Agenda Item 4 Staff Report for Economic Development Task Force Department: Division: Subject: Office of the Chief Administrative Officer Office of Strategic Initiatives 2016 Business Mission to Israel and Proposed Richmond Hill Centre for Hi-Tech Business Development Purpose: The purpose of this report is to update Council on the November 2016 Israel business mission and to recommend financial support for a proposed Richmond Hill Centre for Hi-Tech Business Development. Recommendations: a) That report SRCAO.17.03 be received by Council; b) That $25,000 from the existing Strategic Initiatives, Office of the CAO 2017 and 2018 Operating Budgets be used to support the Richmond Hill Centre for Hi- Tech Business Development; c) That prior to Town funding being made available to the Richmond Hill Centre for Hi-Tech Business, the following conditions are satisfied: (i) the Centre is incorporated; (ii)the Centre provides evidence that the start-up costs identified in this report have been incurred; d) That staff report to Council in 2019 on the benefits received from funding the Richmond Hill Centre for Hi-Tech Business Development. Contact Person: Brenda Osler, Coordinator Economic Development Programs, extension 5483 Submitted by: "Signed version on file in the Office of the Clerk" Gwen Manderson Director Strategic Initiatives 123
Page 2 Approved by: "Signed version on file in the Office of the Clerk" Neil Garbe Chief Administrative Officer Background: Economic Development staff focus much of their efforts in two key areas: business retention and expansion, and business attraction, from within Canada and abroad. In June 2008, Council approved an International Investment Program to assist in achieving the Town s economic development goals and objectives. The Program is comprised of five components: focus on key sectors, focus on key geographic areas, maximize marketing opportunities in Canada, participate in missions outside of Canada to further investment and trade in Richmond Hill and monitor regularly. Research was conducted in 2014 to determine global opportunities for Richmond Hill business attraction activities for two of the Town s key sectors, technology and health. It was determined that Israel, known as an innovative, high tech country with a small local market and a need to seek business opportunities outside of its borders, would be a good fit for Richmond Hill and the Town s businesses. In May 2014, Strategic Initiatives staff retained an external consultant to assist with staff s efforts to create new business opportunities for existing businesses and attract foreign businesses from Israel to Richmond Hill. Since then, the consultant has been focused on contacting individual companies in the technology/health technology sectors with the intent of attracting new business to Richmond Hill. Having the consultant s assistance in foreign direct investment attraction efforts has been invaluable to staff s efforts in this area. During their tenure, the consultant has contacted approximately 1000 companies in Israel to increase awareness and interest in Richmond Hill; 29 Israeli companies visited Richmond Hill to investigate setting up operations here, with one company having registered a business in Richmond Hill; several companies are partnering/working with local Richmond Hill businesses and numerous others are looking to visit and possibly set up operations in 2017-2018. From these activities, staff determined that there were potential opportunities with Israeli companies for business growth and attraction for Richmond Hill. To build on these efforts and the interest in the Town, staff recommended to Council at the November 2015 Economic Development Task Force that a business mission to Israel to expand on 124
Page 3 the efforts of the previous two years would be beneficial for Richmond Hill. The business mission would allow Richmond Hill to follow up with companies that have been in discussions with the Town over the past two years as well as connect with a large number of new companies. Council directed staff to proceed with developing plans for the business mission and canvass the Richmond Hill business community for participants. In November 2016, the Mayor led a business mission to Israel. The purpose of this report is to provide Council with a summary of the mission and its benefits as well as follow-up activities, including potentially supporting a new proposed business centre in Richmond Hill. Israel Business Mission The business mission to Israel took place from November 19 to 28, 2016. Participants included the Mayor, Deputy Mayor, one of the Coordinators, Economic Development Programs from Strategic Initiatives, the consultant and individuals representing seven companies. During the mission, presentations were delivered to Israeli companies in the following locations: Haifa, Netanya, Ra anana, Tel Aviv, Misgav and Rehovot. Approximately two hundred people attended these meetings, which were targeted to companies involved in the technology and health sectors. Following the presentations, one-one meetings were held with the mission participants and Israeli companies. Additional meetings took place after business hours. A large number of Israeli companies showed interest in learning more about the benefits of setting up an office in Richmond Hill. Staff and the Town s consultant have been following up with these companies since returning from the Israel mission. One company visited Richmond Hill in mid-december and another at the end of January, both meeting with potential customers. The mission included twinning Richmond Hill with the City of Netanya, Israel. Netanya s population is comparable to Richmond Hill s, having approximately 200,000 residents and a strong technology sector. A twinning agreement was signed by the Mayor of Netanya and Mayor Barrow to more formally connect companies, organizations, and residents for the betterment of both communities. Staff has since received positive comments from those companies that participated in the mission, including the following direct quotes: Overall, organization of the trip was good, and execution was remarkably on target. The business mission to Israel was a unique and exciting opportunity to create new connections and to see things from a fresh perspective. This mission has 125
