Vancouver Economic Development Commission

City Hall – Business Leader Quarterly Dialogue

December 8, 2009 7:30 – 9:30am

City Square Boardroom

VEDC CEO Phil Heard opened the meeting at 7:45 a.m. and welcomed the attendees. Representing City Hall were Mayor Gregor Robertson, Councillors Suzanne Anton, Heather Deal, Geoff Meggs, and Ellen Woodsworth, City Manager Penny Ballem, Senior Cultural Planner Jacqueline Gijssen, Mayor’s Chief of Staff Michael Magee, General Manager of Community Services David McLellan, Acting Director of the Office of Cultural Service Rich Newirth, Consultant Linda Oglov. Dean Prelazzi attended on behalf of the BC Innovation Council.

Representing the private sector were Amir Alibhai of the Alliance for Arts & Culture, Ron Bagan of Colliers International,  Ron Burnett of Emily Carr University of Art & Design, Matthew Carter of Great Northern Way Campus, Elvy del Bianco of VanCity, Glenn Entis of VanEdge Capital, Warren Franklin of Rainmaker Entertainment, Cheryl Geisler of SFU School of Contemporary Arts, Michael Heeney of Bing Thom Architects, Maureen Kirkbride of TELUS, Ken Peacock of the Business Council of British Columbia, Liz Shorten of the Canadian Film & Television Producers’ Association, and Andy Yan of BTAWorks.

Vancouver’s Creative Advantage

In her opening remarks, Councillor Heather Deal noted that creativity contributes to the economy in a number of ways. Cities are ever-increasing drivers of the economy, and culture is what keeps crowded places livable. Creativity is also more than just culture: it is finding new solutions to challenges, and building resilience into the economy.

She further noted that the cost of land in Vancouver presents a major challenge for artists, and in the institutional and commercial sector the challenge is finding the space for expansions and arrivals. The city controls many of the levers that affect these areas, in the form of zoning, bylaws and business licenses. In areas where senior governments hold the levers, a common strategy and voice for advocacy is necessary. Also important is the need to champion our successes here and internationally.

She described work underway at the City. The review of cultural spaces, while highly technical, has the potential to be transformative for the city in enabling new activity. Individuals are now able to apply for grants. Vancouver City Council has maintained critical arts funding in its entirety during a time of significant budgetary pressure.

Ron Burnett discussed the unpredictable but highly productive nature of creativity and innovation. Human resources can’t be manufactured as if they were goods. Some of Emily Carr’s major recent successes include its partnership with Kerner on a 3D Studio, the first NSERC grant awarded to a creative institution, and an Ipsos Reid survey of students that found that between 85 and 90% of ECUAD students find employment upon graduation, and that 17%  create companies. The flipside to this success is that 12 to 15 students apply for every available space, indicating that the school needs to increase its capacity. Other ECUAD partnerships show the possibilities that institutional and design linkages hold for the city. An MOU with Children’s Hospital aims to find design solutions to improve patient experiences: good design can translate knowledge (such as directions or safety protocols) with less stress to the user. The Great Northern Way Campus holds major promise as the center of inter-university collaboration, and as an anchor of an emerging cultural precinct. GNWC and False Creek Flats will test the City’s creativity to find ways to enable new ventures.

Cheryl Geisler discussed some of the recent developments at SFU. In addition to a partnership with Boeing, the new Centre of Excellence in Animation announced for GNWC, and the “adoption” of the Master’s in Digital Media program, SFU is looking at offering a Master’s in creative economy administration. Woodward’s aims to have a major positive impact on the Downtown Eastside, and initiatives are underway to provide training in video and digital media, and other forms of education to the surrounding area. Partnerships to boost economic activity in the area have been implemented with local restaurants and retailers.

Glenn Entis noted that current stress and layoffs in the gaming industry are in part due to an industry shift from packaged goods to digital downloads. There is currently major momentum behind the visual effects industry. SIGGRAPH 2011 will be a major event that combines an academic and research program, an industry and trade show, and creative events. The local SIGGRAPH chapter is a great place to engage with the graphics community. Making Vancouver a “creative city” will require some of what Turin has done to exude a sense of design throughout all its activities, even if it is only skin deep. Glenn illustrated Vancouver’s challenge with “a tale of two cities”: whereas Peter Jackson and WETA have made New Zealand’s South Island a major centre of new media and digital media, EA Burnaby is the home of the most profitable video game property ever, Need for Speed, but the management and creative control over the property reside in Stockholm and London. The long-term goal of Vancouver as a creative city is to become the home of creators and owners of intellectual property.

Amir Alibhai noted that Vancouver’s culture industry is committed to finding solutions to many local problems, and has strong community connections. Cuts in provincial funding has created a potential double hit through a crisis of confidence in the private sector, with private sector expectations that their funding is used for new investments in high-profile infrastructure and projects, not “keeping the lights on”. Many artists are looking at leaving for Toronto or Quebec, which creates further long-term problems for succession planning. The upside is that the arts community is coming together. It is also recognizing the changes underway in the way that art is made and consumed.

