to New York City

-support for OFE markets

Total$3,000.00

(6)Strategic Planning Session

-event organization and promotion$1,000.00

(7)General Expenses$2,000.00

Total$67,500.00

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Appendix B

Fashion Industry Liaison Committee

Members

Chair (to be appointed by Council)

Mike Canhas

Toronto Dress and Sportswear Advisory

Alexandra Dagg

Union of Needletrades, Industrial and Textile Employees Locals 12, 14, 83, 92 & 136

Peter Duck

Ryerson Polytechnic University

Mel Fruitman

Fruitman Consulting Group

Stewart Halliday

Jones New York

Lynda Jagros May

Fur Guild of Canada

Bob Kirke

Apparel Ontario

Arpi Kunugus-Wilson

The Couture Association of Toronto

Susan Langdon

Toronto Fashion Incubator

Karen Leyland

Bloor-Yorkville Business Improvement Area

Franco Mirabelli

President, Designers Ontario

Karen Palmer

Chameleon Accessories Inc.

Rosalie Starkey

George Brown College

Astor Zieper

Ontario Fashion Exhibitors

(City Council on October 1 and 2, 1998, had before it, during consideration of the foregoing Clause, the following communication (September 29, 1998) from Councillor Brian Ashton, Scarborough Bluffs:

At the meeting of the Economic Development Committee held on September 18, 1998, the Chair was requested to survey Committee Members and recommend a Member for appointment as Co-Chair of the Fashion Industry Liaison Committee. I have reviewed the matter with members and can report that Councillor Norm Kelly has agreed to undertake this mandate.

Submitted for your consideration and approval.)

11

PATH - Promotions Link Inc. Proposal for

Public Access Terminal System

(City Council on October 1 and 2, 1998, amended this Clause by adding to the recommendation of the Economic Development Committee the words "subject to the requirement that the Public Access Terminal System be implemented in such a way that it helps people to identify where they are located in relation to above-ground surface features".)

The Economic Development Committee recommends the adoption of the following report (September 3, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

This report comments on a request for permission to use the PATH official marks for a Public Access Terminal System which has been received, and recommends that the proposal be endorsed and permission provided.

Funding Sources, Financial Implications and Impact Statement:

No funding is required and there are no financial implications for the Corporation of the City of Toronto.

Recommendations:

It is recommended that:

(1)the City of Toronto endorse the proposal by Promotions Link Inc. to introduce a Public Access Terminal System in the PATH walkway system, and provide Promotions Link Inc. with exclusive rights to use the name "PATH" and associated Official Marks for the purposes of a Public Access Terminal System for an interim period of three years;

(2)the City of Toronto approve in principle the installation of prototype Public Access Terminals in City and/or Metro Hall at no cost to the City, and authorize staff to work with Promotions Link Inc. to identify appropriate locations and make the necessary arrangements;

(3)Promotions Link Inc. also be given permission to use the PATH Official Marks on marketing and promotional material and on merchandise;

(4)in the event that no terminals have been installed anywhere in the walkway system and the system is not functional by the end of a twelve month period, that the Commissioner of Economic Development, Culture and Tourism be authorized to evaluate the progress and feasibility of the project and report to Council on the continued appropriateness of providing Promotions Link Inc. with exclusivity to the use of the Official Marks for the purposes of a Public Access Terminal System; and

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

Background:

The PATH walkway system is a ten kilometer network of shopping malls and walkways that runs under downtown Toronto linking most of the major office towers, hotels and attractions in the Financial Core with public transit terminals and parking garages. It is the largest interconnected indoor walkway system in North America, and gives our downtown a unique level of accessibility and competitive advantage. This, however, is a relatively unknown fact.

Each segment of the walkway system is owned and controlled by the owner of the property through which it runs. About thirty five different corporations are involved, and there is no single agency responsible for promoting or managing the system as an integral unit. Although there would be significant public and economic development benefit to co-ordinated management, to date the property owners have shown no interest in participating in such an organization.

In the absence of an organization representing the walkway system as a whole, the City of Toronto undertook to co-ordinate and facilitate the introduction of coherent directional signage, maps and identity markers throughout the system (the PATH wayfinding program). The owners paid for the sign elements installed on their property. The City retained the services of a full time co-ordinator and design team to negotiate the sign locations and secure each owner's agreement. Legal agreements between the City and each owner committing all parties to maintain and update the signage system in the future are registered on title.

