CITY OF LONDON

IIXDUSTRIAL LANDDEVELOPMENTSTRATEGYAn Investrn~t in London’s Future

June 20 200I

CANADA

INDUSTRL4L L&ND DEVELOPMENT STRATEGY

City Council has signaled that ’rThe City of London is open for business."A proposed Industrial Land Development Strategy could put those words into action,literally becoming a spark that helps ignite employment, assessment, and investment inLondon.

The strategy calls for pro-active and targeted land acquisition and servicing ~nvestmentsto maintain a stock ot ser,4ced or selwiceable industrial sites in strategic locations, Thiswould provide an opportunity for London to become more competitive in attracting

This strategy is built upon Councilg long history of supporting economic growi. A"strong, vibrato economy" is a goal of the LondonStra[egic Plan and the relatedstrategies support both the growth of existing local enterprises and the attraction ofnew enterprises, Municipal investment in economic growth takes many forms,including, in recent years:

creation of the London Econom~c Development Corporation (LEDC);grant to support the growth of post-secondasy educational institutions and healthcare facilities;a major program to upgrade the City~ sewer and water infrastructure;

¯ investments in the development of major research facilities; and¯ significam Qgwntown revttalization projects and programs through the Downtown

Millenniu~ Plan. . .

¯ The mission of the" LEDC is to strengthen the London business env~ronmenLso as toimprove the economic wd! being of all citizens. The proposed strategy is consistentw~th this mission. The LEDC, as a promoter of economic growth, wil! be a majorcontribut6r to the success of this strategy and it is important that both both Counciland the LEDC comrntt to its implementation.

For London to capitalize on !ts strengths and compete effectively in the industrialdevelopmem arena, the City and LEDC must be able to meet the needs of prospectiveindustries. Key requirements include! ..1. Availability of s~rviced land at a competitive price,2. Lo~ation near and accessibility to the Highway 40]./at02 corridors.3. A minimum o[ ffsk factors that might delay a project start-up.4. Good traffic flow on arteriaI muds leading to the 401/402 corridors.5, An inventory of 40 to 60 hectares of servi.ced, zoned and available land to allow for

choice.

Here are the highlights of the proposal:establish an industrial !and bank of 10 to 60 hectares focused on the lands adjacentto the A~ort (Ci~/~z~ort Co-Venture) add the lands esst of Hi~nbu~.~e~we~nWtkon Grove Road and ~he 401.initiate Official Phn and Zoning By-law amendmenm m advance the planingof key indnstNal ~owth lands.buy additional I~nds immediately and develop a mid- m Iong-te~ purch~ingstrate~budget an additional $59.6 million over the next 20 y~rs for ~nd acqu~ition andse~cing. This is above th~ $5.8 miEion desi~ated for ~e se~c~ng of the Ai~ortlands and sums approved m 2001 to support mdustNal gro~h in the ~te~in~an D~ve area.a tax tam increase of ~.0% ~n 2003 and 0.3% incr~ in substquent yearn tocumulative total of 2.8 % by 2009 to cover new debt pa~ents. T~s amount canbe 3ecraased starting in 2011.

Here are the benefits:The City~ investment in industrial ]and acquisition and development is intended-toprovide a catalyst for economic gro~h and benefit the broader cotumur~tty bystrengthening the market for local businesses and creating job opportunities forLondoners. For example:

An analysis of an auto parts industria~ plant similar to Keiper indicates that acompany’s $!0.2 tuiltion investment in plant construction and $18 rcftlYton inlocally purchased equipment and tuadfmery y~etds an additional $33 nftlFton inLondon area economic activity, This investment would generate over 1,000 personyears of employment.

¯ The ongoing operation of such an industrial plant would generate impacts thatwould ripple throughout the London area economy, generating over $55 mitFton meconomic activity annually Over a !5 year perind, the industry would yield a totaleconomic acf~vity of almost $700 million (in constant dollars) and 11~000 personyears of etuplo~cnetu.

Demand for city services and for an improved quality of life puts continued presdure onthe City’s tax base that can only be relieved by generating new property tax assessment.An investment in the Strategy will increase taxes in the short-term but in the long-termit is expected to increase the City’s assessment base and employment rates.