Page 4 been an amazing experience - I am already in contact with several professionals from the mission The planning of the business mission was very well organized, including prior to the departure, and exceeded my expectations... I left this mission feeling excited to continue the many new relationships I have formed and I am looking forward to attending the next event planned by such a great community [Richmond Hill]. The business mission to Israel aligned with the Town s economic development goals, including those in the International Investment Program. It assisted existing Richmond Hill businesses efforts to improve their operations by expanding internationally through new contacts with foreign customers, suppliers, partners or investors. The business mission highlighted Richmond Hill to foreign businesses and investors that were seeking to expand their business to Canada/North America. Richmond Hill has now become an option for them to consider. Richmond Hill Centre for Hi-Tech Business Development During the process of contacting Israeli companies, both staff and the consultant learned that there is a support and information gap for businesses new to Canada, particularly in the area of business development, project management and strategic partnerships. In response, the consultant will be establishing a new, not-for-profit organization called the Richmond Hill Centre for Hi-Tech Business Development. The Centre, which will focus on assisting foreign high tech companies interested in locating in Richmond Hill and Ontario by filling the support and information gap, is targeted to be operational some time during the first half of 2017. The Centre will be located in Richmond Hill. The consultant establishing the Centre approached Town staff to determine whether the Town could provide financial support. No specific amount of funding has been requested of the Town for the Centre and funding for the Centre is being sought from other sources. Staff has reviewed the proposal for the establishment and operation of the Centre. The Centre will support the Town s foreign direct investment efforts to attract foreign technology companies to Richmond Hill by providing new companies with much needed assistance in sales and marketing that is not offered elsewhere. Given the potential benefits to the Town and its business attraction efforts, staff is recommending that the Town provide financial support to the Centre. The funding would be used to support start-up costs for the Centre, including leasing office space, maintenance, utilities, internet, phone and IT services for the first two years of operation. 126
Page 5 Staff is recommending that $25,000 in 2017 and the same amount in 2018 be provided to support the start-up costs of the Centre, and that funding come from the existing Strategic Initiatives Division 2017 and 2018 operating budgets. Each year, $25,000 of the Strategic Initiatives Division budget is allocated for the International Investment Program and this funding could be reallocated to support the new Centre. Further, staff is recommending three conditions for providing the funding: a) the Centre is incorporated before Town funding is made available; b) the Centre provide evidence that the start-up costs identified in this report have been incurred before Town funding is made available; and c) the Centre provide the Town with annual updates on its progress and successes in attracting new business to Richmond Hill. After the two year funding period concludes, staff will provide Council with a report on the benefits received by the Town of funding the Centre. Financial/Staffing/Other Implications: Israel Business Mission The cost of the Israel business mission to the Town was approximately $12,000. This covered travel and transportation costs as well as meals and hotel for the Mayor, staff and the consultant. A fee of $2,050 was charged to each participant for ground transportation and logistics, some meals, arranging of business meetings and touring. Participants were responsible for paying for their own flights, hotel and some meals. The source of funding for the business mission was the Strategic Initiatives Division, Office of the Chief Administrative Officer 2016 Operating Budget. Richmond Hill Centre for Hi-Tech Business Development The costs identified in this report to fund the proposed Richmond Hill Centre for Hi-Tech Business Development are $25,000 per year in 2017 and 2018. Funding is currently available in the Strategic Initiatives Division 2017 Operating Budget for the International Investment Program and could be reallocated for this purpose, meaning that no new funding would be required. Should the Strategic Initiatives Division operating budget be impacted during 2017 or 2018 budget deliberations, staff would need to reassess whether this funding is still available for this purpose. There are no staffing implications arising from SRCAO.17.13. Relationship to the Strategic Plan: One of the goals of the Town s Strategic Plan is to have better choice in Richmond Hill for working and doing business. The business mission to Israel and supporting the creation of the Richmond Hill Centre for Hi-Tech Business Development supports this goal by furthering the Town s international economic alliances thus bringing more 127
Page 6 opportunities for business attraction or expansion to Richmond Hill. Expansion of existing businesses or the addition of new businesses to Richmond Hill creates additional employment opportunities for Richmond Hill residents. Conclusion: The business mission to Israel aligned with the Town s economic development goals, including those in the International Investment Program. This mission helped to promote Richmond Hill internationally and introduced staff to a large number of companies interested in expanding to North America. Staff is following up on all leads, and while it is very early in the process, is beginning to see positive results. Supporting the creation of the Richmond Hill Centre for Hi-Tech Business Development will assist with staff s follow up efforts. The Centre will assist with attracting foreign companies to Richmond Hill, potentially creating new employment opportunities. Continued investment and business attraction are key to maintaining competitive advantage and prosperity currently enjoyed by the Town. 128