MINUTES — PUBLIC – ECONOMIC DEVELOPMENT COMMISSION – 4th meeting — October 10, 2024 - 12:30 p.m. to 2:19 p.m.

7. Reflection on the development of specialized economic spaces — Analysis and reflection

The document Développement des espaces économiques spécialisés de Gatineau was sent to members before the meeting. The objective of the presentation is to continue the reflection regarding the development of specialized economic spaces (business and industrial parks) and to submit, if applicable, a recommendation to the city council regarding the City's role in the sale of industrial land. It is recalled that the City has begun a reflection on its specialized economic spaces divided into three parts: evaluation of the supply and needs for land; role of the City in the purchase and sale of land; and revision of land prices. The part on the revision of land prices has been completed. The CDÉ submitted, last June, a recommendation which was ratified by the city council on August 27, 2024. The file therefore returns to the CDÉ regarding the other two identified parts.

The firm LGP begins its presentation by praising the participatory governance established at the CDÉ. A model that could spread throughout Quebec.

Murielle Laberge leaves the meeting at 1:22 PM. The quorum is maintained.

The City of Gatineau is a proactive player in the fluctuation of the industrial market, notably by acting directly through the acquisition of land since 2002. An industrial characterization exercise was done with the thirteen industrial parks using, in particular, data from the assessment roll to paint a portrait of vacant land. Field visits and the use of several data sources were complementary to this work. It emerges from this exercise that 4,404,233 m² of land are vacant, or 30% of specialized spaces. Availability is greater on the Aéroparc side. Publicly owned land offers more latitude for establishing strategies. However, 37% (1,616,162 m²) of vacant land is municipal or public (mainly within the Aéroparc). This is a very interesting proportion that fits with the objectives normally recommended for land control, that is to say, all the actions and tools allowing for the control or acquisition of land as well as buildings with a view to carrying out projects of general interest or development. In other words, this rate gives an indication of the availability of properties (land and buildings) that can give rise to the implementation of public development policies or development strategies (in this case, economic).

A mention is made indicating that some land has been sold or is currently the subject of negotiation. The actual rate may vary and may be more in the order of 20% than 37%.

A municipality's budget is composed mainly of revenue from property taxes. For several decades, revenue from commercial and industrial taxation has been decreasing, due to a lower rate of activity in this sector. There is thus less value portable to the assessment roll. Consequently, zoning or land allocation decisions have a direct effect on municipal taxation. A municipality's taxing power affects the envelope of a building and not its content (equipment, etc.). Therefore, even a desire to increase revenue from industrial taxation can have limited impacts on the tax base. In light of this information, it is therefore suggested to preserve a balance in municipal tax revenues. A target of 20 to 30% of the standardized property wealth (RFU) commercial or industrial constitutes an adequate contribution to a municipality's average budget and preserves a capacity for project development. At 17%, the commercial and industrial RFU of the City of Gatineau is higher than the Quebec average and it has experienced a growth of 1% between 2014 and 2023.

The notion of land control occupies a central place with regard to the future role proposed by LGP for the City in this file. The following reasons support the proposal to use land control to maintain and amplify the City's role as a player:

• Promote sustainable fiscal balance by retaining and enhancing non-residential properties;
• More easily guide the choice of companies in coherence with the development vision;
• Mitigate real estate speculation, allowing for the control of land and rental prices, making commercial and business spaces more accessible.

Several tools allow for land control, including:

• Land monitoring: Tracking acquisition opportunities in a territory;
• Amicable acquisition: Purchase by mutual agreement from owners;
• Right of pre-emption: Priority of purchase on a property put up for sale;
• Expropriation: Forced acquisition for public utility;
• Emphyteutic lease: Long-term rental. Allows for the preservation of municipal assets and ensures recurring income;
• Local real estate fund: Creation of value and economic leverage.

At the end of the presentation, the firm LGP recommends that the City:

• Maintain and amplify its role as a player, notably through land control.
• Ensure its attractiveness by:
  • Having land ready for investment;
  • Having a clear and distinctive economic positioning;
  • Implementing a communication strategy.
• Optimize its specialized economic spaces by:
  • Densifying (existing and future);
  • Preparing to file an exclusion request for the expansion of the Aéroparc;
  • Maximizing the retention and growth strategy of companies.