Responding to market demands and the needs of the tndnstria! seator is a fundamentalaspect of the Industrial Land Development Strategy. The o~tiook is bright for the Cityof London. Although le 2001 slowing of the United States economy ~[lhave an eff~ct on the Canadian economy, Scotia Bank Chili Econommt Wa~en Jushn~redicts steady ~o~h over the n~xt f~ve years, pa~icuhrly m Alberta andth~ long ran, the auto manufacturing sector in sou~westam Ontario should fareResent posRiw bnsins~ a~ouncamenm m London have aNo [ud~d optimism in thecommunit7

The industriai Land Development Strategy builds on this enthusiasm for economicrowth and the strengths of our community The LEDC lists London’s strengths as:

an educated and skilled workfomastrategic location at the junction of Highway ’~01 and ’~02transportation infrastructurehealth-care, education and mseamh facilitiesindustrial strengthcultural diversity

¯ work environment

¯ opportunity for affordable living

It is evident that London has. many comparable and superior locational attributes toother munidpalities in the region who may be competing for industrial capital,

The Industrial Development Strategy has been developed to meet the needs of theindustria! secl st. Research conducted by the LEDC identified the following as factorsinfluencing the site. sdectior! of potential businesses considering a move to London:

The avaiIability of zoned and serviced lands so that the typically tight time framesfrom land acquisition to operations start-i~p can be met;Competitive pricing in comparison to our market area, as most prospects wil! notpay a premium to Iocate in London;Easy track access to the Highway at01 or 402 conidors preferably with visibilityfrom these highways or Airport Road. A 10 to 15 minute travel time from the 4-01or 402 would meet mogt requirements;Prospects must be satisfied that any risk factor~ to their project start-up can beaddressed. Eliminating or reducing risk factors sucha~ zoning approval,environmentaI assessment, or major off-site servicing requirements would faci~.itatethe marketing of industrial land;The availability and reliability of gas, hydro and telecommunication services areequally important as the availability of sewer and water services;The portfolio of available in0ustfiaI lands shouid include a broad range of parcelsizes and locations, including larger, serviced sites of ~ hectares (10 acres) or more.The LEDC suggests that the minimum inventory of serviced, zoned and availableindustrial lands should be 40 to~0 hectares (100 to 150 acres).

This document will demonstrate how the proposed Industrial Land DevelopmentStrategy responds to these needs.

INDUSTt~,IA~ LAND DEVELO!>MEN’r 5"I-I~,’i’EG2’ 5

THE ACTION PLAN

In April 2000, Council approved the following actions used as the foundation fdr theproposed Industrial Land Development Stramgy:i Development of City-owned industhal lands near London Ai~om2 Acquisition and development of rea&ly serviceable lands m close proximity to

provincial highways.3, Acquisition of lands for upscale industria!/commercial business development within

the next five years.4. Acquisition of lands to serve as a long-term investment per~ding future set,acing

works.

Thus, the Industrial Land Development Strategy is an action plan for industrial landa~qutsition, land use planning approvals and servicing schedules.

INDU’~ I RL4,1. LAND D .\ El_t_. iE~ ~- J i’I~ ......

OUR APPROACH

The City has traditionally been involved in industrial land acquisinon and developmentin areas adjacent to major transportation comdors with direct highway access aroundthe perimeter of the Cit3~ This approach which ensured gnat an adequate supply ofserrated industrial land was available to potential businesses, was reasonably successfuland attracted significant businesses over the years. However, the stock of serviced landhas been depleted. The tndustriaI Land Development Strategy will authorize a changeto the current status of land holdings.

Currently, the City holds industrial .land in five main areas:

Trafalgar Industrial Park:This park is 90% sold with a total of 14 ha (35 ac) remaining of mostly smalier pareelsranging in size from 0.5 to 3 acres backing onto existing residential land use.

River Road:This area is in the development stages due to the sale of 4 ha (10 ac), "a~th an optionon an additmnal 3.4 ha (8.5 ac), to Keiper Canada. Appmximatdy 10,8 ha (27 ac) ksrenraining for sale in smaller parcels with the possibility of a larger pared 6f4 ha (10 ac).

Skyway Park:This co-venture with the London International Airport has approximately 68 ha (169ac) of City-owned land in the design and planning stages and can be sold in large andsmall parcels. In addition the Airport Authority has 52 ha (128 ac) of Airport Authorityland for lcase.

Huron Industrial Park:Consists of 68 ha (159 ac) of unserviced land.

Forest City Industrial Park (Hwy 401/HighburyAVilton Grove):The recent City acquisition of 71 ha (177 ac) in thks area is in the design and planningstages.

