Report to: Development Services Committee Date Report Authored: April 26, 2011

SUBJECT: Tools to Promote Economic Development Within Markham Centre

PREPARED BY: Catherine M. Conrad, Town Solicitor, Ext. 4737

Stephen Chait, Director of Economic Development Ext. 4871

Richard Kendall, Development Manager, Ext. 6588

RECOMMENDATION:

1) That the report entitled “Tools to Promote Economic Development Within Markham Centre” be received;

2) That Staff be authorized to commence the process to establish the Markham Centre Secondary Plan Area (OPA 21), shown on Attachment D, as a Community Improvement Project Area;

3) That Staff be authorized and directed to undertake the process, including the preparation of a business case and consultation with stakeholders, to incorporate a municipal services corporation pursuant to section 203 of the Municipal Act, for further designation as an Economic Development Corporation;

4) That a by-law be adopted to establish Markham Centre as shown on Attachment D hereto, as a Community Improvement Project Area;

5) That Staff be authorized to schedule a public meeting in conjunction with the May 31, 2011 Council meeting to consider the draft Community Improvement Plan, attached as Appendix G, identifying a strategic framework for potential community improvement projects in Markham Centre;

6) That staff be authorized directed to do all things necessary, including the execution of any necessary documents by the Chief Administrative Officer, or others delegated by him, to give effect to the recommendations of this report.

EXECUTIVE SUMMARY:

To remain successful and competitive, Markham Centre must continue to build upon its recognition as a place of superior quality and distinction. In a mobile and increasingly global economy, the development of an urban core and employment centre that is dynamic, safe, environmentally friendly and centrally located (supported by regional and inter-regional transportation systems) is essential.

Two programs that are available to local municipalities in Ontario are being considered to assist in the implementation of infrastructure investment and land development in Markham Centre - the establishment of a Community Improvement Plan (“CIP”), and the establishment of a Municipal Services Corporation/Economic Development Corporation. The objective at this point in time is to establish an enabling framework through a CIP and corporate governance structure. Details of specific infrastructure requirements and investment opportunities will be brought forward to Council for consideration as the development of Markham Centre proceeds over time.

1. Purpose 2. Background 3. Discussion 4. Financial

5. Others (HR, Strategic, Affected Units) 6. Attachment(s)

PURPOSE:

The purpose of the report is to obtain Council’s instructions to prepare a Business Case Study and undertake public consultation for the establishment of a municipal services corporation to be designated as an economic development corporation and to establish Markham Centre as a Community Improvement Project Area, and to authorize a public meeting to consider a draft CIP.

BACKGROUND:

Markham Centre is being planned and implemented as the “Town Centre” urban core of the Town of Markham

The Markham Centre Secondary Plan (Official Plan Amendment No. 21) was adopted by Markham Council in 1994, and approved by the Ontario Municipal Board in 1997. The Secondary Plan provides for the future urban core of the Town of Markham, a “Town Centre”, in the Central Area Planning District.

The goal of OPA 21 is to provide a policy framework and direction for detailed land use planning for a vibrant, intensive, mixed use Town Centre. The Town Centre is to have a distinctive character as the urban core of the Town of Markham, which will be the central focus of the Town, unifying its many communities. The Planning District will be a major activity centre which will be transit supportive as well as attractive and comfortable for pedestrians and will integrate a high standard of urban design with existing natural features to create a unique destination.

The Markham Centre area is generally bounded by Rodick Road on the west, Kennedy Road on the east, Highway 407 on the south, and the Highway 7 corridor on the north, as shown on Attachment “D” hereto. Markham Centre is a long term vision. It has been two decades in the planning stages, and a significant amount of land development and investment in infrastructure has occurred since the late 1990’s. The full build out of Markham Centre is anticipated to take another 20 to 30 years. Plans and development proposals continue to evolve to reflect a renewed focus on urban intensification under the Provincial Growth Plan, the Metrolinx “Big Moves” Transportation Plan, the new Region of York Official Plan, and the Town’s Growth Management Strategy to 2031.