The City registered the PATH name and logo as official marks pursuant to Section 9 of the Trade Marks Act. Council's existing policy is that all publishers be permitted to use the logo at no expense and that no monopoly be given to any one company (Clause 148 of Report No. 24 of the Executive Committee, adopted by Council on October 7 and 8, 1991). Requests to use the marks for other purposes have been considered and reported to Council on an individual basis.

Comments:

I have received a proposal from Promotions Link Inc. to introduce a Public Access Terminal System into the walkway system. Each terminal would be an interactive information station providing free information about how to reach specific individual or types of businesses, transit stations, streets, buildings, etc. It also would access a broader information base including tourist oriented information about the city -- for example, events and entertainment listings, hotel locations, transportation information, etc. The system would be funded through fees paid by businesses included in the business directory, by on line and display advertising and by sponsoring developers and host establishments.

The installation of such a system would greatly improve the public's ability to use the walkway system and its many businesses, stores, restaurants and attractions. It would be a more detailed adjunct to the PATH signage system which was designed to provide basic directional information quickly to moving pedestrians. It is recommended that the City fully support Promotions Link Inc. in this initiative and provide:

(a)The requested permission to use the official marks associated with PATH. Because of the significant expense and time that will be involved in developing the public access terminal system, Promotions Link Inc. has requested exclusivity in this permission for a period of three years. This request is considered reasonable provided that there is an ability to review the exclusivity clause after one year in the event that the project is not proceeding.

The requested exclusivity does not constrain Council's current policy that all publishers be permitted to use the PATH logo at no expense in printed material promoting the walkway system.

(b)Permission to use the PATH official marks on marketing and promotional material and on merchandise.

(c)Permission to install prototype Public Access Terminals in City Hall and/or Metro Hall locations at no cost to the City. It is recommended that the appropriate staff be authorized to work with Promotions Link Inc. to identify appropriate locations and make the necessary arrangements.

(d)Assistance from staff to provide access to information contained in our files about the walkway system, property owner contacts and experiences in implementing the PATH signage program.

Issues and Concerns:

The staff of City Legal have raised a concern related to the endorsement of the attached proposal without conduct of some type of competition. They suggest that this might constitute the provision of a bonus to Promotions Link Inc. under Section 111 of the Municipal Act. Our experience has shown that there is very little interest in this type of commercial venture. There have only been three enquiries and no initiatives have emerged into the market place.

It is the view of the office of Economic Development that the attached proposal, if implemented, will be of enormous benefit to the City, the Path System users and Path System businesses. We believe that Promotions Link Inc. can deliver on its proposal where others either could not or would not. We would argue that bonusing, in this case, can only be an issue where there is more than one able and willing business proponent. Five years of operation have shown that there are none. We recommend the one year review as a way to both evaluate the progress of this proposal and to monitor other demands. We acknowledge, therefore, the concern raised by City Legal but recommend the support of this venture.

Conclusions:

It is concluded that the introduction of a Public Access Terminal System into the PATH walkway system would be an asset to the City. Such an addition will augment the strategy and plans by Economic Development to maintain and promote the system and further involve the property owners.

Contact Name:

Judy Morgan; phone number 392-1003; fax number 392-0675; E-mail address jmorgan1@city.toronto.on.ca or Brenda Librecz, Managing Director, Economic Development.

(Submission from Promotions Link Inc.,

titled "Proposal - Path Walkway Program)

Proposal - Path Walkway Program

Objective:

To gain early approval from the City of Toronto for the introduction of a Public Access Terminal System to aid tourists and occasional users with directional support in Toronto's PATH System.

Our project is motivated y the following Guiding Principles:

• Information is the primary product.

• Individual listings of large and small businesses including retail and hospitality sector enterprises are a primary feature.

• Internet Active - Reachable on website anywhere in the world.

• Inter-active and user friendly.

Public Access Terminal - What is it?

The Public Access Terminal is an information delivery system that utilizes the most current computer technology, packaged in a user-friendly format and situated for maximum pedestrian exposure.

Public Access Terminals - How do they work?

Lost or looking for something to do? Simply approach the Public Access Terminal, touch the screen, select an attraction, restaurant, business or retail establishment of your choice and push a button to get personalized directions. The Public Access Terminal also utilizes its link to the Internet to connect with a vast array of information that can be targeted to support the needs of the consumer, the City of Toronto, developers and landlords and advertisers.