The industrial Land Development Strategy proposes that the City continue to beinvolved in the acquisition and development of industrial land. At the present time,market price for larger sites do not make it financially at.tractive for the private sector toservice indusmal land so it is up to the City to create supply and meet marketexpectations. ,

LEDC has chosen a sector strategy approach as the basis for attracting growth. Thesesectors have been chosen because of their pbtential fit with labour force skills,locational advantages, existing expertise, and the current economic enviroi~ment. Theautomotive manufacturing industr); transportation services sector, and agribusinesshave been identified by the LEDC as representing Londong best economic industrialopportunities. These sectors also represent industrial segments that require industrialland. The implementation of a progressive strategy of providing serviced industrial landwhich is pre-zoned and subdivided, either adjacent to or proximate to Highway 40?.will enhance the LEDC prospecu for attracting industry.

The Goal of the Industrial Land Development Strategy is to help attract new industryto the community which will create direct and indirect economic impacts. A newindustrial plant will directly contribute to the economy of the City’ through propertytaxes Due to the interconnectedness of a reomonal economy, new industrial uses alsogenerate indirect economic activities, creating additional output and employmentbenefits. The ripple effect of the plantg input demand and the demand generated by thepopulation it employs is felt through various sectors of the economy and the totaleconomic impact in the community is much larger than the net economic activities ofthe plant itself. This is knovm as the "multiplier process" and provides the primaryincentive for communities to seek new industry.. In the London economy, theestablishment of a new industry will increase the demand for goods and services fromemsting businesses and industries, will create jobs beyond those directly employed Bythe new industry and will increase earnings -- both.employment income and profits-- throughout the econom)~ Depending.on the size of the multiplier, the introductionof a new industry can have a significant impact on the overa!l economy

Increased economic a.c~ivities associated with new industry wiI~ boost the City’s directand indirect tax and fee revenues. New employment increases will lead to an increasein the demand for housing -- both new and resale of existing hon~ing. Existingindustries that act as input suppliers m new industry may expand which will typicallyinvolve the addition of new space or the devdopment of new buildings.

Simply stated, a strong industrial sector translates to a strong local economy. When ourindustrial sector is expanding, so too are the other sectors in our economy. TheIndustrial Land Deve opmem Strai~gy focuses on establishing and expanding Londongindustrml sector.

¯ H_ L~_GISL~ ~TIVE ENVIRONMENT

.Although Council is committed to.expanding th6 mdusmal sector m the City.provincial legislation puts parameters on the incentives that municipalities can offerprospective indnstnes. The proposed Industrial Land Devdopment Strategy ~ designedto increase the likelihood of favourable site selection decisions consistent ,aith theprovisions of the Municipal Act.

The Action Plan of the Industrial Land Devdopment Strategy suggests that the Cityacquire industrial land in strategic Iocatinns. The Municipal Act gives councils thepower to pass by-laws for "acquiring and expropriating land for the purpose of sites forthe establishment and canying on of industries..." (Section 210 paragraph 57). Section11 ! of the Municipal Act provides that "a Council shall not assist directly or indirectlyany manufacturing business or other industrial or commercial enterprise through thegranting of bonuses i~[ aid thereof, and.., shall not grant assistance by... selling anyproperty of the muinctpa[ity at bdow fair market value..." The proposed indnstriaiLand Development Strategy is built upon these provisos.

The Municipal Act and the Local Improvement Act provide the City with differefftoptions to pay for the cost of servicing land. Under the proposed Industrial LandDevelopment Strategy, the cost, or a portion of the cost, can be lev~ed againstrateable property in the City, and as such, every ratepayer v~ll be paying for theservices on a common basis.

To comply with the Municipal Act, the City must not sdl industrial land at a price thatis unquestionably less than fair market value. The proposed Strategy complies with theMunicipal Act, and the pricing strategy wit1 be cominually monitored to ensu.:eongoing compliance.

W;nfle ther~ are ample lands reserved for future industrial devdonment a closerexamination of the zoning, set,ricing, location, lot size and availability of the landsupply reveals the following challenges:

i. Yhere is a need for large industrial sites that are serviced AND pre-zoned forindustrial uses,

ii. Only 12% (235 ha) of vacant industrial sites am actively listed for sale. While thereis a substantial amount of vacant industrial land in the City, much of this land is notbeing actively marketed for sale.

iii. l~r% (28~- ha) of the supply of vacant industrial land i~ City-owned. Given thepreceding point, it may be prudent to increase the stock of City-owned land toensure that an adequate suppIy is available and actively marketed to prospectiveindustries.

80% of the City-owned industrial land in London is in the north eastern section ofthe City. For some prospective industries, visual exposure to Highway 401 or 402would be a significant selling feature for an industrial site and there are very fewzoned and serviced sites that would meet this desire.

