Murky waters in economic development
Business Cape Breton’s demise leaves more questions than answers
While Business Cape Breton officially closed its doors for the final time on Friday, the Cape Breton Regional Municipality emphasized its “urgent” need to find a new economic development model.
CBRM economic development manager John Phalen said he’s been tasked to keep small business retention files moving, while working on the bigger projects he’s already responsible for such as the proposed container port and the downtown commercial tax phase-in program, among other projects.
The Department of Municipal Affairs met with CBRM council and staff earlier this week to begin laying the framework for a new economic development model.
“It’s very urgent. We’ve got to get it done, quickly,” Phalen said in an interview Friday.
He is planning to meet with small business financing group Coastal Business CBDC on
Monday to see if it can pick up some of the work that had been the mandate of Business Cape Breton. CBRM’s economic development agency had its funding cut on March 31.
At the office of Business Cape Breton on Kings Road in Sydney, the now former CEO Eileen Lannon Oldford was still crunching numbers to finalize
year-end reports.
She has remained silent on the demise of her organization for more than two weeks until she was asked Friday about the situation.
“It’s an interesting day but I mean the fact is you can’t operate without resources and that’s where it is,” she told the Post.
Lannon Oldford and three other staff members have been laid off. She said the last several days have been spent contacting clients and wrapping up loose ends.
“We try to finish up as many clients as we can that want to finish up their business plan and we’ve been working with them on that.
“Our clients, hopefully, we’ll direct them or refer them to anybody else that might be able to assist them.”
With her entire career spent working in economic development, Lannon Oldford said she would take some time before deciding what to do next.
During municipal budget deliberations on March 6 a motion was passed by council approving the terms of reference in issuing requests for proposals for economic development initiatives from any qualified organization.
CBRM Mayor Cecil Clarke claimed the provincial government has forced the municipality’s hand because it wasn’t willing to fund a community economic development model that had become Business Cape Breton’s niche.
However, Municipal Affairs Minister Derek Mombourquette said he wanted CBRM to create a model similar to the six regional economic networks (RENs) established for municipalities across Nova Scotia in 2015.
“It’s the most transparent and accountable way for us to monitor the money we provide … and to keep taxpayers informed on these activities,” Mombourquette told the Post in an interview Wednesday.
In the fallout from council’s decision to divert its approximately $288,000 annual budget for economic development away from Business Cape Breton, the organization led by chairman Parker Rudderham decided it wouldn’t apply for any tenders from the CBRM because Business Cape Breton considers the REN structure overly bureaucratic.
“We aren’t interested in facts and figures, we’re interested in tangible results,” Rudderham said last week.
The CBRM, which originally joined the Cape Breton Regional Enterprise Network alongside Inverness, Richmond and Victoria counties, decided to withdraw from the REN in June 2016 following a recommendation from Clarke who considered the group to be unnecessarily “cumbersome.”
Phalen said the province provided approximately $224,000 for economic development for the 2017-18 fiscal year but that money had been withheld because council decided during budget discussions last year to stick with Business Cape Breton.
Debate during budget talks in February 2017 from some members of council had centred around whether more effort should be concentrated on in-house initiatives rather than spending money on agencies such as Business Cape Breton, which was unable to secure funding from the province or the Atlantic Canada Opportunities Agency.
Council inevitably ended up spending $223,956 in core funding and another $63,562 in small business development funding for Business Cape Breton last year.
Those figures do not include special projects carried out by the organization such as the communities in bloom program that cost about $120,000 in 2017.
Even as the CBRM continues to negotiate with Municipal Affairs on the structure of its new economic development engine, Phalen said he’s unsure how much money will be on the table from the province to support the municipality’s efforts.
“It’ll be kind of a unique structure for CBRM,” he said, adding it doesn’t matter if the new entity is named a regional enterprise network or not.
“We don’t really care what they call it as long as they come through with the funding … right now, they’re trying to find a model that’ll fit CBRM.”
The Cape Breton Regional Enterprise Network is overseen by a board of directors and is administered by the Cape Breton Partnership. It’s likely that as the CBRM issues request for proposals on projects, the Partnership will be the one agency likely to get the work, said George Karaphillis, the dean of the Shannon School of Business at Cape Breton University.
“What are the things the municipality needs that their own economic development officer does not do?” said Karaphillis.
“I think if they put those needs on a piece of paper and ask for somebody to submit something, that would be a good thing. It’ll probably end up (being) the Cape Breton Partnership bidding on these RFPs.
“Who else is going to set up a whole office from scratch to do that kind of work? It’s going to be a lot of money involved.”
He said because economic development isn’t an exact science, governments are known for experimenting with new models and funding formulas.
“Economic development is not like a puzzle, it’s a mystery. Sometimes things fall into place and work.”