The total area of Markham Centre (OPA 21) is approximately 400 hectares, of which some 300 hectares is developable. The Rouge River Valley System is the primary open space element within the Planning District, and is a major component in defining the overall structure of the Plan. The basic land use targets identified in OPA 21 included 25,000 residents in 10,000 residential units, and 17,000 office jobs. More recent forecasts, arising from the Town’s Growth Management Strategy, are targeting some 41,000 residents in 20,000 units, and some 39,000 jobs in Markham Centre.

Detailed Precinct Plans Guide the Planning Framework

Creating a new urban downtown in a greenfield setting is a complex and evolutionary process. While OPA 21 establishes a broad framework for the planning and development of Markham Centre, it divides the area into Districts, and relies on the preparation of more detailed “Precinct Plans” to guide planning and development approvals. The “Precinct” is a smaller geographic area within a District, which is an appropriate scale and size for detailed planning studies. A plan for each Precinct is to be prepared by the affected landowners for approval by the Town, to establish further parameters for detailed land use and the physical character and form of development. The Precinct Plan will provide a physical representation of a proposed community, or a portion of a proposed community, by ensuring the following matters are addressed:

- Land use and density distribution

- Major structural elements

- Built form elements

- Streetscape components

- Rouge Valley Greenlands Plan and parks and open space elements

- Traffic and transportation requirements

- Implementation of required background studies, such as Tree Conservation, Archaeological Assessment, Noise Attenuation, Cultural Heritage and Development Phasing.

The Precinct Plans are to be endorsed by Council prior to approval of development applications, but are non-statutory documents. To date, Council has endorsed detailed Precinct Plans for lands in the following Districts: Civic Centre, Warden West, Centre North and Centre West. Remington has recently hired Calthorpe Associates to update the Centre West Precinct Plan, including revised road and block patterns to provide additional connectivity across the GO Rail Line to the proposed “Mobility Hub” multi-model transit facility. Town Planning staff and Adamson Associates Architects have also recently initiated a Precinct Plan process for lands in the Centre East District (which lands are primarily in municipal and Provincial ownership), to address the Mobility Hub and emerging opportunities for land use intensification, transit oriented development and potential sports, entertainment and cultural uses as part of the “Markham Live” concept. Engineering Department staff are currently undertaking a transportation study to address the technical requirements of Metrolinx and other transit agencies regarding the Mobility Hub transit requirements.

Markham’s Economic Development Strategy Requires

Development of a Vibrant, Regional-Scale, Transit-Supported Downtown

Markham Centre is currently home to the IBM Research Lab, Motorola, Honeywell, and the Hilton Hotel and Conference Centre. Medium and high density residential development is well underway, with approximately 4,000 residential units currently occupied or under construction. Markham Centre is home to the Anthony Roman Centre (civic centre), Markham Theatre, Bill Crothers High School for Healthy Active Living, the YMCA, and is planned to accommodate three elementary schools, and the Pan Am Pool. Potential additional sports, entertainment and cultural facilities are under consideration by the Markham Live Committee of Markham Council. When complete, Markham Centre will be an intensive, mixed use urban area, incorporating housing, employment and retail facilities, recreational, cultural, major institutional and civic buildings, to serve as a central “Town Centre” focus for Markham’s many communities. It will be a place where residents, culture, entertainment and businesses thrive side by side. A walkable community integrated with the natural beauty of the Rouge River Valley, Markham Centre will be a place everyone can enjoy.

