Ontario is committed to supporting a strong, innovative economy that provides jobs, opportunities and prosperity for all Ontarians.

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1 Rural and Regional Business Support Integration And Program Review Consultation document Ontario is committed to supporting a strong, innovative economy that provides jobs, opportunities and prosperity for all Ontarians. Investing in regional economic development and strong rural economies is a vital part of the government s plan to build Ontario up and create a dynamic, innovative environment where private sector businesses thrive. Consistent with its Business Growth Initiative, the Ontario government delivers a range of programs, services and tools to help businesses invest, innovate and create jobs across the province, including the regions and in rural areas. Ontario s Regional Funds Ontario s regional and rural economic development funds can help local firms transform into innovative, productivity-focused businesses, positioned to expand their markets. These funds include the: Eastern Ontario Development Fund (EODF); Southwestern Ontario Development Fund (SWODF); Northern Ontario Heritage Fund Corporation (NOHFC); Rural Economic Development (RED) program; and Indigenous Economic Development Fund. Why are we undertaking this consultation/review? The Ministry of Economic Development and Growth (MEDG) and the Ministry of Agriculture, Food and Rural Affairs (OMAFRA) are engaging our economic and business development stakeholders for two reasons: (1) to improve coordination of business support programs in the regions and (2) to undertake a required five year review of EODF and SWODF. 1) Better Coordination: As outlined in the 2016 Ontario Budget, the Eastern Ontario Development Fund, the Southwestern Ontario Development Fund and the Rural Economic Development (RED) Program will be better integrated under the Jobs and Prosperity Fund to help improve the coordination of regional business support programs. This integration will better serve Ontario businesses, build strong rural and regional economies and create jobs across the province. OMAFRA will re-launch a community economic development program under the RED Program. Rural Regional Business Support Integration and Program Review Page 1

2 2) Program Review The Attracting Investment and Creating Jobs Act 2012 requires a 5 year review of the EODF and SWODF that considers: 1. The geographic areas within which the funds operate; 2. The types of financial assistance and incentives and their effectiveness; 3. The accountability measures in effect and options for strengthening them. What s In Scope and Out of Scope What s In Scope for the Consultation: Factors associated with the design and delivery of an integrated regional/rural direct-to-business support program. Feedback on EODF/SWODF geographic regions, effectiveness and accountability to inform the Program Review. What s Out of Scope for the Consultation: Anything not associated with the design and delivery of an integrated regional/rural direct-to-business support program (infrastructure, energy costs, regulations, taxes, etc.) or the Program Review. Input into the community economic development program under RED. Making Good Programs Better Integrating EODF, SWODF and the Business Stream of RED will help to make good programs even better, responding to opportunities in the targeted regions and in rural Ontario. It is important to acknowledge that these programs have undergone reviews in the past, and thanks to previous feedback from stakeholders we have been able to identify a number of key strengths and best practices in program design and delivery that we will want to preserve in the programs moving forward. Among those key learnings and best practices are: Collaborative program design and delivery that reflects regional and rural knowledge & priorities, and provides guidance to business through the application process. Continuous intake and a service commitment so that funding decisions are timely and meet the needs of business. The eligibility checklist serves as a good filtering process to make the best use of resources. Programs target eligible sectors that reflect the diversity of rural and regional economies. Rural Regional Business Support Integration and Program Review Page 2

