U.S.E. Hickson Products Ltd., 15 Wallsend Drive
Coronation Drive Employment District (Ward 16 - Highland Creek)
The Economic Development Committee recommends that the joint report (April 7, 1999) from the Commissioner of
Economic Development, Culture and Tourism, Chief Financial Officer and Treasurer, and the Commissioner of
Works and Emergency Services, be adopted, subject to:
(1)deleting the words "in principle" in Recommendation (1), so as to read:
"(1)Council approve the installation and expansion of water services to U.S.E. Hickson Products Limited"; and
(2)deleting Recommendation (2).
The Economic Development Committee reports, for the information of Council, having requested appropriate staff to report
directly to Council for its meeting on May 11, 1999 with respect to the cost of the financial security to both parties with
respect to Recommendation (3) of the above-noted report.
The Economic Development Committee submits the following joint report (April 7, 1999) from the Commissioner of
Economic Development, Culture and Tourism, Chief Financial Officer and Treasurer, and the Commissioner of
Works and Emergency Services:
Purpose
The purpose of this report is to seek approval of Council for the installation and up-front financing of a new water main to
upgrade services to U.S.E. Hickson's manufacturing operation at 15 Wallsend Drive.
Funding Sources, Financial Implications and Impact Statement
The preliminary estimated cost of installing the water main ranges from $90,000 to $110,000. The advance to U.S.E.
Hickson Products Ltd. would be repaid at current interest rates over a period of ten years. The method of repayment would
be through the property tax billing system.
Recommendations
It is recommended that:
(1)Council approve in principle the installation and expansion of water services to U.S.E. Hickson Products Ltd.;
(2)the City enter into an agreement with U.S.E. Hickson Products Ltd. to construct the water main at the City's cost to be
repaid with interest by U.S.E. Hickson over ten years;
(3)this matter be referred to the City's Treasurer, Commissioner of Works and Emergency Services and the City Solicitor
to determine the feasibility of installing and expanding the water services to U.S.E. Hickson and to report back on the most
appropriate method of proceeding; and
(4)that the appropriate City Officials be authorized and directed to give effect thereto.
Council Reference/Background/History
U.S.E. Hickson Products Ltd. applied for a building permit to expand its operations on September 23, 1998 but could not
proceed because the existing City water main was insufficient to meet the needs of the existing and future expanded
building. An acceptable water sprinkler system was not possible using the existing main on Wallsend. The company
requested the assistance of Economic Development to facilitate the installation of a water main of sufficient capacity along
Wallsend Drive.
A meeting was held October 8, 1998 with representatives from Works and Emergency Services to discuss the feasibility of
installing such a line. Staff agreed that installation was technically feasible. U.S.E. Hickson has indicated that its financial
institution would not extend financing for this project, as the water main would not be an asset of the firm. Therefore, the
company has requested that the water main be installed using the City's water reserve fund and the cost applied to the
company's property tax bill over a period of ten years. Appropriate interest rates would apply.
Comments and/or Discussion and/or Justification
Over the past 5 years U.S.E. Hickson has invested $9,000,000 in property and equipment at its Wallsend site and the
company is allocating a further $3,000,000 to cover future investments. The installation of a water main was not included in
the company's long term business forecast and plan. The cost and installation of the water main was not anticipated since
the company assumed that water mains in the City were of sufficient capacity to service industrial users.
Another important factor in the company's requirement for a sprinkler system is insurance coverage. A new demand by the
insurer has been placed on the company requiring it to fully sprinkler the existing and future buildings or suffer the possible
withdrawal of coverage. The outcome of such an action would be the closure of the premises with the concomitant loss of
taxes and jobs.
In the same context, there is a real concern on the part of the company that a less than sufficient water flow could
jeopardize the safety of the on-site work force. The attached letter provides additional information with respect to U.S.E.
Hickson's request.
The Finance and Legal Department will be required to establish the necessary financial terms and review the text of the
agreement in order that an appropriate billing system is established with the company to install the water main.
Conclusions
The City's agreement to the proposal from U.S.E. Hickson would result in a physical expansion on site of approximately
10,000 square feet generating new property tax revenue in excess of $30,000
annually. The company currently pays more than $241,000 in realty taxes so the total tax bill would generate over $270,000
annually. Further, the expansion would allow the company to hire 12 new employees bringing its total complement to
approximately 100 people.
Contact Names
D. Ronald ReaMike Price
Senior Business Development OfficerGeneral Manager, Water & Waste Water
396-5141Services
Works and Emergency Services Department
392-8200
Alan ShultzF. Bruce Graham
Director, Accounting ServicesDirector, Business Development & Retention
Finance DepartmentEconomic Development
395-6701392-3381
Wanda LiczykBarry Gutteridge
Chief Financial Officer TreasurerCommissioner of Works and Emergency
of FinanceServices
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City of Toronto
Scarborough District
(A copy of the communication (March 8, 1999) attached to the foregoing report was forwarded to all Members of Council
with the April 23, 1999 agenda of the Economic Development Committee and a copy thereof is on file in the office of the
City Clerk.)
