November 7, 2005 Report

DELEGATION REQUESTS

4.1 Request to appear before the Committee from:

(a) Joanna Chapman respecting the audit of Mayor Larry DiIanni's campaign finances

(b) Margaret Robertson respecting audit of Mayor Larry DiIanni's campaign contributions

(Note: The above-noted requests to appear were referred to the Committee of the Whole for consideration by the Corporate Administration Committee at its meeting held on Wednesday, November 2, 2005.)

(c) Mark-Alan Whittle respecting the election audit

Transcription:

[ 02:53 ]Mayor Di Ianni (in the chair): "Members of council you have before you delegation requests 4.1, (a) to (c) as noted on the agenda. It's clear that these delegations will be entertained at a special committee of the whole meeting on November the 9th. What is your pleasure with respect to these requests? Councillor Ferguson. All in favour? Er, seconded by councillor Kelly. All in favour of listening to them? That's carried." [ 03:14 ]

Jackson : Item 6.1, the sale of lands to Maple Leaf Foods, has an overview from staff, has delegations that have been listed now - the new ones added today - then has the proponent at the very end. Can I ask you to the Clerk - is this customary or normal that the proponent would be at the end?"

Christenson : "That is correct. In terms of the planning department process, where applicants that are coming where we have public delegations, staff does a presentation, the public then is allowed to come as a delegation and present their side of the issue, and then the applicant responds at the end. And that is the normal practice. If at the end, there's still questions, the staff will have closing remarks on the issue." Jackson says he appreciates the answer and reserves the right at the end to ask more questions of staff, "based on what the proponents may have said".

Agenda and minutes approved.

[ 02:53 ] Mayor Di Ianni (in the chair): "Members of council you have before you delegation requests 4.1, (a) to (c) as noted on the agenda. It's clear that these delegations will be entertained at a special committee of the whole meeting on November the 9th. What is your pleasure with respect to these requests? Councillor Ferguson. All in favour? Er, seconded by councillor Kelly. All in favour of listening to them? That's carried." [ 03:14 ]

6.1 Sale of City Owned Property - 863 Nebo Road to 6323812 Canada Inc. (Maple Leaf Foods Inc.) and Giuseppe DiCienzo and Vittoria DiCienzo. (PED05092/PW05104/FCS05093) (Ward 11)

Mayor DiIanni announces the item and asks "our staff, Tim McCabe, Neil Everson of Planning, and Tony Sergei of Planning, and Neil of course from Economic Development, to provide an overview. And I'll ask that you hold any questions you might have until the three of them have presented. Then we'll entertain questions of our staff, and then move into the presentations."

Tim McCabe : "You have before you today two reports dealing with a recommendation from your staff to approve two offers to purchase industrial lands for industrial purposes in the soon to be fully serviced North Glanbrook Industrial Business Park. One report is a public report, and the second is confidential supplementary report on the terms and conditions of the offer. The second on these terms and conditions, and questions to your staff, will only be done in camera session. I will be first presenting summary comments, putting the recommendations and the decision we are asking you to make today in the prospectus. Neil Everson, the executive director of economic devleopment, will be giving you a presentation on the benefits of the site for industy, the background of Maple Leaf Foods as a company and its locational needs, its proposed plant, labour force, and will conclude with economic analysis. Tony Sergei, the city's manager of development engineering will summarize the infrastructure plans for bringing services to the park to bring on the approximate 680 acres of shovel-ready land needed for employment.

Mr Mayor, we have a signed agreement of purchase and sale from Maple Leaf Foods for 18.63 hectares or 46 acres. Secondly, we have an agreement with Joseph and Vittorio DiCenzo, an abutting landowner, to purchase 2.9 hectares, or 7.4 acres along the Twenty Road frontage. Maple Leaf Foods have also signed an agreement to purchase 42 acres from the neighbour to be added to the city's 46 acres for the proposed Maple Leaf Foods plant. This is a private agreement, Mr Mayor,and we will not be discussing or commenting on this other sale. Maple Leaf's proposal is a 620,000 square foot state of the art pork processing plant. The DiCenzo's are purchasing the city lands for future industrial land uses which are not specified at this time.