Public Access Terminal - Who plays?

A vast array of information means a wide range of users. Available technology will assist all PATH users. The regular PATH pedestrian, the occasional user and tourists will all benefit from the information services offered by the Public Access Terminals.

Public Access Terminals - Who pays?

Public Access Terminals will be funded through fees paid by revenues produced from inclusion in the business directory, on line and display advertising and by sponsoring developers and host establishments. Users don't pay.

Public Access Terminals - Technology Overview

Public Access Terminals are an Internet based (World Wide Web) series of networked terminals strategically located throughout the downtown PATH system and related downtown hotels, tourist destinations and convention/trade show venues.

Public Access Terminals provide touch-screen access to a host of web-based information including:

• Information on events and entertainment in the city
• Businesses in the downtown core
• Professional services in the downtown core
• Restaurants and tourist establishments in the downtown core
• Retail establishments in the downtown core

Other options to be implemented in the near future:

Live "On-Line" Help:

An optional video-conferencing module will allow users to automatically (either by choice or after a period of indecision) to be linked to a live call centre where a friendly services support representative will provide help in using the Public Access Terminal.

Instant Printing:

A built-in printer is capable of instantly printing directional maps that will promote the amenities of Toronto's Downtown to tourists and occasional visitors from the Region.

Public Access Terminals - When can the system be introduced?

Public Access Terminal technology is already in existence and databases including business listings are in the public domain and available for the introduction of a Public Access Terminal system within 1 year. Test Terminals in City Facilities could be introduced sooner.

Public Access Terminal System - Marketing Program

The introduction of a Public Access Terminal System to the PATH system will be supported by an extensive campaign that will inform existing PATH users about the Public Access Terminal System and raise awareness about the PATH and the Public Access Terminal System among the general public.

Our Media Plan would include both paid and earned media. Building from a Media Launch that would feature an actual terminal, we plan to post a sophisticated web site that would highlight the features of the Public Access Terminals. Other elements of our proposed Media Plan include display advertising in the PATH System and direct marketing to businesses and their employees located in the City's core.

Inserts and advertising in newspapers within 200-km radius will entice clients to look up our web site.

Public Access Terminals - Next Steps

With a prompt approval from the City of Toronto we will be able to bring all of the parties together and introduce this system. Accordingly we request that an agreement between Promotions Link and The City of Toronto be entered into with the following conditions:

(1)Exclusive access to market Public Access Terminals in Toronto's PATH System for an interim period of 3 years.

(2)That test terminals be located in selected City facilities such as City Hall and Metro Hall as the basis for a successful venture that supports the City's economic goals.

(3)Approval to use the existing licenses to merchandise the PATH name and logo.

(4)That as part of a positive working relationship City Staff offer general assistance to the venture.

12

Play Structure and Waterplay Areas

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of the following joint report (September 2, 1998) from the Commissioners of Economic Development, Culture and Tourism, and of Urban Planning and Development Services, subject to the addition of the following recommendation:

"2.that appropriate City officials be requested to proceed with the assessment of playground equipment in City parks including a program for equipment replacement and upgrades to meet standards on a priority basis.":

Purpose:

To update Committee and Council on the Mayor's motion on playground upgrades to the new C.S.A. Standards and the provision of additional waterplay areas.

Funding Source, Financial Implications and Impact Statement:

Funding for the proposed playground improvements and provision of new waterplay areas is currently being finalized and will be included as a category item "Playground and Waterplay Areas" in the department's 1999-2003 Capital Works Programme.

Recommendation:

It is recommended that the Government of Ontario be requested to consider regulating all public and private playgrounds, including their maintenance, through the Ontario Building Code Act using the C.S.A. Standards Z614-98 as the basis for such regulations.

Council Reference/Background/History:

At its meeting of July 17, 1998, the Economic Development Committee requested "The Chief Building Official report to the Economic Development Committee on the new C.S.A. Standards for playground equipment, and the Commissioner of Economic Development, Culture and Tourism report on a phased replacement program for all City playgrounds so that all playgrounds will eventually comply with these new C.S.A. Standards as well as developing a standard city-wide inspection system for all City Playgrounds"; and the Commissioner "report on implementing eight new children's water parks."

