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TO: |
Mayor
and Members of Council |
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FROM: |
Stephen
Chait, Director of Economic Development Bob Glandfield, Sr.
Economic Development Officer |
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PREPARED
BY: |
same as above |
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DATE OF MEETING: |
October
20, 2003 |
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SUBJECT: |
Innovation
Synergy Centre 1st Quarter Status Report |
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RECOMMENDATION:
That the report entitled
“Innovation Synergy Centre Status Report” be received,
And that the Innovation
Synergy Centre be incorporated as
a Community Development Corporation under Part III of the Corporations Act,
And that the Town
appoints the Mayor, the Town Solicitor, and York University’s VP of Research
& Innovation to apply on the
municipality’s behalf for incorporation,
And that the General Manager of the
Innovation Synergy Centre be authorized to sign on behalf of the Town a waiver
and/or non-disclosure agreements between clients of the ISC and the ISC,
contractors (i.e., mentors and consultants) working for the Innovation Synergy
Centre.
PURPOSE:
To inform Council of the progress made to date
in the establishment of the Innovation Synergy Centre, and to inform Council of
the next steps in the process.
BACKGROUND:
In March 2003, Markham
Council approved the staff recommendation that
the Town proceed with the establishment of the Innovation Synergy Centre (ISC).
Specifically Council approved:
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The establishment of the
Innovation Synergy Centre as a not-for-profit corporation (Staff to present, at
a later date, documents of incorporation
and related information for Council approval).
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A 2-year lease (plus an
option to renew) to occupy 4,800 sq. ft. of office space (Lucent Technologies
building), effective May 1, 2003 at an annual cost not to exceed $110,000 to be
funded through the 2003
Economic Development capital account,
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$250,000 in 2003 capital
funds towards the combined operating expenses for the ISC and Markham Small
Business Enterprise Centre (SBEC) for the period of May 1,2003 to April 30,
2004
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Secondment of an Economic
Development funded
staff person year to be the General Manager of the ISC. These funds were previously approved in the
Town’s 2003 operating budget
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And that the existing
Steering Committee of the Mayor plus 3 CouncillorsCouncillors and 2 external advisors continue to guide the
implementation of the ISC and SBEC until the appointment by Council of formal
representatives to the Board of Directors.
DISCUSSION:
Consistent with
the ISC’s 10-year business plan (presented to Council early in 2003), the ISC’s
activities to date have focused on the physical set-up and organizational
start-up of the operations. The following paragraphs provide a summary
highlight of each of the categories of activities.
Leasehold
The ISC location at 1380
Rodick Road has been occupied since
May 2003. The location, layout, and building amenities are all high quality and
have met with the approval of staff, partners, and customers. In addition to
the ISC staff and MSBEC (Enterprise Centre) staff, several workstations are
occupied by associates
on a daily or weekly basis. Among them are: the Ontario Medical Manufacturers
Association, the York Technology Association, and Seneca College.
IRAP (Industrial
Research Assistance Program) officers of the National
Research Council are also regularly using
space set aside for them at the ISC. A
component of the IRAP contribution agreement allows a cost recovery for this
space.
Infrastructure
Although the leased space
contained workstations and the relative phone/ network wiring, it was all interconnected to the Lucent
infrastructure. As a result, a
significant effort was required to separate the two systems before ISC
staff could move forward and
begin to design and install systems for the ISC. Benefiting from previous relationships through the YTA, the
ISC was able to arrange
significant support from both Lucent and Avaya, despite both companies going
through reorganization. The ISC
engaged one of Lucent’s facility
experts to help with the design and of the phone and network
systems.
Installation network systems
After considerable
investigation and consideration of alternatives, a high speed ADSL line was installed to serve both the ISC and the
Enterprise Centre. This has resulted in a considerable cost saving
versus the originally contemplated T1 line at about 4 times the cost.
It should be noted that all workstations and meeting rooms of the ISC have ISDN (Internet
and phone) access.
Telephone
System
Lucent has supplied an unused phone
switch that has more than enough
capacity for the ISC’s needs/use. At ISC’s expense (budgeted), their personnel installed the switch in the
ISC facility. Avaya arranged to have the switch programmed and to train
ISC personnel in its’ use. The ISC
can now provide hosted
organizations with their own phone number and
voice mail.