Markham Centre has gained wide recognition as a new way to manage dynamic growth, while sustaining the natural environment. All new development in Markham Centre must follow LEED standards. LEED (Leadership in Energy and Environmental Design) is a benchmark for the design, construction and operation of high performance “green” buildings. All new development in Markham Centre is connected to the Markham District Energy system (district heating and cooling and co-generation of hydro electric power). The Markham Centre Advisory Committee and Town Staff developed the “Markham Centre Performance Measures”, endorsed by Council, which are used in the review of all development applications to ensure conformity with the planning vision and sustainability objectives for Markham Centre.

Fast Facts:

· More than 30 of buildings are complete or under development – with many more to come (see Status of Development Activity attached as Appendix E)

· The community will include some 75 acres of parkland improved to an urban standard, and some 200 acres of valleyland and public open space to be restored and enhanced in keeping with the Council approved “Greenlands Plan” and integrated with tableland parks

· Transit based location, served by Unionville GO station (identified as a GTA “Mobility Hub” by Metrolinx), with inter-modal connections to VIVA rapid transit, York Region buses, and the future Highway 407 Transitway.

· Accessible road network, with easy connections to Highways 407 and 404, arterial road system (including Highway 7, Warden Avenue and Kennedy Road), and local collector road system (Town Centre Boulevard, Enterprise Boulevard, Rodick Road, and Birchmount Road).

· Markham Centre will be one of North America’s largest LEED communities, and a benchmark for energy efficient district heating and cooling.

· Markham Centre Performance Measures and Guiding Principles are applied by the Markham Centre Advisory Committee and Town Staff and Council to guide development in the area.

Markham Centre is designed to be the community of choice for targeted businesses including the high technology sector, the financial services sector, professional services, and knowledge-based industry. It is therefore imperative that the hard and soft infrastructure essential to fostering this success, and the private sector investment that will signal this success, be encouraged and incented to be in place (and in the right places) in a timely way.

Infrastructure Requirements

There has been very significant investment in Markham Centre to date – both public and private investment. Arterial and collector road networks are in place and are being expanded by both the Town of Markham and the Region of York. The VIVA rapid transit system is being upgraded and installed. Improvements are being made to the GO Rail infrastructure to provide for all day GO service. Plans of subdivision are being registered and the necessary local roads, utilities and underground services are being installed. Individual site plans have been approved, and there has been considerable new development over the past decade.

In addition to the hard and soft infrastructure required by the original Markham Centre Secondary Plan (OPA 21), the increased intensification and density now being planned for the area will place increased demands on infrastructure requirements. In particular, the Unionville GO Station in the East Precinct has recently been identified as a future Metrolinx Anchor Mobility Hub, to serve local, regional and inter-regional transit modes. The multi modal transit station will be a multi-level facility, which is intended to be integrated with surrounding infrastructure, land uses and pedestrian and traffic facilities to create a vibrant mobility hub district spanning both sides of the GO Rail line. Conceptual planning for the Mobility Hub is underway by the Remington Group and the Town through the updates to the Downtown Markham Precinct Plan and the preparation of a new East Precinct Plan.

Opportunities to Span Go Line and Focus Land Uses at Mobility Hub

The existing GO tracks at grade act as a major barrier in the Mobility Hub. Town staff and consultants (Adamson Associates) are exploring options for overcoming this barrier, such as building pedestrian linkages and roads over the GO tracks, and VIVA and 407 Transitway connections under the GO tracks, with a layering of land uses and pedestrian connections spanning the tracks. The Anchor Mobility Hub creates the opportunity for land use intensification and transit oriented development at the GO Station. The Town also is exploring options for a comprehensive “Markham Live” sports centre, cultural and entertainment destination that could be integrated with the future multi modal transit Mobility Hub. Possible elements under review by the Markham Live Committee of Council include sports and training facilities, cultural venues, entertainment, commercial and office uses, hotel and residential, consolidated transit hub, stacked parking and service areas.