Mr Mayor we know that this is a complex, difficult decision for council and it's unfortunate that it has to be. But it's an extremely important decision as well and it's very rare that a city has an opportunity to land such a large employer within its boundaries and receive the benefits and assessment that goes with it.

We support the sale of the land to Maple Leaf Foods and remain confident it will be an excellent use for this new industrial park and its property. The initial employment of the plant, we've been advised, is to be 1200 employees with an excellent potential for the addition of a second shift to double to 2400, a major increase in new jobs for Hamilton . Yes, 80% of Maple Leaf Foods first 1200 employees live in Hamilton , and presently work in the Burlington plant. But let's not be remiss in acknowledging one of the most important of economic development's strategic goals is business retention and job retention. The Stelco rally today at noon is another good example of a city trying to help to save jobs for our residents.

The North Glanbrook Industrial Business Park is within the designated urban boundary in the Regional Official Plan. The 680 acres is already designated as industrial business park in the Glanbrook Official Plan. All of the lands are zoned business park or general industrial, including the residential legal non-conforming uses immediately adjacent to the site on Nebo Road . I will talk more about the planning and the future planning process at the end of my presentation. The subject property is located in the centre of this industrial park, strategically located for industries to gain easy access to the Red Hill Expressway, the QEW, the Linc and the 403, particularly with the extension of Dartnall Road when it's completed.

Dealing with the issues raised to date with Maple Leaf Foods will be thoroughly examined and reported on as part of the future planning process which is not commenced yet. We have no rezoning application, and when and if this is received, the public consultation will be comprehensive, will be transparent and will take whatever time is necessary to make sure it's done right, and people's views are heard and understood. The report before you today pertains to Maple Leaf Foods and the DiCenzo's as purchasers. It is a real estate deal and a real estate business decision that is before you today.

The 55 acres being proposed to be sold to Maple Leaf Foods and the DiCenzos is the only and the last land the city owns in this industrial park. Examples of the questions you should satisfy yourself with today in making this decision on the real estate matter, include do we want to sell the land? Is it surplus to our needs? Is the selling price appropriate? Are we satisfied with the terms of the agreement? Do we feel the timing and conditions related to closing are appropriate? Are we satisfied with the terms related to timing of construction to prevent speculation? Are both the city's and purchasers' responsibilities fair and reasonable? These will be discussed in our in camera session today. The real estate deal is business, and we must continue to be open for business. This major employment park can be seen for our business growth, and growth for retaining our companies and for allowing their expansion and growth for new business attractions is important.

I would ask you to consider in your decision today how will this real estate transaction benefit us, such as creating job opportunities for our less educated and lower-skilled populations in our community we so desperately need. Such as for a major influx of non-residential tax assessment so we can more equitably address the split of taxes between residential and non-residential, and with this increased assessment so we can address our aging infrastructure needs and our social service needs.

The planning process, again Mr Mayor, has not started. It cannot start until council agrees to the real estate deal. It is the planning process that will provide the planned extensive liaison with our resident and community groups, the informal and formal public meetings, the rigorous review of traffic impact studies, wind odour studies, site plan design. Maple Leaf Foods has already committed to . outreach newsletters, speaking engagements, open houses, website and telephone hotline. This is where staff and council will put our minds to questions such as: is this an acceptable land use? What are the traffic impacts and how have these been addressed? What are the odour impacts? How will these be addressed? Can they be addressed? What Ministry of the Environment certificates will be required, and how will the city involve the Ministry of the Environment and city peer review consulants in the review of environmental impact matters? What special zoning regulations can the city include in any bylaw amendments, too, for example, require changes in Maple Leaf Foods operations to even further reduce odours, such as site plan design, the indoor location of trucks unloading the hogs, regulating and prohibiting animals wastes and rendering uses - the types of uses that are historically and have historically been created have created odour problems at the Rothsay location.

Staff do not have answers, Mr Mayor, or a position on the merits of the future application yet. Again the planning process has not begun. We commit to working with the affected ward councillors and mapping out a comprehensive community process, a complete and thorough public process. Again, not to be rushed through any formal meeting of council until the appropriate time. Today we need committee to make a decision on the real estate deal and would refer you to recommendations C on page two of the report, which stresses that this is a conditional decision and that council, any council's agreement on the sale does not in any way commit council or indicate any pre-approval or support by council for the required rezoning, as this rezoning is a separate process under the Planning Act.