Specification and costing
of computer systems
It was originally hoped
that Lucent would have excess equipment ISC could use, but this was
not the case. Working within the Town’s purchasing by-law, and in partnership with the Town’s
ITS department, ISC staff
received bids on its computer
requirements. As of
mid-October the file server has arrived,
and the required desk-top and lap-top
computers have been ordered through the competitive
bidding process that the ITS department had
undertaken. These are expected to be
in place before the official opening of the ISC on November
17. Currently the ISC
staff are making use of their own personal computers.
Funding
At the time of the last report
to Council regarding
implementation of the ISC (March 2003), the
sources and scope for non-Town funding for the ISC was
suggested but not confirmed. This
funding has now been firmed up and confirmed as follows:
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NRC/ IRAP.
The ISC has received a
formal commitment for two years of $300,000 per year to be used to provide services to clients. These are highly
directed funds. They must be used in connection to creating benefits for clients. Any funds not
used by the end of the federal fiscal year will no longer available.
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MEOI.
ISC had expected to receive
$75,000 in “one time” funding to offset
the first year lease costs. All of this
money has been received.
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York University.
At the March
2003 Council meeting when the
ISC concept was approved, York University agreed to supply $100,000 for the ISC to purchase services from the University.
These dollars have been transferred to the
ISC.
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Royal Bank of Canada. The RBC
has agreed to sponsor the activities of the ISC and has provided a
$20,000 grant. In return for this
contribution RBC looks forward to having direct participation in ISC programs
and being represented on the Board of the ISC.
Financial tracking and
control
ISC staff have identified and ordered the required accounting
software. Currently staff are tracking all costs
and revenues via a spreadsheet, and co-ordinating accounts with the Town’s
Finance department. To
date the total incurred capital
and operating costs are running under
budget. Cost savings have been obtained in
the areas of: lower than
budgeted communication costs;
and lower labour cost as some of ISC’s costs are being picked
up under the NRC contract as they are directed to client. Within the IRAP support
structure the ISC is also able to
invoice for the use of space by the NRC personnel using centre, as well as
a small administration component. This is also providing a
non-forecast revenue.
Year One (ending April 30,2004) costs are trending below budget, and a small surplus is forecast to be carried over into Year Two.
Parallel to the work
being accomplished by ISC staff, York University, as a founding partner
in the ISC, continues to support
the implementation process. In March,
the Vice-President Research and Innovation at York, made the case successfully
with MEOI for the $75,000 grant towards the
Lucent Technologies
Building lease. In March, York
University’s Research and Innovation
Office arranged to allocate $100,000 for the
Innovation Synergy Centre to support upcoming York-Markham initiatives. Also in March, York University invited representation
from Markham and
the ISC to participate in a visit to Cary and
the Research Triangle in North Carolina, thus reinforcing the partnership with
Cary. This also gave Markham
officials an opportunity to meet the Dean of
Schulich School of Business and the Dean of
the Faculty of Pure and Applied Sciences informally to discuss the scope of the
ISC and to gain support for
it. Currently, as a result of meetings
internally at York University, the Schulich
School of Business is preparing to contribute direct services and consultation through
the ISC. In addition, together
with the Vice-President Research and Innovation, Schulich is working on a plan
to undertake an impact study of the Centre.
York Technology Association and the Association of Medical Device
Manufacturers are two industry organizations that have established
close working relations with the ISC. Via another contract that
was brokered, the YTA and the AOMM have received funding
for a
paid staff person at the ISC to support the
organization of events for their respective memberships. This individual is housed
at the ISC, and also provides some support to ISC activities. The benefit of this
association is the access and visibility it provides
to their members, many of whom
are ISC’s target clients.
Establishment of
relationship with various levels of government
One of the key components
of the ISC business plan is to convince both
Federal and Provincial governments of
the benefits of working
with the ISC and to use the ISC as a base of operation when working outside of Toronto’s downtown core.
We are making
considerable progress in establishing the profile of the ISC with
these government departments and ministries.
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Ontario. The ICT (information,
communications, and telcom) group of MEOI has
worked closely with ISC staff and encouraged ISC to submit
a proposal under the Prosperity Partnership Program. The ICT provided a positive letter of support as part of the
ISC submission.
The ISC hosted, in partnership
with YTA, a workshop on provincial R&D tax credits with MEOI and Ontario
Revenue to discuss how it can be
improved. ISC has also hosted several visits by Ontario Exports Inc (OEI)
to discuss how we can
work together and have them use the ISC as a base
outside of Toronto. In conjunction with the YTA, ISC
staff are working to identify
companies that want to attend the CEBIT show in Germany in the spring under the
provincial banner, and are also in discussion with OEI to assist in an initiative next fiscal year
to introduce local companies to the U.K. market under their new program.