Some of the bestdocated industrial sites in the City require servicing and!or havesignificant planning processes to go th~’ough before they can be developed.Advancing these lands through the re-designation and rezoning processes andextending services or allocating funding for future servicing, where appropriate,would reduce the risk associated with these sites.

vi. There ~’s only 80 ha of vacam industrial land remaining within planned industrialsubdivisions. This type of development is attractive to many of the companiestargeted by the LEDC.

vii.There is also a need for vacant and available land within prestige industrialsubdivisions (e.g. only 11 ha. available in the office Business Park at Airport Roadand Tartan Drive).

P, ECOMMENDATtONS

Specific recommendations have been developed i~.order to achieve the objectives ofthe lndustri~al Land Development Strato~. The following recommendations flow fromthe four action items of the Industrial Land Development Strate~<

That the City, initiate a process to selectively re-designate key "7Urban Reserve-Indusmal Growth" lands to appmtbriate industria! designations and to identifyissues and guidelines to facilitate the future zoning, subdivision and servicing ofthese lands and that this process be undertaken over a three year period;

2. That a report on the estimated costs of the process to re-designate "Urban Reserve-Industrial Growth" lands and potential sources of funding be prepared for Counsfl’sconsideration;

Following, or in conjunction with, the designation of lands as General l~dustrial,Light Industrial or office Business Park according to the recommended process, theCity wil! consider applications by landowners to change the zoriing of their landsto a zone that will implement the land-use designation and applicable policies ofthe official Plan;

Where lands are pre-zoned for industrial use, planning issues and studyrequirements will he addressed "upfront" where practica!, recognizing that holdingprov~ions may be 3iequired to ensure that.the intent of the Official Plan isimplemented.

5. To supplement the efforts of the private sector industrial development industry., theCity maintain its role as a developer of industrial lands in London;

6, That the City identify priority areas for industrial land acquisition and that thisacquisition provision have an up-front weighting with key parcels acquired overthe next three years;

7. That the City consider ways in which it can partner with private-sector landownersin the development of industrial lands recognizing Municipal Act issues;

8. That the priorities for the location of municipal land acquisition, subject to severalconditions and without limiting other site considerations, are sites near or withconvenient access to Highbury ~.01/Airport Road.

As a measure of what would constitute a wall balanced and sufficient portfolio ofmunicipal tndusmal lands, the following set of targets are recommended:

at leest one very large industrial block, (20 ha (50 ac.) +) designated eitherGeneraI Industrial or Light Industrial; zoned and readily serviceable for a majorindustrial user; ready access to Airport Road or Highways 401 or at02; railaccess is desirable.

1NI. l.,~ i L., & L.4.ND D~’\;ELOI?M~NT ’" ~ -,.= -’v

.30 h~ of d~signated and zoned General Indusmal hnd m a yeasty of m~d tolarg~ bl~ck sizes (1 ha to 10 ha); ~asily accessibi~ ~o Alton Road or Highways#0i or 402; at Icast half of which is sepdced and readily avaffabia:80 ha o[ desi~atad and zoned ~ght lndust~aI land in a va~eV of sma~ tolarge (0.5 ha to 5 ha) bloom in indus~al par~; a mtmmum of 40 ~ located mthe Highway ~01 ~omdor or m the N~on Road cor~dor south of the ~amesNwr, at least half of which is sauced and readily avatlable.40 ha. of desi~ated and zoned lands intended br prestige industrial us< (maybe desi~ated as Light Industrial or office Business Park) m rdacivdy largebloc~ (2 ha - 5 ha +) located in the Highway ~01 co~dor or N~on Roadcomdor south of the Tham~ Nver ~ffth some bloc~ haNng N~ort Road orHighway 401 e~osure, at least hag of which is se~ced and readily available.

!0. There am a number of gaps that should be addressed over the short term (2001through 2003). In brief, to actffeve the recommended targets, the foIlowing actionsare recommended:¯ complete the servi(mg and subdivision of the Skyway Park genemI industrial

lands;¯ expedite the redesignation, rezo~ffng, servicing and subcF~vision of the Porest

City Industrial Park;acquire additional lands (n~inmum 40 ha) tn the priority area before the end of2002, and initiate steps to mdesignate, rezone and subdivide these lands, andto service at least half (20 ha) of these lands within a 5 to 7 years period.