3 Accountability for job creation and investments to ensure that the public gets value for their investments. Leverage rate that promotes responsible decision making by businesses and by government. Continuity/stability of the programs; stakeholders know that the programs will be available for the long term. Guiding Principles Please consider these guiding principles as you provide your comments: Program parameters should reflect best practices identified in previous consultation/review exercises Job retention and job creation will continue to be key outcomes Program parameters will need to reflect the unique circumstances of businesses operating in rural areas and the regions Program support should maximize the impact on the regions and rural areas within the regions Fiscal constraints limited program budget Results from the Current Business Support Programs Eastern Ontario Development Fund Since January 2013, the EODF has committed over $40 million* in 62 projects leveraging business investment of over $410 million, and helping to create and retain over 7,000 jobs. Southwestern Ontario Development Fund Since January 2013, SWODF has committed over $105 million* in 140 projects leveraging business investment of over $1.3 billion and helping to create and retain approximately 28,000 jobs. Approximately 80% of EODF and 60% of SWODF approved projects are in communities with fewer than 100,000 people. Rural Economic Development (RED) Program Since 2013, more than $32 million* has been invested in over 220 RED and REDrelated community and business projects generating over $177 million in new economic activity and supporting more than 3,000 jobs. *These are commitments for approved, contracted, and closed projects, not all of which have yet been announced. Rural Regional Business Support Integration and Program Review Page 3

4 For reference, the following table presents a comparison of key parameters of EODF/SWODF and RED, along with some observations and considerations related to similarities and differences between the programs. Parameter Program Objectives EODF/SWODF Promotion of regional economic development: Attracting and retaining investment Creating and retaining jobs. Promoting collaboration and cluster development Productivity, Innovation and Expanding markets Existing Program Criteria RED Business Development Stream Strengthen rural Ontario Building economic capacity Encouraging collaboration Economic competitiveness Productivity, Innovation and Expanding Markets Workforce Training Job creation and retention Observations and Considerations Goals are aligned to support economic development, productivity, innovation, expanded markets and job creation Geographic Regions Regions by defined counties. 15 counties in eastern Ontario 18 counties in southwestern Ontario Projects must benefit rural Ontario (municipalities with less than 100,000 people and/or with a population density of 100 people/km² or less) Program is available all across Ontario, including the north Significant overlap of eligible regions EODF and SWODF do not cover the north or the GTA Need to balance program design and funding allocation available Target/Eligible applicants (business stream) Existing businesses with 10 or more employees and 3 + years financials/operating history in an eligible sector Businesses, including corporations, individuals (e.g. sole proprietorship), and co-operatives EODF and SWODF have more specific eligibility criteria Rural Regional Business Support Integration and Program Review Page 4

5 Targeted Sectors Eligible projects Small Community Pilot - businesses with 5-9 employees in communities of <20,000 population or population density less than 100 people/km² Advanced manufacturing, Life sciences, ICT, Tourism, Processing Investments in new technologies/equipmen t to offer new products or to serve new markets Minimum job creation requirement Meet program objectives above Can fund all businesses except retail or commercial developments Plans/strategies Applied research and analysis to support planning and prioritysetting Business or sector development and diversification Marketing, promotional or branding activities Workforce attraction, retention and development Broad to reflect diverse regional economies however some sectors excluded in EODF/SWODF Projects should demonstrate alignment with government objectives Minimum investment and job creation commitment Application Process Minimum $500,000 in eligible project costs Exception: Small Community Pilot min investment is $200,000 Job creation requirement if fewer than 20 employees at start must create 50%; for companies larger than 20 must create 10 or more jobs Must create more than 50 jobs to qualify for loan Ongoing, open application 2 stage eligibility checklist, full No minimum investment Job creation/retention commitments not required to receive funding Intake rounds, open application Single stage application EODF and SWODF have specific accountability for investment and job creation RED can support smaller businesses Some differences, notably, open intake versus intake rounds Rural Regional Business Support Integration and Program Review Page 5