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Region
of York. ISC is
in discussion on how to work closely with the regional Export specialists who work with companies
in York Region in assisting
clients they
identify as the type of client ISC
can help. One of their Export
advisors is very active in Markham
(they will provide leads
to qualified clients). The ISC is also a partner in the York
Regional Biotechnology Cluster Initiative Program, chaired by York University, and
in a GTA Multi-Media Study.
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GTMA. We have met with the several individuals from the Greater
Toronto Marketing Alliance and discussed how we can
compliment their initiatives to attract investment. ISC agreed
to help host visiting international delegations (the first delegation, from
Austria, was received in September). This arrangement provides
Markham and the ISC with an early look at
companies wishing to establish themselves within the GTA, and allow the ISC to
connect these companies with
local expertise. Development of this
relationship will continue.
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Federal. A number of meetings have
been held with Industry Canada. They have recently
approached ISC on hosting another
mission. They are aware that ISC will need additional
resources from them
if they expect ISC staff to do in-depth company matching.
The underlying objective
in this initiative to is to have an early opportunity to interface with foreign
companies looking to establish a North American foothold. Industry Canada is promoting Canada as a North
American base, as indicated by one of the recent Austrian visitors.
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Other
initiatives. Under the Province’s
Prosperity Partnership Fund, ISC applied for additional
$200,000 support (Oct 1). This initiative
catalysed a
similar initiative by North Bay to develop
a proposal under the same program to form a “virtual” network of four
additional Innovation Synergy Centres in North Bay, Sudbury, Sault Ste Marie
and Timmins. The ISC in Markham will be a
hub and source of expertise and mentoring as required to support
their activities.
Over the 4-month period
that it has been operating in the Lucent building, the staff, partners (i.e.,
York University and the National Research Council), and associates (i.e.,
Seneca College, York Technology Association,
and others) of the Innovation Synergy Centre have prepared the ISC for its
formal establishment as an incorporated body, and have actively promoted the
ISC to its intended markets through hosted events, corporate calling, and
facilitated meetings.
A brief description of these activities and the status of projects are
presented as follows:
Leasehold
The ISC location at 1380
Rodick Road has been occupied since May 2003. The location, layout, and
building amenities are all high quality and have met with the approval of staff, partners, and
customers. In addition to the ISC staff and MSBEC (Enterprise Centre) staff,
several workstations are occupied by associates on a daily or weekly basis.
Among them are: the Ontario Medical Manufacturers Association, the York Technology
Association, and Seneca College. IRAP
officers of the National Research Council are also regularly using space set
aside for them at the ISC. A component
of the IRAP contribution agreement allows a cost recovery for this space.
ISC staffing and mentors
The ISC is currently
staffed by the General Manager, one Manager of Client Services, and one
administrative person. The GM is a full-time contract funded by the Town’s
Economic Development Department. The other two staff are on month-to-month contracts, and a
portion of their salaries are recouped through National Research Council
contract funding. A key function of the Manager of Client Services is to identify potential
mentors and advisors, as well as to establish
process methodologies
and to investigate the appropriate
software. To date we have
established a pool of approximately 35 mentors. ISC staff have arranged the use of an ASP Client management
system to track our client activities. In addition, ISC
has been offered a preferred rate from another YTA member for use of
their project management software. The
process of working with clients, and establishing links with clients is well
underway.
Organization Structure
Considerable attention has been devoted by the
Town and York University
staff to the development of the ISC organization model. This work has been
assisted by the CG Group who has facilitated discussions and provided
alternative models for consideration. Based on the current consensus position,
it is recommended that the ISC
be headed by a 9-person Board of Directors including 2 Co-Chairs (one
representing the Town and one representing York University). The seven Board
members are to be elected by the ISC Members (i.e., the Town and York
University) and should be representative
of the ISC’s target customers. The formula for electing Board members and the
by-laws governing the Board are presented in Attachments 1-3).
Incorporation and Legal Indemnity
In order to insulate the Town and its partners
from legal and financial
risk, and to afford the Town and York University a legal instrument to guide
their partnership in the ISC, staff
have considered alternative ways in which to incorporate the ISC. This
work has been assisted by the legal firm of WeirFoulds. Based on an analysis of alternatives
(see Attachment 4), it is recommended that the ISC be incorporated as a
Community Development Corporation under Part III of the Corporations Act.
