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Survey shows Comox Valley’s economic development model the outlier on Vancouver Island

Oct 16, 2019 | CVEDS, Latest Feature

By George Le Masurier

Among Vancouver Island communities, only the Comox Valley continues to use a 1980s model for delivering economic development and destination marketing; an organizational structure that other municipalities and regions have abandoned.

And that model may be at the root of local dissatisfaction with the Comox Valley Economic Development Society.

Businesses and organizations representing multiple sectors of the community have expressed a variety of concerns and skepticism about CVEDS. Those concerns appear to stem in part from the lack of accountability built into its structure, which a 2014 performance review suggested could incubate an operational philosophy that leads to low levels of trust and credibility.

This is not an uncommon problem for governments with arms-length organizations governed by boards that have no direct public accountability. It is one reason why, in recent years, Nanaimo and Campbell River have folded economic development commissions with models similar to CVEDS.

Voting in 2017 to disband Rivercorp, Campbell River’s equivalent to CVEDS, Councillor Charlie Cornfield said it was time “to turn the page.”

“As disappointed as I am to see the model that myself and council had supported and encouraged — it didn’t work the way we had intended,” Cornfield told a Campbell River newspaper at the time.

Other communities clearly agree. A Decafnation survey of Vancouver Island and nearby coastal regions found that only the Comox Valley still operates an arms-length economic development function.

Municipal staff handle economic development in Powell River, Campbell River, Parksville and Qualicum, Port Alberni, Nanaimo and Cumberland.

Even the Cowichan Valley Regional District handles economic development “in-house” for a large geographic area that includes several different jurisdictions, including Duncan, Chemanius, North Cowichan and Ladysmith.

The Comox Valley is also the only community to still combine economic development with visitor center management and destination marketing. Other municipalities have either contracted out tourism marketing or rely on community member-based organizations, such as Chambers of Commerce.

“Combining economic development and tourism? Nobody saw that as a good model,” Nanaimo Mayor Leonard Krog told Decafnation.

Symptomatic of CVEDS problems, the Village of Cumberland, Denman Island and Hornby Island have all withdrawn from the regional economic development function. And there is speculation that one or two electoral areas are considering the value of their continued participation in advance of next year’s first quarter contract negotiations.

CVEDS’ five-year contract with the Comox Valley Regional District expires on March 31, 2020.

“If people are dropping out of something that indicates poor leadership or a structure that isn’t going to succeed,” Krog said.

 

Case study: Nanaimo

Prior to 2011, the City of Nanaimo handled economic development in-house with designated municipal staff. Eight years ago, then mayor John Ruttan spearheaded formation of the Nanaimo Economic Development Corporation, an arms-length entity similar to CVEDS that also had tourism marketing responsibilities.

But just five years later, new mayor Bill McKay and council pulled destination marketing responsibilities from the NEDC. That triggered a public rant by then EDC executive John Hankins for which he was fired from his $130,000 a year job.

McKay and Nanaimo Council then decided in December 2016 to take economic development back in-house and fold the corporation.

Now, the city has taken the first steps toward creating a new hybrid model for economic development that new Mayor Leonard Krog believes will enhance Nanaimo’s prosperity through the ups and downs of the economic cycle.

“There’s no question our city in-house staff needs some capacity,” Krog told Decafnation. “”Nanaimo is in a unique position as a port city, with a university and a regional hospital, and our location — there’s more population north of the Malahat than south of it — so economic development warrants more investment.”

In August, Nanaimo City Council endorsed the recommendations of a report by Neilson Strategies to create a hybrid model with many of the organizational details being determined by a broad-based community task force.

If it’s ultimately adopted, the new Nanaimo structure would expand the existing in-house economic development department, with this initial scope of services:

  • develop the city’s economic development strategy
  •  produce related economic reports
  • assist businesses in navigating city departments and provide information
  • manage the city’s contract with Tourism Vancouver Island for destination marketing, and any other related contracts with external agencies
  • provide input to city departments to facilitate economic activity

The new plan would also create a new arms-length Nanaimo Prosperity Agency, whose initial scope would include:

  • implementation of the economic development strategy
  • coordinate with organizations with a stake in economic development
  • develop a Nanaimo brand and attract new businesses

The city is also creating a temporary Economic Development Task Force drawn from community leaders that will investigate and review ownership, funding, governance and staffing options for the Nanaimo Prosperity Agency and recommend a final operating model to the City Council.