High Upfront Costs Require New Financing Mechanisms

The infrastructure investments that would be required for the road and transit alignments, structured and underground parking, municipal services, major land uses, and the multi-modal transit station are challenging in their potential cost to the municipality, other levels of government, transit agencies, and private sector investors. The current Development Charges regime for Markham Centre already makes this a particularly expensive area for development in comparison to other development sites in Markham and across the Greater Toronto Area. These high costs have posed competitive cost obstacles resulting in a relatively slow absorption rate for new commercial and office development in Markham Centre to date. Whereas the residential market demand has been sufficiently robust to absorb these high costs, the commercial and office markets in Markham Centre have lagged behind the pace of growth experienced in other districts. For example, the limited commercial and office development built to-date has relied on the limited opportunity to provide interim surface parking on future development sites, a condition that will not prevail in future phases of development which are to be based on underground and structured parking.

In light of market constraints on the ability to achieve the planned intensity and pace of development, and the partnership opportunities associated with “Markham Live”, it is evident that alternative financial instruments and incentives must be considered. An enabling framework is required to position the Town to overcome the infrastructure challenges and to achieve Markham Centre’s planned density and intensity of destination land uses. Two programs that are suited to overcome these challenges and to spur the desired form of development are the establishment of a CIP, and the establishment of a Municipal Services Corporation/Economic Development Corporation.

OPTIONS/ DISCUSSION:

Both the CIP and establishment of a Municipal Services Corporation (to be designated further as an Economic Development Corporation) can be utilized by lower tier municipalities to provide a variety of incentives to landowners within the municipality or a fixed part thereof, in order to achieve municipal objectives such as new development, renewal development, development that meets certain environmental standards, and to encourage investment in areas to achieve the objectives of the Official Plan.

1. COMMUNITY IMPROVEMENT PROJECT AREA

Section 28 of the Planning Act authorizes municipalities to designate, by by-law, the whole or any part of an area as a community improvement project area, provided that the municipality’s official plan contains provisions relating to community improvement plans. Community improvement planning was used in the 1970’s and 1980’s to facilitate neighbourhood renewal and rehabilitation (e.g. Main Street Unionville Community Improvement Plan 1985 dealt with repairs and upgrades to municipal services, streetscaping and street furniture, and undergrounding of overhead wires). More recently, some municipalities are utilizing it as an incentive to achieve development that delivers on municipal objectives, including environmental standards such as LEED ©, employment uses, intensification, energy efficiency, construction of critical infrastructure, and economic development. Incentives available within a community improvement project area include:

grants, loans and land under section 28 of the Planning Act

tax assistance under section 365.1 of the Municipal Act, 2001

Assistance provided pursuant to a Community Improvement Plan is an exception to the bonusing rule found in section 106 of the Municipal Act, which generally prohibits providing financial assistance to industrial or commercial enterprises. Financial assistance, as further described below, can be provided in order to carry out a Community Improvement Plan and achieve development and infrastructure in the right places at the right times.

The Town’s Official Plan (section 2.12) contains provisions permitting it to establish Community Improvement Project Areas within the Town. See Attachment C. CIP’s may be used as a tool to provide incentives to encourage the type, form and quality of development and redevelopment that will advance community interests and the objectives of the Town’s Official Plan. Specifically the Town’s OP authorizes the use of CIP’s to encourage “new development and redevelopment, which is supportive of the goals and objectives of this Plan” (which would include the policies of the Markham Centre Secondary Plan – OPA 21).

· Area selection is guided by a number of criteria including areas where there is “the need for appropriate investment, growth and development incentives to achieve the goals and objectives of this Plan”.

· CIP’s are to be used to direct private investment, as well as public investment to:

o Repair and upgrade deficient or deteriorated public infrastructure and amenities

o Acquire lands or buildings and any subsequent clearing, rehabilitation, redevelopment or resale of these properties

o Stimulating and directing growth and development that advances the community interest and supports the objectives of the Official Plan

· Main Street Markham and Main Street Unionville have already been designated as Community Improvement Project Areas

· Additional areas, such as Markham Centre, may be designated by by-law, without requirement for an Official Plan Amendment.