Unlike regulatory incorporations, this form of incorporation is expeditious
(estimated to
require no more than 3-4 weeks from time of application) and does not require
public meetings or the preparation of new business cases. In order to move
forward with this application, and to best reflect the active partnership
between the Town and York University, it is recommended that the Town appoint
the Mayor, the Town Solicitor, and York University’s VP of Research &
Innovation to apply on the
municipality’s behalf for incorporation.
Staff are pursuing cost
estimates for insurance to indemnify the
future Board of Directors and to protect the Town and its partners (note, this
was budgeted for in the ISC business plan).
In order to allow the ISC to provide mentoring services while still
operating as an agent of the Town.
Non-disclosure and consultant/mentor
waiver agreements have been drafted by legal counsel to protect the ISC and its
partners from legal claims by ISC clients.
Without this protection of the Town and the staff and Directors of the
ISC, the ISC cannot perform one of its core services – the mentoring of businesses. In order to facilitate the signing of these
documents (it is likely that these forms will be used by staff 4-6 times
weekly), it is recommended that the General Manager of the ISC be authorized to
sign on behalf of the Town
(until the ISC is incorporated).
Name and Logo
A thorough examination of names and brand
designs has been undertaken. Work is also nearing completion regarding
copyrights and Internet rights. Plans are underway to present the preferred
alternatives to a
representative group of advisors and partners by way of a presentation. A presentation of the preferred name(s),
logo(s), and design(s) at the time of tabling of this report to Committee on
October 20, 2003.
Financial Status
The ISC has been
successful in
attracting funding from a variety of public and private sector partners. All of
the funding originally forecast and communicated to Council in previous reports
has been confirmed. Year One (ending April
30, 2004) costs are trending below budget, and a small surplus is forecast to be carried over into
Year Two.
Marketing Activities
To date over 500 visitors to the ISC have been
recorded. The ISC has been proactive in many matters including the following:
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York University. The ISC has had several
opportunities to
work with York University scientists and to arrange campus visits. Staff from the Office of
the VP of Research and Innovation meet weekly with ISC staff and have supported
submissions to MEOI referred to in this report. The University is in the process of hiring an
Industry Liaison Representative who will work with the ISC staff and SMEs
(small medium size enterprises) interested in research
and commercialization. He/she will be stationed in
the ISC. York University continues to be proactive in assisting
the Town and the ISC in building the ISC’s reputation with the highest level
executives at NRC and MEOI.
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Seneca College. Information has been
shared with scientists at Seneca and the President has encouraged the college
staff to take an active interest
in the ISC. Seneca is contributing its own marketing and graphics capabilities
to the branding of the ISC. Seneca has arranged to second an individual to work
at the ISC, one morning each week.
Ř York Technology
Association. The “Peer to Peer” program has been relocated to
the ISC and has resulted in expressions of interests by mentoring
candidates. In addition, YTA seminars
and workshops are also held in the Lucent showroom each month.
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Senior levels of government. The ISC has been the
subject of growing
interest by Industry Canada, the NRC, and the Canadian Technology Network. The
ISC has hosted visits by more than 10 delegations seeking to learn more about
ISC’s mandate and capabilities. Recently Industry Canada began to direct
foreign investment
inquiries to the ISC (e.g., Austria and the UK). In addition to the financial
support received from the Ontario Ministry of Enterprise,
Opportunity and Innovation, the Province has encouraged the ISC to be a
catalyst for significant policy and technology cluster initiatives.
Key objectives for the next
quarter
In moving ahead with the balance of
its Year One program, the ISC’s objectives for the next three months include
the following: 1. Official launch of ISC in November; 2. Completion of the
ISC’s Incorporation
and establishment of a Board of Directors; 3. Expansion
of client activity and launch of the mentoring program; and 4. Marketing to clients.
FINANCIAL CONSIDERATIONS:
A
discussion of the various financial implications has been provided in the preceding
paragraphs.
ENVIRONMENTAL
CONSIDERATIONS:
none
ACCESSIBILITY
CONSIDERATIONS:
none
ENGAGE 21ST
CONSIDERATIONS:
This project was first acknowledged by Council
as part of a comprehensive strategic economic development initiative, and is
consistent with the
Town’s vision and community strategy.
BUSINESS UNITS CONSULTED
AND AFFECTED:
The Town’s Treasurer and the Town Solicitor have
reviewed this report, and are supportive of its contents.
ATTACHMENTS:
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Stephen Chait, Director
of Economic Development |
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Mary-Frances Turner,
Commissioner, Strategy, Innovation & Partnerships |