11. In order to facilitate the "up-front" acquisiti£n of iands at a reasonable raw landcost for the purposes of implementing the industria! Devdopment Strate~w, it isrecommended that Council allocate $6M in 2002, $3M p~r year for 2003-2005,$ !.3M per year for 2006-2010 and $0.8M per year for 2011-2020 for a totaI of$29.5M for industrial land acquisition purposes.

12. To address the potential mid,-term gaps identified above, the followir~g actions aresuggested for the 2003 - 2008 time period:

plan m acquire and service 40 ha. of pmsti.ge and light industrial land(5 to 7 years);acquire an additional 20 to ~r0 ha. of land;if warranted, initiate additionaI land acq~tsitt~n in the Hwy. 401 corridor andplan for the serricing of these lands;in 2006, in conjunction with the five year review of the Officiai Plan, considerthe merits of expanding the Urban Growth Area to add additional industriallands in the Hwy 401/402 corridors.

13.To enhance the markegmg of industrial lands, staff from Planrdng andDevdopment, the LEDC and Realty Services will prepare, for Council’sconsideration, recommendations to guide the function, design and target market, ofplanned industrial parks. Upon acceptance by Council, the recommendations will

. be implemented through the subdivision approval process and the marketing ofmunicipal industrial lands.

That the foiiowin~ facilitation measures be underta~zen:i) a common listing of data sources and contact names for City Divisions and

external agencies having an interest in industNal land deveiopmem be createdand maintained;

ii) a clarification of responsibilities of City Stal~ for *,he co-orcunanon" o"information requests and responses between prospective industries andTor theLEDC and Municipal Divisions;

iii) City staff to continue to expedite development approval and servicing processeswhere possible and appropriate.

15.That the implementation of the Industrial Land Devdopment Strategy bemonitored by the Realty Services Division in consultation with the EnvironmentalServices, Planning and Development, Finance, and LEDC staff; that a set g~fperformance indicators be developed for this pnrpose; and, that an annual reportoutlining achievements, shortfalls and recommendations for adjustment beprepared for Council’s consideration. In addition, this team will be responsible toundertake a critical review of the strategy at major inte~,als (ie. every 5 years).

These recommendations relate directly to the Actions agreed to by City Council (April2000) and the objectives of the Industrial Land Devdopment Strategy. In order toimplement these recommendations, planning, servicing and financing analyses arereqNired.

PLANNING

Through Official Plan Amendment #88 (OPA 88), over 1100 hectares .(2,700 acres) o:flands within tee annexed area Were desigtfated as ’~Urban Reserve - lndnst~.al Growth".This des~gnation shows that these lands are intended for primarily industrialdevelopment over the twenty-year planning period of the Official Plan.

City Council has asked for an action plan to get land use planning approvals in place.The first step in changing the planning status of lands in the Industrial Growth Area isto apply for their re-designation in the Official Plan to General Industrial, LightIndustrial or ONce Business Park.

The determination of appropn~te industrial land use designations ~nd approximatecollector road alignments for lands currently designated as Urban Reserve - IndustrialGrowth can be accomplished in advance of development-driven applications andwithout the necessity of comprehensive area planning provided that this "scopeddown" process includes the following elements:

consultation with landowners;a scan of environmental features in the form of ’Subject Lands Status Reports";consufiation witl~ the appropriate external agencies;broader-level engineering studies to identify area-wide servicing and transportationrequirements;the identification of area-specific issues and guidelines to be addressed throughsubsequem approval processes. (Matters such as regional store?water management,delineation and protection of en’zimnmental features, arterial road accessrestrictions and area-specific servicing requirements). The up-front identification ofissues and solutions would facilita~e the processing of zoning, subdivision a~dservicing approvals at a later date.

While much of the work can be undertaken by City staff, there would be some costinvolved in this process, primarily for environmental and engineering consulting fees.To spread these costs and the demands on. staff time, the process could be phased overthree years with high priority areas redasignated in 2002, medium priority areas in2003 and lower priority areas in 200~.

Council has asked that consideration be given to the pro-zoning of industrial !~nds as ameans of increasing their readiness for development. Lands could be pro-zoned inc~njunction with thei~ retdesignation from Urban Reserve to an Industrial designationif the appropriate Official Plan criteria can be addressed "upfront": Alternatively,holding provisions can be applied to require that:a. development proceed on full services according to the provisions of a subdivision

or development agreement;b. archaeological assessments are undertaken; andc. environmental impact studies are prepared.The holding provisions would be lifted a subsequent stage in the developmentapproval process.