Comments and/or Discussion and/or Justification:

In March 1998, the Canadian Standards Association (C.S.A.) introduced the "Z614-98 Standard for Children's Play Spaces and Equipment". This new "Standard" replaces the "1991 Playground Guidelines CAN/CSA-Z614-M90". The new standard provides requirements for playspaces and equipment intended for use by children aged 18 months to 12 years. The Standard contains recommendations on technical requirements and practices applicable to the design, manufacture/construction, installation, maintenance, and inspection of children's playspaces.

There has been significant harmonization of the new Standard with the American Society for Testing and Materials (ASTM) Standard on Public Playspaces, in respect to the technical nature of the Standard.

These Standards were prepared by the Technical Committee on Children's Playspaces and Equipment under the jurisdiction of the Standards Steering Committee on Public Safety and has been approved as a National Standard of Canada by the Standards Council of Canada.

Currently, there are more than 800 Parks and Recreation playgrounds, most of which were installed prior to the new C.S.A. Standards. An audit of all city owned playgrounds is a priority and is being organized. Staff will report back to this Committee with its findings and action plan. The audit will provide a comprehensive inspection of all playspaces, analysis of compliance with the new C.S.A. Standards, identify safety zones and encroachment areas. It will identify potential hazards and immediate safety concerns which will help to prioritize and establish future maintenance and/or repair programs.

There are currently five certified inspectors within the Economic Development, Culture and Tourism Department. The department goal is to establish a cross section of staff to complete the educational requirements and become certified inspectors by the C.S.A. and Canadian Parks and Recreation Association. This cross section will be made up primarily of staff in the department's five operating districts as well as the department's planning staff. This will ensure that the existing playgrounds as well as all new designs will comply with the standards.

Play equipment replacement was an ongoing practice in all former municipalities. This program has been given a high priority in our Capital Works Programme and will continue to be a priority until all playgrounds meet the 1998 C.S.A. Standards. The need to retrofit or replace older play structures is even more evident in light of the new C.S.A. Standards. Estimates are being finalized for this work and they will be identified (on a priority basis) under the project heading "Playgrounds and Waterplay" in our 1999-2003 Capital Works Programme. The criteria for retrofitting potential locations include: existing park assets, age of play equipment, the opportunity to add new life to a park, etc. It is specifically noted that recognizing the likely magnitude of required improvements, this will be a long term initiative extending beyond the 1999-2003 Capital Works Programme.

The Chief Building Official and Executive Director, Building notes that with playground related injuries it is important to recognize that many other private or public agencies, other than the City Parks and Recreation, also build playgrounds, such as schools, child care centres, family resource centres, multifamily residential complexes, etc. According to information provided by the Canadian Hospitals Injury Reporting and Prevention Program (CHIRPP) in 1993 almost 42 percent of playground injuries occurred in public parks, 34 percent at school and day care facilities and 24 percent on private properties. In a playground there are many elements that can be hazardous. CHIRPP data also shows that over a one year period out of 59,520 records of injuries of children, 8,358 were related to playgrounds.

The playground surface on which a child falls has been identified as the greatest injury causing factor, followed by inadequate barriers and height of platforms. 72 percent of all playground injuries are due to falls, of which 59 percent are due to falls directly on the playground surface.

It must be recognized that playground injuries of children should be a major cause of concern. Currently there are no mandatory requirements anywhere in Canada to control design, construction and maintenance of playgrounds or playground equipment. It is possible that improvements can be made to this situation. The solution may be to introduce such regulations in the Ontario Building Code, based on the C.S.A. Standard Z614-98.

The Mayor's motion also requested that we report on the implementation of eight new children's waterplay areas in the communities of Toronto, Scarborough, East York, York and Etobicoke.

Currently in the City of Toronto there is a total of 38 waterplay areas, (East York 6, Etobicoke 3, North York 16, Scarborough 12, Toronto 1, York 0). Those that have been built have proven to be popular.

As part of the Capital Works Programme, a number of locations will be proposed based on facility location criteria and these locations will be reviewed with the local Councillors.

Conclusions:

Departmental staff are organizing an assessment of playground equipment in City parks. The 1999-2003 Parks and Recreation Capital Works Programme submission will include a number of playground and waterplay areas across the city. Council should request the province to consider regulation of playgrounds through the Ontario Building Code.

