June 3, 1999

To:Economic Development & Parks Committee

From:Joe Halstead, Commissioner Economic Development, Culture and Tourism

Subject:Toronto Technology Centre - Ward 8 - North York Spadina

Purpose:

The purpose of this report is to inform Council of the innovative plans that Euromart International Bancorp. Inc. (Euromart) has for The Toronto Technology Centre at the site of the former Donwsview Canadian Forces Base supply depot. The report seeks support for the unique research and development campus concept and requests that the Assessment and Policy Task Force explore the feasibility for implementing a new Research and Development (R&D) tax classification across the City to encourage new investment by R&D based companies.

Recommendations:

1.That the City of Toronto endorses the Research Technology Park on the Downsview Lands and support Euromart's proposal for the Toronto Technology Centre as a strategic location for companies operating in the information technology and telecommunications sector.

2.That as a result of both local and national economic benefits, the City request support from the Provincial and Federal levels of government for the Toronto Technology Centre initiative.

3.That Economic Development staff work towards achieving Council's policies for these lands (Downsview Secondary Plan) to assist the developer, Euromart, in preparing a marketing strategy and to identify and attract suitable companies to locate at the Toronto Technology Centre.

4.That the Assessment and Policy Task Force be requested to investigate the implementation and impact of a city-wide preferential R& D tax classification.

Council Reference/Background/History:

On November 20th, 1996 Canada Lands Company (CLC) invited three proponents to submit detailed business proposals for the redevelopment of certain parcels of lands at the former Canadian Forces Base at Downsview. The successful bidder for one of those parcels, Euromart, is proposing an advanced technology campus with focus on companies with a high R&D component.

Euromart, one of the largest privately held development organizations in Canada, was founded in 1963 with Bruno Arnold as their founding Chairman. The Euromart Group of Companies specializes in all aspects of financing, acquisition, development and management of real estate assets. Euromart has assembled a highly experienced development team including Adamson Associates (Architects), Marshall Macklin Monaghan (Consulting Engineers), Urban Strategies Inc. (Planning & Development Consultants) and Royal LePage Commercial Real Estate Services to develop the Toronto Technology Centre.

Currently, Euromart has 4.5 million square feet of space under management. Euromart's major projects include the First Markham Place, a 350,000 sq. ft. shopping centre; First Markham Village, a 1,000 unit residential community; 3 million sq. ft. Waterloo Technology Park on the campus of the University of Waterloo; the Toronto Professional Office Building and the Creditel Office Buildings in Toronto.

Euromart has secured the rights to a 99 year land lease for approximately 65 acres of land from Canada Lands Company. This parcel of land currently houses a 950,000 sq. ft. supply depot built in the 1950's as a warehouse and storage facility for the Canadian Forces.

In January 1999, Euromart approached the City of Toronto Economic Development staff to assist in the creation of a 3 million sq. ft. advanced technology centre. The concept plan includes the adaptive reuse of the existing supply depot.

Comments and/or Discussion and/or Justification:

More than 25% of all R&D in the Information Technology & Telecommunications (IT&T) industry is conducted here in Ontario making it the most R&D intensive province in Canada. Greater Toronto with more than 500 IT&T companies and more than 15,000 IT&T employees performing R&D, has become one of the top 5 R&D centres in North America.

Over the past 30 years the Greater Toronto Area (GTA) has evolved as a world leader in Information Technology and Telecommunications (IT&T). Currently, there are more than 3,100 firms in the IT&T industry in the GTA employing more than 155,000 IT&T employees. These IT&T companies earn revenues of $38 billion annually including more than $10 billion from exports.