Elvy del Bianco described VanCity’s recent initiatives, including the recent Social Finance initiative that is expected to become 50% of the credit union’s future business. Part of this entails a shift in a philanthropic model of granting towards capacity-building that gives organizations resources and financial skills to build strong businesses. Many SMEs are hitting a financial wall and require patient capital that will help them grow. A positive trend is the move from an atomized sector towards collaborations and co-ops that leverage each others’ strengths, such as the 901 Main Street cooperative that has found a new space and maintained community, or the HIVE dance cooperative that has shared rehearsal space and administrative capacity.

Warren Franklin described the situation in the film sector, where tax credit inequity is drawing projects to other jurisdictions. If the live action part of the industry migrates, there is a significant loss of expertise. Despite this, strong infrastructure exists here, and digital infrastructure is at a tipping point. The potential for campus settings for firms is a strong attractor, and some SMEs are working on combining their resources to obtain technologies that make them competitive with much larger firms.

Matthew Carter detailed the plans for GNWC, including a new business plan that aims to develop the site and create a welcoming environment for creative industries. Co-location with educational institutions is a major asset, and efforts to build community in creative clusters have a catalyst in the Master’s of Digital Media program.

Liz Shorten described the efforts of the city’s screen-based entrepreneurs to build the local industry from a service base for external businesses to a cluster of strong businesses developing their own projects and properties. Existing financing relationships are largely outside of BC, but leverage about $150M in federal money, up to $200M in provincial funds, and much more in private sector finance. While credits were designed as a mechanism to capitalize firms, they have become an operational incentive, so alternate means are being explored to address current challenges in capitalizing firms.

Dean Prelazzi of BCIC noted that his organization has the mandate of stimulating entrepreneurship, and works in tandem with universities to incubate emerging ventures and build strong businesses in the sector.

Jacqueline Gijssen described the Cultural Facilities Plan, which aims to create space that is affordable and sustainable. Much of the focus so far has been on presentation spaces, but creation space is also vital to the sector. The plan has focused on non-profits, but building collaboration with industry is also critical.

Discussion

While tax credits in BC are still generous, the Province’s lack of response to competitive incentives concerns the industry. BC has the lowest levels of public and private funding for the arts, though the City of Vancouver has a very high level of arts support. Many large businesses invest under strict conditions that can be at odds with the creative process. In San Francisco, the private sector has created a thriving arts community, in spite of massive cuts to the California Arts Council. The City is shifting its arts granting program more towards an investment-focused concept that builds industry capacity. The city’s venture capital firms invest significant amounts in local firms, but many arts projects need capital that is more patient than VC money – incentives and infrastructure for patronage in the city could be beneficial.

The city needs to create spaces for innovation where entrepreneurs can sow seeds that they expect to grow. In San Francisco’s design district, spaces were made available, turning an underused district into a tourist precinct and a hub for global firms that generate hundreds of millions annually.

It was suggested that green and creative industry workshops in Vancouver House during the Olympics could provide a good industry showcase. Land use changes and City investments are made based on an expectation of returns to the community – individual artists or projects may come and go, but it is important that people know Vancouver as the place to come to participate in creative industries and activities.

Mayor Robertson wrapped up the discussion by describing the challenge reconciling the hard realities of City finance with the soft realities of a creative environment. Much work is being done to create a welcoming environment: the VEDC is working to attract creative firms, the City has created a Cultural Concierge to help with regulatory processes, and the City’s Open Source initiative demonstrates a more open form of governance. There are also major opportunities in the future development of the Cambie Corridor and False Creek Flats, assets that other cities would love to have. The 2010 Olympics and Vancouver’s 125^th anniversary in 2011 will be showcases for the exciting work being done. Longer-term, work will need to be done to build a culture of financing in the city that responds to the huge opportunities that exist in the green and creative sectors.

Economic Outlook

Ken Peacock presented a global and provincial economic outlook. His presentation is available here. He noted that recovery is underway, but much slower than is often the case, with GDP growth much more moderate than what is typically experienced in a full rebound. Projects are still having trouble with financing, and US consumers are still tentative. The BC forecast for 2010 is relatively strong, despite recent indicators that show private sector payrolls declining and job growth largely in the self-employed and public sector categories.

Ron Bagan described the state of regional real estate markets. He noted in the vein of the creative industry discussion that many developments are looking at mixed-use facilities, but that few have contemplated inclusion of educational facilities, which could be an opportunity. The residential market has quickly rebounded, perhaps too quickly in terms of price escalation. Downtown now has a limited supply of land for further development. The Cambie corridor has sparked significant interest in development opportunities. The cost of retail facilities, even outside the downtown is at record levels, with a Shoppers’ Drug Mart development in the South Granville neighborhood being developed at roughly $1000 per square foot.

Jonathan Kassian presented VEDC’s Quarterly Economic Report, which can be found here. He noted that recovery is proceeding slowly, especially in terms of job growth. A jump in housing prices is stimulating limited building activity, with some small projects returning to the city. Mining is one of the few bright spots, though tourism and freight are recovering slowly, and creative sectors are currently experiencing some success despite major concerns about the future. Several companies in the new media and visual F/X sectors have established offices or partnerships in Vancouver, indicating that the city is becoming a destination of choice for those industries.

Phil Heard thanked the participants for their input, and adjourned the meeting at 9:30 a.m. Discussions continued among the participants informally after the meeting was adjourned.