Contact Names:

Frank Kershaw, 392-8199

Yaman Uzumeri, 395-7513

13

Upper Village (York) Business Improvement Area (BIA) -

1998 Operating Budget

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of Recommendations Nos.(1) and (2) of the report (September 2, 1998) from the Commissioner of Economic Development, Culture and Tourism subject to the addition of the following recommendation:

"(4)that authority be granted for the introduction of the necessary bill in Council to give effect thereto."

The Economic Development Committee reports, for the information of Council, having adopted Recommendation (3) of the aforementioned report and forwarded a copy thereof to the Budget Committee for its information.

The Economic Development Committee submits the following report (September 2, 1998) from the Chief Financial Officer and Treasurer:

Purpose:

Approval of Business Improvement Area (BIA) annual budgets is required by Council as per Section 220 of the Municipal Act, as amended by Bill 106.

Source of Funds:

No City funding is required since Business Improvement Area operating budgets are raised by a special levy on members.

Recommendations:

It is recommended that:

(1)the Economic Development Committee certify to City Council the expenditure estimates of the Upper Village (York) Business Improvement Area for the year 1998 in the amount of $95,000.00;

(2)the expenditure estimates of the above Business Improvement Area be adopted; and

(3)a copy of this report be forwarded to the Budget Committee for its information.

Comments:

The budget approval process for BIA budgets is as follows. Each BIA submits a budget which has been approved by the members and the Board of Management to the BIA Office. As with all agency budgets, the Finance Department reviews the budget and submits it to this committee for recommendation to Council for adoption. Once the budgets have been approved, the funds are raised by the City by a special levy on the commercial and industrial property owners within the bounds of the business improvement area.

The following Business Improvement Area held its meeting on the noted day at which the budget (see Appendix A) was approved:

Approved ByApproved By

BIAMembersBoard of Management

Upper Village (York)August 19, 1998August 19, 1998

The following table adjusts the gross budget to arrive at a net budget for special levying purposes for the Business Improvement Area:

19971998 Budget

Budget Request

Upper Village

Expenditure Estimates 55,00095,000

Miscellaneous Revenue00

BIA's Prior Years

(Surplus)/Deficit 0(40,000)

Net Expenditure Budget55,000 55,000

Appendix B is a list of all the City's Business Improvement Areas which indicates the status of their budget submission. It should be noted that of a total of 39 budgets, the City has not received 8.

Contact Names:

Donald Altman, telephone: 397-4220; fax: 392-6963

Internet e-mail: daltman@city.toronto.on.ca

Ingrid Girdauskas, telephone: 392-1134; fax: 392-1380

Internet e-mail: igirdaus@city.toronto.on.ca

--------

Appendix A

Operating Budget of The Upper Village (York) BIA

For The Year 1998

Budget Summary

1997

1997Council1998

ProjectedApprovedBudget

Actual Request Request

$$$

Revenue and Surplus55,012 55,00095,000

Expenditures:

Administration00500

Capital02500088,174

Maintenance5,3425,0001,826

Promotion and Advertising5,69315,0004,000

Contingency 0 7,000 500

Total Expenditures11,03555,00095,000

(GST Included)

(Surplus/Deficit)43,97700

--------

Appendix B

A - Approved by Council - May 13, 1998

B - Approved by Council - June 3, 1998

C - This Report

D - Budget not submitted

E - Approved by Council - July 29, 1998

14

Issuance of Tax Receipts for Toronto 2000

(City Council on October 1 and 2, 1998, adopted this Clause, without amendment.)

The Economic Development Committee recommends the adoption of the following report (September 11, 1998) from the City Clerk:

Recommendation:

The Millennium Task Force on September 9, 1998, recommended to the Economic Development Committee, and Council, the adoption of the report, dated September 3, 1998, from the Project Manager, Millennium Task Force, recommending:

"That the Treasurer and Chief Financial Officer, upon receipt of donations to the City which are accompanied by a request that the City use such monies to support Toronto 2000, report to City Council for instructions on the disbursement of any such monies.

Background:

The Millennium Task Force had before it a report, dated September 9, 1998, from the Project Manager, Millennium Task Force, respecting the Issuance of Tax Receipts for Toronto 2000.

The Millennium Task Force further reports having received a communication from Mr. E. McCullough, Executive Director, Toronto 2000 with regard to the subject matter.