SERVIC!NG

The key ~oa] of the Industrial Land Develonment Strategy is to attract new indus[r~tHowever, this Strategy reco~tzes that in order to g~in the economic benefits disOassedearlier, there are parallel costs borne by the municipality as a result of the new industryand the economic acti~qty that it generates. These costs relate to the increased demandplaced on public services such as roads, sewers, policing, fire protection, education,recreanonal set,aces, social services etc. While it wouId be difficult to estimate all costsassociated with a new industrial plant, the Industrial Land Development Strategy hasestimated the costs for servicing industrial subdivisions, including trunk servicingcosts, engineering and contingencies (this may include planning expenses, externalroad work costs, or other costs which have not been estimated at this time)..

Servicing costs will result from the implementation o[ the recommendation toimmediately establish 50-60 hectares of industrial land and maintain an inventory ofCity controlled serviced and readily serviceable land.

The land servicing parcels were pnoritized according to the following criteria:the need lot a land bank of serviced industrial land in the order of 40-60 hectareswith another 40-60 hectares of land designated, zoned and readily serviceable;the expectation that City lands wilt be consumed at a rate of approximately 10hectares per year.

Shown in the table bdow is a preferred schedule for servicing, determined by theprioritizing of lands:Target year to Amount of Total of Total landbe in service Locarion City land land sales (ha) remaining (ha)

2001 Ihver Road

2002 Forest City:Phase 1 40

2002 Skyway Park: Phase 1 2~ 20 60

By 12.31.200g

2005 Industrial Land: Phase 1 30

2006 Forest City: Phase 2 25By 12.31.2006 60 75

2008 Skyway Park:Phase 2 35

2010 Wilton Grove Area: Phase 3 25By 12.31.2010 100 95

20!4 Industrial Land: Phase 2 27By 12.31.2014 140 82By 12.31.2021 200 22

The amount of banked land varies between 60 and 95 hectares due to the staging ofworks and the desire to allow for sdection among a vaneD’ of locations. In addition,there is a limit on locations in order to minimize the costs to the City for the lands thatit owns and markets.

INDUSTRIAl, ]_AND DEVt:’?I..C;PMENT SfI~4.TEGY

This servicing plan pro\4_des signi[ieant flexibility to the City by creating a_focus for theapproval and developmen[ of indusinal parks that pro~fides:

specific locations to meet a variety o[ business needs.... a vanaty o[ lot staes

appropriate O[ficial Plan policies anu zoning to accommodate a wide range ofindustrial uses.

1-his servicing plan also ensures that serviced land will always be available and thatserviceable land (land for which the servicing has been planned and designed) can beeasily and quickly brought to the market.

With these pieces in place, the City will be able to adapt to vanabiliv in demand.If the market requires more land than is anticipated, the City can qinctdy respond byadvancing its servicing plans. Similarly, if the market is slower than expected, theexpenditure of resources can be delayed until demand warrants the servicing ofsubsequent phases

There are a number of projects already in the City’s Capital Budget and master plansthat are an integral part of this Industrial hand Development Strategy. They includeworks such as the:

Southeast pump station and reservoirwidening of Airport Roadexpansion o[ the Pottersburg and Adelaide pollution control plantsconstruction of the Southside pollution control plantPottersburg Creek remediation and storm water managementsanitary servicing and storm water management in the White Oaks DrivefDingmanDrive corridorconstraction of the Cheapside trunk sanitar~ sewerWonderland Road7 401 interchange

In addition, there are many other works identified in the Budget and master plans thatsupport increases in capacity to meet anticipated residential, commercial andinstitutiona! growth.

The Industrial hand Development Strategy is built upoi~ Councilg commitment toimplement these works in a timely fashion to complement the anticipated demands forcapacit~

This Cost Summary forms the h~sis for the Industr~al Devdopmen[ Strategy~n~ncing plan. .

($ millions) ($ millions)

Miscellaneous costs Included $5.6

The Industrial Land Development Strategy is based on the prerrffse that London needsto compete aggressively and directly in the attraction of industrial grov~h. To do so, anoptimum investment in planning, servicing and municipal land development isrequired. For the City, the return on tilts investment can take maW forms includingindirect benefits related to job creation, assessment growth and economic spinoffs. As adevdoper of industrial lands however, the City may not quickly or in total, recover itsdirect costs of acquiring land and exmnd’mg services. The proceeds that can begenerated from competitively priced industrial land sales are generally not aninducement for private sector investment. Tht~ is the reason the municipality must-

The Industrial Land Development Strategy promotes industrial development throughtax supported servicing of indusmal lands. A closely monitored program of publicinvestment in the acquisition and servicing of industrial lands is the critical componentof the Industrial Land Development Strategy

Once the City has a saleable product in inventor); the City can expect to recover, witha small prenfium~ the land acquisition portion of the investment. Unless m~rketconditions change however, the City is not likely to recover servicing costs under thisStrategy The size of the premium on the sale of lands will depend on market values atthe time of sale. Eventually, it is hoped that the pr~rrftum on land costs would coverservicing costs as well, and the private sector would be engaged in a viable enterprise "of buying, servicing, and selling industrial lands. When this situation is realized themunicipality may reduce or withdraw totally from industrial land acquisition anddevelopment activities.