The opinions of the members are solicited on the suggested recommendation as well as on the question of the City's contribution to economic development. The presentation prompts the following comments, questions, or clarifications:

• The sale of land seems to benefit medium or large-scale projects and not smaller projects such as those of start-up companies. It is asked if cities rely more on the purchase of buildings. An affirmative answer is given to this question by noting that at least twenty examples exist in the province, including the city of Trois-Rivières or the Îles-de-la-Madeleine. The acquisition of existing buildings allows for offering spaces at more affordable costs to companies.
• To the question of whether cities can subsidize start-up companies, it is indicated that there are generally two categories of aid possible for a city. The subsidy is not ideal since it often leads to the financial dependence of a company whose business plan is not viable in the long term. Proactive cities rather have guarantee funds with various terms (shareholder, credit guarantee, etc.); they manage risk to help companies acquire buildings by having the necessary liquidity for this purpose.
• This is a very technical presentation from which it emerges that the more the City acquires land, the more it ensures land control between 20 and 30%. Thus, at the present time, it would be more a matter of acquiring land than selling it. It is answered that indeed the land control strategy playing between 20 to 30% implies ensuring that the constructions carried out on the land are quality buildings with added value from an economic point of view (particular architectural treatment, densification allowing more buildings per square foot of land, etc.). This type of measure makes it possible to increase the standardized property wealth resulting from industrial taxation.
• A plan seems essential to achieve this land control. It is emphasized that a vision indeed facilitates decision-making in addition to ensuring greater coherence of action. It seems essential to hold strategically located land and to enhance it. Other levers such as expropriation or the right of pre-emption can be used.
• Since the city of Drummondville is very industrial, did the land previously belong to the city? Did it use a land control strategy? It is indicated that Drummondville just like Lévis are very dynamic cities that benefit from a natural advantage linked to the abundance of land pooled during municipal mergers. They do not have land control strategies. Their strategy is much more one of attraction based on location and accessibility of the workforce. It is highlighted that the current scarcity of land means that the strategies of different cities need to be adapted since ten years ago, there was an abundance of land. Land control strategies are adapted to this new reality; they constitute an innovative response to the current context of scarcity.
• We want clarifications regarding the role played by cities in the issue of sustainable development or problems related to energy demands. It is mentioned that the notion of sustainable development is not easy to make percolate on the ground. Initiatives are starting to bear fruit. Attractiveness now passes through the sustainable development of territories and it is defined more and more in terms of quality of living environments. The prices or locations of land are no longer the only factors.
• As for the City of Gatineau, it is specified that the sustainable development criterion is already included in practices. The quality of projects and their impacts in their environments are part of the project appreciation criteria (circular economy, supply chains, LEED certification, etc.). This concern is also present in the ongoing initiative to address mobility issues in the Aéroparc. The energy problem is pan-Quebec. Some more energy-intensive industrial projects are subject to moratoriums.
• In addition to the land control strategy, it would be interesting for the City to consider optimization avenues such as the development of energy sharing networks. The city could federate and mobilize actors in this direction. Energy sharing networks already exist. Uses are different and energy demands differ according to the times.
• It is suggested to include the downtown area in the economic development zone in order to acquire buildings there to attract companies and rely more on the rental aspect than the sale. It is indicated that this is part of the discussions and that guidelines have been given in this direction by the city council. However, it is more of an economic diversification framework than an industrial one since zoning does not allow this type of development downtown.
• Owners struggling with difficult financial situations might see their burden lightened if the City were to acquire certain buildings.
• It is asked if we should already initiate the procedures to prepare an exclusion request for the Aéroparc. It is indicated that to do so, it is necessary to demonstrate to the Commission de protection du territoire agricole (CPTAQ) that there is no longer any space available in the urban perimeter. The city must show that it has done all its homework, and that despite everything, it is in a land shortage. At the present time, it might be wiser to put efforts into densifying this business park than on its sprawl, in order to optimize its economic spaces.
• It is emphasized that we will have to prepare for the expansion of the business park since in 2050 there will be a lack of land.
• Densification is a short-term priority. We must take action in advance to prepare an exclusion request. We must reflect on what is targeted: a centralization creating a business community at the same location or acquiring several available plots of land here and there throughout the city. It is mentioned that a vision exercise will have to be done to establish a strategy extending to several parks or several hubs. We must show a certain agility and seize opportunities to stimulate less dynamic sectors. The City must therefore take a position on the idea of land control, examine the assets it has, and see which ecosystem seems to need it the most. At the end of the exchanges, a consensus emerges regarding the recommendation proposed by LGP. Work will continue to validate the suggested guidelines. The recently adopted policy may need to be modified. The file will progress to the city council, if applicable. CDÉ members will be informed of developments.