CIP Advantages

· Ability to make grants or loans to property owners/tenants within the CIP area ie private property owners:

o Grants may be made available to pay for “eligible costs” which are costs related to

§ Environmental site remediation

§ Development, redevelopment, construction and reconstruction of lands and buildings for rehabilitation purposes or for the provision of energy efficient uses, buildings, structures, works, improvements or facilitites

· Tax relief, full or partial, from municipal property taxes and School Taxes, subject to notice to the Region and the consent of the Minister of Finance.

· Tax Increment Equivalent Grant (TIEG)

o Grant equal to the full amount or a portion of the amount of the estimated municipal property tax increase after a property is developed or redeveloped.

CIP Process

· Official plan policies providing for community improvement areas are required, prior to adoption of a community improvement plan. Markham’s Official Plan has such provisions in place and two improvement areas have already been identified, as set out in Attachment C;

· Determination of the community’s needs and challenges;

· Consultation with the Ministry of Municipal Affairs is required, prior to adoption;

· Consultation with the public, and a public meeting (on May 24^th, 2011, prior to the Council meeting scheduled for that date), prior to adoption;

· Specific areas for adoption of a CIP are further designated by by-law;

· Preparation of CIP to address issues identified; a draft of the Community Improvement Plan is attached hereto as Attachment G;

· Upon adoption of the CIP, notice of adoption is to be given in accordance with the regulations, including notice to the Ministry of Municipal Affairs and Housing

· The CIP is subject to appeal to the Ontario Municipal Board, but absent an appeal within the 20 day appeal period, the adopted CIP comes into force without further approvals

The emerging concept plan for the Mobility Hub area proposes to create the required crossings by altering the grade of the roads on either side of the tracks to meet above the GO rail line. The future development sites in the adjacent development blocks would then be completed on a phased basis, through the construction of parking structures on the existing grades with the building’s main entrances matching the elevated grade of the new streets. This has the added advantage of addressing the provision of cost effective structured parking at existing grade, in a constrained environment with a high water table. The Adamson concept plan and proposed road/transit alignments were endorsed by Development Services Committee on March 1, 2011 as the basis for preparing Precinct Plans in the Mobility Hub area.

The ability to finance and implement the required infrastructure to support the Mobility Hub and related land uses will be critical for the development of lands at the planned densities within the East Precinct and the Remington lands west of the GO track.

The Town is currently undertaking studies, in consultation with Metrolinx and the transit agencies, to fully understand the required infrastructure and financial implications. Another aspect to achieving the higher densities associated with the mobility hub and addressing the needs of the transit providers is the provision of adequate parking both in the short term (at-grade) and particularly in the long term as this parking is converted to structures concurrent with higher density development and higher order transit.

The Metrolinx Big Moves document identifies a full range of financial and development tools that are potentially available as part of a mobility hub development strategy which may include tax increment financing, community improvement plans, area development charges, and public-private partnerships. The proposed Community Improvement Plan is one strategy recognized as a possible way to assist the Town in achieving its objectives for Markham Centre and the Mobility Hub.

Examples of potential infrastructure projects that could be considered through the Community Improvement Plan process may include, but are not limited to:

- Municipal parking facilities and structures

- Steetscape improvements

- Undergrounding of hydro wires

- Enhanced bridge and pedestrian crossings of the Rouge River and tributaries

- Implementation of the Markham Centre Greenlands Plan

- Realignment of Tributary 5 in East Precinct

- Servicing infrastructure, including stormwater management facilities

- Green infrastructure initiatives

- Roads and crossings of the GO rail line

- Road construction and linkages to Kennedy Road

- Road and pedestrian connections across Highway 407.

The CIP will be an enabling framework document. Details of specific infrastructure requirements and investment opportunities will be brought forward to Council for consideration as development in Markham Centre proceeds over time.