For the purposes of this financing plan, the ~pproximate impact of the proposedIndustrial Land Development Strategy on the tax rate has been pgojected over a twentyyear time horizon. These projections have assumed:1. that there wifl continue to be a market for industrial lands2. that the City wiIl be successful in sellingan average of appmxiraately 10 hectares

(25 acres) of land each year in each of the next 20 years. (January 2001 to May2001 sales = 7.3 ha/18 ac)

3. that the projections reflect an assumed average sales price of $40D00 per acre - aeonse~ative estimate for prime industrial land.

The industhal Land Devdopment Strategy serves as the Ci[yb blueprint for acquisition,planning, servicing and financing of industrial land. Financial projections have been

developed which reflect the need for initial investments in bo~h hnd acqmsinon and"hard" sources. The ~ic~l production process that precedes creation of ss~csdtndusmat l~nd is l~ed bdow:1. ~cquisi~ion of hnd (which m~y occur long bdor~ t~ remaining steps)2. phnning of subdi~sion lot confi~r~uon ~nd ~cc~ss3. planmng of s~cmg both ~thin and exremaI to the subdivision.i. projected costing of saucing5 desi~ and detailed costing of s~cing6. construction of se~cing

The financing plan of the Industrial Land Development Strategy proposes that the Citymake investments at each stage of development which may be approved through itsannuaI capital budgeting process. In the financing plan being presented, it isrecommended that a total of $29.5 miIlion is required for the acquisition of rawindustrial land at prime locations over the next 20 years.

The expenses of servicing the thr4e priority areas (Forest City, Skyway Park, andanother bIock of industrial land) are included in the financing plan and budgetproiections. These costs are incremental to the existing approved capital budget (2001and prior). In this way, the projections focus on the incremental tax rate implicationsof undertaking the proposed Industrial Land Devdopment Strateg~

The premise of the Industria! Land Development Strategy is the application of publicfunds {o the acquisition and development of industrial lands. Appendix A reflects theincremental budget implications that might ensue from adopting this 5trateg3~ Thegraph depicts the total projected .debt payment costs fi;om inception of the planthrough its first 20 years. The peak years of expenditure, based on the proposedphasing of the Strategy, ,re in years 2009 through 20tl. During that period, annualdebt payments associated with land acquisition and servicing will range between $7.2and $7.6 million. When offset by the estimated incremental proceeds from land sales,the net effect of the proposed Strategy wil! peak at an approximate 2.8% tax rateincrease. The financing plan suggests that a taX rate increase of 1% in 2003 and 0.3%increases in subsequent years to a cumulative tots1 of 2.8% by 2009 would satisfy thenet incremental debt payments associated vath the plan. After 201 !, annual debtpayments required to service this Strategy will decline and there will be a possibilityfor a similar decline in the tax rate. However, this decline may be preempted if themarket demandsanother round of acquisitions and servicing for new priorityindustrial sites.

The Industrial Land Development Strategy will be closely monitored to ensure thatopp6rtumttds are not missed and that lessons which may affect the strategy arelearned. It is suggested that the Civic Administration report to Board of ContmI on aregular basis to provide updates and review the framework based on experience andinformation collected. These monitoring reports will provide accountability and ensureproper management of the $trateg~

The Industria! Land Development Strategy is structured to maximize the portfolio ofindustrial land while minimizing the risk associated with such a venture. From abudget standpoint, until some. turnover of the.developed lands begins, the financialrequirements of this Strategy fal! largely on the current tax base. However, withaggressive marketing of land and an active monitoring program, it is anticipated thatthe Industrial Land Development Strategy" wifl be successi~ul in meeting its goal ofattracting new industry to the City of London.