The task force will also play a role with in-house staff in developing the economic development strategy, including hiring the consulting firm to complete the strategy and endorsing the final draft for council adoption.

The city has already signed a contract with Tourism Vancouver Island for destination marketing services valued at about $650,000 in the first year.

 

Case study: Campbell River

Prior to 2017, the City of Campbell River funded an arms-length corporation governed by an independent board of directors, called Rivercorp, to provide economic development services. Similar to the Comox Valley Economic Development Society, Rivercorp handled destination marketing and managed a visitor’s centre in addition to its economic activities.

But by April of 2011, Rivercorp was being widely criticized for a lack of measurable results. Public dissatisfaction had started to manifest itself at city council meetings, according to a report in a Campbell River newspaper.

Former councillor Ziggy Stewart said simply that Rivercorp wasn’t doing its job.

“I’ve been involved with Rivercorp for the last five budgets now, and just strictly from a business decision, the return on investment hasn’t been there,” Stewart said.

Former councillor Mary Storry said the community had lost faith in the organization.

“At this point we’re looking for performance and we haven’t seen the performance,” Storry said.

Then, at an all-candidates meeting during the 2014 municipal elections, both the outgoing mayor Walter Jakeway and Mayor-elect Andy Adams said Rivercorp wasn’t delivering enough economic growth. That sounded the death warrant for Rivercrop.

According to a news report, Jakeway called Rivercrop a “disaster” and said the “entire thing needed to be gotten rid of.”

Rose Klukas

So it wasn’t a surprise when Rivercorp’s chief executive, Vic Goodman, resigned after the 2014 elections. And it shocked no one in April of 2015 when Mayor Andy Adams and City Council announced their intention to fold Rivercrop and take economic development in-house.

“A thorough re-evaluation, in collaboration with the Rivercrop board, has helped us conclude that the best way forward is to bring the economic development role into city operations,” Adams said. “We are confident that combining the economic development function with community development work done in other city departments will result in a more efficient and coordinated effort.”

Campbell River hired Economic Development Officer Rose Klukas in May of 2016 to report directly to City Manager Deborah Sargent. Klukas previously held the same position in Kitimat.

Adams told Decafnation this week that Klukas’ office is next to his and Sargent’s as a visible indication of the importance placed on economic development.

“Prospective investors have access to the mayor and city manager,” he said. “Those connections create synergies and opportunities.”

Campbell River also separated out responsibilities for destination marketing and visitor centre management.

Campbell River Council hired the consulting firm, Chemistry Consulting, to study how other communities dealt with tourism and destination marketing. They found that Tourism Vancouver Island handles these roles for many Island communities.

But the city chose an unlikely company, Destination Think. It’s a global company with offices in places like Amsterdam and the Australian Gold Coast and works for big municipal Canadian clients like Banff Lake Louise, Calgary, Montreal and Stratford.

Destination Think also works with smaller BC communities such as Vernon, Langley and Richmond.

“We took a chance on them and it’s the best decision we ever made,” Adams said. “We’re tapped into their worldwide reach.”

The arrangement with Destination Think included the creation of Destination Campbell River to implement a five-year tourism plan, which was developed over six months with community consultation.

The city hired Kirsten Soder to head that effort with an assistant and seasonal staff to operate the Campbell River visitor’s centre. Soder was previously the executive director of Tourism Tofino.

An independent long-time organization, the Campbell River Tourism Promotion Society, agreed this year to wind down its operations and join forces with Destination Campbell River. Now all online enquiries get directed to a single website maintained by the city.

Campbell River contributes $250,000 annually from city coffers and the Destination CR group receives close to another $500,000 from the city’s hotel tax, officially known as the Municipal Regional and District tax. Destination Think leverages that up with provincial grants.

Mayor Adams told Decafnation that the city has finally aligned all its economic and tourism efforts and they’re pulling in the same direction. And there’s a financial bonus, too.

“The realignment is costing us less or at least the same as before,” he said. “And with the MRDT money we’re able to do even more.”