Mr Mayor I'd like to turn it over to Neil Everson right now to have presentations with respect to economic development."

DiIanni : "Thanks very much. Neil?"

Everson : [slide presentation] ".These are the areas that both myself and Mr Sergei the manager of engineering development will be presenting today. I will cover the first the first two items on the background, economic analysis and Mr Sergei will conclude with the North Glanbrook Business Park servicing plan and related issues. Now I'll move quickly through this next session because, as discussed, the representatives of Maple Leaf Foods will address in much more detail.

Maple Leaf Foods is a global food processing company employing 23,000 people in Canada , the US , Europe and Asia . They are a publicly traded company with a very strong growth From less than $4 billion in sales in 2000 - and I know you can't read the end of it, but that's $6.4 billion in sales recorded last year in 2004. Maple Leaf currently has two existing operations in the City of Hamilton employing 450 people. And the point I'd like to make here is that if you combine that 450 with the proposed and suggested 2400 jobs that would result in Maple Leaf Foods employing in Hamilton more than 10% of their total global workforce. And that's a significant number.

Here as you can see there's three different product groups under Maple Leaf Foods and we will be dealing today with the meat products group. Some of their leading brands you can see there on the last portion of this slide.

Just some background on the plant location work itself. In March 2004 the initial contact was made with economic development. This was only preliminary site location work and it was conducted by Maple Leaf Foods. This is a high level search, and city staff identified both brownfield and greenfield sites as potential locations for this operation. In September 2004 Maple Leaf contacted the mayor's office and they indicated that they had identified Hamilton as the preferred location for the pork processing facility. Your worship, as you are aware, you implemented the Invest in Hamilton Team to secure this investment and gave this project top priority.

In our September meeting with Maple Leaf, these points were confirmed as the site requirements for the proposed pork processing facilty. And let's take a look at them. We're looking for the availability of up to 100 acres. The property had to be within the urban boundary and zoned industrial. There had to be the availability of or the access to . municipal services and other utilities. Other utilities being things like hydro, telephone, fibre optic infrastructure. One of the most key factors was the proximity to major transportation corridors. And that was for the three primary reasons. One for the supply of raw materials. Two for the shipment of finished product. And three for accessibility for their labour force.

One of their other key factors was access to public transit. And this is, as Mr McCabe mentioned, with regards to staff retention. Public transit is a very affordable means to this income level in order to commute to work, but it also has significant benefits to the municipality. Whereas if we consider the location of the plant, where buses in the morning are traditionally running down full and going back empty, and the converse is true in the afternoons, these buses will in fact be going up in the morning filled with Maple Leaf employees and coming down full in the afternoon.

Now here if I can show you is an aerial of the North Glanbrook Industrial Park . [17:30] And again going back to their requirements for proximity to a transportation corridor, you can see there's the Linc expressway, the 403, there's the proposed North Glanbrook Industrial Park in that location, and here you can see what will be completed in 2007 the Red Hill Creek Parkway and access to the Queen Elizabeth there. Here is an aerial, more detailed, of the North Glanbrook Industrial Business Park, and you can up here is highway 53 or Rymal Road .

If you recall another key criteria was the availability of 100 acres and the location within an industrial park that is zoned and resides within the urban boundary. North Glanbrook Industrial Park in fact does meet all three of those criteria.

What we've done here on this slide for your information is we've identified the number of properties surrounding the proposed location, which is highlighted in red. And what we did is that these properties include everything from the residential lot to a commercial business, to a large multi-acre farm. And as you can see we did them in concentric rings from a half kilometre, extending out to four kilometres and you can see the total properties in top right hand corner. So for the first half kilometre, 84 properties. Within one kilometre 181 properties, and within two kilometres 1,532 properties. [The 3 km figure on the slide was 3954].