(Report dated September 3, 1998, addressed to the

Millennium Task Force, from the Project Manager)

Purpose:

To address the request from Toronto 2000 respecting the issuance of tax receipts for individuals, businesses and organizations who may choose to make a donation to Toronto 2000.

Recommendation:

That the Treasurer and Chief Financial Officer, upon receipt of donations to the City which are accompanied by a request that the City use such monies to support Toronto 2000, report to City Council for instructions on the disbursement of any such monies.

Background:

Under the authority contained in the Income Tax Act in accordance with Sections 110.1 and 118.1, persons who make unconditional gifts to Canadian municipalities may receive a receipt from the municipality which is accepted by Revenue Canada as deductible for income tax purposes. If however, monies are paid to the City with a written condition, that same are to be used to support Toronto 2000, then such gifts may be considered "conditional", and therefore not qualified to receive a charitable receipt from the municipality for income tax purposes. Accordingly, since the gift to the Municipality must be unconditional to be tax deductible, the desire of the donor that the donation be applied to support Toronto 2000 should be limited to a request (i.e., rather than a requirement). In addition, City Council will need to make a determination that supporting Toronto 2000 is in the municipal interest to authorize that municipal funds (to the extent received in such gifts) be used to support Toronto 2000.

Staff had the opportunity to meet with the Finance Department to discuss the possibility of providing tax receipts for individuals, businesses and organizations that may choose to make a donation to Toronto 2000. The request to give this consideration came from Toronto 2000, and is attached.

As a Canadian Municipality the City of Toronto is in a position to issue tax receipts for funds raised in the form of donations. Council is at liberty to determine that the funds are being raised for a legitimate need, and may determine with how the funds raised are expended.

Toronto 2000 has requested that funds raised through donations potentially be receipted for income tax purposes by the City. This is possible in the event that the donations are made payable to the City of Toronto and are accompanied with a request that the funds be allocated to Toronto 2000. The City can then issue the tax receipt, and then determine how the amount donated is to be disbursed.

Administrative considerations include whether or not there will be large numbers of receipts that need to be issued thereby requiring significant staff time. It is difficult to determine at this time, but Toronto 2000 anticipates that the majority of funds raised will be through corporate sponsorships dollars as opposed to donations, and therefore would not require receipts.

The disbursement of the funds raised can be dealt with on a donation by donation basis, or City Council could direct, in advance, that all funds raised with the accompanying request by the donor that said funds be forwarded to Toronto 2000, shall all be disbursed to Toronto 2000.

The Task Force is being asked to consider the request by Toronto 2000 to issue tax receipts to donors. Depending on the decision of the Task Force, the request and recommendation will need to forwarded to Council for approval.

(A copy of the communication (August 11, 1998) from Mr. Ernie McCullough, Toronto 2000, attached 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.)

15

Other Items Considered by the Committee

(City Council on October 1 and 2, 1998, received this Clause, for information, subject to deferring consideration of Item (f), entitled "Proposed Use of Funds Generated from Cash-in-Lieu of Parkland Dedication", embodied in this Clause until the next regular meeting of City Council to be held on October 28, 1998.)

(a)Urban Aboriginal Economic Development.

The Economic Development Committee reports having deferred consideration of the following report and referred the recommendations contained therein to the Commissioner of Economic Development, Culture and Tourism with a request that he review the recommendations and report thereon to the Committee:

(July 21, 1998) from the City Clerk, advising that the Task Force on Community Access and Equity on July 16, 1998, recommended to the Economic Development Committee, the adoption of the implementation strategy outlined in Appendix "A" of the joint report dated June 1, 1998 from the Chief Administrative Officer and Executive Director of Human Resources, wherein it is recommended in part, that the Economic Development Committee and the Department of Economic Development, Culture and Tourism respond to the Task Force on Community Access and Equity and the Aboriginal Planning Group, regarding the following recommendations that the City of Toronto:

(a)determine the feasibility and establishment of a Toronto Urban Aboriginal Business Development Corporation;

(b)provide support for Aboriginal business networking by establishing links between Aboriginal suppliers and other levels of governments;

(c)examine and identify opportunities for Aboriginal businesses arising from privatization and/or the sale of assets;

(d)support the establishment of an Aboriginal business information centre and facilitate the funding for this centre in partnership with banks, the Province, the Government of Canada, and the Federation of Canadian Municipalities;