The Toronto Technology Centre will provide a conducive environment for the advancement of technological innovation. Located in the heart of the Greater Toronto Area, the Toronto Technology Centre is well serviced by transportation infrastructure:

• major highways- 400, 401, 407, 409, Allen Expressway
• major subway - Downsview Station and future Sheppard line
• major railway line - GO Line from downtown Toronto through the site to Aurora and Newmarket
• major airport - Lester B. Pearson International Airport
• access on adjacent airport runways for executive jets
• local transit, bus service

The Toronto Technology Centre is located within close proximity to academic institutions and intellectual resources:

Universities

1.University of Toronto

2.York University

3.Ryerson Polytechnical University

4.McMaster University

5.University of Waterloo

6.Brock University

7.Wilfred Laurier University

Colleges

1.George Brown College

2.Seneca College

3.Centennial College

4.Sheridan College

5. Mohawk College

The Defense & Civil Institute of Environmental Medicine (DCIEM) is located west of the Research and Technology Park on the Downsview Lands. The DCIEM is a research complex which develops medical products for defense and civil uses. Also, located north of the site is the York University and University of Toronto Aerospace Studies Institute.

Euromart plans to invest up to $400 million to create a hi-tech campus designed to enhance technological innovation. The Toronto Technology Centre will be a strategic location for both national and international companies, working in the information technology and telecommunications sector.

Development Status

This parcel of land is designated (RTP) Research-Technology Park by a former City of North York's Official Plan Amendment. The purpose of this amendment was to guide the development of the former Canadian Forces Base at Downsview and nearby lands. This parcel of land is intended as a business park with a high-technology focus that will accommodate office, research, technology and related uses in a park-like setting.

The Official Plan Amendment states that Council will ensure that buildings in the Research-Technology Park are:

-sited in a park-like setting;

-designed to be sensitive to and complement the surrounding park; and

-have a maximum height of six storeys.

Canada Lands Company is responsible for providing site infrastructure. Currently, the existing infrastructure can accommodate up to 2 million sq. ft. of office and technology space. The Research-Technology Park can be developed up to a maximum gross floor area of 3 million sq. ft.; however, this may require additional transportation infrastructure. The infrastructure improvements for this parcel of land are still pending.

The Secondary Plan for the Downsview Lands states potential future rapid transit improvements, such as an inter-modal transfer station in the vicinity of the CN railway line and Sheppard Avenue to connect GO train with the TTC subway system and/or a potential future extension of the Sheppard subway and a potential future inter-modal transfer station in the vicinity of Carl Hall Road.

Research & Development Tax Classification

Council established the Assessment and Policy Task Force to examine tax and assessment issues and opportunities as a result of the introduction of Current Value Assessment. The Province of Ontario, which has jurisdiction over assessment related matters, can create additional tax classes by regulation without new legislation.

Communities compete intensely for companies with a significant component of their operation being research and development. Quite early in the site selection process, companies examine the cost competitiveness of a location in addition to the availability of skills labour, proximity to transportation infrastructure and education facilities.

Currently, Toronto locations do not compare favourably with neighbouring locations in Mississauga, Markham or Vaughan from a property tax standpoint (see attached table 1). One opportunity to address this inequity for companies that have a high component of R&D activity is to establish a new tax class recognizing this type of activity and applying a preferential tax rate to attract and retain R&D investment in the City of Toronto.

The importance of R&D to companies in Toronto cannot be under estimated. This type of activity provides some of the most highly paid jobs in our economy. Spin-off employment from R&D activity is often higher than other forms of employment due to the export value and international applicability associated with this type of work.

A city-wide review of R&D activity will be required to determine the impact of a preferential tax rate on the City's tax base. City-wide application of the preferential tax rate is required so as to not bonus any one property owner. The benefits of a reduced tax rate for R&D could have a positive impact on other existing R&D companies by sending a strong message that the City of Toronto is interested in attracting R&D investment. The full implications and timing for the establishment of a new preferential tax class requires further investigation. Economic Development staff are prepared to assist the Assessment and Policy Task Force on this matter.

Conclusions:

The former City of North York Council has already endorsed this parcel of land as a Research and Technology Park in the Secondary Plan for Downsview. Staff of the Economic Development Department of the City of Toronto support Council's initiative and want to assist Euromart in the creation of an advanced technology centre.

Contact Name:

Bruce Graham

392-3381

Brenda Librecz

397-4700

Joe Halstead

Commissioner Economic Development, Culture and Tourism

ECO-99-24