 

Case study: Cowichan Valley Regional District

Skeptics of taking Comox Valley economic development in-house have often cited the difficulty of satisfying all the staff and elected officials from three separate municipalities, a regional district and three electoral areas.

But the Cowichan Valley has done it for years.

The Cowichan Valley has always managed its economic development activities through an in-house regional district function, according to Barry O’Riordan, manager of Economic Development Cowichan.

And since 2016, the economic development office no longer handles any tourism or destination marketing responsibilities.

“In 2016, the Cowichan Valley Regional District contracted Tourism Cowichan Society to deliver the regional tourism services. The regional tourism requisition mandated by a CVRD bylaw is $120,000 and this is used to leverage additional support from Destination BC,” O’Riordan told Decafnation this week. “Additionally, Tourism Cowichan Society receives MRDT funds that flow through the CVRD and industry contributions in the form of membership dues to form their overall budget.”

Prior to 2016, regional tourism services were delivered through the EDC office, but that was found to be an inefficient model.

Cowichan regional visitor centres are now managed by the Chambers of Commerce in Duncan, Chemainus, Ladysmith and Lake Cowichan.

 

Case Study: Cumberland

As Decafnation has previously reported, the Village of Cumberland announced it would withdraw from Comox Valley Regional District’s economic development function during the summer of 2015.

Participation became an issue during the 2014 municipal elections when all candidates seeking Village Council positions supported a withdrawal.

The Village had taken part in the 2014 performance review of CVEDS by Urbanics Consultants and candidates said the resulting report and recommendations reinforced the community’s perspective that the service was unsatisfactory and was not serving the best interests of Cumberland.

Other Comox Valley elected officials opposed Cumberland’s withdrawal, and the village has been penalized for withdrawing after the CVRD awarded CVEDS with a five-year contract in March of 2015. It has paid about $40,000 per year to the service for the past three years to complete its financial obligation.

In 2018, the village hired Kaelin Chambers as its first economic development coordinator to implement a Cumberland-specific strategy. One of his top priorities is to attract new businesses to the Bevan Industrial Lands, which comprise roughly 84 percent of all available commercial property in the Comox Valley.

Because it currently has a small commercial base, the Village’s finances rely primarily on property taxes from the community’s 3,500 residents.

Chambers has already had success. He reported this month that Tree Island Yogurt plans to purchase 15 acres along Bevan Road from Comox Timber Limited to construct a 28,000-square-foot production facility. It will be about four times larger than the companies current facility in Royston.

 

What’s next

The CVEDS board must present its proposed five-year strategic plan to CVRD directors by Oct. 31. And a review of CVEDS contract fulfillment by consultants Explore Solutions is due by Dec. 31.

Nine of the 10 CVRD directors — Cumberland won’t have a vote — will then use those two documents to deliberate the future of economic development and tourism marketing in the Comox Valley. 

 

 

 

 

 

 

 

 

 

THE CVEDS CONTRACT RENEWAL PROCESS

The five-year agreement with CVEDS differs from other CVRD contracts for services. Because the regional district created the nonprofit society through Bylaw 345, the agreement for economic development services is not open to competitive bids. There is no Request for Proposal issued and the CVRD does not consider proposals from any other individuals or companies.

On June 1, the CVRD provided a letter to CVEDS that it would enter into negotiations for a potential five-year renewal of the contract after it receives the society’s new strategic plan on Oct. 31 and following an independent contract performance review due by Dec. 31.

However, the letter did not commit the CVRD to a new agreement, according to Scott Smith, the regional district’s general manager of planning and development services branch.

But Smith also confirmed that the CVRD has no Plan B. There is no parallel process underway to investigate alternate models of providing economic development services should negotiations with CVEDS not result in a renewed contract.

 

QUOTES FROM URBANIC CONSULTANTS 2014 REVIEW

“We feel that there will always be a certain level of scepticism surrounding the value of CVEDS activities unless it can produce the metrics that taxpayers want.”

“We feel that an organization such as CVEDS (or any economic development organization) does require a certain level of social license in order to effectively carry out its job  … the unique political landscape of Comox Valley warrants an effort to earn, build and maintain social license within the community.”

“The majority of the criticism we have obseved has centered on a lack of communication and transparency.”

 

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