(e)with other funding partners, support the creation and maintenance of a directory of Aboriginal businesses in the Greater Toronto Area;

(f)with other funding partners, support the creation of an Aboriginal institute of education dedicated to business management;

(g)in partnership with banking institutions explore appropriate mechanisms to make information about business funding resources available at community agencies, e.g. business plans, loans;

(h)in partnership with banking institutions, present educational business seminars with Aboriginal community agencies;

(i)initiate a process of consultation with banking institutions and other levels of government to develop a sustaining infrastructure of loans, services and trained Aboriginal staff to provide meaningful growth opportunities to Aboriginal people. This should include exploring with financial institutions and other levels of government non-traditional ways to build the basic equity required of small businesses for procuring loans. For example, the banks would review requirements of assets, securities, and collateral for issuing lines of credit for new entrepreneurs or small businesses. Further, the City of Toronto should communicate with banking institutions the need to provide training to their risk management staff in dealing with assessment of loan applications from Reserves;

(j)communicate its concerns to the Federal Minister of Industry Canada regarding the budget reduction of Aboriginal Business Canada from $80 million to $35 million, and request that this decision be reviewed and its budget revised;

(k)express to Aboriginal Business Canada and other levels of government the need for a loan fund for urban Aboriginal businesses located in the Greater Toronto Area; and

(l)in partnership with the federal and provincial governments, explore the need to establish an Aboriginal human resource centre that would provide Aboriginal employment telephone-hotlines and advertise employment opportunities in the local Aboriginal community.

(b)Overview of Key Issues and Opportunities in Economic Development,

Culture and Tourism.

The Economic Development Committee reports having referred the following report from the Commissioner of Economic Development, Culture and Tourism, together with related material, to the Chair with a request that he convene a special meeting of the Economic Development Committee to discuss this report and that senior staff of the Department of Economic Development, Culture and Tourism be requested to attend:

(i)(September 1, 1998) from the Commissioner of Economic Development, Culture and Tourism; submitting a Discussion Paper, dated September 4, 1998, entitled "Towards a Strategic Agenda, Key Issues and Opportunities in Economic Development, Culture and Tourism" which provides background information in order to assist the Committee in determining how it wishes to approach strategic planning and issues resolution, and how the Department and the Committee can best work together in this regard; and recommending that this report be received for information; and

(ii)(September 17, 1998) from the Managing Director, Toronto Historical Board, recommending that this report be received for information.

(c)Proposed Contract Award - Arena and Major Facility

Advertising Program - Parks and Recreation Division.

The Economic Development Committee reports having deferred consideration of the following report to its next meeting on October 19, 1998, and referred the communication from the President, MediaCo to the Commissioner of Economic Development, Culture and Tourism with a request that he review this communication and report back to the Committee at that time:

(i)(September 1, 1998) from the Commissioner of Economic Development, Culture and Tourism, recommending that:

(1)a five year contract for the exclusive indoor advertising rights for arenas and major facilities within the Parks and Recreation Division be awarded to DM Media;

(2)this contract reflect the terms and conditions contained within the Request for Proposals in this report;

(3)the Commissioner of Economic Development, Culture and Tourism, the City Solicitor, and the Director of Purchasing, be directed to negotiate, prepare and execute the appropriate contract(s);

(4)the portion of annual revenues in excess of the $1,000,000.00 revenue budget requirement, be placed in a balance sheet account for basic improvement use by the participating facilities; and

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

(ii)(September 17, 1998) from Mr. Andrew Hethrington, Vice President, MediaCo. Inc., expressing concern with the Request for Proposals (RFP) which was issued in respect of this contract; and requesting that this matter be referred back to staff for further consideration.

(d)Millennium Task Force - Report to Council.

The Economic Development Committee reports having recommended the adoption of the following report and forwarded its recommendation in this respect to the Budget Committee for consideration at its meeting on September 23, 1998 and subsequent submission to City Council for its meeting on October 1, 1998 via the Strategic Policies and Priorities Committee.