2. MUNICIPAL SERVICES CORPORATION

Section 203 of the Municipal Act permits a municipality to establish a share capital (ie for profit) corporation to provide a system, service or thing that the municipality itself could provide. In particular, the corporation may be established to provide economic development services, defined by Ontario Regulation 87/10 to include:

(a) Promotion of the Town for any purpose, including by the collection and dissemination of information and the development of economic development strategic plans;

(b) Acquisition, development and disposal of sites in the municipality for residential, industrial, commercial and institutional uses,

(d) Provision of residential housing,

(e) Provision of general parking facilities (including structured parking)

(f) Provision of counseling services to or encouragement of the establishment and initial growth of small businesses operating or proposing to operating in the Town

(g) Undertaking community improvement consistent with a community improvement plan approved by the Town under subjection 28(4) of the Planning Act,

(h) Improvement, beautification and maintenance of municipally-owned land, buildings and structures in an area designated by the Town beyond the standard provided at the expense of the municipality generally, and promotion of any area of the Town as a business or shopping area

(i) Provision of facilities for amusement or for conventions and visitors’’ bureaus

(j) Provision of culture and heritage systems.

While a CIP is a municipal program that enables municipalities to provide incentives to private property owners to develop in such a way and in such a location as to achieve the objectives of the municipality’s Official Plan, a Municipal Services Corporation (MSC) is a corporation that can foster economic development by entering in partnerships with private entities for the provision of facilities and infrastructure that achieve municipal economic development objectives or targets. The benefit of an MSC is that the municipality can transfer assets, including land, to the MSC, and provide loans or grants, at less than fair market value, to private entities partnering with the municipality, improving the viability of the facility or infrastructure projects.

Advantages

· The Town may provide assistance to the corporation including

o Giving, lending or selling any property of the Town, including money

o Guaranteeing borrowing;

o Providing the services of employees or contractors

· Such assistance is not required to be at fair market value

· The municipality can impose special levies on properties pursuant to s. 326 of the Municipal Act for the additional benefit received in this area

· Such assistance can be exempt from the bonusing prohibition and the municipality can make funding available to the corporation if the purpose of the funding is to “subsidize the cost of public transportation facilities or services or public access to recreation and cultural facilities”

Process

· Preparation and adoption of a business case study must be completed and adopted by the Town

· Public consultation on the proposal to establish an MSC

· Designation of the MSC as an Economic Development Corporation (EDC)

· Adopt “Asset Transfer Policy” for transfer of land or other assets to the EDC

FINANCIAL CONSIDERATIONS AND TEMPLATE: (external link)

The CIP and the EDC are tools available to municipalities to promote investment in development and its required infrastructure by landowners and other private parties. Specific implementation of any of the incentives made available through these tools will be the subject of additional reports to Council.

HUMAN RESOURCES CONSIDERATIONS

N/A

ALIGNMENT WITH STRATEGIC PRIORITIES:

Implementation of Markham Centre aligns with all of Council’s key strategic priorities under “Building Markham’s Future Together” (growth management; transportation and transit; environment; diversity; municipal services; recreation and culture).

BUSINESS UNITS CONSULTED AND AFFECTED:

The Finance and Planning and Urban Design Departments were consulted in the preparation of this report.

RECOMMENDED

BY: ________________________ ________________________

Catherine M. Conrad Stephen Chait, Director of

Town Solicitor Economic Development

________________________ ________________________

Jim Baird, John Livey,

Commissioner of Chief Administrative Officer

Development Services

ATTACHMENTS:

Attachment A – Part IV of the Planning Act – Community Improvement

Attachment B – Section 365.1 of the Municipal Act

Attachment C – Markham’s Official Plan provisions for Community Improvement Plans

Attachment D – Map of Markham Centre

Attachment E – Status of Development Activity

Attachment F - Economic Development Corporation Preliminary Business Case Study

Attachment G – Draft Community Improvement Plan