Just one point in regards to economic strategy. One of the major deliverables in our revised and approved economic strategy is to attract food processing industries to the city and to capitalize on our over $1 billion a year agricultural process. Now food processing is identified as a key economic cluster for three reasons. One, it builds on Agricultural Hamilton's one billion dollar agricultural cluster. Second, its our strategic geographical location of the city in comparison to southern Ontario and with access to . routes to the US . And three, our multi-modal transportation ability. That's road, rail, air and water.

So let's look at these points in terms of our strategy. I've identified that food processing has been identified in our economic development strategy, and locating Maple Leaf Foods is consistent with and conforms to that strategy. In fact in 1991 the Region of Hamilton-Wentworth commissioned a business study for a food processing business park, and North Glanbrook Industrial Business park was identified by KPMG as a location.

Number three I've talked about the 450 currently operating, working in this sector and within the municipality of Hamilton . The fourth point - recession proof industry - let me make this perfectly clear, no industry is recession proof but meat processing perhaps is as close as it comes. It is less impacted by the globalization of the economy, especially as compared to other manufactured products that have migrated to low cost production countries. In terms of export and diversified markets, the point I'm trying to make here is that manufacturing contributes and creates jobs in a community. Exporting the product generates much needed foreign exchange and . supplying a domestic market eliminates any imports of foreign-made products. Lastly in terms of manufacturing processes are the spinoff benefits. It is a fact that manufacturing processes do create more spinoff opportunities than does retail, commercial or service sector. [ 21:24 ]

What I represent this afternoon, Mr Mayor through the staff, council and the audience, are only those economic benefits that can be accurately measured. This is not a comprehensive economic analysis that includes multipliers and spinoff benefits that pass down throughout the local economy. What I want to do today is remain consistent with our economic development as always reported results, and that is with numbers than can be physically verified. And let me emphasize that this is the most accurate analysis possible, based on the information we received, and the assumptions we made.

So these are the assumptions regarding the potential plant location. And I'm taking this - and when you see my numbers - this is the maximum benefit we can receive as a municipality from this current location. So the assumption is made that the plant will be fully built-out to 620,000 square feet, and it will be assessed at a value of $60 million. That's a conservative figure and that number was determined in concert with our corporate services department and MPAC, the Municipal Property Assessment Corporation. The second point is that there would be 100,000 square feet spinoff benefits, spinoff businesses located, and we estimate the cost of the construction to be $75 per square foot. The water consumption, again with this plant fully operational and operating with multiple shifts, will be 9,091 cubic metres, or two million gallons per day, and again that's for the operation. And the payroll, the assumption here is that the average wage rate including benefits is $18 per hour, and I'm making the assumption again for maximization of . 2400 employees.

Now let's take a look at the economic analysis. The building permit costs we estimate to be $536,000. The development charges - and this is calculated at today's rates. We do not know what the development charges would be by the time building permits are issued on this plant, but we're using a conservative figure here of $1,012,500. So you're looking at an immediate impact of $1.5 million, and this does not include the proceeds from the land sale which will be discussed in council in camera later this afternoon. In terms of long terms benefits to the municipality, and these are annually occurring. And again let me reiterate this is when the plant is fully built out. Municipal taxes would be approximately $3,780,000 per year. $2.5 million of that would be direct to the city. $1.2 million would come in terms of education [paid to the province]. And municipal taxes of the 100,000 square feet of spinoff activity would be approximately $442,000. And the estimated combined water and sewer revenues would be roughly $4,864,501, for a total annual impact to the community of $9,086,501 per annum. In terms of community benefits, and again I'm using a conservative figure here, there's 620,000 square feet estimated at $150 per square foot of construction would be approximately $100 million. Add to that the $7.5 million construction value of spinoff companies, and we're looking at immediate community benefit of $107,500,000. And this is the present value. Construction, obviously we would see obviously related with building trades and new construction. In terms of long term community benefits, again I'm using that maximum number of jobs when its operating with multiple shifts, would be 2400 dollars [jobs?] and the wage rate I've described to you of $18, the estimated payroll for Maple Leaf Foods would be approximately $89 million a year. Now this is a very significant number because if we were scoping this out and we were conducting a thorough economic analysis, payroll is one of the economic benefits that really is directly injected into the local economy. It is really, if you are looking at impact in terms of dollars in the community, payroll is, because in most cases that's where the majority of the residents reside.

