London Economic Development Corp. answers to city hall

The agency charged with attracting new businesses to London has had its authority clawed back by the city and is on a shorter leash, having to answer to city hall.

The city has reined in the authority of the London Economic Development Corp. to negotiate real-estate deals with new industries locating in London amid charges the corporation was in danger of violating provincial law.

?The LEDC is negotiating deals on land they do not own and someone just twigged to it and said, ?They can?t do this' ? said Coun. Bud Polhill, who sits on the city?s investment and economic prosperity committee.

City politicians reduced the LEDC?s scope in May, the fallout of a failed bid to land a food- warehousing facility that led to charges LEDC proposals would have violated the ?bonusing? provisions in the Municipal Act.

The company involved, Sysco, had offered $3.5 million for 26 hectares of city-owned industrial land.

?The LEDC was making commitments about land it had no authority to. There were concerns raised,? a source close to the city said.

?There was a need to make the line of authority very clear about who has authority to deal with this.?

Also, the city was concerned a senior member of the LEDC staff has been pushing the city to sell land to one developer.

Though the LEDC never had power to sell or negotiate real- estate deals, talks were often held with potential new industries about how possible sites were to be developed, and the city?s legal department became concerned when those promises may have violated provincial law.

As for ?bonusing,? it?s a broad term that includes offering a tax break, cash or a land swap to an industry as an incentive to lure them to a community.

Peter White, LEDC chief executive, said the changes are just formalizing an arrangement that has existed between the city and LEDC for its 12-year history.

?We always had to go to city hall,? he said, denying LEDC made promises to clients.

?That is false, it does a disservice to our team.?

But sources say the LEDC had a history in recent years of making promises to clients about the development of business sites it did not have authority over. Discussion in December 2011 between the LEDC and Sysco, a Texas-based food-processing industry, was the final straw.

?It had been a concern for some time, and this just highlighted it,? said one source.

Politicians also approved ?enhanced? reporting procedures to make the LEDC answer to the city.

?We want to make sure taxpayers are getting value for their money,? Polhill said

At the same time, politicians approved beefing up the LEDC?s annual budget to nearly $2.2 million, a 1% hike, even though it has a surplus of more than $600,000.

?That surplus is something we are discussing, we have to deal with it,? Polhill said. ?We may look at putting it somewhere else, or toward another project. They have to satisfy us as to why they have it.?

norman.debono@sunmedia.ca

twitter.com/NormatLFPress

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THE ISSUE

- In December 2011, Texas-based food giant Sysco offered nearly $3.5 million to buy 26 hectares of industrial land in Innovation Park on Veterans Memorial Parkway near Bradley Avenue. Politicians turned down the offer because other industries, offering more jobs, were considering the site. City councillors also balked at Sysco?s demand the site be graded and prepared, work that would have cost $726,000 and dropped the purchase price from $53,000 an acre by about $11,000.

- Sources said the London Economic Development Corp. made promises about land development to attract Sysco that would have violated ?bonusing? laws in the Municipal Act.

- In May, city politicians reported the city?s realty-services office will take over real-estate negotiations with potential new businesses, ending the LEDC?s practice of talking real estate with clients.

- In July, Sysco announced it?s locating in Woodstock.

WHO DOES WHAT

- City politicians spelled out in May the roles of the LEDC and the city?s realty-services division

- Politicians reiterated the LEDC?s job is to attract businesses to London. The corporation?s role is restricted in negotiations on the sale of industrial land ?where representation may be made by LEDC that would result in violations of Section 106 of the Municipal Act,? said a staff report to city council?s finance and administrative services committee

- The job of the city?s realty-services division is to acquire and sell land at fair market value, ensuring all laws and policies are adhered to\

WHAT'S BONUSING?

Section 106 of the Municipal Act states:

- ?A municipality shall not assist directly or indirectly any manufacturing business or other industrial or commercial enterprise through the granting of bonuses for that purpose,? it states.

- Bonuses are defined as giving or lending municipal property; guaranteeing borrowing; leasing or selling property below fair market value; and partial or total exemption from levies, charges and fees

THE DANCOR ISSUE

- City staff also raised concerns a senior member of the LEDC team pushed the city to buy land from Dancor, a developer with significant holdings near London International Airport and Hwy. 401.

- City staff said the optics of the LEDC going to bat for one developer aren?t good because the agency must be seen by the city?s development community to be impartial.

- White said it?s ?absolutely not true? that the LEDC pushed the city to buy land from Dancor.

- The agency works closely with the company because it has much-needed building inventory, he said.

- ?We offer clients what is available, what is in the marketplace.?

WHAT THEY SAID

The LEDC is negotiating deals on land they do not own and someone just twigged to it and said, ?They can?t do this.'

Coun. Bud Polhill, who sits on the city?s investment and economic prosperity committee

Staff wanted clarification about lines of delineation with the LEDC, it was nothing more than clarification. We are always careful (about bonusing).

Coun. Nancy Branscombe, who sits on the finance and administrative services committee

There is likely some confusion in the private sector when it comes to who to contact when buying land in London. What is paramount is they must have absolute confidentiality, and that is a challenge when there are many players in the equation.

George Kerhoulas, commercial realtor in London with Cushman and Wakefield

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Source: http://www.lfpress.com/2012/11/18/london-economic-development-corp-answers-to-city-hall

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