6 Level of Funding Support application Funding support up to 15% Grant - up to 15% to $1.5M max, OR Loan up to $5M for projects >$10M and 50+ jobs created (up to $1.5M of the loan forgivable) Stacking with other provincial funding not permitted Up to 20% of eligible costs Cap of $1M Stacking with other provincial funding not permitted Some differences grant/loan Leverage is somewhat aligned OMAFRA will re-launch a community economic development program under RED. Proposed Program Design: It is imagined that EODF, SWODF, and the Business Stream of RED will be integrated under a new stream of the Jobs and Prosperity Fund called the Rural and Regional Growth Fund. Under this model, EODF and SWODF would continue to operate under the Attracting Investment and Creating Jobs Act (2012). Feedback from this consultation/review exercise will help us evaluate options regarding the level of integration, while ensuring that the program design speaks to the government s desire to see greater coordination of regional business support programs. Key Questions for Consideration: Project Assessment Criteria EODF and SWODF operate under the Attracting Investment and Creating Jobs Act (2012). As per the name of the Act, the level of job creation and private sector Rural Regional Business Support Integration and Program Review Page 6

7 investment associated with a project are key factors taken into consideration when projects are assessed. Question #1: From a regional/rural perspective, in addition to new job creation and private sector investment, what are the most important criteria that need to be considered in assessing the merits of a project? (Growth, Productivity, Innovation, New Markets, Geographic Location, etc.) Thresholds Current EODF/SWODF Minimum Investment and Job Creation Commitment: Tier Initial Jobs New Jobs Required Minimum Investment $ 1* 5-9 Increase by 50% 200, Increase by 50% 500, Increase by ,000 * In order to qualify for consideration under Tier 1, a business must be located in a community with a population <20K or with a population density <100 persons/ km². This Tier was added to EODF and SWODF in 2012 in order to encourage projects from smaller companies in smaller communities. Prior to 2012, all companies needed to have a minimum of 10 jobs at the time of the application. Question # 2: Job creation is a key government priority. With this in mind, how would you modify the existing program thresholds (business size, job creation requirements, minimum investment, and population considerations for smaller businesses) to make the programs even more relevant to the regions and to rural Ontario, while retaining a focus on the government s job creation priority? Support Level A fundamental consideration of program design involves setting the maximum level of provincial support (i.e. cost-share) available to any one project and/or applicant. Multiple reviews of the Ministry of Economic Development and Growth s regional programs have suggested that a funding cap of 15% is enough to influence the nature of an investment (e.g. buying an enhanced version of a piece of equipment, accelerating the investment, accelerating the job creation, etc.), without incenting applicants to undertake projects that do not make sound business sense. Question # 3: Recognizing that resources are limited and that the maximum support level has an impact on the overall number of projects that can be supported, what should be the appropriate maximum support level of the Regional and Rural Growth Fund? What factors need to be taken into consideration in setting the maximum Rural Regional Business Support Integration and Program Review Page 7

8 provincial contribution level for the fund (e.g. size of business, nature of business, investment size, geographic location, eligible sectors, etc.)? Best Practices in Program Delivery/Administration Question # 4: Reflecting on your experience with EODF/SWODF/RED, and other business support programs, what best practices would you like to see preserved or adopted in the delivery of an integrated regional and rural program moving forward? Other Question # 5: As MEDG and OMAFRA work to integrate EODF, SWODF and RED, what are the key factors that the ministries need to keep top of mind in order to ensure that the integrated programs respond to the needs of businesses and the economic opportunities in rural communities and the regions? Question # 6: What role do the business streams of EODF, SWODF, and RED play in furthering regional economic development priorities? Are there ways that this can be strengthened even further? WAYS TO SHARE YOUR COMMENTS We want to hear your ideas on integrating business support programs to support rural Ontario and your feedback on EODF and SWODF tell us what s working and your innovative ideas for making good programs even better. There are a number of ways to share your feedback: Online survey: The survey will be live from December 5, 2016 to January 15, your comments to Mail: send a written submission to: Ontario Ministry of Economic Development and Growth Ontario Ministry of Agriculture, Food and Rural Affairs Funding Administration Branch 10th Floor, 77 Grenville Street Toronto, ON M7A 2C1 For questions on this consultation document, the EODF/SWODF review or the integration of RED/SWODF/EODF business supports, please contact us at Rural Regional Business Support Integration and Program Review Page 8

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