Mr Mayor there are a number of other benefits to the plant, obviously for an investment of this magnitude. Here are a few that I wanted to point out. And again the first one is something that Mr McCabe alluded to, and this is the retention of current employment for Hamilton residents. The concern is if this proposed facility locates to another municipality, then we will see one of three things happen. That we'll continue to see the out-commuting of local labour or employment opportunities outside the boundaries of this municipality. Second, we'll see the relocation, we could possibly see the relocation of residents to the other community where this plant establishes. Or three, worst case scenario, we could see loss of these 900 jobs of current Hamiltonians.

The second point, a Fortune 500 anchor tenant for North Glanbrook industrial park. The point I want to make here is that it is very difficult to locate industry in a place where there are no recognizable companies. And let me quote you the example of the Ancaster industrial park which opened in the early eighties. It took us 20 years for us to sell property in that park, but in 2003 Stackpole located two automotive parts manufacturers - the precision metals component part and the . products plant. As soon as that announcement of the plant was made, we sold out the remainder of the land in phase three, phase four and the 65 acre private parcel adjacent to Tradewinds Drive was sold out - all within a year.

In terms of spinoff companies and new businesses and local suppliers, I believe I've made this point. Manufacturing does generate significant business, and especially in terms of local suppliers and utilities services that would benefit from this plant's location.

My last slide is very self explanatory, and again, I'm using a number once fully operational. [The slide listed companies which had closed or reduced employment to a total of 1600 lost jobs - Rheem 150, Camco 900, Levi 400 and Tiercon 150]. If you look at a projected total jobs of 2400, less the 900 residents currently working at that plant, there's a potential here for 1500 new jobs. Based on what we're losing, and what we have lost in the last 12-18 months, you can see that it's almost a wash in terms of total numbers. And again, let me perfectly clear with council and the audience. Although those jobs may not be at the same wage rate or skill levels, it is still very important that the city secure full-time manufacturing employment during a period of what we're seeing as major globalization of production affecting every city in North America . Mr Mayor at this time I'd like to turn it over to Tony Sergi for discussion of the servicing plan." [28:36]

DiIanni : "Tony? At the end of Tony's presentation we'll take questions, councillor."

Sergi : [slides continue] ".the geographical area that we're referring to is the North Glanbrook industrial park in this area here, and there's significant corridors that have been established over the last 30 years to provide servicing. One is the Nebo Road corridor. One is the future Dartnall Road corridor, and transportation issues associated with Trinity Church Road extension will be eventually connecting to the Red Hill Creek Expressway. Significant engineering analsyis has been completed to look at this geographical area. We have determined, and tried to determine, the best approach to provide the required infrastructure for both the proposed site and the entire park. We're looking at optimizing the usefulness of the proponent's infrastructure. We want to get to the point where we are not phasing works to the extent that we will have impacts on throwaway costs. By this I mean, we will look at establishing the road profile, such that when demand is needed, extensions will be added on to them to increase their width. Value engineering is a very major part of this entire analysis. Currently, the city has various studies underway. We have the master transportation plan study, the Hannon Creek subwatershed study, and the secondary plan review, city-wide water and wastewater, and the city-wide master transportation plan. All these studies are in advanced stages. We're attempting to get most of the conclusions out to the public in the very near future for public input. The water wastewater plan has been out there already, along with some of the transportation. The Glanbrook industrial park . transportation study provide for corridors for Rymal Road and the various other road networks that will be required, is at the point where we'll be meeting in December with the options and alternatives. The servicing for the industrial park will be a multi-year project. Phasing will be proceeding in accordance with the master plan and the studies. However, various other projects have begun planning or are underway - areas such as Nebo Road . Road profiles have been established. Sanitary trunk sewer elevation has been established. The catchment area has been established along with detailed water analysis of the demands of the business park. The exact timing of the industrial park will be subject to the various studies being completed. And property acquisition is one of the main issues that we'll be dealing with, along with the cooperation of the landowners and the developers. They will drive the process, as is in everything. We need to ensure that we're all on the same page, and that we're moving in a very proactive way. The park itself has some very unique areas and that is part of the subwatershed master plan to ensure that we protect the open water courses that may be in the area. And that's why we're doing them in conjunction with the transportation study, to ensure that the areas that are identified as being required for stormwater management, such as ponds or channelization, they be identified early so that the comprehensive designs are integrated into each other. And so that there is no roadblocks in the future. That's pretty well it." [33:05]

