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A Community Improvement Venture Initiative (CIVI) was one of six central recommendations in Cobourg's Vitalization Plan to lead redevelopment through the provision of “gap financing” – that is, mortgages and loan guarantees for small and medium-size projects.  But before proceeding with this, a consultant was hired to tell Council if the idea was viable.  That is, can it work, is there a reasonable return on investment?  At next Monday’s C.O.W. Council meeting, the consultant Gillian Hatton of Location Strategies Inc. is expected to present her interim report on the business case for a CIVI (“Interim” meaning pending Council approval) - this is the third attempt after being postponed twice.

Although she did not make it to the Council meetings on June 22 and 29, the report she was to present was made available on the agendas for these meetings as well as for the meeting on July 6th. Both the Downtown Coalition Advisory Committee and the Economic Development Advisory Committee have recommended adoption. Below is my summary of what that report says (still long but shorter than 96 pages - see link below under "Full Report").

Summary of CIVI Report

Questions Answered

  • What is a CIVI (Community Improvement Venture Initiative)?
  • Has anyone done anything similar and was it successful?
  • How is success measured?
  • How much does it cost?
  • What is the expected return?
  • How should it be organized?
  • What else should be done?

What is a CIVI?

Gillian HattonAccording to the consultant (Gillian Hatton - photo right):

CIVIs are a downtown revitalization organization model used throughout the US and the UK. They are less common in Canada with most operating in cities and towns of a greater size than Cobourg. A CIVI is typically a separate arm’s-length legal entity of a municipality. Nonetheless, they are still accountable to the municipality through audits and budget approval but their day-to-day operations are independent of the municipality. A CIVI’s basic offerings are two-fold: loans and non-financial assistance.

Loans are used for downtown businesses that are facing difficulty with obtaining competitive financing from mainstream lenders, such as banks and credit unions. These loans are used for gap-financing, i.e., to kick-start a project and attract other investors. Secondly, non-financial assistance such as business planning,

Has anyone done anything similar and was it successful?

There are not a lot of examples in Canada of similar initiatives – and they were all larger towns.

  • Centre Venture, Winnipeg;
  • Renaissance Brandon, in Manitoba;
  • Downtown Village Development Corporation in Sudbury;
  • Brampton Downtown Development Corporation

Plus other similar initiatives. They all claim success. London and Oshawa investigated but chose not to proceed.

How is success measured?

There are two measures: Increase in tax revenue and indirect measures such as fewer vacant properties in Downtown (see below).

How much does it cost?

There are really two numbers to consider:

1. The amount to be loaned out
The number used for evaluation purposes was $10,400,000 spread over 10 years – with an estimated $5,600,000 in the first 4 years. This money would be borrowed by the town.

2. Operating costs
Estimated at $299,200 per year (one person, plus office plus $150,000 in "marketing" expenses). Expenditure would start in 2016. Phase two of the consultant's work (business plan) would provide more detail on this.

What is expected return?

The direct return: (tax revenue increase) is estimated at $262,000 (NPV) and interest $297,000 (NPV).  But there is also an indirect return: when the town invests, the experience of others shows that approx. 3 times the Town’s investment is made by private investors.  That is, there is a 3:1 leverage and another $30M is expected from private sources.  Note that the original is not lost but is an amount owned by the Town – think mortgage.

How should it be organized?

  • An arms length organization with a downtown development mandate. Private sector driven with political/Town board representation in ex-officio capacity

This would have the advantages of:

  • No political interference 
  • Clear downtown development focus
  • Potential to manage and invest funds
  • Generate ROI & revenue
  • Deliver projects at the speed of the private sector

Gillian included in her report other Indirect Benefits:

Indirect Tangible ROI

CIVI Investments and Interest

  • Commercial projects: Increase in business counts, employment, business retention
  • Residential projects: increase in population
  • Retail expenditure retention
  • Increase in number of visitors

Taxes Payable

  • Increase in: assessed property values, rental values
  • Decline in vacancy rates

Indirect Intangible ROI

  • Preservation of heritage buildings
  • Build a sense of place and community pride
  • Provide a crucial draw for the tourism sector
  • Increase morale of business owners
  • Enhance the liveability of the surrounding areas
  • Provide environmental benefits by reducing demolition waste
  • Spearhead business retention/expansion and investment attraction initiatives
  • Combined assets form part of a unique identity for Cobourg

What else should be done?

Although it is not expected to be mentioned in Gillian’s presentation to Council, the full report says that this program must be done in conjunction with a robust incentive program including:

  • Rent abatement programs for tenants - annual cost of $50,000 - $150,000.
  • Property tax credits for building owners- total cost of $32,500 - $987,600 depending upon number of buildings (1-10) and term (5-15 years).
  • Commercial rent subsidy program for new businesses setting up in the downtown - annual cost between $62,500 - $187,000.

That is, a CIVI does not replace the need for these. Note that under current Municipal Law, the delivery of these programs requires the existence of a Community Improvement Program - but that is now being produced. Full details of what these are and their costs are in the full report.

Full Report

The full report is 96 pages and is available at this link (7MB). [Link to presentation PowerPoint below].

Note that this (CIVI) project would be in addition to other ongoing work - Cobourg is a business friendly town - like it or not. More on help provided by the Town and other agencies at this Cobourg Internet page.

Recommendation to Council

Economic Development officer, Wendy Gibson in her covering memo recommended continuing with the consultant to prepare a Business Plan and said:

The concept would include the hiring of personnel, under the guidance of a private/public-sector board of directors, to develop and implement strategies and to identify and capitalize on economic, physical and social development opportunities in Cobourg's downtown.

The agency would be charged with fostering re-development of the downtown through strategic management, financial and other support. It would potentially expedite development in the downtown by promoting private-public cooperation and innovative partnerships. It would also encourage new retail business to capitalize on the new downtown vision as well as residential and commercial ventures. There would be a particular emphasis on the rejuvenation of heritage buildings and development of vacant or underutilized downtown properties.

At the meeting next Monday, Council is expected to follow reccomendations from staff and the two advisory Committees and continue to work with the consultants to carry out phase two of the RFP which is to develop a comprehensive business plan based upon the model of creating an arms-length CIVI.   This will include governance, budget and human resources requirements.

But since this report has been on the Council's public agenda for three weeks, there has been time for members of the public to review it and already there are questions being asked:

  • Is it fair to spend this kind of money on just downtown or even just a few downtown businesses?
  • Is this a good use of the Town's money?
  • Would the town be taking on too much risk?

 Addendum - July 4, 2015

Download the Powerpoint presentation here that Consultant Gillian plans to use.


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