(September 9, 1998) from the City Clerk recommending to the Economic Development Committee, Budget Committee, and Council, the adoption of the report, dated September9, 1998, from Councillor C. Korwin-Kuczynski, Chair, Millennium Task Force, wherein it is recommended that:

(1)the City of Toronto, along with the rest of the world, celebrate the arrival of the millennium beginning with a New Year's Eve celebration marking the turn of the century, and continuing throughout the year 2000; the New Year's Levee on January 1, 2001 marking the arrival of the millennium;

(2)the City work co-operatively with Toronto 2000, an incorporated board of volunteers mandated to co-ordinate the involvement of community organizations, by sector, across the City;

(3)the City work closely with all groups/organizations planning special millennium celebrations;

(4)the City work with other levels of government to ensure that Toronto residents, organizations and agencies are informed of opportunities and programs available through the Provincial and Millennium offices;

(5)the City deliver its messages to all parts of the community by ensuring that each and every Ward Councillor is informed and involved in celebrating the millennium at the community level;

(6)the City approve, in principle, the establishment of a Millennium Grants Program so that community initiatives and potential legacy projects may be a significant part of Toronto's Millennium;

(7)the City establish a Millennium Project Revolving Account in the amount of $1,000,000.00, payable in advance pending formal budget approval, and that the proposed final millennium budget be submitted to Budget Committee for review;

(8)access and equity principles be considered a vital core of the millennium celebrations;

(9)Council give direction to all City departments and staff to provide full co-operation and in-kind support for the production of this celebration and the secondment of staff with associated budget dollars;

(10)the City immediately book appropriate venues such as Roundhouse Park, Bobby Rosenfeld Park, Metro Convention Centre, Casa Loma, for the Millennium celebrations; and

(11)City departments refer all Millennium related activities to the Millennium Task Force to avoid duplication.

(e)Federation of Canadian Municipalities and the Multilateral

Agreement on Investment.

The Economic Development Committee reports having received the following report:

(July 14, 1998) from Councillor Layton, Don River, advising, for information, that the Federation of Canadian Municipalities (FCM) has been advised by the federal chief negotiator of the Multilateral Agreement on Investment, that the office of the Federal Minister for International Trade was considering a proposal to hold consultations in communities across the country with respect to the Multilateral Agreement on Investment; and stating that FCM staff will prepare a briefing note to municipalities once the consultative process has been defined by the Minister's office.

(f)Proposed Use of Funds Generated from Cash-in-lieu of Parkland Dedication.

The Economic Development Committee reports having recommended the adoption of the following report and forwarded its action in this respect to the Budget Committee for consideration and subsequent submission to City Council via the Strategic Policies and Priorities Committee.

(September 8, 1998) from the Commissioner of Economic Development, Culture and Tourism, recommending that:

(1)the Chief Financial Officer and Treasurer be authorized to establish a city-wide reserve fund for cash-in-lieu of parkland collected by the City, as noted within this report;

(2)Cash-in-lieu of parkland payments received prior to December 31, 1998 in respect of developments that have received planning approvals prior to December 31, 1997 be allocated for local expenditures as outlined in the report;

(3)the Budget Committee be advised with respect to the Committee's recommendations resulting from this report; and

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

(g)Tree Maintenance Backlog.

The Economic Development Committee reports having referred the following report to the Commissioner of Economic Development, Culture and Tourism, with a request that he report thereon to the Economic Development Committee for consideration with his Department's 1999 Operating Budget:

(September 9, 1998) from Councillor Pantalone, Toronto-Trinity Niagara, expressing concern with the increasing backlog in maintenance service calls for trees on City of Toronto property (e.g., front yards); and recommending that the Forestry Section prepare a report, in time for the 1999 budget cycle, such report to enumerate the city-wide service levels and what must be done in order to return any backlogs to an acceptable level.

(h)Municipal Conflict of Interest

The Economic Development Committee reports having received the following report:

(September 16, 1998) from the City Solicitor, reporting as requested by Council at its meeting held on July 8, 9 and 10, 1998, on the Mayor's ability to participate as the Chief Executive Officer for the City of Toronto, on the Board of Directors of the Bid Committee [Toronto 2008 Olympic Bid Corporation] given the composition of the Bid Committee; advising that the Mayor, by virtue of being a director of the bid corporation, does not have a financial interest in that corporation, and the Municipal Conflict of Interest Act would not restrict him from participating in the corporation as a member of its Board of Directors; and recommending that this report be received for information.

Respectfully submitted,

BRIAN ASHTON,

Chair

Toronto, September 18, 1998

(Report No. 2 of The Economic Development Committee, including additions thereto, was adopted, as amended, by City Council on October 1 and 2, 1998.)