Jackson asks about number of workers actually, and whether second shifts exist in Brandon or Burlington . Notes no public transit to this area. Mary Lou Tanner says it will be extended to this site. Asks about support from various departments, and how they support it. Rob Hall : "I think the more appropriate wording would be we have no objections. The issue is not one of whether or not we have information to support it. We just don't have that information because it's not that time in the process of planning to gather that information." Jackson : "I'm just reading from the staff report here that says all divisions and senior staff that are listed here - public health is one of them - are supportive of the recommendations listed in this report." Jackson then asks about support of public works. Tanner responds but only in general terms - says lands are in industrial business park and urban boundary and they have obligation to service them in a fiscally and environmentally responsible fashion. Jackson : "Okay, that sounds like a nice theoretical response, Mary Lou." Also questions $18 wage rate. Everson says he selected it and "bounced it off Maple Leaf and they weren't in disagreement". Everson got this from Ontario figures for the industry "but this number has been bounced off and confirmed by Maple Leaf that it would be in this range." Jackson asks Everson to identify existing Maple Leaf operations in Hamilton . Everson says he doesn't know but Maple Leaf representative will. Jackson "Staff said there's 450 employees at three operations and I just thought they would know where those three operations, or what they are."

Bratina questions use of 2400 workers figure. "What is it that we are going to get." "We need to know what we're voting to approve, not what eventually may come along." Also asks how come employees double if you add second shift - managers, support staff, etc. Everson can't answer it. Collins asks if staff have calculated tax losses because of reduced residential property values near the plant. Everson says they haven't. "We don't have that information available for council at this time." Bruckler asks what kind of spinoff businesses. Everson says ask Maple Leaf then guesses at some. "I'm not as familiar with the industry as they are". McHattie asks about "analysis that's gone into this". No mention of environmental benefits - what form of analysis was done. How was triple bottom line applied. No response from senior staff. Glen Peace : "The intent, certainly in my mind, of triple bottom line is on a more global sense, not on every specific project." McCabe agrees with Peace. Notes social benefits of job retention and not losing these jobs. "We have not looked at the environmental benefits, councillor McHattie, until we know the details of the impact as part of the planning process." McHattie asks "were any of the disbenefits looked at as well. I don't see much negative in this report and it reminds me, I hate to say, of the aerotropolis report where it was very positive and there was really no negative benefits or disbenefits identified. Is there a reason why there is no discussion of the disbenefits in this report?" McCabe says this is a real estate deal and "with this type of company, with this type of jobs, with the terms and conditions that we feel are fair and reasonable, it's all positive, so we don't see any downsides." McHattie asks about 10% of workforce claim by Everson. McHattie asks about other impacts of developments such as additional hog farms in the area. Will the rendering plant expand? DiIanni says answers not available at this time. McHattie asks if city sells the land and then doesn't proceed what's the likelihood of Maple Leaf going to OMB. DiIanni says staff will provide answer in camera. . Samson : "Is there a study on file, because this is what I was told, that once the park is serviced in a year to a year and a half it will be completely sold out with or without Maple Leaf? This study was obviously done prior to Maple Leaf coming on the scene. Is that an accurate statement?" Everson says he's not aware of the study. DiIanni intervenes: "Is that the Hemson study that we did for the Red Hill Expressway that talked about the economic impact of the expressway. I don't think it had any timelines.." Samson confirms that is the study. Samson asks if assessment is going to be $60 million, "what is it currently in Burlington ?" Everson : "I don't have that information. Maple Leaf will." Samson: "With all due respect, your worship, I would think if we are going to be projecting out, the least that we could have is an assessment of what it is where they are presently . it just seems to me that's fundamental." Goes to Rinaldo who says "I don't have the information but we could readily get it. If you want I can have it before the end of the meeting. But again what I want to emphasize is that the value of the Burlington plant would be entirely different than the value of a brand new plant.." .. Morelli asks for breakdown of wage rates. Told to ask Maple Leaf. .