Wednesday, March 07, 2012

Growing London's Economy: Reducing Barriers To Growth

In response to a comment I made about London's economic growth, or lack thereof, was asked by London Councillor Joni Baechler if I could provide some suggestions. I've come up with a few general suggestions to help attract new businesses to London and to encourage existing businesses to grow.

1. Commercial and Industrial Taxes

I've been pouring through the data in the BMA Municipal Study 2010 and have noticed a few areas where London could improve its competitiveness in terms of commercial and industrial taxes.

The BMA report provides several comparisons between other Ontario cities in many areas. In many comparisons, London has fairly competitive property taxes. However, when some new businesses are looking for a home, they may see London as less attractive than other nearby options. I looked at several metrics from the BMA report, but narrowed my focus of each to the following:
  1. How does London compare overall?
  2. Host does London compare to other cities over 100,000 in population?
  3. How does London compare to other cities in Southwestern Ontario?
  4. How does London compare to the nearby "competition?" 
    • That is: how do we compare to our neighbours of similar size who business may also consider investing in? My list of Nearby Competing Cities is: Kitchener, Waterloo, Cambridge, Woodstock, Sarnia, Windsor, St. Thomas, Guelph and Niagara Falls.
Using these four perspectives, I looked at the following comparisons from the BMA report:

Neighbourhood Shopping Centre Taxes:

Defined as: "Typically the smallest type of center comprised of retail tenants that cater to everyday needs such as drugstores, convenience stores and hardware stores." This is likely the most common type of business in London, making it key to our economy, yet we tax these businesses quite heavily:
  • Overall: 4th Highest
  • Cities with +100,000 population: 4th Highest
  • Cities in Southwestern Ontario: Highest
  • "Nearby Competing Cities": Highest
Hotel Taxes:
  • Overall: 4th Highest
  • cities with +100,000 population: 2nd Highest
  • cities in Southwestern Ontario: Highest
  • "Nearby Competing Cities": Highest
Motel Taxes:
    • Overall: 6th Highest
      • Cities with +100,000 population: 3rd Highest
        • Cities in Southwestern Ontario: 2nd Highest
        • "Nearby Competing Cities": 2nd Highest
        Standard Industrial Taxes:

        The manufacturing sector is a key part of London`s economy. While London has close to average tax levels on both standard and large sized industry, we have neighbouring cities with much more attractive taxes.
        • St Thomas is 29% lower ($1.67 vs $1.18 per square foot)
        Large Industrial Taxes:
        • Several nearby competing cities are lower: Kitchener $1.06 (-17%), Sarnia $1.11 (-13%), St. Thomas $1.14 (-11%), and Niagara Falls and Cambridge both at $1.17 (-9%), compared to London`s $1.28.
        Industrial Vacant Land Taxes:
        • London clocked in at $2,844 per acre, but again, some of our neighbours offer much more attractive options: St. Thomas $1,223 (-57%), Sarnia $1,775 (-38%), and Woodstock $1,864 (-34%).
        If we want to help our businesses grow and especially if we want to attract new businesses, we need to do better than average. We need to make London an attractive option to new business. Keeping taxes frozen at 0% won't cut it. City Council needs to cut unnecessary spending and work towards reducing the tax burden on our economy.

        2. Reduce Regulations

        An often hidden cost to business is the cost of complying with excessive regulation. While this is not a direct financial burden, many regulations require additional time or resources which does have a financial impact of business.

        Other municipalities as well as higher levels of government are adopting "One-For-One" rules for any regulations passed. The concept of these policies is simple. In order to enact any new regulation, an existing regulation must be repealed. This helps to keep to number of regulations from growing, but also directs attention towards cleaning up old regulations which may be obsolete, unnecessary, even harmful or simply not working as they were intended.

        The Government of Canada is even looking into adopting a "One-For-One" rule in their Recommendations Report - Cutting Red Tape…Freeing Business to Grow.

        [Edit: Starting last September, the British government enacted a "One-For-One" rule as well as requiring that a panel of business experts scrutinize new legislation before it is introduced. It's estimated that regulations cost UK businesses £88.3bn in 2010. Source: http://www.bbc.co.uk/news/business-10878262]

        3. Remove Parking Meters from Downtown

        Every time I visit London's downtown to shop at one of our downtown businesses, parking is always a problem. Having to pay for parking in order to visit a store discourages me from shopping downtown, especially if I'm not even sure if the store will have the item I want, or if I just want to browse. Many times, I'll opt to find what I want elsewhere in the city or simply buy online. Parking meters are a drain on our downtown economy.

        Remove all parking meters from the downtown core, offering 2 hour free parking on downtown streets instead. This will reduce direct revenue, but some of that loss will be saved by the reduced maintenance and enforcement costs. The revenue loss will be further offset by the increased tax base due to downtown growth.

        4. Community Involvement in Improving Roads

        Reports estimate that Toronto loses $6B per year due to gridlock. How much does London lose? While we aren't as big as Toronto, we're still a large city with a small-town road system and traffic congestion is a major problem in London.

        I'm not holding my breath on London ever getting a ring road, but there are many small improvements that can be made across the city. The people who best know about problem areas in our roads are the people who drive on these roads every day. We need to hear from them.

        As was done with our latest budget process, we need a way for Londoners to easily communicate their suggestions for road improvements. This may involve another App Contest to find the right tool, or is simply a User Voice instance where people can suggest ideas or vote on the ideas of others.