A new report out of Sault Ste. Marie is recommending a complete overhaul of the city’s economic development activities, to be completed within one year, should the report be adopted.
Commissioned by city council last March, the report, prepared by MDB Insight, recommends updating the city’s Economic Development Fund (EDF), suggesting the city needs to have a tighter rein on which projects it’s funding.
A complete review is required, and would be “subject to an accounting audit to determine return on investment.”
“The EDF is a municipally controlled fund, which is administered by city council,” the report says in its executive summary. “Analysis found that the fund requires a deeper level of ownership on the part of the city in terms of managing and deciding on funding recipients.”
The current relationship between the city and the EDC represents a conflict of interest, the report notes, and any future agreement must distance the two entities.
The report also recommends the consolidation of the Sault Ste. Marie Economic Development Corp. and the Sault Ste. Marie Innovation Centre into one organization.
The two parties are arm’s length organizations that receive funding from the city for economic development purposes. The Innovation Centre has focused on the development and incubation of science and technology projects, while the Economic Development Corp. has worked on a broader range of projects.
Consolidating the organizations would streamline “mechanisms of accountability and performance monitoring,” the report says.
“Second, from a user and service perspective, consolidation would present a unified brand and central location for directing stakeholder attention,” the report reads. “This would help ‘declutter’ the existing landscape and reduce confusion over who does what.”
The report also says that consolidation would reduce redundancies between organizations, in addition to the pooling of resources and a reduction in costs.
To facilitate the change, the report suggests setting up a transition committee and manager, and undergoing a corporate strategic planning process to guide the new organization, to establish a vision, mission, goals, objectives, and clear action plans.
With the change, the city would have to establish a new memorandum of understanding between the city and the new organization, which would formalize the relationship.
The report also suggests implementing a funding threshold that would require city council approval before going ahead.
“The threshold, if agreed upon, would serve as a form of insurance that the city is satisfied with the due diligence, reason, and potential outcomes of action and inaction associated with investments that exceed a given amount,” the report reads.
“The mechanism also allows the city to intervene on high expenses that it believes are too risky, if it is not satisfied with the arguments put forward by the new organization.”
A new board of directors will be required to head the organization, and the report suggests looking to centralize office and incubation space to reduce overhead. A full examination of assets and liabilities of the existing organizations is also recommended.
Due diligence is strongly recommended to ensure that the process meets all legal requirements.
The report lays out a timeline of one year to complete all the recommendations, although it is suggested most should be complete within six months.
A Transition Committee and manager should be put in place as soon as possible, the report says. Within six months, the Economic Development Fund should be updated, the EDC and the Innovation Centre should be consolidated, and a board of directors and executive leadership should be in place.
A review of the memorandum of understanding should take fewer than 12 months.
City council will receive the report on Monday, and will be asked to adopt three recommendations: direct staff to return in January with a plan to implement the report’s recommendations; provide notice to the EDC that the city is terminating its memorandum of understanding; and provide notice to the Innovation Centre that the city is terminating its memorandum of understanding.