APPEND~_X ARisK. Scenaxno

Annual Incremental Deht PayTnent Projection (Explanation to Chart)One of the key considerations in adopting the lndustnal Land Devdopment Strategy(ILDS) is to determine what it will cost the CitZ Recognizing that investments in landand servicing must be made before aW financia! recovery through sales is possible, theincremental net debt payments arising from the strategy were projected, in this way,the impact of the ILDS on tax rates could be forecasted.

This graph depicts a projected incremental debt pa.wnent pattern, as a result of theILDS, from 2002 forward. A number of assumptions and estimates are inherent in thegraph:a. Priority locations for industrial devdopment were ider~tified.b. A target rate of incremental serviced Industrial Land saIes equal to approximately

five(5) additional ha for a total of !0 ha per year of prime location, servicedindustrial land per year were projected to be sold at a conservative price, as a resultof undertaking the ILDS.

c. The next step in the projections was referred to as "Phasing". During this step~ staffidentified in rough terms (based on the target rate of land ’*take up") how muchland, should be acquired, and when. A generous inventory of land was built intothe projections.

d. Using conservative assumptions, the debt payments necessary to sustain both theinvestments in land and servicing were computed and translated !nto a projecteddebt payment stream. That debt repayment stream is depicted in the graph bdow.Also depicted is the incremental target revenue stream expected to result from theILD$ (based on 5 additional ha. land sales rate beginning in 2003). The left handaxis of the graph reflects the debt payments, and ]arid sales recoveries in terms ofdollars (see bars in graph); the right hand axis reflects the nor implkatinns on thetax rate, in terms of percentage increase assuming $2.6 million in additional netdebt payments = 1% tax rate increase (see line graph).

The compilation of assumptions above has bee~ referred to as the "low risk" scenario.The result depicted in the graph shows a peak in the cumulative increase (assumingtarget sales levels are achieved) in the tax rate of 2.8% wil! be necessary by the year2011. This implies that, all elements of the projection coming to fruition, an initialincrease of 1% in 2003 and annual increases of 0.3% tn the tax rate for the next 6years (ie. cumulatively 2.8%) would provide sufficient additional funds to imp[ememthe proposed strateg,¢

8

Industrial Land Devolopmont Stratogy

:2002 :2006; 2010 201.4200,4 2008 2012

Year

20i8 2022:20! 6 :2020

3.0%

0.0%

June 26,2001

L. H. ReedCity ManagerSuite 1105

I hereby certify that the Municipal Council, at its session held on June 25, 2001 resolved:

21. That, on the recommendation of the City Manager, on the advice of the Industrial LandDevelopment Strategy Working Group, the following actions be taken with respect to the proposedIndustrial Land Development Strategy:

(a) the report entitled, "Industrial Land Development Strategy - An Investment in London’s Future" BERECEIVED and be circulated for review and comment to industry representatives, individuals andinterest groups; it being noted that the recommendations of the report are ~ hereto asAppendix "A";

(b) the Civic Administration BE REQUESTED to arrange a public participation meeting of the Board ofControl to be held in September 2001 for the purpose of receiving input and comments from thepublic concerning the recommendations in the report;

(c) the Civic Administration BE REQUESTED to identify the operating resources required to implementthe acquisition, construction, marketing and sales strategies recommended in the report;

(d) the Civic Administration BE REQUESTED to continue monitoring the status of Bill 56, theBrownfields Statute Law Amendment Act, 2001 and to report back to the Board of Control withfurther recommendations relating to a Brownfields Industrial Land Development Strategy for the Cityof London; and

(e) the Civic Administration, in cooperation with the London Economic Development Corporation BEREQUESTED to explore opportunities with educational institutions, the private sector, and thefederal and provincial governments to enhance London’s ability to deliver specialized training forindustry located or locating in London;

The Corporation of the City of LondonOffice: 519-(519)661-6400Fax: 519-(519)661-4892council&committees@city.london .on .cawww.city,london.on.ca

-2-

it being noted that the 2002 Capital Budget with forecasts for 2003-2007 will be developed based onexisting priorities and may be subject to change at the time of budget deliberations based on furtherdirections with respect to the proposed Industrial Land Strategy. (41.8.1.) (21/18/BC)

G. H. HallmanManager of Legislative Services/crg

Jeff Malpass, Deputy City ManagerN. G. Bellchamber, Room 406R. A. Blackwell, Room 1014V. A. Cote, Room 708H. G. Howlett, 3rd Floor MTD. A. Leckie, Room 1006G. T. Hopcroft, Room 1014R. Sanderson, Realty Services, 111 Horton StreetR. Panzer, Room 609R. Standish, 9th FloorP. Christiaans, Room 406D. McDonald